WE ARE SHAPING
THE MOBILITY
OF THE FUTURE
ANNUAL REPORT 2017
The new era of electric mobility requires visionaries
and people of action. Find out in our image brochure
how BMW Group is shaping the mobility of the future.
4
CORPORATE
GOVERNANCE
Page 198 Statement on Corporate Governance
(Part of the Combined Management Report)
Information on the Company’s Governing Constitution
Page 198
Page 199 Declaration of the Board of Management and of the
Supervisory Board pursuant to § 161 AktG
Page 200 Members of the Board of Management
Page 201 Members of the Supervisory Board
Page 204 Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
Page 206 Composition and Work Procedures of the
Super visory Board of BMW AG and its Committees
Page 213 Disclosures pursuant to the Act on Equal
Page 214
Gender Participation
Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
Page 216 Compliance in the BMW Group
Page 221 Compensation Report
(Part of the Combined Management Report)
Page 239 Responsibility Statement by the
Company’s Legal Representatives
Page 240 Independent Auditor’s Report
5
OTHER INFORMATION
Page 248 BMW Group Ten-year Comparison
Page 250 Glossary – Explanation of Key Figures
Page 252 Index
Page 254 Index of Graphs
Page 255 Financial Calendar
Page 256 Contacts
CONTENTS
1
TO OUR SHAREHOLDERS
Page
4 BMW Group in Figures
Page
8 Report of the Supervisory Board
Page 18 Statement of the Chairman of the
Board of Management
Page 24 BMW Stock and Capital Markets in 2017
2
COMBINED
MANAGEMENT REPORT
Page 30 General Information and Group Profile
Page 30 Organisation and Business Model
Page 40 Management System
Page 44 Report on Economic Position
Page 44 General and Sector-specific Environment
Page 48 Overall Assessment by Management
Page 49 Financial and Non-financial Performance Indicators
Page 52 Review of Operations
Page 72 Results of Operations, Financial Position and Net Assets
Page 86 Comments on Financial Statements of BMW AG
Page 90 Report on Outlook, Risks and Opportunities
Page 90 Outlook
Page 96 Risks and Opportunities
Page 111 Internal Control System Relevant for Accounting and
Financial Reporting Processes
Page 112 Disclosures Relevant for Takeovers
3
GROUP FINANCIAL
STATEMENTS
Page 118 Income Statement
Page 118 Statement of Comprehensive Income
Page 120 Balance Sheet
Page 122 Cash Flow Statement
Page 124 Statement of Changes in Equity
Page 126 Notes to the Group Financial Statements
Page 126 Accounting Principles and Policies
Page 139 Notes to the Income Statement
Page 145 Notes to the Statement of Comprehensive Income
Page 146 Notes to the Balance Sheet
Page 167 Other Disclosures
Page 183 Segment Information
Page 188 List of Investments at 31 December 2017
TOWARDS
THE FUTURE
Our Annual Report is also available
in digital form under:
http: / / annual-report2017.bmwgroup.com
The fuel consumption, CO2 emissions, power consumption and operating range figures
were determined according to the European Regulation (EC) 715 / 2007 in the version appli-
cable. The figures refer to a vehicle with basic configuration in Germany and the range
shown considers the different sizes of the selected wheels / tyres and the selected items of
optional equipment.
Further information on official fuel consumption figures and specific CO2 emissions values
of new passenger cars is included in the “Guideline for fuel consumption, CO2 emissions
and electric power consumption of new passenger cars”, which can be obtained free of
charge from all dealerships and at https: / / www.dat.de / en / offers / publications /
guideline-for-fuel-consumption.html.
1
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW Stock and
Capital Markets
TO OUR SHAREHOLDERS
Page 4 BMW Group in Figures
Page 8 Report of the Supervisory Board
Page 18 Statement of the Chairman of the Board of Management
Page 24 BMW Stock and Capital Markets in 2017
1
4
BMW Group
in Figures
BMW GROUP IN FIGURES
Key non-financial performance indicators
• 01
Group
Workforce at year-end 1
Automotive seGment
Deliveries 2
Fleet emissions in g CO2 / km 3
motorcycles seGment
Deliveries 4
2013
2014
2015
2016
2017
Change in %
110,351
116,324
122,244
124,729
129,932
4.2
1,963,798
2,117,965
2,247,485
2,367,603
2,463,526
133
130
127
124
122
4.1
– 1.6
115,215
123,495
136,963
145,032
164,153
13.2
Further non-financial performance figures
• 02
Automotive seGment
Deliveries
BMW 2
MINI
Rolls-Royce
Total 2
Production volume
BMW 5
MINI
Rolls-Royce
Total 5
motorcycles seGment
Production volume 6
BMW
FinAnciAl services seGment
2013
2014
2015
2016
2017
Change in %
1,655,138
1,811,719
1,905,234
2,003,359
2,088,283
305,030
3,630
302,183
4,063
338,466
3,785
360,233
4,011
371,881
3,362
1,963,798
2,117,965
2,247,485
2,367,603
2,463,526
1,699,835
1,838,268
1,933,647
2,002,997
2,123,947
303,177
3,354
322,803
4,495
342,008
3,848
352,580
4,179
378,486
3,308
2,006,366
2,165,566
2,279,503
2,359,756
2,505,741
4.2
3.2
– 16.2
4.1
6.0
7.3
– 20.8
6.2
110,127
133,615
151,004
145,555
185,682
27.6
New contracts with retail customers
1,471,385
1,509,113
1,655,961
1,811,157
1,828,604
1.0
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 (2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units).
3 EU-28.
4 Excluding Husqvarna, deliveries up to 2013: 59,776 units.
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
To Our Shareholders 5
Key financial performance indicators
• 03
Group
Profit before tax in € million
Automotive seGment
Revenues in € million
EBIT margin in % (change in %pts)
RoCE in % (change in %pts)
motorcycles seGment
EBIT margin in % (change in %pts)
RoCE in % (change in %pts)
FinAnciAl services seGment
2013
2014
2015
2016
2017
Change in %
7,893
8,707
9,224
9,665
10,655
10.2
70,630
75,173
85,536
86,424
88,581
9.4
63.0
5.3
16.4
9.6
61.7
6.7
21.8
9.2
72.2
9.1
31.6
8.9
74.3
9.0
33.0
8.9
78.6
9.1
34.0
2.5
–
4.3
0.1
1.0
RoE in % (change in %pts)
20.0
19.4
20.2
21.2
18.1
– 3.1
Further financial performance figures
• 04
in € million
2013
2014
2015
2016
2017
Change in %
Total capital expenditure 1
Depreciation and amortisation
Free 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 (EBT)
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Income taxes
Net profit
6,711
3,741
3,003
76,059
70,630
1,504
19,874
6
6,100
4,170
3,481
80,401
75,173
1,679
20,599
7
5,890
4,659
5,404
92,175
85,536
1,990
23,739
7
5,823
4,806
5,792
94,163
86,424
2,069
25,681
6
7,112
4,822
4,459
98,678
88,581
2,283
27,567
7
– 15,955
– 17,057
– 19,097
– 20,017
– 19,760
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
9,386
7,695
187
2,184
– 17
– 663
9,665
7,916
185
2,166
170
– 772
– 2,564
5,329
– 2,890
5,817
– 2,828
6,396
– 2,755
6,910
9,880
7,863
207
2,194
14
– 398
10,655
8,691
205
2,207
80
– 528
– 1,949
8,706
22.1
0.3
– 23.0
4.8
2.5
10.3
7.3
16.7
1.3
5.3
2.2
10.7
0.5
–
40.0
10.2
9.8
10.8
1.9
– 52.9
31.6
29.3
26.0
Earnings per share in €
8.08 / 8.10
8.83 / 8.85
9.70 / 9.72
10.45 / 10.47
13.12 / 13.14
25.6 / 25.5
Pre-tax return on sales 2 in % (change in %pts)
10.4
10.8
10.0
10.3
10.8
0.5
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
2 Group profit before tax as a percentage of Group revenues.
6
BMW Group
in Figures
BMW Group deliveries of automobiles*
• 05
BMW Group revenues
• 07
in 1,000 units
in € billion
2,247.5
2,118.0
1,963.8
2,367.6 2,463.5
2,500
1,250
0
100
50
0
92.2
94.2
98.7
76.1
80.4
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units,
2017: 384,124 units).
BMW Group profit before financial result (EBIT)
• 06
BMW Group profit before tax
• 08
9,118
9,593
9,386
9,880
7,978
in € million
11,000
5,500
0
10,655
9,224
9,665
8,707
7,893
in € million
11,000
5,500
0
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
To Our Shareholders REPORT OF THE
SUPERVISORY BOARD
STATEMENT OF THE
CHAIRMAN OF THE
BOARD OF MANAGEMENT
BMW STOCK AND
CAPITAL MARKETS IN 2017
1
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW Stock and
Capital Markets
8
Report of the
Supervisory Board
Norbert Reithofer
Chairman of the Supervisory Board
To Our Shareholders Dear Shareholders,
9
The BMW Group sold more than 100,000 electrified vehicles during the past year. With the
move towards electrification of the fleet and the biggest model offensive ever undertaken in the
company’s history, the BMW Group is getting ready for the future. The BMW Group delivered
an outstanding earnings performance in the financial year 2017 and once again confirmed its
leading position in the premium segment with record deliveries.
Monitoring and advisory activities of the Supervisory Board
Throughout the financial year 2017, the Supervisory Board performed its duties with the utmost
care in accordance with the law and the Articles of Incorporation. We provided the Board
of Management in their strategic development and management of the BMW Group with
constructive advice and closely and continuously monitored its running of the business.
The Board of Management reported regularly to us on the implementation of Strategy
NUMBER ONE > NEXT. Key areas of focus included the BMW Group’s strategy for drivetrain
technology and progress in the field of electric mobility. Further major activities were the revised
Board of Management compensation system and the Group business plan. At each of our five
Supervisory Board meetings, we discussed in detail the current situation of the BMW Group
with the Board of Management.
The Company’s situation and development have been continually in our focus, also outside of
meetings. The Board of Management reported to us regularly on the latest sales and workforce
figures and provided us with information on matters of particular importance as they arose.
Between meetings, the Chairman of the Board of Management, Mr Harald Krüger, informed
me directly and promptly in our regular consultations on the current state of major business
transactions and projects.
Furthermore, when necessary, the Chairman of the Audit Committee, Dr Karl-Ludwig Kley,
liaised directly with the Member of the Board of Management responsible for Finance, Dr Nicolas
Peter, outside scheduled meetings.
In its regular reports on the BMW Group’s current situation, the Board of Management provided
us with information on the deliveries trend and the competitive environment in the Automotive
and Motorcycles segments as well as the development of new contracts and business volumes
in the Financial Services segment, also explaining any variances against forecast. The Board of
Management also provided us with the latest workforce figures, reported on developments on
key markets and explained business forecasts.
The Board of Management also highlighted in its situation reports important current transactions
and projects, which we then followed up in our in-depth discussions. These included, for
example, progress made in the areas of product quality and customer satisfaction. The Board of
Management also reported on events such as the “diesel summit” in Berlin and the International
Motor Show (IAA Cars) in Frankfurt. In addition, the Board of Management explained the status
of various cooperation negotiations and transactions, such as the establishment of a joint venture
with other manufacturers to build a European network of fast charging stations.
Regarding the Chinese market, the Board of Management provided us with detailed information
on business developments and specific local requirements and explained the strategy pursued
in this region.
10
Report of the
Supervisory Board
At the beginning of the year, the Board of Management presented to us the new models and
model revisions due for market launch in 2017.
One Supervisory Board meeting was held at the Dingolfing plant. A major focus of this
meeting was the report of the Board of Management on the development of the worldwide
production network, highlighting in particular international cooperation between the plants.
It also explained how Industry 4.0 innovations are being applied in production, for example
in the field of logistics, where components tracking increases supply reliability. The Group
has already been exploiting the possibilities of additive manufacturing (3D printing) in pro-
duction for several years. A further topic of the meeting was BMW Group’s strategy in the
area of taxes and customs duties. The Board of Management presented a range of scenarios
on the operational and financial impact for the BMW Group of the United Kingdom’s exit
from the European Union. We were also briefed by the Board on the US administration’s
announcements regarding taxes and duties and the possible consequences for the BMW Group.
We also discussed the CSR Directive Implementation Act and its impact on non-financial
reporting for the BMW Group. In this context, the Supervisory Board has amended its rules
of procedure and expanded the tasks of the Audit Committee. We commissioned the audit
firm PricewaterhouseCoopers GmbH to perform a voluntary, limited assurance review of the
separate report on non-financial information. During a guided tour of the Dingolfing plant,
we were able to learn about the future production of the BMW i NEXT, amongst others.
The two-day Supervisory Board meeting focused in particular on the Group’s strategy and the
long-term corporate plan.
During the first part of the meeting we discussed the annual review of Strategy NUMBER ONE > NEXT
with the Board of Management. The Board of Management explained the decisions taken in each
strategic area, such as the expansion of digital services and products and developments in the
field of autonomous driving. It also presented various scenarios for the development of drivetrain
systems and outlined the measures it has taken to respond flexibly to customer requirements. The
Board of Management also provided us with a detailed account of the competitive environment
in the electric mobility sector. We support the Board of Management’s initiatives to expand the
charging infrastructure.
In the course of a vehicle presentation, we had the opportunity to drive the current BMW Group
models with various drivetrain concepts on a test track. We were able to see for ourselves
the progress made in the field of autonomous driving. Selected vehicles, including various
battery-electric vehicles (BEVs), and technologies were also presented and explained to us
through models and exhibits.
In the second part of the meeting, we reviewed in detail the long-term corporate plan for the
years 2018 to 2023 and discussed in depth various risk scenarios with the Board of Management.
The Board of Management explained the Performance NEXT programme, which will support
the financing of future topics by leveraging potential on the performance and cost side. After
careful examination and discussion, we approved the plan and urged the Board to implement
systematically the measures proposed and to drive ahead with electric mobility at the BMW Group,
in order to act from a position of strength.
To Our Shareholders 11
We also took a close look at the BMW Group’s IT strategy. The Board of Management explained
the steps already taken towards further digitalisation of the BMW Group. At the same time, it
informed us on the threat of cyberattacks and outlined the safeguards and defence measures
within the IT security management system.
At our final meeting of the financial year 2017, the Board of Management presented the annual
planning for the financial year 2018. We reviewed in detail the opportunities and risks and
discussed them with the Board of Management.
With respect to vehicle architecture, the Board of Management explained measures taken to
implement the electrification strategy and presented the specific benefits.
In addition, the Board of Management addressed the allegations made against BMW in various
media outlets with regard to emissions treatment and confirmed that the BMW Group engages
in no activities or technical measures to influence the test mode for measurement of emissions.
Furthermore, the Board of Management reported in detail on the performance, risk situation
and business strategies of the Financial Services segment. It described the measures in place
to comply with regulatory requirements and provided information on the status of regulatory
proceedings against a locally based financial services company.
Within the Personnel Committee and Supervisory Board, we closely examined the structure
and amounts of compensation for members of the Board of Management. In our review, we
took into account the development of the Group, as well as compensation of the executive
management and the overall workforce in Germany over time. In addition, we consulted studies
of the compensation at DAX-listed companies. We were assisted here by an independent external
compensation consultant. After a detailed examination and discussion, we concluded that
the compensation of the Board of Management for the financial year 2017, including pension
entitlements, is appropriate.
While leaving the existing overall upper limits unchanged, we have revised the compensation
system for the Board of Management. Apart from an increase in Board members’ base salary,
the focus was on revising the system for variable remuneration. We have paid special attention
to linking variable remuneration even more closely to sustainable business development and
the long-term business plan. A new multi-year component has been introduced, in the form of
a performance cash plan. Other provisions contained in the standard service contract for Board
members were also updated. With the agreement of its members, all Board of Management
service contracts have been amended with effect from 1 January 2018. Further information on
Board of Management compensation and on the new compensation system with effect from
the financial year 2018 is provided in the Compensation Report (see section Statement on
Corporate Governance).
A further topic reported on by the Board of Management was the current status of the diversity
concept. The Board informed us on the targets they have set for increasing the proportion
of women in the workforce, particularly in the management, and the current level of target
achievement. In addition, the Board of Management explained the measures it has taken to
encourage cultural diversity and a mixed age structure in the workforce.
12
Report of the
Supervisory Board
Together with the Board of Management, we gave careful consideration to the corporate governance
standards of the BMW Group as well as the provisions of the German Corporate Governance
Code. The same also applies to the proposal that the Chairman of the Supervisory Board should
engage in dialogue with investors on subjects specific to the Supervisory Board. As a result of the
revision of the compensation system with effect from the financial year 2018, it was necessary to
retrospectively cancel the previous performance targets for variable compensation for the years 2018
and 2019 and replace them with the new, more ambitious target system. The current Declaration
of Compliance pursuant to § 161 AktG is included in the Corporate Governance Report.
The Supervisory Board had already adopted detailed targets for its own composition which
included competence-related criteria. These targets were confirmed in the form of the “competency
profile”. Based on a self-review conducted by the Supervisory Board, it was concluded that the
current composition of the Supervisory Board is in line with the targets of the diversity concept
and competency profile, as well as other targets set for its composition at 31 December 2017.
No conflicts of interest arose on the part of Members of the Board of Management or Supervisory
Board during the year under report. Significant transactions with Supervisory Board members
and other related parties as defined by IAS 24, including close relatives and intermediary entities,
were examined on a quarterly basis.
Following a detailed efficiency examination in the previous year, the Supervisory Board reviewed
the efficiency of its activities in 2017 on the basis of a structured questionnaire. Moreover, mem-
bers of the Supervisory Board had the opportunity to discuss matters with me individually. The
self-review was discussed in the full Supervisory Board. Overall, the work of the Supervisory Board
was deemed efficient. No significant need for change was identified. Proposals, for example with
respect to the reports provided by the Board of Management, were taken into account.
Average attendance of the five Supervisory Board meetings held in the financial year 2017 was 94 %.
An individualised overview of attendance at meetings of the Supervisory Board and its committees
for the financial year 2017 has been published on the BMW Group’s website. All members of the
Supervisory Board attended more than half of the meetings of the Supervisory Board and those
committees to which they belonged during their term of office in the financial year 2017.
Description of Presiding Board activities and committee work
In order to increase efficiency and ensure better preparation of its plenary meetings, the Super-
visory Board has established a Presiding Board and four committees. Committee chairpersons
reported in detail and in a timely manner on Presiding Board and committee work at the following
meeting of the Supervisory Board. The shareholder representatives were informed by myself of
the activities of the Nomination Committee. A detailed description of the duties, composition
and work procedures of the various committees is provided in the Corporate Governance Report.
The Presiding Board convened five times during the financial year under report. Assuming
no other committee was responsible, the focus of our activities was on preparing the detailed
agenda for the meetings of the full Supervisory Board. Complex and wide-ranging topics, such
as the long-term plan, were prepared together in detail with the Board of Management and
senior heads of department on the basis of written and oral reports. We also selected further
topics for full Supervisory Board meetings and made suggestions for reports submitted to
the full Supervisory Board.
To Our Shareholders 13
The Audit Committee held five meetings and two telephone conference calls during the finan-
cial year 2017. In the course of those conference calls and at one meeting together with the
Board of Management, we reviewed the Quarterly Financial Reports prior to their publication.
Representatives of the external auditors were present during the presentation of the Half-Year
Financial Report.
The Audit Committee’s meeting in spring 2017 focused primarily on preparing for the Supervisory
Board meeting at which the financial statements were to be examined. Before recommending
to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft be elected as
Company and Group auditor at the Annual General Meeting 2017, we obtained a Declaration
of Independence from KPMG. We also considered the scope and composition of non-audit
services, including tax advisory services provided by KPMG entities to the BMW Group. We
found no indications of grounds for exclusion, conflicts of interest, or risk to the independence
of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2017 and
the review of the Half-year Financial Report were deemed appropriate. Subsequent to the Annual
General Meeting 2017, we therefore appointed KPMG AG Wirtschaftsprüfungsgesellschaft for
the relevant engagements and specified additional audit focus areas.
During the financial year 2017, the Head of Group Controlling reported to the Audit Committee
on the current risk profile of the BMW Group. In this context, we reviewed in depth a number
of individual topics, such as risk management with regard to suppliers.
The Head of Group Financial Reporting presented to us current developments in the internal
control system (ICS) underlying financial reporting. The tests performed highlighted no material
ICS weaknesses which would jeopardise the system’s effectiveness.
The Head of Group Internal Audit presented the main findings of Group internal audits per-
formed during the year under report and outlined the areas of focus for planned audits. He also
informed us about an external quality assessment of Group audit activities, which concluded
that the relevant German and international standards were met.
A key focus of the Audit Committee’s work was on compliance. The Chairman of the BMW Group
Compliance Committee informed us about the status of compliance within the Group, initially
in the regular report at the end of June. He presented here new IT systems designed to support
compliance management. Immediately after the appearance of media reports on cartel allegations
at the end of July in connection with the so-called “circle of five”, we held a meeting of the Presiding
Board and the Audit Committee. The Board of Management informed us in detail of the status of
the internal investigation that it had immediately launched and which is being conducted with the
support of an international law firm. The Head of Legal Affairs and Patents explained the legal
background of the allegations. We also discussed the BMW Group Compliance Management’s
existing preventive measures with respect to antitrust compliance. The progress of the internal
investigation was analysed in detail at the two subsequent Audit Committee meetings, both of
which were attended by a representative of the appointed law firm. As a precautionary measure,
the Chairman of the Audit Committee also had the representative of the appointed law firm
report on the progress of the investigation without members of the Board of Management or
myself being present. These issues were discussed at length at the subsequent meetings of the
Supervisory Board.
14
Report of the
Supervisory Board
Another area of focus for the Audit Committee was preparing for the change in external auditor
with effect from the 2019 financial year. In this context, we organised a tender procedure in
accordance with new statutory requirements and, after carefully examining the applicants,
made a recommendation to the full Supervisory Board. The non-audit services provided by the
auditor were also regularly scrutinised.
An independent auditor engaged by us to conduct the mandatory audit of over-the-counter
derivative transactions confirmed the effectiveness of the system that BMW AG currently employs
to ensure compliance with regulatory requirements.
In conjunction with the Employee Share Programme, the Audit Committee approved the decision
of the Board of Management to raise the Company’s share capital in accordance with § 4 (5) of
the Articles of Incorporation (Authorised Capital 2014) by € 491,000 and to issue a corresponding
number of new non-voting bearer shares of preferred stock, each with a par value of € 1, at
favourable conditions to employees.
The Personnel Committee convened four times during the financial year 2017. The meetings
focused on preparations for revising the Board of Management compensation system and related
service contracts.
The Personnel Committee also undertook the preparatory work for the Supervisory Board’s
decision to appoint a new Board of Management member to head the Sales and Brand BMW,
Aftersales BMW Group, taking account of the requirements profile and diversity concept agreed
upon for the Board of Management.
In individual cases, we also gave our approval to Board of Management members to assume
mandates outside the Group.
The Nomination Committee convened once during the financial year 2017. We reviewed the
succession planning for shareholder representatives and made recommendations for the proposal
of candidates for the Supervisory Board election of the Annual General Meeting 2018, taking
into account the composition targets previously resolved by the Supervisory Board.
The statutory Mediation Committee did not need to convene during the financial year 2017.
To Our Shareholders 15
Composition of the Board of Management
The composition of the Board of Management changed at the turn of the year following the appoint-
ment of Pieter Nota as a Member of the Board of Management with effect from 1 January 2018.
Mr Nota has joined the BMW Group with a wealth of international experience in the areas of sales
and marketing. He succeeds Dr Ian Robertson as Board member responsible for Sales and Brand
BMW, Aftersales BMW Group. In agreement with the Supervisory Board, Dr Robertson retired
from the Board of Management with effect from the end of 31 December 2017. He will continue
to support the BMW Group with his expertise as ambassador of the BMW Group in the United
Kingdom until 30 June 2018. With his energy and commitment, Dr Robertson contributed to the
BMW Group’s outstanding growth and success during an almost ten-year term of office on the
Board. We wish to express our appreciation and thank Dr Robertson for his dedicated services.
In addition, we decided in three cases to renew the appointment of members of the Board of
Management.
Composition of the Supervisory Board,
the Presiding Board and Supervisory Board Committees
In view of the applicable age limit, with effect from the end of the Annual General Meeting
2017, Professor Henning Kagermann stepped down from the Supervisory Board, of which he
had been a member since 2010. We thank Professor Kagermann for his valuable work and the
trustful cooperation with which he served on the Supervisory Board. At the Annual General
Meeting 2017, Dr.-Ing. Heinrich Hiesinger was elected as new shareholder representative for
a five-year term of office.
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year. The Corporate Governance Report includes a summary
of the composition of the Supervisory Board and its committees.
Examination of financial statements and the profit distribution proposal
KPMG AG Wirtschaftsprüfungsgesellschaft has audited the Company and Group Financial
Statements of Bayerische Motoren Werke Aktiengesellschaft (BMW AG). It also conducted a
review of the abridged Interim Group Financial Statements and Interim Group Management
Report for the six-month period ended 30 June 2017. The results of the review were presented
to the Audit Committee by representatives of KPMG AG Wirtschaftsprüfungsgesellschaft. No
issues were identified that might indicate that the abridged Interim Group Financial Statements
and Interim Group Management Report had not been prepared in all material respects in
accordance with the applicable provisions.
16
Report of the
Supervisory Board
The Group and Company Financial Statements of BMW AG for the year ended 31 December 2017
and the Combined Management Report – as authorised for issue by the Board of Management
on 15 February 2018 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft and given
an unqualified audit opinion.
The Auditor’s Report has been signed since the financial year 2016 by Christian Sailer, as
independent auditor (Wirtschaftsprüfer), and since the financial year 2014 by Andreas Feege,
as independent auditor (Wirtschaftsprüfer) responsible for the performance of the engagement.
The financial statements for the financial year 2017, the Combined Management Report, the
reports of the external auditors and the Board of Management’s profit distribution proposal
were made available to all members of the Supervisory Board in a timely manner.
The Audit Committee closely examined and discussed these documents at a meeting held on
26 February 2018. The Audit Committee reviewed in detail the key audit matters raised in
the auditor’s report of the Company and Group Financial Statements and the related audit
procedures performed by KPMG.
The Supervisory Board examined the relevant drafts of the Board of Management at its meeting
on 8 March 2018, after hearing the committee chairman’s report on the meeting of the Audit
Committee. In both meetings, the Board of Management gave a detailed explanation of the
financial reports it had prepared. Representatives of the external auditor were present at both
meetings. They reported on the main findings of their audit, explained the key audit matters in
the audits of the Company and Group Financial Statements and answered additional questions
of members of the Supervisory Board.
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage developments that
might threaten the Company’s going-concern status. They confirmed that no material weaknesses
in the internal control system and risk management system with regard to the financial reporting
process were identified. Similarly, they did not identify in the course of their audit work any
facts that were inconsistent with the contents of the Declaration of Compliance pursuant to
§ 161 AktG, issued by the Board of Management and the Supervisory Board.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we
concurred with the results of the external audit. In accordance with the conclusion reached
after the examination by the Audit Committee and the full Supervisory Board, no objections
were raised. The Group and Company Financial Statements of BMW AG for the financial year
2017 prepared by the Board of Management were approved at the Supervisory Board meeting
held on 8 March 2018. The financial statements have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropriated profit to
pay an increased dividend of € 4.00 per share of common stock and € 4.02 per share of non-voting
preferred stock. We consider the proposal appropriate and have therefore approved it.
To Our Shareholders 17
On presentation of the Sustainable Value Report, the Audit Committee and the Supervisory
Board also reviewed the separate non-financial report of BMW AG (Company and Group) at
31 December 2017, which has been drawn up for the first time by the Board of Management. The
audit firm PricewaterhouseCoopers GmbH has performed a “limited assurance” review of these
reports and issued an unqualified opinion thereon. The documents were carefully examined
by the Audit Committee at its meeting on 26 February 2018 and by the Supervisory Board at
its meeting on 8 March 2018. The Board of Management gave a detailed explanation of the
reports at both meetings. Representatives of the auditors attended both meetings, reported on
significant findings and answered additional questions raised by the members of the Supervisory
Board. The Supervisory Board acknowledged and approved the separate non-financial report
(Company and Group) drawn up by the Board of Management.
Expression of appreciation by the Supervisory Board
We wish to express our appreciation to the members of the Board of Management and the
entire workforce worldwide of the BMW Group for their joint efforts and hard work, which have
contributed to the outstanding performance for the financial year 2017.
Munich, 8 March 2018
On behalf of the Supervisory Board
Norbert Reithofer
Chairman of the Supervisory Board
18
Statement of the
Chairman
of the Board of
Management
Harald Krüger
Chairman of the Board of Management
To Our Shareholders Dear Shareholders,
19
Progress is not possible without change. Change is a constant in all of our lives. The BMW Group
charts its own course – with innovation, determination and foresight. We want to offer
solutions for the challenges of today and tomorrow. Each and every one of our associates is
giving their all. Our corporate culture encourages values of openness and transparency in
our everyday actions.
Financial year 2017: goals accomplished
At the BMW Group, we stand by our promises. And we deliver! We achieved our targets for the
financial year 2017, with new all-time highs for automobile and motorcycle deliveries, as well as
Group pre-tax earnings.
BMW Group leads global premium segment in 2017
More and more customers are buying vehicles built by the BMW Group. Our customers have made
this company a leading manufacturer in the global premium segment for the past 14 years. For
the seventh consecutive year, sales reached a new all-time high in 2017. As forecast, automotive
deliveries rose slightly to 2.46 million vehicles. This represents an increase of 4.1 percent in a
highly competitive environment.
Our strong, emotional brands are extremely desirable to customers. In Fortune Magazineʼs
“Worldʼs Most Admired Companies”, the BMW Group is now the highest-ranked automobile
manufacturer in the top 20 and the most admired European company.
All-time highs for BMW, BMW M, MINI and BMW Motorrad
Our core BMW brand once again sold more than two million vehicles in 2017 – over four percent
more than the previous year. BMW M GmbH also contributed to this, reporting record deliveries
of more than 80,000 M and M Performance models for the first time.
MINI sales climbed more than 3 percent to over 370,000 vehicles. BMW Motorrad saw a significant
increase, with deliveries of motorcycles and scooters up more than 13 percent to 164,000 units.
In the ultra-luxury segment, Rolls-Royce was unable to match the previous yearʼs strong result.
With the Phantom model changeover and in a difficult environment, sales decreased by around
16 percent to 3,362 vehicles.
Milestone: over 100,000 electrified vehicles sold
Electric mobility is currently our main strategic focus. We reached an important milestone
on the road to sustainable mobility last year, when I presented the 100,000th electrified
vehicle sold by the BMW Group to its new owner at BMW Welt in Munich. It was a BMW i3,
purchased by an 80-year-old customer – which just goes to show that it is never too late to
switch to an electric car.
In 2017, we delivered 103,080 cars with electrified drivetrains to customers. Overall, sales of our
BMW i models together with BMW iPerformance and MINI Electric plug-in hybrids increased
by two-thirds over the previous year.
20
Statement of the
Chairman
of the Board of
Management
Every customer and every market counts
It is part of our philosophy that every customer counts – and so does every market. We aim for a
balanced distribution of sales across the main market regions of Europe, Asia and the Americas.
This enables us to balance out regional market fluctuations.
Asia was the main growth driver in 2017 and China the most important single market. In
Mainland China, deliveries climbed to more than 590,000 vehicles. In Europe, sales remained
on a par with the previous year, at around 1.1 million units, despite a downturn in the UK,
with ongoing Brexit negotiations. In the Americas and the US, we saw slight decreases, with
total sales of around 450,000 vehicles for the region. However, the trend has reversed in the US
since late 2017.
Our value creation is as global as it is flexible
The high flexibility of our global production network lays the foundation for the BMW Groupʼs
continued growth. In 2017, twice as many vehicles came off the production line than in 2009.
The company currently operates 31 facilities in 14 countries, and we continue to invest in our
locations in Germany and worldwide. A good example of this is the major expansion of our
Dadong plant in Shenyang, China, which we operate as part of our joint venture with Brilliance
China Automotive Holdings Ltd.
In San Luis Potosí, Mexico, plant construction is proceeding according to schedule. We are already
qualifying young specialists at our new training centre there. Over the next few years, we will
see different types of drivetrains on the roads. We are preparing our sites for this diversity by
creating flexible architectures and plants. This will allow us to produce models with efficient
combustion engines alongside electric vehicles and plug-in hybrids. From 2020 on, the use of
scalable modular electric construction kits will enable us to fit all model series with any type of
drivetrain. This will make us extremely flexible, whichever way demand develops.
Financial indicators reach new highs
In the financial year 2017, Group revenues rose slightly to reach a new all-time high of 98.7 billion
euros. Earnings before tax posted a significant increase of 10.2 percent year-on-year and exceeded
10 billion euros for the first time. Annual net profit was up 26 percent to 8.7 billion euros.
The Group financial statements also reflect the positive impact of the tax reform in the US. The
EBIT margin in the Automotive segment stands at 8.9 per cent and therefore remains within
our target range. The Financial Services segment once again made a significant contribution to
the Group result, with pre-tax earnings of more than 2 billion euros.
Significantly higher dividend
Dear shareholders, your company remains on track for success – and it is only fitting that you
should share in that success. The Board of Management and Supervisory Board will therefore
propose to the Annual General Meeting that the unappropriated profit of BMW AG for the
financial year 2017 be used to issue a dividend of 4.00 euros per share of common stock and
4.02 euros per share of preferred stock. That is the highest dividend the company has ever paid.
BMW AG associates in Germany will also benefit from the companyʼs positive performance
through our profit-sharing programme.
To Our Shareholders 21
The momentum will continue in financial year 2018
Phase II of the biggest model offensive in our history
In 2018, we will enter the second year of the biggest model offensive in our history. We will
continue moving forward, with highly emotional new models like the BMW i8 Roadster and
the BMW Z4.
We are focusing on two segments in particular: first, the highly profitable luxury class. Here, we
will be launching new luxury models like the BMW 8 Series, the BMW X7 and the Rolls-Royce
Phantom onto the market. These will bring us closer to our goal of occupying the leading position
in the luxury segment.
2018 will also be our “X year”, with the expansion of our highly successful BMW X family. As
well as the X7, this will include the new X3 available since late last year, the cool new X2 and
the new X4. I am sure our new X vehicles will totally appeal to our customers.
Half a million electrified vehicles in total by the end of 2019
Electrification will remain a top priority for us over the coming years. We aim to sell more than
140,000 electrified vehicles in 2018 and have half a million electrified BMWs and MINIs on the
roads by the end of 2019.
When the BMW i3 was released in 2013, not many would have believed that the BMW Group
would today be leading the market for electrified vehicles in Europe. Today, in this growing
segment, we already have a much larger market share than in traditional drivetrains.
All our brands will gradually be electrified. All electrified BMW models will become part of
BMW i. We have a clear roadmap to 2025: in 2019, a battery-electric MINI; in 2020, the first fully
electric model from the core BMW brand, the X3. These will be followed in 2021 by the iNEXT,
our new technology flagship, which the whole company will learn from.
BMW i Vision Dynamics eagerly awaited
This concept car was one of the stars of the Frankfurt Motor Show in 2017. In the BMW i Vision
Dynamics, we are targeting an electric range of 600 kilometres – fifth-generation storage and
battery technology will make this possible.
Electrification pays off:
European fleet CO2 emissions continue to fall
By stepping up the pace on sustainable drivetrains, we are also reducing our fleet CO2 emissions.
This was also the case in 2017, even though the percentage of diesel vehicles decreased, partly
due to the current discussions in Germany. Emissions figures for our new vehicle fleet in Europe
currently stand at 122 grams of CO2 per kilometre. We have a clear objective to meet the European
Unionʼs emissions requirements from 2021.
22
Statement of the
Chairman
of the Board of
Management
Developing electric mobility infrastructure
Against this backdrop, we are actively supporting infrastructure development. We aim to be a
system provider for electric mobility: with ChargeNow and IONITY for charging infrastructure,
the new BMW Energy Services business segment and our Battery Cell Competence Centre
in Munich.
The future belongs to autonomous driving
We will officially open our campus for autonomous driving, just outside Munich, in spring 2018.
Here, we will work with our partners, Intel and Mobileye, to develop autonomous driving – which
we see as one of the main driving forces for the mobility of tomorrow. A growing number of
renowned companies from different industries are joining our shared platform. We believe
that security is vital to autonomous driving – not just with respect to the vehicles themselves,
but also customer data.
Ten million BMW Group vehicles are already connected via Connected Drive. It takes about
25 million test kilometres to get an autonomous vehicle ready for series production. In 2018, our
fleet of autonomous BMW 7 Series models will continue to collect data on the roads, mainly in
Germany, Israel and California.
Global expansion of the NOW family
Systematic expansion of our mobility services is firmly anchored in our Strategy NUMBER ONE > NEXT.
In early 2018, we signed a contract to acquire 100 percent of DriveNow. Our premium car-sharing
service already has over a million customers in 13 cities. A growing number of older people,
families and business travellers are also using DriveNow. Our ReachNow service is available in
the US and, since late 2017, also in China, in collaboration with a local partner.
Finding a parking space is a problem for many drivers. Earlier this year, the BMW Group acquired
Parkmobile LLC, in a move that makes us the largest provider of mobile parking services in
North America and Europe, with 22 million customers in 1,000 cities.
To Our Shareholders 23
Dear Shareholders,
These examples show how we are successfully shaping the future of mobility in all its different
facets. With your support, we are transforming ourselves into a tech company for mobility
with a clear focus on customers and service. You have given us your backing for our long-term
approach with Strategy NUMBER ONE > NEXT. For that, I would like to thank you personally,
and on behalf of the entire Board of Management and our associates worldwide.
Our associates stand behind Strategy NUMBER ONE > NEXT
According to our most recent employee survey, 90 percent of our associates say they are proud
to work for the BMW Group. More than 80 percent say they are familiar with the target and
content of our strategy. This shared understanding will give us even greater momentum. We all
want the BMW Group to be the first place customers turn to for individual premium mobility
experiences. We aim to be the clear number one.
Your company delivers consistently high profitability
Of course, dear shareholders, that also means ensuring your company remains profitable. The
BMW Group has the financial resources to fund these upfront investments in the future – which
gives us a clear competitive edge. Our R&D ratio will increase in 2018, from 6.5 to 7 percent, or
around 7 billion euros. Expenditure will also remain high in 2019. For the past eight years, we
have kept the EBIT margin in the Automotive segment within our target range of 8 to 10 percent,
or higher, from one quarter to the next. We intend to maintain this high-level of consistency.
Top-rated European automobile manufacturer
Our sharp focus on the future, combined with solid financials, enables us to have easier
access to international capital markets. Moodyʼs has upgraded BMW AGʼs long-term rating to
A1. Our company also has the highest Standard & Poorʼs rating of any European automobile
manufacturer.
We will continue to follow our path, taking advantage of the opportunities that arise. By doing
so, we can ensure that BMW AG remains an attractive investment over the long term and a
company with a promising future.
Harald Krüger
Chairman of the Board of Management
24
BMW Stock and
Capital Markets
in 2017
BMW STOCK
AND CAPITAL
MARKETS
IN 2017
Ratings at top level
Dividend proposal foresees
significant increase
www.bmwgroup.com / ir
Over the course of 2017, capital markets were influ-
enced by a favourable global economy. Positive growth
signals coming from emerging markets as well as robust
economic developments in industrialised countries
made for an encouraging year on worldwide exchanges.
Development of BMW stock compared to stock
market indices since 28 December 2012
• 09
in %
200
100
0
172.9
169.7
153.1
119.1
BMW
preferred
stock
BMW
common
stock
Prime
Auto-
mobile
DAX
Favourable year on stock markets
A variety of factors influenced developments on
stock markets during the period under report. The
year began with considerable political uncertainty
concerning future developments in the European
Union (EU). Consequently, the German stock index
(DAX) recorded its low point for the year in February at
11,510 points. Concerns about the stability of the EU
abated following the strong election performance of
pro-European parties in the Netherlands and France,
providing the DAX with renewed upward momentum
towards the middle of the year. Nevertheless, the
ongoing tension between the USA and North Korea
dampened the mood on stock markets perceptibly.
In the autumn months, positive economic and job
market figures in Germany contributed to an upswing
on the stock market. Despite uncertainty surrounding
the formation of a new government in Germany, the
DAX remained stable during the final months of the
year. Furthermore, the European Central Bank’s (ECB)
decision to keep benchmark interest rates low – and
thus maintain its expansionary monetary policy – had
a beneficial impact on investor sentiment. In the USA,
the Federal Reserve gradually raised the reference
interest rate. Likewise, the Bank of England increased
interest rates for the first time in a decade. The reform
bill passed to cut tax rates in the USA also fuelled
hopes of further economic growth.
To Our Shareholders 25
250
200
Prime Automobile
DAX
BMW preferred stock
150
BMW common stock
100
50
BMW AG development of stock
• 10
Index: December 2012 = 100
250
200
150
100
50
Source: Reuters.
2013
2014
2015
2016
2017
2018
BMW common stock followed the downward trend
of the sector index during the first seven months of
the year, finishing July 12.4 % down on the previous
year-end level. Its value picked up after the IAA, rising
to an interim high of € 89.97 in November 2017. After
losing some ground during the remainder of the year,
BMW common stock closed at € 86.83, 2.2 % down over
the year. BMW preferred stock finished the year at
€ 74.64, 2.7 % up on its market price one year earlier.
At the end of 2017, with market capitalisation amount-
ing to some € 56.3 billion, the BMW Group was among
the ten most valuable German enterprises listed on
the stock market.
The DAX remained above the previous year’s closing
level throughout the year. After the elections in the
Netherlands and France, the index rose in June 2017
to its then high for the year of 12,889 points before
retreating somewhat during the summer months.
Thanks to a strong upturn lasting through to early
October, the DAX closed the year at 12,918 points,
posting a significant gain for the period (+ 12.5 %).
The EURO STOXX 50 recorded a 6.5 % rise over the
same period, finishing the year at 3,504 points.
Investor uncertainty caused the Prime Automobile
Index to lose ground significantly during the first half
of the year, driven by doubt as to whether the business
models of German automobile manufacturers will
remain profitable going forward. The debate about
diesel engines had a further negative impact on the
German automobile sector. The IAA motor show in
Frankfurt am Main in September 2017 strengthened
confidence on capital markets with the presentation
of numerous initiatives in the field of electric mobility.
The improvement in investor sentiment was reflect-
ed in the sector index, which finished the year at
1,687 points, 12.0 % up over the previous year.
26
BMW Stock and
Capital Markets
in 2017
Ratings remain at top level
Thanks to its consistent future-oriented approach and
solid financials, the BMW Group continues to be the
best-rated carmaker in Europe.
Company rating
Non-current financial liabilities
Current financial liabilities
Outlook
Moody’s
Standard &
Poor’s
A1
P – 1
stable
A+
A – 1
stable
Since December 2013, BMW AG has had a long-term
rating of A+ (stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor’s.
This represents currently the highest rating given by
Standard & Poor’s to a European car manufacturer.
In January 2017, Moody’s raised its long-term rating
for BMW AG from A2 (positive outlook) to A1 (stable
outlook). The P-1 short-term rating was confirmed.
The improved assessment reflects the attractive
product launches as part of the model offensive, the
good position of the BMW Group with regard to the
challenges faced by the automobile industry, a con-
sistently strong operating performance and a solid
financial and capital structure.
The ratings underline the BMW Group’s robust
financial profile and excellent creditworthiness. As
a result, the Company not only enjoys good access to
international capital markets, but also benefits from
attractive refinancing conditions.
Employee Share Programme
For more than 40 years, BMW AG has enabled its
employees to participate in its success. Since 1989,
this participation has taken the form of an Employee
Share Programme. A total of 491,114 shares of pre-
ferred stock were issued to employees as part of this
programme in 2017.
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG’s share capital in 2017 by € 491,000 from
€ 657,109,600 to € 657,600,600 by issuing 491,000 new
non-voting shares of preferred stock. This increase
was executed on the basis of Authorised Capital 2014
in Article 4 (5) of the Articles of Incorporation. The
new shares of preferred stock carry the same rights as
existing shares of preferred stock. The newly issued
shares of preferred stock for employees are entitled to
receive dividends with effect from the financial year
2018. In addition, 114 shares of preferred stock were
acquired via the stock market or as a result of cancelled
employee purchases relating to the previous year.
Significant increase in dividend
Due to the positive earnings development, the
Board of Management and the Supervisory Board
are proposing to the Annual General Meeting to use
the net profit of BMW AG of € 2,630 million (2016:
€ 2,300 million) for the payment of a dividend of
€ 4.00 per share of common stock (2016: € 3.50) and a
dividend of € 4.02 per share of preferred stock (2016:
€ 3.52). The payout ratio for the year 2017 therefore
stands at 30.2 % (2016: 33.3 %).
To Our Shareholders BMW stock
• 11
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
Free cash flow Automotive segment
Equity
1 Xetra closing prices.
2 Proposed by management.
3 Weighted average number of shares for the year.
4 Stock weighted according to dividend entitlements.
27
2017
2016
2015
2014
2013
601,995
601,995
601,995
601,995
601,995
86.83
90.83
77.71
88.75
92.25
65.10
97.63
122.60
75.68
89.77
95.51
77.41
85.22
85.42
63.93
55,605
55,114
54,809
54,500
54,260
74.64
78.89
67.29
4.00 2
4.02 2
13.12
13.14
6.78
82.95
72.70
74.15
56.53
3.50
3.52
10.45
10.47
8.81
72.08
77.41
92.19
58.96
3.20
3.22
9.70
9.72
8.23
67.84
74.60
59.08
2.90
2.92
8.83
8.85
5.30
62.09
64.65
48.69
2.60
2.62
8.08
8.10
4.58
65.11
57.03
54.25
28
BMW Stock and
Capital Markets
in 2017
Intensive communication with capital markets
continued
The BMW Group continued to inform analysts, inves-
tors, and rating agencies throughout 2017 with regular
quarterly and year-end financial reports. The com-
prehensive information package provided for capital
market participants included numerous one-on-one
and group meetings, dedicated socially responsible
investment (SRI) roadshows for investors using sustain-
ability criteria in their investment decisions, and debt
roadshows for fixed-income investors and credit ana-
lysts. Communication focused on the BMW Group’s
new model offensive and answers to the challenges
facing the automobile industry going forward. Topics
discussed included autonomous driving and electric
mobility. A further focus was the profitability of the
BMW Group’s business models. In addition to partici-
pating in various conferences and roadshows, product
presentations and a technology workshop were held
for analysts and investors in Munich.
To Our Shareholders 2
Combined
Management
Report
General Information
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
COMBINED MANAGEMENT
REPORT
Page 30 General Information and Group Profile
Page 30 Organisation and Business Model
Page 40 Management System
Page 44 Report on Economic Position
Page 44 General and Sector-specific Environment
Page 48 Overall Assessment by Management
Page 49 Financial and Non- financial Performance Indicators
Page 52 Review of Operations
Page 52 Automotive Segment
Page 58 Motorcycles Segment
Page 59 Financial Services Segment
Page 61 Research and Development
Page 63 Purchasing and Supplier Network
Page 64 Sales and Marketing
Page 66 Workforce
Page 68 Sustainability
Page 72 Results of Operations, Financial Position and Net Assets
Page 86 Comments on Financial Statements of BMW AG
Page 90 Report on Outlook, Risks and Opportunities
Page 90 Outlook
Page 96 Risks and Opportunities
Page 111
Internal Control System Relevant for Accounting
and Financial Reporting Processes
Page 112 Disclosures Relevant for Takeovers
2
30
General Information
and Group Profile
Organisation and
Business Model
GENERAL
INFORMATION
AND GROUP
PROFILE
Fleet CO2 emissions again reduced
€ 6,108 million
+ 18.3 %
Research and develop-
ment expenditure up
significantly
ORGANISATION AND
BUSINESS MODEL
www.bmwgroup.com / company
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose of
the Company is the production and sale of engines,
engine-equipped vehicles, related accessories and
products of the machinery and metal-working
industry as well as the rendering of services related
to the aforementioned items. The BMW Group is
subdivided into the Automotive, Motorcycles and
Financial Services operating segments. The seg-
ment Other Entities primarily comprises holding
companies and Group financing companies. The
BMW Group operates on a global scale and is rep-
resented in more than 150 countries. At the end of
the reporting period, the BMW Group employed a
workforce of 129,932 people.
Founded in 1916 as Bayerische Flugzeugwerke AG
(BFW), Bayerische Motoren Werke G. m. b. H. came
into being in 1917 before finally becoming Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) in 1918.
The BMW Group comprises BMW AG and all subsidi-
aries over which BMW AG has either direct or indirect
control. BMW AG is also responsible for managing the
BMW Group as a whole.
With the three automobile brands BMW, MINI and
Rolls-Royce, as well as the motorcycles business
BMW Motorrad and the Financial Services busi-
ness, the BMW Group gives its customers and their
demands always the highest priority. The BMW Group
is therefore one of the most successful makers of
automobiles and motorcycles worldwide and among
the largest industrial companies in Germany. It is the
only manufacturer that focuses exclusively on the
premium segment with all its brands. With BMW,
MINI and Rolls-Royce, the BMW Group owns three
of the best-known premium brands in the automotive
industry. In addition to its strong market position in
the premium segment of the global motorcycles sector,
the BMW Group is also successful in the financial
Combined Management Report 31
Motorcycles segment
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility segments.
BMW Motorrad also offers a broad range of equip-
ment options to enhance rider safety and comfort.
The motorcycles sales network is organised similarly
to that of the automobiles business. Currently, BMW
motorcycles are sold by more than 1,200 dealerships
and importers in over 90 countries.
Financial Services segment
The BMW Group is also a leading provider of finan-
cial services in the automobile sector, operating
more than 50 entities and cooperation arrangements
with local financial services providers and importers
worldwide. The segmentʼs main business is credit
financing and the leasing of BMW Group brand cars
and motorcycles to retail customers. Customers can
also choose from an attractive array of insurance and
banking products. Operating under the brand name
Alphabet, the BMW Group’s international multi-brand
fleet business provides financing and comprehen-
sive management services for corporate car fleets
in 19 countries. Through its multi-brand business
Alphera, the BMW Group provides credit financing,
leasing and other services to retail customers. The
segment also supports the BMW Group’s dealership
organisation, for example by financing dealership
vehicle inventories.
services business. Moreover, the BMW Group has
developed in recent years into one of the leading
providers of premium services for individual mobility.
In 2016, the BMW Group presented its Strategy
NUMBER ONE > NEXT. This builds on the previous
strategy and expands its scope in light of new develop-
ments and the social responsibility of the BMW Group.
At the heart of Strategy NUMBER ONE > NEXT is a
commitment to future-oriented activity with develop-
ment of products, brands and services in the premium
segment for individual mobility. New technologies such
as alternative drivetrains, digitalisation and connec-
tivity are further key areas of focus. The BMW Group
is currently in the process of transformation from a
traditional automobile maker to a customer-oriented
mobility company. This means that customer focus will
be given greater emphasis. All activities of the Group
are oriented towards the customer.
Presentation of segments
In order to provide a better insight into the Group, this
report also includes a presentation of the operating
segments Automotive, Motorcycles and Financial
Services.
Automotive segment
The core BMW brand caters to a broad array of cus-
tomer requirements, ranging from fuel-efficient and
innovative models equipped with Efficient Dynamics
to efficient, high-performance BMW M vehicles. At the
same time, the BMW Group continues to redefine the
boundaries of premium with BMW i. With an even
greater focus on innovation and sustainability, BMW i
embodies the vehicle of the future, with electric drive-
train, intelligent lightweight construction, exceptional
design and newly developed mobility services.
The MINI brand is an icon promising supreme
driving pleasure in the premium small car segment.
Rolls-Royce is the strongest brand in the ultra-luxury
segment with a tradition stretching back well over
100 years. Rolls-Royce Motor Cars is specialised in
bespoke customer experiences and offers the highest
level of quality and service.
The global sales network of the automobile business
currently comprises around 3,400 BMW, 1,580 MINI
and 140 Rolls-Royce dealerships. Within Germany, sales
are conducted through branches of the BMW Group
and independent authorised dealerships. Sales outside
Germany are handled primarily by subsidiary compa-
nies and by independent import companies in some
markets. The BMW i dealership and agency network
currently covers more than 1,500 locations.
32
General Information
and Group Profile
Organisation and
Business Model
Research and
Development
Research and Development
2. Connected
A major factor in the success of the BMW Group is
its consistent focus on the future. A long tradition of
innovation is not only the basis of the BMW Group’s
economic success, but an integral part of its corporate
philosophy. Shaping individual mobility and finding
innovative solutions today for the needs of tomorrow
is a key driving force for the BMW Group. Research
and development (R&D) are therefore of key import-
ance for the BMW Group as a premium provider.
With its Strategy NUMBER ONE > NEXT, the
BMW Group is focusing on the topics of electric
mobility, digitalisation and autonomous driving. The
key trends of individual mobility are summarised
at the BMW Group in the term ACES (Autonomous,
Connected, Electrified, Services).
The second strategic direction is summarised un-
der the term Connected Drive, an integrated digi-
tal concept in which the driver, the vehicle and
the outside world are all able to interact with one
another. The vehicle can be attuned to the individ-
ual needs of each driver, thus making it a smart
companion. In future, transferring certain tasks to
the vehicle will broaden the range of options avail-
able to the customer when driving. The time saved
can be used for other purposes. This results in
increased comfort for the driver and greater safety
for road users in general. Numerous safety and
comfort features already exist in BMW, MINI and
Rolls-Royce brand automobiles as well as BMW
Motor rad brand motorcycles. In 2021, the
BMW iNEXT will take to the roads with an elec-
tric drivetrain and full connectivity. It will also
reach a new level on the way to autonomous
driving.
Accordingly, the BMW Group’s R&D activities include
the following four topics:
3. Electrified
1. Autonomous
Since 2017, the BMW Group has pooled its devel-
opment expertise in the fields of vehicle connec-
tivity and autonomous driving at its own develop-
ment centre. More than 600 BMW Group
em ploy ees are now working in cooperation with
other partners at a campus near Munich, thereby
developing and expanding the open platform
for autonomous driving. By the end of the expan-
sion, more than 2,000 employees will be work-
ing at the new site towards achieving fully auto-
nomous driving in fields ranging from software
development to road testing.
One of the strategic objectives of the BMW Group
is to continuously optimise the energy efficiency
of automobiles and motorcycles, including elec-
tri fication of the product range across all brands.
Under the term Efficient Dynamics, the
BMW Group has been successfully working on
reducing fuel consumption and vehicle emissions
through the development of highly efficient com-
bustion engines, increasing electrification of drive-
trains, intelligent lightweight construction,
improved aerodynamics and coordinated energy
management.
The BMW i brand reflects Efficient Dynamics in its
most systematic form. Flexible vehicle architec-
ture, innovative electric and plug-in hybrid drive-
trains and the use of new materials are the results
of an integrated approach that is also reflected in
a resource-efficient selection of materials and the
intensive use of renew able energy in the production
process. This contributes to a very favourable
environmental footprint in BMW i vehicles over the
entire product life cycle.
Combined Management Report
33
Against a backdrop of rapid technological change
within the automotive industry, the BMW Group
also enters into specific cooperation agreements with
selected technology partners. The aim of collabor-
ation with external partners, also across sectors, is
to combine expertise in order to bring innovations to
customers within the shortest time possible.
A total of 14,047 people at 16 locations in five coun-
tries worked in the BMW Group’s global research and
development network at 31 December 2017.
Research and development expenditure rose sig-
nificantly year-on-year to € 6,108 million (2016:
€ 5,164 million; + 18.3 %). The research and develop-
ment expenditure ratio stood at 6.2 % (2016: 5.5 %).
The ratio of capitalised development costs to total
research and development expenditure for the peri-
od (capitalisation rate) stood at 39.7 % (2016: 40.5 %).
Amortisation of capitalised development costs totalled
€ 1,236 million (2016: € 1,222 million; + 1.1 %). Further
information on research and development expendi-
ture is provided in the Report on Economic Position
(Results of Operations) and in
note 7 of the Group
Financial Statements.
In 2017, numerous awards and prizes once again
underscored the BMW Group’s high level of inno-
vation competence, above all in the areas of design,
the use of innovative technologies and intelligent
connectivity.
see
note 7
As part of the BMW i brand, the BMW iPerformance
range forms a model family of its own with plug-in
hybrid drivetrains. All BMW iPerformance models
are equipped with a smart energy management
system that ensures ideal interaction between the
combustion engine and the electric motor. The
option to drive all-electric, added efficiency gained
through electric assistance features and the
spontaneous response characteristics provided by
the additional electric drivetrain lead to a new
harmony of driving pleasure and sustainability.
The flexibility of the technologies used makes
it possible to rapidly expand the broad range of
iPerformance models to include further series
as required.
With its MINI Electric, MINI is reinterpreting the
urban tradition of the brand for the electric age
and reinventing individual mobility for the city.
The market launch of the first plug-in hybrid of
the MINI brand (MINI Cooper S E Countryman
ALL4: fuel consumption in l / 100 km (com-
bined) 2.3 – 2.1 / / CO2 emissions in g / km (com-
bined) 52 – 49 / / Electric power consumption
in kWh / 100 km (combined) 14.0 – 13.2) in sum-
mer 2017 was followed by the presentation of
the all-electric MINI Electric Concept at the IAA
Cars in 2017. The series launch of all-electric
MINI vehicles is scheduled to begin in 2019.
The Vision 100 study presented for the Rolls-Royce
brand in 2016 gave customers a first glimpse into
the future of automobile luxury powered by electric
drivetrains.
4. Services
The fourth strategic direction relates to individ ual
mobility services. The BMW Group aims to be
the leading provider of premium mobility services
going forward. To achieve this, it is essential to
understand clearly the needs of its customers
world wide. This knowledge is the basis for pro-
viding customers with an attractive, comprehen-
sive range of services. This includes easy-to-use,
digitally supported mobility services that also
feature bring-and-collect services or help custom-
ers find free parking spaces in urban environ-
ments. Further information can be found in the
section “Sales and Marketing”.
The BMW Group attaches great importance to training
and development of its workforce. In 2017, investment
in training and development programmes across the
Group amounted to € 349 million (2016: € 352 million).
In addition, 1,554 trainees were hired worldwide. A
total of 4,750 young people are currently undergoing
vocational training or participating in internal pro-
grammes to develop young talent.
For several years now, the BMW Group has supported
intercultural exchange. In partnership with the UN
Alliance of Civilizations, the BMW Group presents
the Intercultural Innovation Award for exemplary
projects in this field.
The principles and importance of sustainable business
management are emphasised in the new Strategy
NUMBER ONE > NEXT, which includes a clear com-
mitment to preserving resources. The BMW Group
remains fully committed to ecological and social
sustainability along the entire value chain as well as
to comprehensive product responsibility.
Further information on sustainability and human
resources can be found in the sections “Workforce”
and “Sustainability” in the Group Management Report
and in the Sustainable Value Report 2017 published
on the Company’s website at
https: / / www.bmwgroup.com / svr.
34
General Information
and Group Profile
Organisation and
Business Model
Sustainability
Production Network
Sustainability
Long-term thinking and responsible action have long
been the foundations of the BMW Group’s identi-
ty and its economic success. As early as 1973, the
BMW Group appointed an environmental officer in
what was then a pioneering development within the
automobile sector. Today, the Sustainability Board,
comprising all members of the Board of Management,
sets the strategic direction along with binding targets.
Since 2001, the BMW Group has been committed to
the United Nations Environment Programme, the
UN Global Compact and the Cleaner Production
Declaration.
For years, the BMW Group has ranked among the most
sustainable companies in the automotive industry and
is the only carmaker to have been listed consecutively
in the renowned Dow Jones Sustainability Index since
1999.
The BMW Group takes a holistic approach to sus-
tainability management that encompasses the entire
value chain. Apart from reduction of CO2 emissions,
key components of the sustainability strategy include
operational environmental protection, sustainability
in the supply chain, employee orientation and social
commitment.
Since 1995, the BMW Group has cut the CO2 emis-
sions of new cars sold in Europe (EU-28) by more than
42 %. Average CO2 emissions in Europe (EU-28) in 2017
amounted to 122 g / km (2016: 124 g / km; – 1.6 %). The
systematic expansion of the Group’s vehicle fleet with
alternative drivetrains as well as innovative mobility
services have contributed significantly to the progress
made. In 2017, for the first time more than 100,000
electrified vehicles were sold in one year.
The BMW Group has set itself the goal of being a
leader in the use of renewable energy in production
and the value chain. In 2017, 81 % (2016: 63 %) of
the BMW Group’s electricity worldwide came from
renewable sources.
In view of increasingly complex supplier relationships,
it is important for the BMW Group to work together
with suppliers to increase transparency and resource
efficiency along the supply chain. The aim is to require
suppliers to comply with environmental and social
standards across the value chain.
Combined Management Report Production Network
At the end of the reporting period, the Group’s pro-
duction network totalled 31 locations in 14 countries.
These comprise 19 BMW Group plants, five joint
ventures, four partner plants and three contract
production plants. The same quality, safety and sus-
tainability standards apply for all plants throughout
the BMW Group production network worldwide.
35
The 19 BMW Group plants comprise 13 automobile and
engine plants, two plants for BMW motorcycles, three
sites for producing components, pressed parts and
tools and one supply centre. In 2017, the BMW Group
was already producing electrified vehicles at a total
of nine locations.
Locations
BmW Group plAnts
Araquari
Berlin
Chennai
Dingolfing
Eisenach
Hams Hall
Landshut
Leipzig
Manaus
Munich
Oxford
Rayong
Regensburg
Rosslyn
Spartanburg
Steyr
Swindon
Wackersdorf
Country
Brazil
Germany
India
Germany
Products
BMW 3 Series, BMW X1, BMW X3, BMW X4
BMW motorcycles, Maxi-Scooters, car brake discs
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW M
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
Germany
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
United Kingdom
Germany
Germany
Brazil
Germany
United Kingdom
Thailand
Germany
South Africa
USA
Austria
United Kingdom
Germany
Lightweight construction components, electric drivetrain systems and special engines
Petrol engines for BMW, MINI
BMW i8 plug-in hybrid engines
Core engine parts
BMW 1 Series, BMW 2 Series, BMW i, BMW M
Motorcycles
BMW 3 Series, BMW 4 Series, BMW M
Petrol and diesel engines, high-performance engines for M models
Core engine parts
MINI Hatch, MINI Clubman
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5
Motorcycles
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW X2, BMW M
BMW 3 Series
BMW X3, BMW X4, BMW X5, BMW X6, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
High-performance engines for M models
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Processing of carbon fibre components
Rolls-Royce Phantom, Ghost, Wraith, Dawn
Rolls-Royce Manufacturing Plant Goodwood
United Kingdom
36
General Information
and Group Profile
Organisation and
Business Model
Production Network
The plants in Shenyang (China) are operated within
the joint venture with Brilliance China Automotive
Holdings Ltd. The Shenyang site comprises the
Dadong and Tiexi automobile plants as well as an
engine plant complete with foundry and battery
factory.
Locations
Joint venture BmW BrilliAnce
Automotive holdinGs ltd.
Dadong (Shenyang)
Tiexi (Shenyang)
Tiexi (Shenyang)
Country
China
China
China
Products
BMW 5 Series Extended-Wheelbase Version
BMW 1 Series, BMW 2 Series, BMW 3 Series (and Extended-Wheelbase Version),
BMW X1 Extended-Wheelbase Version
Petrol engines, production of core engine parts
SGL Automotive Carbon Fibers (ACF) is a joint oper-
ation of the BMW Group and the SGL Group. At the
Moses Lake site in the state of Washington, USA, carbon
fibres are produced for subsequent use in manufactur-
ing carbon fibre fabrics in Wackersdorf.
In November 2017, the SGL Group and the BMW Group
signed an agreement, under which SGL Carbon SE will
gradually acquire the BMW Group’s 49 % stake in the
joint operation SGL ACF. At the same time, an agreement
exists for the continuation of the business relationship
in future projects involving the use of carbon.
Locations
Joint operAtion
sGl Automotive cA rBon FiBers
Moses Lake
Wackersdorf
Country
USA
Germany
Products
Carbon fibres
Carbon fibre fabrics
Combined Management Report 37
The main function of the BMW Group’s four part-
ner plants is to serve regional markets. During the
year under report, BMW and MINI vehicles were
manufactured in Kaliningrad (Russia), Cairo (Egypt),
Jakarta (Indonesia) and Kulim (Malaysia).
Locations
PARTNER PlANTS
Jakarta
Cairo
Kaliningrad
Kulim
Country
Indonesia
Egypt
Products
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 5 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Russia BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Malaysia
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, MINI Countryman
The BMW Group also awards production contracts
to external partners for specific vehicle types and
motorcycles. During the period under report, BMW
and / or MINI models were produced by Magna
Steyr AG & Co KG, Graz (Austria) and VDL Nedcar
bv, Born (Netherlands). In addition, BMW motorcycles
were manufactured by TVS Motor Company Limited,
Hosur (India).
Locations
Country
Products
contrAct production
Born
Graz
Hosur
Netherlands
Austria
India
MINI Hatch, MINI Convertible, MINI Countryman, BMW X1
BMW 5 Series Sedan
Motorcycles
38
General Information
and Group Profile
Organisation and
Business Model
BMW Group locations worldwide
• 12
43
Sales subsidiaries and
Financial Services
locations worldwide
31
Production and
assembly plants
16
Research and
development
locations
Headquarters
Canada
usA
Mexico
United Arab
Emirates
Brazil
Argentina *
South Africa
New Zealand
Russia
India
China
South Korea
Japan
Hong Kong
Thailand
Malaysia
Singapore *
Indonesia *
Australia
Research and development
network outside Europe
BMW Group Designworks, Newbury
Park, USA
BMW Group Technology Office USA,
Mountain View, USA
BMW Group Engineering and
Emission Test Center,
Oxnard, USA
BMW Group ConnectedDrive Lab
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
BMW Group Technology Office,
Shanghai, China
BMW Group Engineering China,
Beijing, China
BMW Group Engineering Japan,
Tokyo, Japan
BMW Group Engineering USA,
Woodcliff Lake, USA
Partner plants
outside Europe
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
BMW Technology, Chicago, USA
Sales subsidiaries and
Financial Services
locations worldwide
Production
outside Europe
BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture – 3 plants)
SGL Automotive Carbon Fibers
(joint operation – 2 plants)
* Sales locations only.
Combined Management Report
BMW Group locations in Europe
• 13
39
Sweden
Finland *
Denmark
Czech
Republic *
Poland *
Austria
Slovakia *
Hungary *
Romania *
Bulgaria *
Greece
Norway
Germany
Netherlands
uk
Ireland
Belgium
France
Switzerland
Spain
Portugal
Italy
Slovenia *
Malta
Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
Research and development
network in Europe
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
BMW Group Research and
Technology, Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology
Centre, Landshut, Germany
BMW Diesel Competence Centre,
Steyr, Austria
Partner plants
in Europe
Partner plant, Born,
Netherlands
Partner plant, Graz,
Austria
Sales subsidiaries and
Financial Services
locations Europe
40
General Information
and Group Profile
Management System
MANAGEMENT SYSTEM
The business management system applied by the
BMW Group follows a value-based approach, with a
clear focus on profitability, consistent growth, value
increase for capital providers and safeguarding jobs.
To ensure the desired degree of corporate autonomy,
the Company’s available capital is to be profitably
employed. The prerequisite is that the amount of
profit generated sustainably exceeds the cost of the
Company’s equity and debt capital.
The BMW Group’s internal management system
is based on a multi-layered structure with varying
BMW Group – value drivers
• 14
degrees of detail, depending on the level of aggre-
gation. Operating management occurs primarily at
segment level. In order to manage long-term Company
performance and assess strategic issues, additional
key performance indicators are taken into account
within the management system at Group level. In this
context, with effect from the beginning of the 2017
financial year, the pre-tax return on sales has been
introduced as a new indicator of earnings quality for
the BMW Group as a whole. Value added continues
to serve as an indicator for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in simplified form in the following diagram.
Value added
–
Return on capital
(RoCE or RoE)
×
Profit
–
Expenses
Revenues
Capital employed
Average weighted
cost of capital rate
Return on sales
Capital turnover
Cost of capital
÷
÷
×
Combined Management Report 41
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling level.
The financial and non-financial value drivers are
reflected in the key performance indicators used to
manage the business. In the case of project decisions,
the system provides a project-oriented management
logic based on value or profitability measures. These
provide a fundamental basis for decision-making.
Management of operating performance
at segment level
Operating performance at segment level is managed
at an aggregated level on the basis of returns on capi-
tal. Depending on the business model, the segments
are measured on the basis of return on total capital
or equity. Specifically, return on capital employed
(RoCE) is used for the Automotive and Motorcycles
segments and return on equity (RoE) for the Financial
see sections
Performance
Indicators and
Outlook
Return on capital employed
• 15
Services segment. These indicators combine a wide
range of relevant economic information, such as prof-
itability (return on sales) and capital efficiency (capital
turnover), to provide a measurement of segment
performance and the development of enterprise value.
Automotive segment
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. RoCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment’s RoCE is 26 %.
RoCE Automotive =
Profit before
financial result
Average capital
employed
Profit before financial result in € million
Average
capital employed in € million
Return on capital employed in %
Automotive
7,863
7,695
10,009
10,361
2017
2016
2017
2016
2017
78.6
2016
74.3
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that do not incur interest (e. g. trade payables and
other provisions).
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are sales volume,
segment revenues and the operating return on sales
(EBIT margin: profit / loss before financial result as
a percentage of revenues) as the key performance
indicator for segment profitability. The management
system also takes into account average CO2 emissions
for the fleet, which, through their influence on ongoing
development costs and due to regulatory requirements,
can have a significant long-term impact on Group
performance. Fleet emissions correspond to average
CO2 emissions of new cars sold in the EU-28 countries.
42
General Information
and Group Profile
Management System
Motorcycles segment
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26 %.
roce
Motorcycles
=
Profit before
financial result
Average capital
employed
Return on capital employed
• 16
Motorcycles
Profit before financial result in € million
Average
capital employed in € million
Return on capital employed in %
2017
207
2016
187
2017
609
2016
566
2017
34.0
2016
33.0
In view of the increasing strategic importance of the
segment, the operating return on sales (EBIT margin:
profit / loss before financial result as a percentage of
revenues) was adopted in the year under report as a
key performance indicator. The long-term target range
is between 8 and 10 %. In conjunction with the non-
financial value driver sales volume, this will enable
RoCE development to be understood in greater detail.
Financial Services segment
As is common practice in the banking sector, the
Financial Services segment is managed on the basis
Return on equity
• 17
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. In view
of generally increasing regulatory requirements, a
greater amount of equity capital will be allocated to
the segment in future, which will result in a lower
RoE. In this context, the long-term target return will
be changed with effect from 2018 from at least 18 %
currently to at least 14 %.
RoE Financial
Services
=
Profit before tax
Average equity capital
Financial Services
2,207
2,166
12,167
10,236
2017
2016
2017
2016
2017
18.1
2016
21.2
Profit before tax in € million
Average equity capital in € million
Return on equity in %
Combined Management Report
43
Strategic management at Group level
Strategic management and quantification of financial
implications within the long-term corporate planning
are performed primarily at Group level. The key
performance indicators are Group profit before tax
and the size of the Group’s workforce at the year-end.
Group profit before tax provides a comprehensive
measure of the Group’s overall performance after
consolidation effects and a transparent basis for com-
paring performance, particularly over time. The size of
the Group’s workforce is monitored as an additional
key non-financial performance indicator.
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
return on sales and value added. Value added, as
a highly aggregated performance indicator, also
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. A positive value added means that a
company is generating more value than the cost of
capital.
Value added
Group
= earnings amount –
cost of capital
= earnings amount –
(cost of capital rate ×
capital employed)
in € million
BMW Group
Earnings amount
Cost of capital (equity + debt capital)
Value added Group
2017
2016
2017
2016
2017
2016
10,958
10,000
6,843
6,407
4,115
3,593
Capital employed comprises the average amount of
Group equity employed during the year as a whole,
the financial liabilities of the Automotive and Motor-
cycles segments, and pension provisions. The earnings
amount corresponds to Group profit before tax, adjust-
ed for interest expense incurred in conjunction with
the pension provision and on the financial liabilities of
the Automotive and Motorcycles segments (earnings
before interest expense and taxes). The cost of capital
is the minimum rate of return expected by capital
providers in return for the capital employed. Since
capital employed comprises an equity capital (e. g.
share capital) and a debt capital element (e. g. bonds),
the overall cost of capital rate is determined on the
basis of the weighted average rates for equity and debt
capital, measured using standard market procedures.
The pre-tax average weighted cost of capital for the
BMW Group in 2017 was 12 %, unchanged from the
previous year.
Value-based project management
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Project decisions are based on calculations derived
from the expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the key performance
indicators.
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of pro-
ject decisions on periodic earnings and profitability
over the term of each project. The overall result is a
cohesive management model.
44
Report on
Economic Position
General and Sector-
specific Environment
REPORT
ON ECONOMIC
POSITION
Best-ever sales volume for
automobiles and motorcycles
€ 10,655 million
+ 10.2 %
Group profit up
significantly
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
General economic environment
Compared to the previous year, the global economy
improved noticeably during the period under report
with a growth rate of 3.7 %. The economic upturn
extended to all regions of the world, regardless of
political uncertainties. The Chinese economy also
grew at a faster rate.
The eurozone recorded its fourth consecutive year of
growth in 2017. At 2.5 %, the region even registered
its biggest increase in gross domestic product (GDP)
since the financial crisis. With economic output up in
Germany (+ 2.2 %), France (+ 1.9 %), Italy (+ 1.5 %) and
Spain (+ 3.1 %), GDP growth within the eurozone was
broadly based. The favourable order-book levels of
industrial companies, rising exports and an increased
willingness to invest contributed to this positive
development. This led, amongst others, to a drop in
unemployment from recent high levels to their low-
est level for several years. Despite rising government
spending, the debt ratio for the 19 eurozone countries
dropped slightly to 88 % of GDP.
In the United Kingdom, uncertainty regarding the
country’s future relations with the EU continued to
dominate. Previously favourable consumer sentiment
within private households subsided perceptibly and
the public sector was able to make only a moderate
contribution to economic growth. As a consequence,
economic growth slowed for the third time in succes-
sion to stand at 1.8 %. The situation was aggravated by
the Bank of England’s raising interest rates in order
to dampen price inflation. The weak pound, on the
other hand, caused exports to pick up significantly
during the period under report and restricted import
growth, resulting in a lower current account deficit.
Economic output in the USA continued to expand
at a robust rate of 2.3 % in 2017. Private domestic
demand, boosted in part by low unemployment, was
a key source of momentum for the economy. Exports
and industrial production also grew strongly. In light
of these factors, the US Federal Reserve raised interest
rates further over the course of the year and changed
its reinvestment policy for securities.
Combined Management Report 45
Currency markets
The US dollar / euro exchange rate fluctuated between
1.04 and 1.20 US dollars to the euro during 2017 and
weakened slightly on average to 1.13 US dollars to the
euro. As announced, the US Federal Reserve raised its
benchmark interest rates during the year under report,
thus continuing on its less expansionary monetary
course. The ECB reduced the volume of its purchases
of securities during the same period.
Fluctuations in the value of the British pound currently
also reflect political uncertainty. At the beginning of
2017, the pound was able to regain some ground. With
new elections resulting in a minority government,
doubts emerged regarding the United Kingdom’s
future political course and its economic performance.
The value of the British currency fell from 0.84 to an
interim rate of 0.93 pounds to the euro, ending the
year with an average rate of 0.88 pounds to the euro.
The Chinese renminbi again lost value year-on-year,
with an average exchange rate of 7.63 renminbi to the
euro for the period. The Japanese yen fell by about
5 % in 2017. The average exchange rate for the year
was 127 yen to the euro.
By contrast, the currencies of major emerging econ-
omies rose in value during the reporting period. The
Russian rouble and the Brazilian real gained some
12 % and 7 % respectively against the euro. The Indian
rupee appreciated by just 1 % against the euro.
China’s GDP grew by 6.9 % in 2017, driven by further
year-on-year growth in industrial production. Demand
from private households remained at a similarly high
level to previous years. However, rising levels of debt
within the private sector prompted the central bank to
tighten monetary policy. As a result, the increase in the
price of real estate in China’s largest cities was halved.
At 1.7 %, the Japanese economy grew far more dy-
nami cally in 2017 than in previous years. Consumer
spending and demand for capital goods increased,
in part substantially. Exports also increased strongly
due to the weak yen. Industrial production grew at
the fastest rate since 2010.
Solid GDP growth was also registered for emerging
markets overall. Russia (+ 1.5 %) and Brazil (+ 0.9 %)
both returned to growth. The upswing in Russia
was broadly based, with private demand picking
up noticeably and both investment and industrial
production also recovering. By contrast, economic
growth in Brazil was able to gain only moderate
momentum. Although industrial production rose
moderately, domestic consumer spending remained
flat and investment spending even fell for the fourth
year in succession.
After a relatively weak first half of 2017 in India, due
to the impact of the switch to new banknotes, the
economy experienced a turnaround during the second
half of the year. Over the year as a whole, the Indian
economy recorded a 6.6 % increase in GDP.
Exchange rates compared to the euro
• 18
Index: December 2012 = 100
250
200
150
100
50
Russian Rouble
Japanese Yen
British Pound
Chinese Renminbi
US Dollar
2013
2014
2015
2016
2017
2018
250
200
150
100
50
Source: Reuters.
46
Report on
Economic Position
General and Sector-
specific Environment
Oil price trend
• 19
Price per barrel of Brent Crude
150
100
50
0
Price in US Dollar
Price in €
2013
2014
2015
2016
2017
2018
Source: Reuters.
Precious metals price trend
• 20
Index: December 2012 = 100
Palladium
Gold
Platinum
2013
2014
2015
2016
2017
2018
150
100
50
0
Source: Reuters.
150
100
50
0
150
100
50
0
Combined Management Report Energy and raw materials prices
The agreement reached between the Organisation
of Petroleum Exporting Countries (OPEC) and other
countries to cut back crude oil production proved
stable during the year under report and was extended
at the end of 2017. Against this backdrop, the price
of Brent crude oil per barrel rose from an average of
44 US dollars in 2016 to 54 US dollars in 2017.
The robust economy also boosted demand for precious
and non-ferrous metals in 2017. The average price of
raw materials relevant for the BMW Group increased
in part significantly by between 15 and 40 % year-on-
year. On the production side, stricter environmental
regulations and severe weather events resulted in
reduced supply availability.
Steel markets developed similarly, with prices for
the input materials iron ore and coking coal rising
again in 2017. In addition, both the USA and the EU
continued to apply protectionist measures on steel
products from various countries. At the same time, the
wave of consolidation in the steel industry continued.
Steel price trend
• 21
Index: January 2013 = 100
120
90
60
2013
2014
2015
2016
2017
2018
Source: Working Group for the Iron and Metal Processing Industry.
47
International automobile markets
Registrations of passenger cars and light commercial
vehicles on international automobile markets grew by
1.9 % to 87.7 million units in 2017. The overall positive
trend from the previous year therefore continued,
albeit at a less dynamic pace. Momentum came pri-
marily from Europe (15.6 million units; + 3.3 %) and
China (24.7 million units; + 2.4 %). By contrast, regis-
trations in the USA fell by 1.8 % to 17.2 million units.
In Europe, Italy (2.0 million units; + 8.0 %) and Spain
(1.2 million units; + 7.7 %) recorded robust growth.
French and German markets both performed better
than one year earlier, recording increases of 4.8 %
to 2.1 million units and 2.7 % to 3.4 million units
respectively. The UK automobile market was domi-
nated during the year under report by uncertainty
regarding the Brexit negotiations, causing the number
of registrations to drop by 5.7 % to 2.5 million units.
Japan saw a turnaround on the domestic automobile
market in 2017, with new registrations rising signifi-
cantly by 5.5 % to 5.0 million units.
Automobile markets in major emerging economies
came out of recession in much stronger health in 2017.
Russia saw a 16.1 % increase to 1.5 million units, while
registrations in Brazil grew by 9.9 % to 1.9 million units.
International motorcycle markets
Motorcycle markets in the 250 cc plus class developed
inconsistently in 2017. Worldwide, motorcycle registra-
tions were slightly down on the previous year (– 1.5 %).
Motorcycle registrations in Europe increased by 1.8 %.
However, declining markets in Germany (– 12.9 %) and
the UK (– 2.1 %) had a dampening effect on the overall
performance. By contrast, increases were recorded
for Spain (+ 3.8 %) and France (+ 6.6 %). A particularly
strong rise of 14.3 % was registered in Italy. The abso-
lute number of new registrations in Italy was therefore
higher than in Germany for the first time since 2012.
The US market fell short of the previous year’s level
for the second year in succession (– 5.4 %).
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
The BMW Group can look back on a successful
business performance in 2017, despite growing
uncertainties in the international environment and
increased competition. The overall picture for the
results of operations, financial position and net assets
was positive. Overall, the business development met
or even exceeded management expectations. This
assessment also takes into account events after the
end of the reporting period.
48
Report on
Economic Position
General and Sector-
specific Environment
Overall Assessment
by Management
Financial and Non-
financial Perfor-
mance Indicators
International interest rate environment and
development of pre-owned vehicle prices in the
premium segment
The global economy gained momentum in 2017. Major
central banks supported this development with their
continued expansionary policy. Over the course of
the year, however, they also took measures partly to
tighten monetary policy.
The ECB, on the other hand, continued its monetary
policy. In October, it announced it would halve the
volume of its bond purchases with effect from Janu-
ary 2018. This news was perceived by capital markets
as a sign of a less expansionary monetary policy rather
than a turnaround.
High import costs brought about by the weakening
of the British pound since the Brexit decision caused
inflation in the UK to rise above its target of 2 % over
the course of the year. In a bid to counteract this devel-
opment, the Bank of England decided in November
to raise its interest rate by 25 basis points to 0.5 %.
During 2017, the US Federal Reserve continued the
process of normalising its monetary policy. In the
course of the year, it resolved on three occasions to
raise the benchmark interest rate, in each case by 0.25 %
and to gradually reduce the size of its balance sheet.
After a strong performance in the first half of the
year, economic momentum in China dropped slightly
in the second half. At the same time, inflation rose
moderately, driven by rising raw material prices. After
repeated increases in money market interest rates,
the Chinese central bank decided against any further
tightening of its monetary policy in the second half
of the year.
The Japanese economy gained pace in 2017 and unem-
ployment fell to a 20-year low. As the inflation rate
remained well below the target of 2 %, the Japanese
central bank decided to retain its highly expansionary
monetary policy.
In some European countries, in particular Germany
and the UK, diesel engines were often the subject of
political discussions in 2017. Pre-owned car markets
in the premium segment responded here with price
declines for diesel vehicles. In mainland Europe,
prices for petrol vehicles remained stable or even
rose slightly, resulting in stable price levels overall.
In the UK a similar effect was seen for pre-owned
diesel and petrol vehicles, however the overall market
for pre-owned premium vehicles was slightly down on
previous years. Prices for pre-owned vehicles were also
slightly down in North America. Markets in Asia have
so far been unaffected by discussions about types of
engine. Prices in this region were stable in 2017 and
even slightly up in China.
Combined Management Report 49
1 Including the
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
(2017: 384,124
units, 2016:
316,200 units).
Automotive segment
Deliveries to customers: slight increase
In 2017, the Automotive segment sold a record number
of vehicles for the seventh year in succession. Despite
growing political and economic uncertainties in the
international environment, deliveries to customers
increased slightly by 4.1 % to a total of 2,463,526 1
BMW, MINI and Rolls-Royce brand vehicles (2016:
2,367,603 1 units). Dynamic market conditions, par-
ticularly in Asia, had a positive impact on automobile
sales volumes. In Europe, sales volume remained at
the previous year’s high level despite slightly lower
deliveries to customers in Germany and the UK. Sales
volume in the Americas region, however, was slightly
down on the previous year.
Sales of the core BMW brand increased slightly by
4.2 % to 2,088,283 1 units in the year under report
(2016: 2,003,359 1 units). MINI also recorded slight
growth, with deliveries up by 3.2 % to 371,881 units
(2016: 360,233 units). Rolls-Royce Motor Cars sold
3,362 units (2016: 4,011 units; – 16.2 %).
As foreseen in the outlook for the financial year 2017,
Automotive segment sales volumes increased slightly
and were therefore in line with expectations.
2 EU-28.
Fleet carbon dioxide (CO2) emissions 2:
slight decrease
The fleet-wide deployment of Efficient Dynamics
technologies and the increasing proportion of
electri fied automobiles are effectively reducing
vehicle CO2 emissions. CO2 emissions from the vehi-
cle fleet sold in Europe (EU-28) decreased slightly
in the year under report to 122 g CO2 / km (2016:
124 g CO2 / km; – 1.6 %).
As foreseen in the outlook for the full year 2017, fleet
carbon emissions fell slightly and were therefore in
line with forecast.
FINANCIAL AND NON-
FINANCIAL PERFORMANCE
INDICATORS
The following section provides information on the key
financial and non-financial performance indicators for
the Group and segments. They are used as the basis for
internal management of the BMW Group. As part of
the analysis of operations and the financial condition
of the BMW Group, forecasts made the previous year
for the financial year 2017 are compared with the
actual business development in 2017.
Group
Profit before tax: significant increase
Group profit before tax increased significantly year-
on-year by 10.2 % to € 10,655 million and therefore
surpassed expectations (2016: € 9,665 million). In
the Quarterly Report to 30 September 2017, the
BMW Group predicted a solid increase in Group
profit before tax. In the Annual Report 2016, a slight
increase had been foreseen.
The BMW Group profited among other things from
strong volume growth in the Automotive and Motor-
cycles segments. The significantly higher financial
result also played an important role. This included a
substantial contribution from the result from equity
accounted investments, which grew as a result of
improved performance of the joint venture BMW
Brilliance Automotive Ltd., Shenyang, as well as
valuation effects arising from the participation of new
investors in the HERE mapping service. Furthermore,
commodity derivatives gave rise to further positive
valuation effects in other financial result, particularly
in the final quarter of the year.
Workforce at year-end: slight increase
The BMW Group workforce consisted of 129,932 employ-
ees at the end of the reporting period (31 Decem-
ber 2016: 124,729 employees; + 4.2 %). Projects relating
to the electrification of vehicles, autonomous driving
and the new model offensive played a major role in
the workforce increase. Growth in automobile and
motorcycle business and the expansion of financial
and mobility services also contributed to the higher
head count.
As foreseen in the outlook for the financial year
2017, there was a slight increase in the size of the
BMW Group’s workforce, which was thus in line with
expectations.
50
Report on
Economic Position
Financial and Non-
financial Perfor-
mance Indicators
Revenues: slight increase
Automotive segment revenues rose by 2.5 % in 2017 to
a new high level of € 88,581 million and were therefore
slightly up on the previous year (2016: € 86,424 million).
The favourable translation effects on foreign currencies,
which led to an upward revision of the outlook for
revenues at the end of the first half-year, could not
be realised, as reported in the Quarterly Report to
30 September 2017.
The forecast of a slight rise in Automotive segment
revenues made in the Annual Report 2016 was there-
fore confirmed.
eBit margin in target range of between 8 and 10%
The EBIT margin in the Automotive segment (profit
before financial result divided by revenues) came in
unchanged at 8.9 % compared to the previous year. As
foreseen for the financial year 2017, the EBIT margin
in the Automotive segment was therefore within the
target range of between 8 and 10 % and in line with
expectations.
Return on capital employed: slight increase
The return on capital employed (RoCE) increased to
78.6 % (2016: 74.3 %; + 4.3 percentage points), reflect-
ing the improvement in capital employed and the
positive segment earnings development, which was
better than expected. Higher deferred income from
Connected Drive and service contracts also had an
impact.
The outlook for RoCE, which had already been raised
in the Quarterly Report to 30 June 2017 from a slight
decrease to in line with last year’s level was once more
exceeded. The RoCE of the Automotive segment in
2017 was therefore once again well above the mini-
mum target of 26 %.
Motorcycles segment
Deliveries to customers: significant increase
The Motorcycles segment reported significant growth
in 2017, with deliveries to customers rising by 13.2 % to
164,153 units (2016: 145,032 units). This performance
not only set a new record, it also took the single-year
sales volume figure above the 150,000 mark for the
first time.
As foreseen in the outlook for the financial year 2017,
Motorcycles segment sales volumes increased signif-
icantly and were therefore in line with expectations.
eBit margin in target range of between 8 and 10%
The EBIT margin in the Motorcycles segment (profit
before financial result divided by revenues) came in at
9.1 % (2016: 9.0 %; + 0.1 percentage point). As foreseen
for the financial year 2017, the EBIT margin was within
the target range of between 8 and 10 % and therefore
in line with expectations.
Return on capital employed: slight increase
The return on capital employed (RoCE) of the Motorcy-
cles segment increased slightly by 1.0 percentage point
to 34.0 % (2016: 33.0 %), mainly reflecting effective
working capital management and the improvement
in earnings.
The outlook for RoCE, which had been raised in the
Quarterly Report to 30 June 2017 from in line with
last year’s level to a slight increase, was achieved. In
the Annual Report 2016, RoCE in line with last year’s
level had been foreseen.
Combined Management Report 51
Financial Services segment
Return on equity: slight decrease
As predicted in the Annual Report 2016, the return
on equity of the Financial Services segment was lower
than one year earlier, at 18.1 % (2016: 21.2 %; – 3.1 per-
centage points). The slight decrease mainly reflected
the impact of more stringent regulatory requirements
for equity capital. Nevertheless, the internal RoE tar-
get of at least 18 % was once more achieved.
The key performance indicators of the BMW Group
and its segments can be summarised as below:
BMW Group comparison of 2017 forecasts with actual outcomes 2017
• 22
Forecast for 2017
in 2016 Annual Report
Forecast revision
during the year
Actual outcome
in 2017
Q3: solid increase
€ million
10,655 (+ 10.2 %)
129,932 (+ 4.2 %)
Group
Profit before tax
Workforce at year-end
Automotive seGment
Deliveries to customers 1
Fleet emissions 2
Revenues
EBIT margin
Return on capital employed
motorcycles seGment
Deliveries to customers
EBIT margin
slight increase
slight increase
slight increase
slight decrease
slight increase
target range
between 8 and 10
slight decrease
significant increase
target range
between 8 and 10
Q2: solid increase
Q3: slight increase
Q2: in line with
last year’s level
Return on capital employed
in line with last year’s level
Q2: slight increase
FinAnciAl services seGment
Return on equity
slight decrease
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units).
2 EU-28.
units
2,463,526 (+ 4.1 %)
g CO2 / km
122 (– 1.6 %)
€ million
88,581 (+ 2.5 %)
%
%
8.9 (–)
78.6 (+ 4.3 %pts)
units
164,153 (+ 13.2 %)
%
%
%
9.1 (+ 0.1 %pts)
34.0 (+ 1.0 %pts)
18.1 (– 3.1 %pts)
52
Report on
Economic Position
Review of Operations
Automotive Segment
REVIEW OF OPERATIONS
Automotive Segment
Deliveries up slightly to new record level
The BMW Group sold 2,463,526* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2017, thereby
setting a new record for the seventh year in succession
(2016: 2,367,603* units; + 4.1 %). BMW brand sales
increased slightly by 4.2 % to 2,088,283* units (2016:
2,003,359* units). The number of MINI brand vehicles
sold also grew slightly by 3.2 % to 371,881 units (2016:
360,233 units). Rolls-Royce Motor Cars delivered 3,362
limousines to its customers during the period under
report (2016: 4,011 units; – 16.2 %). A new all-time
high was thus not only recorded at Group level, but
also for the BMW and MINI brands.
Dynamic growth in Asia, volatility on European
and US markets
The BMW Group reported further significant sales
volume growth on Asian markets in 2017. In total,
it sold 848,826* BMW, MINI and Rolls-Royce brand
vehicles, achieving a double-digit increase of 13.6 %
(2016: 747,291* units). The Chinese market made
an important contribution to this performance
with 595,020* units delivered to customers (2016:
516,785* units; + 15.1 %).
Within Europe, the diesel debate in Germany and the
UK and uncertainty surrounding the Brexit negoti-
ations weighed on the generally positive deliveries
trend. The BMW Group sold a total of 1,101,760 units
BMW Group deliveries of vehicles by region and market
• 24
of its three brands, matching the previous year’s high
figure (2016: 1,092,155 units; + 0.9 %). In Germany,
deliveries to customers fell slightly year-on-year to
295,805 units (2016: 298,928 units; – 1.0 %). In the UK,
sales volume at 241,674 units was also down on the
previous year (2016: 252,205 units; – 4.2 %).
The highly competitive market environment on the
American continent dampened the Group’s sales per-
formance, particularly during the first nine months
of 2017. Deliveries fell by 2.0 % to 451,136 units
(2016: 460,398 units). Sales in the USA fell slightly
by 3.5 % to 353,819 units (2016: 366,493 units). In the
fourth quarter of 2017, however, a turnaround was
perceptible in both the USA (98,137 units; fourth
quarter 2016: 96,609 units; + 1.6 %) and on the conti-
nent as a whole (124,547 units; fourth quarter 2016:
122,393 units; + 1.8 %).
BMW Group – key automobile markets 2017
• 23
as a percentage of deliveries
Other 29.2
Japan 3.2
Italy 3.5
France 3.7
UK 9.8
24.2 China
14.4 USA
12.0 Germany
in 1,000 units
Europe
thereof Germany
thereof UK
Americas
thereof USA
Asia*
thereof China*
Other markets
Total*
2017
2016
2015
2014
2013
1,101.8
1,092.2
1,000.4
295.8
241.7
451.1
353.8
848.8
595.0
61.8
298.9
252.2
460.4
366.5
747.3
516.8
67.7
286.1
231.0
495.9
405.7
685.8
464.1
65.4
914.6
272.3
205.1
482.3
397.0
658.4
456.7
62.7
859.5
259.2
189.1
463.8
376.6
578.7
391.7
61.8
2,463.5
2,367.6
2,247.5
2,118.0
1,963.8
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units, 2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units, 2013: 198,542 units).
Combined Management Report BMW* brand sales at record level
In 2017, the number of BMW brand vehicles deliv-
ered to customers worldwide grew slightly by 4.2 %
to 2,088,283 units (2016: 2,003,359), thereby setting
a new deliveries record. Major contributions came
from the BMW 1 Series, the new BMW 5 Series, the
BMW 7 Series, the BMW X1, the BMW X5 and BMW i.
Sales of the BMW 1 Series rose significantly by 14.7 % to
201,968 units (2016: 176,032 units). By contrast, deliv-
eries of the BMW 2 Series were down year-on-year to
181,113 units (2016: 196,183 units; – 7.7 %). Sales of the
BMW 3 Series at 409,005 units were close to the pre-
vious year’s level (2016: 411,844 units; – 0.7 %). Deliv-
eries of the new BMW 5 Series at 347,313 units were
Deliveries of BMW vehicles by model variant*
• 25
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
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units, 2016: 316,200 units).
53
up on the previous year (2016: 331,410 units; + 4.8 %),
with an 11.7 % increase in the second half of 2017.
Customers took delivery of 64,311 units of the
BMW 7 Series worldwide (2016: 61,514 units; + 4.5 %).
Demand for the BMW X family was strong in 2017,
with worldwide sales up by 9.6 % to 706,741 units
(2016: 644,992 units). Growth was particularly signifi-
cant for the BMW X1 with sales up by almost one-third
to 286,743 units (2016: 220,378 units; + 30.1 %). The
BMW X3 model change did not take place until
November 2017, which resulted in sales falling short
of the previous year’s high figure (146,395 units; 2016:
157,017 units; – 6.8 %). Deliveries of the BMW X5 rose
solidly to 180,905 units (2016: 166,219 units; + 8.8 %).
2017
2016
Change in %
Proportion of
BMW sales volume
2017 in %
201,968
181,113
409,005
131,688
347,313
11,052
64,311
286,743
146,395
52,167
180,905
40,531
1,416
33,676
176,032
196,183
411,844
133,272
331,410
13,400
61,514
220,378
157,017
58,055
166,219
43,323
5,432
29,280
2,088,283
2,003,359
14.7
– 7.7
– 0.7
– 1.2
4.8
– 17.5
4.5
30.1
– 6.8
– 10.1
8.8
– 6.4
– 73.9
15.0
4.2
9.7
8.7
19.6
6.3
16.6
0.5
3.1
13.7
7.0
2.5
8.7
1.9
0.1
1.6
100.0
54
Report on
Economic Position
Review of Operations
Automotive Segment
Increased deliveries at MINI
The MINI brand also set a new sales volume record
in 2017, with worldwide deliveries up by 3.2 %
to 371,881 units (2016: 360,233 units). The new
MINI Countryman made an important contribution,
with growth of almost one-quarter (84,888 units; 2016:
Deliveries of MINI vehicles by model variant
• 26
in units
MINI Hatch (3- and 5-door)
MINI Convertible
MINI Clubman
MINI Countryman / Paceman
MINI total
Rolls-Royce affected by political uncertainties
Sales volume development at Rolls-Royce Motor Cars
in 2017 was influenced primarily by ongoing political
uncertainties in the Middle East and unfavourable
market conditions in the USA. Moreover, the top-of-
the-range model, the Phantom, was no longer fully
available. Deliveries of the successor model began in
January 2018 (Rolls-Royce Phantom: fuel consumption
in l / 100 km (combined) 13.9 / / CO2 emissions in g / km
(combined) 318 – 319). In 2017, Rolls-Royce Motor Cars
delivered 3,362 vehicles to customers worldwide (2016:
4,011 units; – 16.2 %).
Deliveries of Rolls-Royce vehicles
by model variant
• 27
in units
Phantom
Ghost
Wraith / Dawn
Rolls-Royce total
2017
2016
Change in %
235
1,098
2,029
3,362
389
1,175
2,447
4,011
– 39.6
– 6.6
– 17.1
– 16.2
For the first time, more than 100,000 electrified
vehicles sold
The BMW Group achieved its target of delivering more
than 100,000 electrified vehicles in 2017, underlining
its position as a worldwide market leader in terms
of combined sales of all-electric and plug-in hybrid
vehicles and market leader in Europe.
68,301 units; + 24.3 %). The Convertible also remained
successful in 2017 with 33,351 units sold (2016:
30,050 units; + 11.0 %). The MINI Hatch (3- and 5-door
models) fell slightly short of the previous year’s level
with 194,070 units sold (2016: 198,373 units; – 2.2 %).
2017
2016
Change in %
Proportion of
MINI sales volume
2017 in %
194,070
198,373
33,351
59,572
84,888
30,050
63,509
68,301
371,881
360,233
– 2.2
11.0
– 6.2
24.3
3.2
52.2
9.0
16.0
22.8
100.0
With a total of 103,080 BMW i, BMW iPerformance and
MINI Electric vehicles, deliveries of electrified vehicles
to customers were approximately two-thirds up on the
previous year (2016: 62,255 units; + 65.6 %). BMW i and
BMW iPerformance deliveries grew by more than one-
half to 97,281 vehicles (2016: 62,255 units; + 56.3 %).
The BMW i3 (BMW i3 (94 Ah) with fully electric eDrive:
electric power consumption in kWh / 100 km (com-
bined) 13.6-13.1 / / CO2 emissions in g / km (combined) 0)
continued to be in high demand, with deliveries to
customers rising by well over a fifth to 31,482 vehicles
(2016: 25,528 units; + 23.3 %). A significant contribution
came from the sporty version, the BMW i3s, which
was launched in summer 2017 (BMW i3s (94 Ah) with
fully electric eDrive: electric power consumption in
kWh / 100 km (combined) 14.3 / / CO2 emissions in g / km
(combined) 0). Deliveries of BMW plug-in hybrid mod-
els sold under the iPerformance brand almost doubled
to 63,605 units (2016: 32,975 units; + 92.9 %). Between
launch in June 2017 and the end of the year under
report, 5,799 units of the MINI Electric were delivered
to customers.
Deliveries of electrified models
• 28
in units
BMW i
BMW iPerformance
MINI Electric
Total
2017
2016
Change in %
33,676
63,605
5,799
29,280
32,975
–
103,080
62,255
15.0
92.9
–
65.6
Combined Management Report High capacity utilisation across production
network
In 2017, strong customer demand and new model
launches resulted in high capacity utilisation across
the BMW Group production network. New production
records were set in 2017, with a total of 2,505,741 1
Vehicle production of the BMW Group by plant
• 29
55
BMW, MINI and Rolls-Royce brand vehicles manu-
factured (2016: 2,359,756 1 units; + 6.2 %), comprising
2,123,947 1 BMW (2016: 2,002,997 1 units; + 6.0 %),
378,486 MINI (2016: 352,580 units; + 7.3 %) and 3,308
Rolls-Royce brand vehicles (2016: 4,179 units; – 20.8 %).
in units
Dingolfing
Spartanburg
Regensburg
Leipzig
Munich
Tiexi 2
Dadong 2
Oxford
Rosslyn
Rayong
Araquari
Chennai
Goodwood
Graz (Magna Steyr) 3
Born (VDL Nedcar) 3
Partner plants (Jakarta, Cairo, Kaliningrad, Kulim)
Group
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 396,749 units, 2016: 305,833 units).
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
3 Contract production.
2017
2016
Change in %
Proportion of
production in %
376,580
371,316
338,259
246,043
196,455
269,309
127,440
223,817
53,105
21,084
12,768
8,952
3,308
50,272
168,969
38,064
339,769
411,171
346,291
246,550
216,769
161,901
143,825
210,971
63,117
17,844
15,408
8,568
4,179
53,528
87,609
32,256
2,505,741
2,359,756
10.8
– 9.7
– 2.3
– 0.2
– 9.4
66.3
– 11.4
6.1
– 15.9
18.2
– 17.1
4.5
– 20.8
– 6.1
92.9
18.0
6.2
15.0
14.8
13.5
9.8
7.9
10.8
5.1
8.9
2.1
0.9
0.5
0.4
0.1
2.0
6.7
1.5
100.0
The BMW Group’s leading production system is well
positioned for the future with its unique flexibility.
In line with the Strategy NUMBER ONE > NEXT, the
system is characterised in particular by efficiency
and robust processes. Production competence thus
provides a crucial competitive edge and contributes
to the BMW Group’s profitability and sustained
success.
Flexibility, quality and adaptability are key character-
istics of the Group’s production system. Its flexibility
enables the BMW Group to respond rapidly to chang-
ing market situations and fluctuations in regional
sales volumes by adapting its production plans.
Digitalisation, standardised modules and intelligent
composite construction demonstrate the competence
of the Group’s production network. At the same time,
the production system offers customers a high degree
of customisation.
In Shenyang (China), the two plants of the joint
venture BMW Brilliance Automotive Ltd. (BBA) in
Dadong and Tiexi produced over 396,000 units of five
BMW models, setting a new record in the process. The
new large-scale northern extension at the Dadong
plant was opened in 2017. During the opening cer-
emony, the first extended-wheelbase version of the
new BMW 5 Series Sedan rolled off the production
line. As a result of the expansion, space has been
created at the plant to add a sixth BMW model to the
line-up, the new BMW X3. BBA also opened the High
Voltage Battery Centre in Tiexi during the year under
report. This will also supply batteries to the Dadong
plant, where the BMW 5 Series plug-in hybrid will
be produced for the local market from 2018 onwards.
56
Report on
Economic Position
Review of Operations
Automotive Segment
International production network
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value.
25 years ago the BMW Group announced its decision
to build a plant in the USA, in Spartanburg, South
Carolina. Marking that anniversary, the first third-
generation BMW X3 came off the production line
in 2017. More than four million vehicles have been
produced at the plant to date.
In San Luis Potosí (Mexico), preparations for con-
structing the new plant are progressing according to
plan. In 2017, the new training centre was opened in
the first of the buildings to be completed at the plant,
which is due to become operational in 2019.
In Europe, the British production cluster compris-
ing the plant in Oxford, the engine plant at Hams
Hall and the pressing plant in Swindon forms part
of the BMW Group’s production network. The
MINI Hatch and the MINI Clubman are produced in
Oxford. In order to keep pace with forecast growth,
the MINI Hatch, the MINI Convertible and the
MINI Countryman are also produced under contract
for the BMW Group at the automobile manufacturer
VDL Nedcar bv, Born, the Netherlands. In total,
MINI production increased by 7.4 % year-on-year to
378,486 units.
In 2017, production of the new Rolls-Royce Phantom
began at the Rolls-Royce manufacturing plant in
Goodwood (UK). Important construction work was
also carried out at the site during the reporting period.
In order to accommodate future models, Rolls-Royce
Motor Cars is investing in a new single-line production
system at the plant. Furthermore, the technology and
logistics centre in Bognor Regis near Goodwood was
expanded in 2017.
In Rosslyn (South Africa), preparations are currently
underway for producing the next generation of the
BMW X3. The necessary expansion and modification
measures are being carried out during the ongoing
production of the BMW 3 Series.
Combined Management Report 57
Worldwide network for drivetrain production
The engine plants in Munich, Hams Hall (UK) and
Steyr (Austria) supply diesel and petrol engines
for the worldwide network. The Shenyang (China)
engine plant supplies local production facilities. The
BMW Group’s largest engine plant in Steyr has pro-
duced engines for 35 years. In 2017, the 20 millionth
engine came off the production line.
Drivetrain production for electrified vehicles is spread
over various locations within the production network.
The technologies used in making electric drivetrain
components are developed at the Prototype Con-
struction Centre in Munich. As competence centres,
Dingolfing and Landshut take a leading role in the
production of electric drivetrain systems. Electric
motors for the BMW Group’s electrified vehicles are
also produced at these plants. The batteries required
are produced at the three battery factories in Din-
golfing, Spartanburg and Shenyang. The battery
factory in Shenyang was opened in 2017. At the end
of 2017, the foundation stone was laid in Munich for
a battery cell competence centre, which is scheduled
for completion by the beginning of 2019. The aim is
to continue developing battery cell technology.
Production competence in Germany
The German plants play a leading role within the
Group’s international network. For the seventh year
in succession, the BMW Group produced over one
million vehicles at its German plants in Munich,
Dingolfing, Regensburg and Leipzig.
In 2017, the BMW Group plants in Dingolfing and
Landshut celebrated their 50th anniversary. The two
locations play a key role within the BMW Group as
competence centres for the future technologies light-
weight construction and electric mobility. Dingolfing
and Landshut are the Group’s plants for electric drive-
trains. Battery production and the BMW Group’s new
lightweight and engineering centre are also located
there.
In May 2017, a new paint shop was commissioned at
the BMW Group Munich plant. The facility is not only
highly efficient, it also sets new standards for sustain-
able production. The consumption of electricity, gas
and water, as well as the production of waste air, have
been significantly reduced.
At the end of 2017, production of the BMW X2 started
at the BMW Group plant in Regensburg. At the highly
flexible Regensburg plant eight models are produced
on a single production line.
The BMW Group’s Leipzig plant put into operation
a battery storage farm, demonstrating how batteries
can be both sustainably and profitably reused after
vehicles reach the end of their life cycle. Using on-site
wind turbines, the BMW Group as a major industrial
consumer combines its own decentralised renewable
energy generation with local energy storage. The plant
reached further milestones with the production of the
100,000th BMW i3 and the 15,000th BMW i8 during
the year under report.
The BMW Group Eisenach plant celebrated its 25th
anniversary in 2017. Apart from its toolmaking exper-
tise, the Eisenach plant has specialised in recent years
in the production of almost all sheet metal, aluminium
and stainless steel outer body parts for the Rolls-Royce
plant in Goodwood (UK).
58
Report on
Economic Position
Review of Operations
Motorcycles
Segment
Financial Services
Segment
Motorcycles Segment
BMW Group deliveries of motorcycles*
• 30
164.2
137.0
145.0
115.2
123.5
in 1,000 units
180
90
0
2013
2014
2015
2016
2017
* Excluding Husqvarna, sales volume up to 5 March 2013: 59,776 units.
BMW Group – key motorcycle markets 2017
• 31
as a percentage of sales volume
Other 44.1
UK 5.7
16.2 Germany
10.1 France
8.8 Italy
8.3 USA
6.8 Spain
BMW Motorrad grows significantly
In 2017, the Motorcycles segment profited amongst
others from the launch of numerous attractive new
models and model revisions. Deliveries of BMW
motorcycles worldwide were significantly higher than
the previous year, rising by 13.2 % to 164,153 units
(2016: 145,032 units). The segment thus surpassed
the 150,000-unit mark for the first time, setting a new
sales volume record for a financial year.
Dynamic growth in Europe
Motorcycle sales in Europe grew strongly in
2017, exceeding 100,000 units for the first time.
BMW Motorrad delivered a total of 101,524 units to
customers (2016: 87,983 units; + 15.4 %). In Germany,
sales volume was up by 7.1 % to 26,664 units (2016:
24,894 units), despite a contracting motorcycles
market. Sales growth in Italy (14,430 units, 2016:
12,300 units; + 17.3 %) and Spain (11,193 units, 2016:
9,520 units; 17.6 %) was even in the double digits.
Sales in France were particularly strong, with
deliveries up by almost one-quarter to 16,607 units
(2016: 13,350 units; + 24.4 %). In the USA sales at
13,546 units fell just short of the previous year’s
level (2016: 13,730 units; – 1.3 %) in a difficult mar-
ket environment. However, the market recorded
an upturn in the fourth quarter (3,346 units; 2016:
2,782 units; + 20.3 %).
Motorcycles production significantly expanded
A total of 185,682 motorcycles rolled off production
lines during the year under report (2016:
145,555 units; + 27.6 %). The significant increase
in output was mainly driven by high demand
and the start of production by the Indian partner,
TVS Motor Company Limited. Expansion work at the
BMW Group plant in Berlin was largely completed
during the reporting period and will be finalised in
2018. The latest measures will create the capacities
required to achieve planned growth.
R nineT family now complete
BMW Motorrad completed the R nineT product family
line-up in 2017 with the launch of the R nineT Pure,
R nineT Racer and R nineT Urban G / S models. In
August 2017, the K 1600 B was introduced to keep up
with demand on the US motorcycle market. It will be
followed in March 2018 by the K 1600 Grand America,
which was presented at the EICMA motorcycle trade
show. All in all, BMW Motorrad launched six new
motorcycle models and five model revisions during
the period under report.
Combined Management Report 59
Slight growth in new business
Credit financing and leasing business with retail
customers remain a key element of the success of the
Financial Services segment. During the period under
report, 1,828,604 new credit financing and leasing
contracts were concluded with customers, slightly
up (+ 1.0 %) on the previous year (2016: 1,811,157 con-
tracts). Credit financing grew slightly by 2.8 %, while
the number of new leasing contracts fell slightly by
2.6 %. Overall, leasing accounted for 33.0 % and credit
financing for 67.0 % of new business.
The proportion of BMW Group new vehicles leased
or financed by the Financial Services segment in the
financial year 2017 amounted to 46.8 %, 2.8 percentage
points down on the previous year (2016: 49.6 %).* The
decrease was due to a cap on new business volume
in China, through which the People’s Bank of China
regulates the banking and financial services sector.
In the pre-owned financing and leasing business for
BMW and MINI brand vehicles, the segment record-
ed a solid increase in the number of new contracts
signed, which was up by 7.2 % to 387,937 contracts
(2016: 361,928 contracts).
The total volume of new credit financing and leasing
contracts concluded with retail customers during the
period under report amounted to € 55,049 million,
in line with the previous year (2016: € 55,327 mil-
lion; – 0.5 %).
Financial Services Segment
Continued growth for the
Financial Services segment
The Financial Services segment continued to perform
well within a highly competitive market environment
and concluded a successful financial year 2017. In
balance sheet terms, business volume grew by 1.1 %
to € 124,719 million (2016: € 123,394 million). Adjusted
for exchange rate factors, business volume amounted
to € 131,995 million (+ 7.0 %). The contract portfolio
under management at 31 December 2017 comprised
5,380,785 contracts and therefore grew by 5.2 % year-
on-year (2016: 5,114,906 contracts).
Contract portfolio of
Financial Services segment
• 32
in 1,000 units
* The calculation
only includes
automobile mar-
kets in which the
Financial Services
segment is repre-
sented by a con-
solidated entity.
4,130
4,360
4,719
5,115
5,381
6,000
3,000
0
2013
2014
2015
2016
2017
BMW Group new vehicles financed or
leased by Financial Services segment*
• 33
in %
50
25
0
44.0
41.7
46.3
49.6
46.8
Leasing 21.5
20.9
22.1
22.3
20.8
Financing 22.5
20.8
24.2
27.3
26.0
2013
2014
2015
2016
2017
* Until 2015 excluding Rolls-Royce.
Contract portfolio in multi-brand financing
business decreases
The Financial Services segment recorded a slight
increase (+ 2.8 %) in the number of new multi-brand
financing contracts in 2017, with 157,626 contracts
(2016: 153,297 contracts). As a result of a portfolio
sale, the total contract portfolio comprised 406,813
contracts at 31 December 2017, significantly lower
than one year earlier (2016: 466,436 contracts; – 12.8 %).
Dealership financing up year-on-year
The total volume of dealership financing increased
to € 19,161 million in the period under report (2016:
€ 18,307 million; + 4.7 %).
Deposit business volume at previous year’s level
Customer deposits represent an important source of
refinancing for the Financial Services segment. The
volume of deposits stood at € 13,572 million at the end
of the reporting period, in line with the previous year
(2016: € 13,512 million; + 0.4 %).
Solid growth in insurance brokerage business
With a solid increase of 5.9 % in 2017, the number of
new brokered insurance contracts grew to 1,337,652
contracts (2016: 1,262,973 contracts). At 31 Decem-
ber 2017, the total number of brokered insurance
contracts amounted to 3,649,362 (2016: 3,411,872 con-
tracts; + 7.0 %).
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Report on
Economic Position
Review of Operations
Financial Services
Segment
Research and
Development
The total portfolio of credit financing and leasing con-
tracts with retail customers developed positively again
during the financial year 2017, with a slight increase
of 4.7 % year-on-year. In total, 4,926,228 contracts were
in place with retail customers at 31 December 2017
(2016: 4,703,417 contracts). The Asia / Pacific region
continued to grow in 2017, with a 9.6 % increase in
the contract portfolio. The Europe / Middle East / Africa
region (+ 8.8 %) and the EU Bank* (+ 5.1 %) also regis-
tered solid year-on-year growth, while the Americas
region saw a slight decrease in the contract portfo-
lio (– 2.7 %).
Contract portfolio retail customer financing
of Financial Services segment 2017
• 34
* The EU Bank
comprises
BMW Bank GmbH,
its branches in
Italy, Spain and
Portugal, and its
subsidiary in
France.
in % per region
Asia / Pacific 18.5
EU Bank* 21.1
32.6 Europe /
Middle East / Africa
27.8 Americas
* EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
Solid growth in fleet business
The BMW Group is one of Europe’s foremost leasing
and full-service providers. The Financial Services
segment’s fleet management business, under the
brand name Alphabet, offers commercial customers
leasing and financing arrangements as well as specific
services. The number of fleet contracts rose by 5.5 %
during the financial year 2017. At 31 December 2017,
the segment was thus managing a portfolio of 679,895
fleet contracts (2016: 644,420 contracts).
Combined Management Report 61
Research and Development
www.bmwgroup.com / innovation
New development centre for autonomous driving
At the end of 2016, around 600 BMW Group employees
were already working on developing highly automated
driving technologies. In 2017, the BMW Group began
to pool its entire expertise in vehicle connectivity and
autonomous driving at a new campus near Munich.
The new development centre aims to promote col-
laboration across companies and individual deci-
sion-making competence. This is achieved through flat
organisational structures, lean processes and teams
working in close proximity. At the new location, more
than 2,000 employees will work across disciplines on
development of the next steps towards fully autono-
mous driving.
During the year under report, 40 BMW 7 Series test
vehicles were used to conduct trials for highly auto-
mated and autonomous driving on motorways and
in urban environments. These vehicles were tested at
worldwide locations, in particular at the sites of Intel
(USA), Mobileye (Israel) and the BMW Group (Munich).
The joint further development of these BMW 7 Series
prototypes will lead to the BMW Group’s first highly
automated series-produced vehicle: the BMW iNext,
which is due to be launched in 2021.
Risk profile
Despite ongoing political and economic uncertainties
and the debate, particularly in some European coun-
tries, about exhaust emissions from diesel vehicles,
the global economy continued to develop positively
in 2017. This contributed to the continued low level of
risk in the overall Financial Services portfolio.
Development of credit loss ratio
• 35
in %
0.5
0.46
0.50
0.37
0.32
0.34
0.25
0
2013
2014
2015
2016
2017
The risk profile of the segment’s credit financing port-
folio also remained stable at a low level. The credit loss
ratio on the total credit portfolio amounted to 0.34 %,
marginally higher than one year earlier (2016: 0.32 %).
Sales proceeds generated from BMW and MINI brand
vehicles showed a solid increase from the previous
year, due to volume and mix effects. Despite the
positive development, the level of residual value
losses on remarketed vehicles rose year-on-year. The
expected increase was mainly due to the debate on
diesel engines in parts of Europe. The situation was
also affected by continuing challenges on the North
American pre-owned vehicle market.
Further information on the risk situation is provided
in the section Risks and Opportunities.
Research project on fast charging technology
In July 2016, under the leadership of the BMW Group,
the “FastCharge” project was begun together with
Allego GmbH, Phoenix Contact E-Mobility GmbH,
Dr. Ing. h. c. F. Porsche AG and Siemens AG. The aim
of the three-year project is to conduct research on
electric vehicles with far shorter charging times and
the required charging infrastructure. A further aim
is to demonstrate ways of implementing the findings
for everyday use.
The joint project is examining every aspect of fast
charging in practice, with the aim of introducing
the required technologies on an industrial scale. The
overall system is to be implemented in prototypes and
presented to the public in the course of the current year.
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Report on
Economic Position
Review of Operations
Research and
Development
Purchasing and
Supplier Network
Connectivity and digital services expanded
At the BMW Innovation Days 2017, the BMW Group
presented the current level of progress and the latest
developments with regard to integrating vehicles in
the customer’s digital world. In the context of digitali-
sation, connectivity is a key pillar in the BMW Group’s
strategy for the future, NUMBER ONE > NEXT. Today,
around 10 million BMW Group vehicles are already
connected worldwide through Connected Drive.
The customer is the central focus of the Group’s per-
sonalised digital services. The range is divided into
four fields: vehicle-related services, lifestyle-related
services, mobility-related services and the integration
of digital assistants.
The vehicle-related services field is already extensive
and includes functions such as automatic climate con-
trol via smartphone or a 3D view of the vehicle from
a remote location. It also includes services such as
reminders of the next vehicle service appointment or
individual financial services. Going forward, services
for personalised vehicle settings will also be available,
so that each vehicle will automatically adapt to the
current user and situation.
Mobility-related services help users to reach their
destinations conveniently and as quickly as possible.
These services help users find the most pleasant route,
not only when in the vehicle, but also when nearby.
For example, drivers can use their smartphones to dis-
play the best time to begin their next journey. Parking
and charging options at the selected destination can
also be displayed via the vehicle’s navigation system.
Lifestyle-related services allow the vehicle to be
integrated in the digital life of the user. For example,
third-party services such as entertainment, news or
music can be seamlessly and easily integrated.
The range of supporting services also includes integra-
tion of digital assistants from the user’s environment,
for example the already familiar concierge services.
Combined Management Report 63
Regional mix of BMW Group
purchase volumes 2017
• 36
in %, basis: production material
Asia 7.7
NAFTA 14.5
Rest of Western
Europe 17.7
1.0 Other
37.6
Germany
21.5 Eastern Europe
Purchasing and Supplier Network
Ensuring access to resources in a
volatile environment
With its globally oriented organisation, the Purchasing
and Supplier Network ensures access to all necessary
external resources in an environment that remains
highly volatile. Activities include the procurement and
quality assurance of production materials, raw materi-
als, capital goods and services. External suppliers are
selected systematically on the basis of competitiveness
according to the criteria of quality, innovation, flex-
ibility and cost. More recently, activities have been
focused particularly on the ability to respond quickly
to changing demand for various types of drivetrain
technology.
Connecting procurement markets
The BMW Group remains committed to its strategy of
maintaining a regional balance with regard to growth
in sales volume, production and purchasing volumes.
The strategy makes an important contribution to nat-
ural hedging against currency fluctuations.
Investments ensure expertise in productivity and
technology
Alongside purchasing and quality assurance, the
third pillar of the Purchasing and Supplier Network’s
activities remains in-house production of key vehicle
components. In order to ensure over the long term the
flexibility and competitiveness of internal component
production, the BMW Group invests in state-of-the-art
production facilities and efficient structures.
During the period under report, logistics processes
at the Group’s most important component plant in
Landshut were significantly simplified with the open-
ing of the new supply centre, thus achieving another
important milestone.
64
Report on
Economic Position
Review of Operations
Sales and Marketing
Sales and Marketing
www.bmwgroup.com / brands
The BMW Group’s sales and distribution network
comprises some 3,400 BMW, 1,580 MINI and
140 Rolls-Royce dealerships worldwide. Sales are
conducted by independent authorised dealerships,
BMW Group branches and subsidiaries, and inde-
pendent importers in certain markets. The dealership
and agency network for BMW i currently comprises
over 1,500 locations.
BMW i continues to grow
Under the brand name BMW i, the BMW Group
has offered customers a range of electric mobility
solutions since 2013. The brand covers BMW i and
BMW iPerformance vehicles as well as a wide array
of services. Under the name 360° ELECTRIC, BMW i
provides a comprehensive range of products and
services for all-electric vehicles and plug-in hybrids
worldwide. In 2016 and 2017, the second generation
of the BMW i Wallbox was introduced for quick and
easy charging at home.
During the year under report, the BMW Group togeth-
er with other automobile manufacturers founded the
joint venture IONITY with the aim of establishing a
high-performance, fast-charging network in Europe
along key transport routes. The BMW Digital Charging
Service uses Connected Drive to integrate the vehicle
in the customer’s charging infrastructure and automat-
ically charges at the cheapest times, taking electricity
prices into account. The service also provides a con-
stant overview of the vehicle’s energy requirements
as well as ongoing and completed charging activities.
Premium services for individual mobility
In the context of the Group’s corporate strategy
NUMBER ONE > NEXT, mobility services are given
increasing emphasis. Since 2011, the BMW Group
has offered a growing range of services for individual
mobility, including mobility services such as DriveNow
in Europe and ReachNow in the USA and China. In
addition, ParkNow and ChargeNow provide custom-
ers with digital solutions for parking and charging.
At 31 December 2017, the DriveNow premium car
sharing service had over one million customers in 13
major European cities. The percentage of electrically
powered vehicles in these fleets stands at around
15 % and is due to increase. Since introduction of the
first electrified vehicles into the DriveNow fleet more
than 16 million kilometres with zero local emissions
have been driven. This corresponds to a CO2 saving
of around 2,500 tonnes.
In January 2018, the BMW Group signed an agreement
with Sixt SE for the complete acquisition of the shares
in the car sharing provider DriveNow. The agreement
was signed subject to the approval of the antitrust
authorities.
In 2016, the BMW Group launched the ReachNow
service in the USA, where it is currently available
in Seattle, Portland and Brooklyn. Apart from car
sharing, ReachNow is also offering as a pilot project
in Seattle a service that enables customers to book a
premium vehicle with a driver (ReachNow Ride). Cus-
tomers can also reserve the use of a vehicle for several
days, including delivery of the vehicle to the desired
location (ReachNow Reserve). Moreover, ReachNow
offers individual small fleets for residential complexes
or company solutions (ReachNow Fleet Solutions).
ReachNow currently has around 80,000 members in
the USA.
On 1 December 2017, “ReachNow powered by
EvCard” was launched in Chengdu, China, offering
in cooperation with local partner EvCard a fleet of
100 BMW i3 vehicles for hire. The vehicles can be
picked up or returned at 25 central locations in the
urban area.
ParkNow is the BMW Group’s digital parking service.
It enables ticket-free, cashless parking via app, both
at roadside and in multi-storey car parks. In Janu-
ary 2018, the BMW Group acquired Parkmobile LLC,
the largest provider of mobile parking services in
North America. Parkmobile Group Europe, which
also owns ParkNow amongst its brands, has been
wholly owned by the BMW Group since April 2016.
In Europe and North America, Parkmobile reaches
over 22 million customers and offers digital parking
solutions in more than 1,000 towns and cities.
Through ChargeNow, the BMW Group provides easy
access to a constantly growing network of public
charging stations. With more than 130,000 charging
points in 29 countries, ChargeNow provides access
to the world’s largest charging network. Customers
can locate the charging stations directly via the
ConnectedDrive navigation system integrated in the
vehicle, via the ChargeNow app or via the internet
website.
In February 2017, the BMW Group founded the
company “Digital Charging Solutions”, which sells
access to the ChargeNow charging network, as well as
related services, also to third parties. Groupe PSA was
one of ChargeNow’s first corporate customers during
the period under report. PSA will provide its electric
vehicle customers in France with charging access via
the network established by ChargeNow.
Combined Management Report 65
Growth in service business
During the year under report, the BMW Group’s
service business was strengthened by investment in
the future logistics network and by measures aimed
at ensuring a high level of customer satisfaction.
Digitalisation of offerings is playing a crucial role in
these developments. Business with spare parts has
also been expanded. The creation of the joint venture
Encory by the BMW Group and the ALBA Group in
September 2016, with additional offerings in reuse
of automotive spare parts, is making a valuable con-
tribution to the BMW Group’s sustainability strategy.
A pilot project was initiated in Spain in mid-2017.
Other markets are set to follow.
BMW rejuvenates model range
During the period under report, the BMW brand reju-
venated its range with six new models and 15 model
revisions. The market launch of the seventh generation
of the BMW 5 Series played a significant role, with the
Sedan (in February), the extended-wheelbase version
for China and the Touring version (both in June). The
5 Series also includes iPerformance, M Performance
and M5 models. The new BMW 6 Series Gran Turismo
and the new X3 were launched in November. The model
initiative includes revised models of the BMW 1 Series,
2 Series and 4 Series. The revised BMW i3 and the new
BMW i3s came onto the market in autumn 2017.
Record year for BMW M
The year 2017 was the strongest in the history of
BMW M GmbH for sales of M and M Performance
models. In view of growing demand in the high-perfor-
mance automobile segment, the dealership network is
being systematically enlarged. In 2017, the number of
BMW M certified dealerships grew to 850 worldwide,
representing a doubling in size over the last four years.
New Rolls-Royce Phantom presented
A highlight of the year 2017 was the presentation
of the new Rolls-Royce Phantom in London in
July. With its Black Badge Edition, Rolls-Royce
Motor Cars is targeting new customer groups
in the super-luxury class. After launching the
Black Badge models Ghost and Wraith, the Dawn
Black Badge was added as a third version in 2017
(Rolls-Royce Ghost Black Badge: fuel consumption
in l / 100 km (combined) 14.6 / / CO2 emissions in g / km
(combined) 333; Rolls-Royce Wraith Black Badge:
fuel consumption in l / 100 km (combined) 14.6 / /
CO2 emissions in g / km (combined) 333; Rolls-Royce
Dawn Black Badge: fuel consumption in l / 100 km
(combined) 14.7 / / CO2 emissions in g / km (com-
bined) 337).
MINI reports another record year
In 2017, the MINI brand achieved its third record-
breaking year in succession for sales volume. The
successful market launch of the new Countryman
generation in the first quarter 2017 played a major
role in this performance. The second edition of the
popular Countryman range also went on sale as a
plug-in hybrid version in summer of 2017, making
it the first MINI plug-in hybrid in series production.
66
Report on
Economic Position
Review of Operations
Workforce
Workforce
www.bmwgroup.com / careers
Slight increase in workforce
The BMW Group’s worldwide workforce increased
to a total of 129,932 employees at the end of the
reporting period (2016: 124,729 employees; + 4.2 %).
The increase mainly reflects the expansion of the
BMW Group’s international production network.
Moreover, in conjunction with the implementation
of the Group’s Strategy NUMBER ONE > NEXT, an
increasing number of experts in future-oriented fields
such as artificial intelligence and autonomous driving,
electric mobility, smart production and logistics, data
analysis and software development were hired.
BMW Group employees
• 37
Automotive
Motorcycles
Financial Services
Other
Group
31. 12. 2017
31. 12. 2016
Change in %
117,664
112,869
3,506
8,645
117
3,351
8,394
115
129,932
124,729
4.2
4.6
3.0
1.7
4.2
Realignment of dual vocational training
In the context of digitalisation and technological
change, the BMW Group has initiated a strategic
realignment of its dual vocational training. As well
as promoting STEM subjects (science, technology,
engineering and mathematics), the focus is also
on introducing new digital forms of teaching and
learning. In this context, the BMW Group has initi-
ated the process of adapting existing career profiles
and introducing new ones across its national and
international training network. The total number
of apprentices and participants in development
programmes for young talent increased slightly to
4,750 (2016: 4,613; + 3.0 %).
BMW Group apprentices at 31 December
• 38
5,000
4,445
4,595
4,700
4,613
4,750
2,500
0
2013
2014
2015
2016
2017
High level of investment in employee qualification
At € 349 million, spending on training and develop-
ment remained high (2016: € 352 million; – 0.9 %). By
training its workforce in areas such as electric mobility,
hydrogen, fuel cells, lightweight construction and
robotics, the BMW Group is creating an important
foundation for future activities. Expansion of digital
and agile competences is a further area of focus.
Combined Management Report The BMW Group remains a highly attractive
employer
In 2017, the BMW Group was once again ranked
among the world’s most attractive employers. In the
latest “World’s Most Attractive Employers” rankings
published by the agency Universum, the BMW Group
was once again named best German employer across
all sectors and the most attractive automotive company
in the world. In 2017, BMW Group China was named
for the first time most attractive employer across all
sectors in China.
The BMW Group also came out top in the Trendence
Young Professional Barometer Germany. Moreover,
the Group again improved its position in the Trend-
ence Barometer Study for engineering graduates in
Germany, moving up to first place in 2017. In addition,
the Group again achieved strong results in the Uni-
versum study “Young Professionals Germany” with
placings one, three and five in the categories Business,
Engineering and IT respectively. The BMW Group was
therefore among the best-ranked companies in the
studies across all sectors.
Employee attrition rate at BMW AG*
• 39
as a percentage of workforce
7.0
3.5
0
3.47
2.70
2.64
2.08
1.41
2013
2014
2015
2016
2017
67
Diversity as a competitive factor
Diversity will remain a key factor in ensuring the
BMW Group’s continued competitiveness in future.
Focus is given to the three aspects of gender, cultural
background and age / experience. The aim is to ensure
equal opportunities for all employees and at the same
time utilise and promote the diversity of the Group’s
workforce. Over the year, the BMW Group again
implemented a broad array of measures to promote
diversity. Further information on this topic is also
provided in the Sustainable Value Report 2017.
The proportion of women in the workforce as a
whole, as well as in management functions and
young talent development programmes, increased
during the financial year under report. The percent-
age of women in the total BMW Group workforce
rose to 19.3 % (BMW AG: 16.1 %), above the internal
target range of 15 to 17 %. The proportion of women
in management positions rose to 16.0 % across the
BMW Group (BMW AG: 14.0 %). In the year under
report, female representation on the BMW Group’s
trainee programme and in student programmes stood
at approximately 44 % and 31 % respectively.
Proportion of female employees in manage-
ment functions at BMW AG / BMW Group*
• 40
BMW Group 13.0
BMW AG 10.6
13.5
11.3
15.3
13.3
16.0
14.0
14.3
12.5
in %
16
8
0
* Number of employees on unlimited employment contracts leaving the Company.
2013
2014
2015
2016
2017
*Since 2017 including maternity leave.
The workforce at the Group’s locations within
Ger many is becoming increasingly international.
Employees from over 110 countries work together
successfully in Munich. Moreover, a balanced age
structure in the workforce encourages an exchange
of ideas and knowledge between generations and
plays a key role in reducing the loss of know-how
when valuable employees retire.
68
Report on
Economic Position
Review of Operations
Sustainability
Sustainability
www.bmwgroup.com / responsibility
Economic success, the responsible use of resources
and the assumption of social responsibility form the
basis for long-term growth within the BMW Group.
Through sustainable activity, the Company secures the
future of its business model. With regard to sustain-
ability, the BMW Group concentrates on three areas:
— The development of products and services for
sustainable individual mobility (for example
electric mobility and services such as DriveNow
and ReachNow)
— The efficient use of resources along the entire
value chain
— Responsibility towards employees and society
Through its sustainability policy, the BMW Group
supports the achievement of the UN’s Sustainable
Development Goals (SDG), which were adopted in
September 2015.
Further information on sustainability within the
BMW Group and related topics is provided in the
Sustainable Value Report, which is published online
at
https: / / www.bmwgroup.com / svr at the same time as the
Annual Report. The Sustainable Value Report is
drawn up in accordance with the “Comprehensive”
option of the Standards of the Global Reporting
Initiative (GRI) and subject of a limited assurance
engagement in accordance with IASE 3000 (Inter-
national Standard on Assurance Engagements 3000
(Revised): “Assurance Engagements other than Audits
or Reviews of Historical Financial Information”).
In accordance with the stipulations of the German
CSR Directive Implementation Act, BMW AG is
required to publish a non-financial declaration at
both Company and Group level for the first time
for the reporting year 2017. The declaration is pub-
lished jointly for BMW AG and the BMW Group as a
combined separate non-financial report within the
Sustainable Value Report. The information required
by law is included in the sub-chapters preceding the
voluntary reporting in accordance with GRI standards
and is marked accordingly.
The combined separate non-financial report is avail-
able online within the Sustainable Value Report 2017
at:
https: / / www.bmwgroup.com / svr.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Dialogue helps the Company to recognise global trends
at an early stage, achieve sustainability objectives
more effectively and strengthen social commitment.
In the course of this dialogue, the BMW Group gains
a clear picture of how current trends are changing the
business environment and which role the BMW Group
can play. For example, stakeholder dialogue events on
the topic of urban mobility were held during 2017 in
Milan, Chicago, Hangzhou, Mexico City and Delhi.
In order to identify key sustainability topics at an early
stage, the BMW Group also conducts materiality anal-
yses on a regular basis. Moreover, social challenges
are continually monitored and analysed in order to
gauge their significance, from the point of view of both
external and internal stakeholders. The materiality
analysis is used to create a materiality matrix, which
is used as a basis to monitor the strategic direction of
sustainability management. The materiality matrix is
described in greater detail in the Sustainable Value
Report 2017.
Combined Management Report Materiality matrix
• 41
High
relevance
High
materiality
69
Fuel efficiency and CO2 emissions
of vehicles*
Energy efficiency and CO2 emissions
from value creation*
Pollutant emissions
of vehicles*
Occupational health and safety*
Environmental and social standards
in the supply chain / sustainable sourcing*
Human rights*
Prevention of corruption and
anticompetitive behaviour*
Alternative drivetrain technologies*
Product safety*
Connected and autonomous driving*
Mobility concepts
and services*
Data protection*
s
r
e
d
l
o
h
e
k
a
t
s
e
h
t
r
o
f
e
c
n
a
v
e
l
e
R
Medium
materiality
Air emissions from value creation*
Attractive workplace, talent attraction and retention*
Diversity and equal opportunity*
Customer satisfaction*
Water consumption
Waste and water waste
Use of urban space
Responsible marketing and product communication
Responsible financial services
Employee-management relations
Low
materiality
Employee development and training*
Socio-economic impacts on society*
Design for Recycling*
Efficient use of resources in value creation
Political involvement
Development of local companies
Biodiversity
Corporate volunteering
Donations and philanthropy
Corporate citizenship
Low
relevance
Low
relevance
Relevance for the BMW Group
High
relevance
* These areas were rated highly material, as they were among the three topics the respondent stakeholder groups considered most important.
70
Report on
Economic Position
Review of Operations
Sustainability
Top rankings in sustainability ratings
The BMW Group again achieved top rankings in pres-
tigious sustainability ratings in 2017, thereby under-
lining its leading position as a sustainable company.
In the Dow Jones Sustainability Indices (DJSI) rating,
the BMW Group is the only German automobile maker
to have been included once again in the two indices
“World” and “Europe” and the only company in the
sector to have been continuously represented since
the indices were established.
In the CDP rating (formerly the Carbon Disclosure
Project), the Group achieved the best rating for its cli-
mate protection efforts. The BMW Group is therefore
one of only two companies worldwide to have been
listed in the highest category eight times in succes-
sion. The BMW Group also achieved the best rating
in the CDP water rating, which assesses companies’
responsible use of water resources. The Group was
again listed in the British FTSE4Good Index in 2017.
Fleet carbon dioxide emissions reduced
The development of sustainable products and services
is an integral part of the BMW Group’s business mod-
el. The fleet-wide deployment of Efficient Dynamics
technologies is contributing to a continual reduction
in CO2 emissions. The electrification of the fleet con-
tinued to make significant progress in 2017. Due to the
expansion of the model range, annual sales of electri-
fied BMW Group vehicles increased significantly and,
with 103,080 units, surpassed the announced target of
100,000 units. Efficient Dynamics and electrification
form the basis for future compliance with legal CO2
and fuel consumption requirements. Between 1995
and 2017, average CO2 emissions of vehicles of the
Group’s three brands sold in Europe fell by 42 %.
In 2017, the BMW Group’s fleet of new vehicles sold
in Europe (EU-28) consumed an average of 4.6 litres of
diesel and 5.6 litres of petrol per 100 km respectively.
CO2 emissions averaged 122 g / km.
Clean production
Integrated sustainability management in production
processes ensures that resources are used efficiently.
Since 2006, the consumption of resources and emis-
sions per vehicle produced have been reduced by
an average of 53.2 %. The individual figures for the
development since 2006 are as follows:
in %
Energy consumption
Water consumption
Process wastewater
Non-recyclable waste
Solvent emissions
CO2 emissions
2017
– 36.5
– 31.9
– 51.2
– 79.6
– 59.0
– 61.0
In 2017, at 2.17 MWh per vehicle produced, the
BMW Group slightly reduced energy consumed in
the production process compared with the previous
year (2016: 2.21 MWh; – 1.8 %). This was mainly due
to the implementation of new production structures
at Group plants in Shenyang and the installation of
LED lighting throughout the entire Group production
network.
Through measures to boost energy efficiency and the
purchase and in-house generation of electricity from
renewable sources at BMW Group production sites,
production-related CO2 emissions fell significantly
by 24.1 % to 0.41 tonnes per vehicle produced in 2017
compared with the previous year (2016: 0.54 tonnes).
The substantial improvement in CO2 efficiency was
mainly due to improvement in energy efficiency and,
above all, sourcing of power supplies in Germany, the
UK and Austria exclusively from renewable sources.
In 2017, at 2.22 m³ per vehicle produced, water
consumption was slightly below the previous year’s
level (2016: 2.25 m³; – 1.3 %). At 0.40 m³, the volume of
process wastewater per vehicle produced fell by 4.8 %
(2016: 0.42 m³). The amount of non-recyclable waste
from production processes increased from a very low
level the previous year to 3.86 kg per vehicle produced
(2016: 3.51 kg; + 10.0 %) in the period under report.
Solvent emissions were cut by 9.6 % to 1.03 kg per
vehicle produced during 2017 (2016: 1.14 kg).
Overall in 2017, the BMW Group reduced resource
usage and emissions per vehicle in the production
process by an average of 5.3 %, equivalent to a total
cost reduction of € 161 million, mainly due to a slight
improvement in the energy efficiency ratio.
Combined Management Report 71
Sustainability along the value chain
Sustainability criteria also play a key role in the
selection and evaluation of suppliers as well as in
the field of transport logistics. The BMW Group has
therefore integrated comprehensive sustainability
management in its purchasing processes. The Group’s
positive business performance in recent years has also
caused a significant rise in transportation require-
ments worldwide. The BMW Group principle that
production follows the market is an effective method
of significantly reducing the need for transportation,
thus keeping CO2 emissions as low as possible.
Sustainability in human resources policies
In 2017, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
contributes significantly to the high degree of employ-
ee loyalty within the BMW Group and is one of the
reasons for the low staff attrition rate. This enables
the BMW Group to maintain a low level of personnel
recruitment expenditure. Further information on the
attrition rate is provided in the section “Workforce”.
A key reason for the BMW Group’s ongoing success
and an example of the high level of employee identi-
fication are the personal engagement and the ideas
brought forward by staff members. This is demonstrat-
ed by the € 18.2 million saved in 2017 in conjunction
with the ideas management programme CREATE.
Social engagement
In 2017, the BMW Group contributed a total of € 33.4 mil-
lion for social engagement (2016: € 87.8 million), includ-
ing € 16.2 million for donations (2016: € 70.4 million).
The significant decrease compared to 2016 was due to
a one-time donation to the BMW Foundation in honour
of the Company’s centenary year 2016.
72
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Economic Position
Review of Operations
Results of Opera-
tions, Financial Posi-
tion and Net Assets
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
Results of operations
In the financial year 2017, the BMW Group again
achieved year-on-year growth in revenues, deliveries
and profit before tax. The number of BMW, MINI and
BMW Group condensed income statement
• 42
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income and expenses
Profit before financial result
Financial result
Profit before tax
Income taxes
Net profit
Earnings per share of common stock in €
Earnings per share of preferred stock in €
in %
Pre-tax return on sales
Post-tax return on sales
Gross margin
Effective tax rate
Profit before tax for the financial year 2017 was
significantly higher year-on-year.
Rolls-Royce brand vehicles delivered to customers rose
slightly by 4.1 % to 2,463,526* units.
2017
2016
Change in %
98,678
– 78,744
19,934
– 9,560
– 494
9,880
775
10,655
– 1,949
8,706
94,163
– 75,442
18,721
– 9,158
–177
9,386
279
9,665
– 2,755
6,910
13.12
13.14
10.45
10.47
4.8
– 4.4
6.5
– 4.4
–
5.3
–
10.2
29.3
26.0
25.6
25.5
2017
2016
Change in %pts
10.8
8.8
20.2
18.3
10.3
7.3
19.9
28.5
0.5
1.5
0.3
– 10.2
* Includes the joint venture BMW Brilliance Automotive, Shenyang Ltd.
(2017: 384,124 units, 2016: 316,200 units).
Combined Management Report 73
BMW Group revenues increased slightly by 4.8 % year-
on-year to reach € 98,678 million (2016: € 94,163 mil-
lion). This was mainly driven by higher sales volume
of BMW Group vehicles, growth in the leasing and
credit financing contract portfolio and increased sales
of returned leasing vehicles in the Financial Services
business.
Negative currency effects held down revenue growth.
Currency effects were mainly the result of develop-
ments in the average exchange rates of the British
pound and the Chinese renminbi.
Group revenues by region were as follows:
BMW Group revenues by region
• 43
in %
Europe
Asia
Americas
Other regions
Group
2017
2016
45.6
30.1
21.2
3.1
47.1
28.8
20.7
3.4
100.0
100.0
BMW Group cost of sales
• 44
in € million
Manufacturing costs
Cost of sales relating to financial services business
thereof interest expense relating to financial services business
Research and development expenses
thereof amortisation of capitalised development costs
Service contracts, telematics and roadside assistance
Warranty expenses
Other cost of sales
Cost of sales
The Group’s cost of sales was slightly higher than in
the previous year due to volume and mix effects. Costs
relating to the Group’s Financial Services business,
which were significantly higher than the previous
year, also contributed. Revenue growth from the sale
of returned leasing vehicles had a corresponding effect
on cost of sales. Currency effects held down the scale
of the increase.
2017
2016
Change in %
43,877
22,932
1,801
4,920
1,236
2,081
2,041
2,893
43,175
20,723
1,638
4,294
1,222
2,018
2,165
3,067
78,744
75,442
1.6
10.7
10.0
14.6
1.1
3.1
– 5.7
– 5.7
4.4
74
Report on
Economic Position
Results of Opera-
tions, Financial Posi-
tion and Net Assets
BMW Group performance indicators relating to research and development expenses
• 45
in %
Research and development expenses as a percentage of revenues
Research and development expenditure ratio
Capitalisation rate
2017
2016
Change in %pts
5.0
6.2
39.7
4.6
5.5
40.5
0.4
0.7
– 0.8
Due to the continued product offensive, vehicle electri-
fication and development work on autonomous driving,
research and development expenses at € 4,920 million
(2016: € 4,294 million) were significantly up on the pre-
vious year. As a result, total research and development
expenditure – comprising research costs, non-capital-
ised development costs and capitalised development
costs (excluding amortisation thereon) – amounted
to € 6,108 million in the year under report (2016:
€ 5,164 million). The capitalised development costs
were mainly related to the production start of new
models and modules.
Overall, gross profit amounted to € 19,934 million,
reflecting a solid improvement over the previous year.
Selling and administrative expenses were € 402 mil-
lion higher at € 9,560 million, mainly as a result of
the increased workforce and higher marketing and
IT expenses.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled € 4,822 million (2016: € 4,806 million).
The net amount of other operating income and expens-
es in 2017 was € – 494 million (2016: € – 177 million),
with, amongst others, higher allocations to provisions
for litigation and other legal risks contributing to the
year-on-year change.
Profit before financial result (EBIT) increased solidly
and amounted to € 9,880 million (2016: € 9,386 million).
see
note 12
At € 775 million, the financial result was significantly
higher than one year earlier. This was mainly driven
by a € 297 million increase in the result from equity
accounted investments to € 738 million. This was due,
amongst others, to a € 183 million positive earnings
effect following the sale of 15 % of the shares in HERE
International B. V., Amsterdam, by THERE Holding B. V.,
Amsterdam. The earnings contribution from BMW Bril-
liance Automotive Ltd. also increased, driven by sales
volume within a stable competitive environment. In
addition, other financial result improved by € 117 mil-
lion to € 248 million. In contrast to the previous year, the
result on investments in 2017 included no impairment
losses on other investments. Furthermore, the net inter-
est result improved by € 82 million to a net amount of
€ – 211 million. This was mainly due to the lower interest
expense arising from the unwinding of the discount
on non-current provisions and higher liquidity, which
resulted in lower financing requirements in selected
countries.
Overall, profit before tax increased significantly year-
on-year to € 10,655 million (2016: € 9,665 million).
The income tax expense for the year amounted to
€ 1,949 million (2016: € 2,755 million). The significantly
lower year-on-year tax expense was mainly due to the
reduction in the US federal corporate income tax rate
from 35 % to 21 % with effect from 1 January 2018,
which was taken into account in the measurement of
deferred taxes at 31 December 2017. The revaluation
of deferred taxes had an overall positive impact of
€ 977 million on net profit for the year. Further infor-
note 12 of the Group Financial
mation is provided in
Statements.
Combined Management Report Results of operations by segment
BMW Group revenues by segment
• 46
in € million
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
75
2017
2016
Change in %
Currency adjusted
change* in %
88,581
2,283
27,567
7
– 19,760
98,678
86,424
2,069
25,681
6
– 20,017
94,163
2.5
10.3
7.3
16.7
1.3
4.8
3.9
11.1
8.7
–
–
5.1
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year’s figures.
BMW Group profit / loss before tax by segment
• 47
in € million
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
BMW Group margins by segment
• 48
in %
Automotive
Gross profit margin
EBIT margin
Motorcycles
Gross profit margin
EBIT margin
2017
2016
Change in %
8,691
205
2,207
80
– 528
7,916
185
2,166
170
– 772
10,655
9,665
9.8
10.8
1.9
– 52.9
31.6
10.2
2017
2016
Change in %pts
18.4
8.9
20.8
9.1
17.9
8.9
20.8
9.0
0.5
–
–
0.1
76
Report on
Economic Position
Results of Opera-
tions, Financial Posi-
tion and Net Assets
Automotive segment
Automotive segment revenues grew slightly due to
higher sales volumes, with currency factors and a
continued highly competitive business environment
holding revenue growth down. Cost of sales increased
slightly in line with sales volume growth. The gross
profit margin was in line with the previous year.
Profit before financial result increased slightly to
€ 7,863 million (2016: € 7,695 million). The positive
effect of volume growth was offset by increases in
research and development expenses, selling and
administrative expenses and other operating expenses.
At € 828 million, the financial result was significantly
higher than one year earlier. In addition to the effects
from result from equity accounted investments and
other financial result described above, the net interest
result also had a positive impact on the Automotive
segment’s financial result. Thanks to lower year-on-
year interest and similar expenses, the net interest
result improved significantly to a net amount of
€ – 205 million (2016: € – 413 million).
Overall, the Automotive segment reported a solid
increase in pre-tax profit.
Motorcycles segment
Motorcycles segment revenues rose significantly,
mainly reflecting year-on-year volume growth. Higher
sales of optional equipment, spare parts and acces-
sories as well as improved pricing also contributed.
The net amount of other operating income and
expenses deteriorated by € 24 million to a net amount
of € – 11 million. The previous year’s figure benefit-
ed in particular from higher income arising on the
reversal of write-downs than in the year under report.
Profit before tax rose significantly compared to the
previous year thanks to the positive business devel-
opment.
Financial Services segment
The Financial Services segment recorded solid reve-
nue growth due to positive development in the credit
financing business and the higher volume of returned
leasing vehicles sold. The risk profile remained at a
historically favourable level in the year under report.
Segment selling and administrative expenses increased
by € 76 million to € 1,370 million, mainly due to higher
personnel and IT project costs.
The net amount of other operating income and expens-
es improved by € 51 million to € – 17 million. Income
from the reversal of provisions, amongst others, had
a positive effect.
The financial result improved by € 31 million to a net
amount of € 13 million, due, amongst others, to higher
fair value measurement gains within other financial
result.
Profit before tax in the Financial Services segment
was slightly up on the previous year, mainly reflecting
business volume growth and the improved net amount
of other operating income and expenses.
Other Entities segment / Eliminations
Profit before tax in the Other Entities segment fell
significantly year-on-year, mainly due to the lower
net interest result.
Inter-segment eliminations reduced Group profit
before tax by € 528 million. The amount of elimina-
tions was lower than in the previous financial year as
a result of the lower volume of new leasing business
in 2017 and the positive effect of reversals in the
portfolio of leased products (2016: negative impact
of € 772 million).
Combined Management Report 77
Financial position
The cash flow statements for the Group and the
Automotive and Financial Services segments show
the sources and applications of cash flows for the
financial years 2017 and 2016. Cash flows are classi-
fied according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow
statements correspond to the amounts disclosed in
the balance sheet.
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
BMW Group financial position
• 49
in € million
2017
2016
Change
5,909
– 6,163
1,572
– 159
1,159
3,173
– 5,863
4,393
55
1,758
2,736
– 300
– 2,821
– 214
– 599
Cash inflow / outflow from operating activities
Cash inflow / outflow from investing activities
Cash inflow / outflow from financing activities
Effects of changes in exchange rate and composition of Group
Change in cash and cash equivalents
The increase in cash inflow from the Group’s operat-
ing activities was mainly due to the higher net profit
for the year (€ 1,796 million) and lower additions to
leased products (€ 1,392 million), compared to the
previous year.
The increase in cash outflow from the Group’s invest-
ing activities mainly reflects higher overall invest-
ments in intangible assets and property, plant and
equipment (€ 1,289 million), partially offset by higher
cash proceeds from the disposal of investments and
other business units (€ 1,096 million).
The Group’s financing activities show a € 1,913 million
reduction in cash inflows from the issue of bonds and
a € 1,000 million decrease in cash outflows for bond
repayment. In addition, cash inflows from other finan-
cial liabilities decreased by € 4,261 million. Changes
in commercial paper gave rise to net cash inflow of
€ 953 million (2016: net cash outflow of € 1,632 million).
The cash outflow from investing activities exceeded
the cash inflow from operating activities by € 254 mil-
lion in the financial year 2017. In the previous year,
the shortfall was higher at € 2,690 million.
78
BMW Group change in cash and cash equivalents
• 50
Report on
Economic Position
Results of Opera-
tions, Financial Posi-
tion and Net Assets
in € million
15,000
10,000
5,000
0
+ 5,909
15,000
7,880
– 6,163
– 159
+ 1,572
9,039
10,000
5,000
0
Cash and
cash
equivalents
31. 12. 2016
Cash inflow
from
operating
activities
Cash outflow
from
investing
activities
Cash inflow
from
financing
activities
Currency
translation,
changes in
Group composition
Cash and
cash
equivalents
31. 12. 2017
Free cash flow for the Automotive segment was as
follows:
in € million
2017
2016
Change
Cash inflow / outflow from operating activities
Cash inflow / outflow from investing activities
Net investment in marketable securities and investment funds
Free cash flow Automotive segment
10,848
– 6,544
155
4,459
11,464
– 5,432
– 240
5,792
– 616
– 1,112
395
– 1,333
The decrease in cash inflow from the Automotive seg-
ment’s operating activities was mainly due to higher
net outflow for other operating assets and liabilities.
Cash outflow from investing activities was influenced
in particular by the overall € 1,273 million increase in
investments in intangible assets and property, plant
and equipment.
Net financial assets of the Automotive segment com-
prise the following:
in € million
2017
2016
Change
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.
7,157
4,336
9,774
21,267
4,794
4,147
12,077
21,018
– 1,480
19,787
– 1,498
19,520
2,363
189
– 2,303
249
18
267
Combined Management Report Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
in € million
2017
2016
Change
Cash inflow / outflow from operating activities
Cash inflow / outflow from investing activities
Cash inflow / outflow from financing activities
Net
– 6,384
937
4,334
– 9,844
– 102
11,601
– 1,113
1,655
3,460
1,039
– 7,267
– 2,768
79
Cash outflow from operating activities in the Finan-
cial Services segment is driven primarily by the cash
flows relating to leased products and receivables from
sales financing. Cash inflow from investing activities
results mainly from cash proceeds from the disposal
of investments and other business units (€ 970 million).
Cash inflow from financing activities is mainly driven
by the change in other financial liabilities.
Refinancing
A broad range of instruments on international money
and capital markets is used to refinance worldwide
operations. Funds raised are used almost exclusively to
finance the BMW Group’s Financial Services business.
The overall objective of Group financing is to ensure at
all times the solvency of the BMW Group. This leads
to three areas of focus:
1. Ability to act through permanent access to strate-
gically important capital markets
2. Autonomy through the diversification of refi-
nancing instruments and investors
3. Focus on value through optimisation of financing
costs
Financing measures undertaken centrally ensure
access to liquidity for the Group’s operating subsid-
iaries at standard market conditions and consistent
credit terms. Funds are acquired in line with a target
liability structure, comprising a balanced mix of financ-
ing instruments. The use of longer-term financing
instruments to finance the Group’s financial services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid liquidity risk in the
portfolio. This conservative financial approach also
supports the Group’s rating. Further information
is provided in the section Liquidity risks within the
Report on Outlook, Risks and Opportunities.
Thanks to its good ratings and the high level of accept-
ance it enjoys on capital markets, the BMW Group
was again able to refinance operations at favourable
conditions on debt capital markets during the finan-
cial year 2017. In addition to the issue of bonds, loan
notes and private placements, commercial paper
was also issued. As in previous years, all issues were
in high demand, not only from private but also in
particular from institutional investors. In addition,
retail customer and dealership financing receivables
and rights and obligations from leasing contracts
are securitised in the form of asset-backed securi-
ties (ABS) financing arrangements. Specific banking
instruments, such as customer deposits used by the
Group’s own banks in Germany and the USA, are
also used for financing. Loans are also taken out with
international banks.
80
Report on
Economic Position
Results of Opera-
tions, Financial Posi-
tion and Net Assets
BMW Group composition financial liabilities
• 51
in € million
Derivate instruments 1,090
Commercial paper 4,461
Liabilities to banks
12,658
Liabilities
from customer
deposits (banking)
13,572
Other 1,132
Bonds
44,880
Asset-backed
financing
transactions
16,855
BMW Group financial liabilities by maturity
• 52
in € million
50,000
42,326
41,100
44,144 43,865
25,000
0
Maturity (years)
11,261 9,683
within
1
between
1– 5
later
than 5
2016 2017
2016 2017
2016 2017
In 2017, the BMW Group issued four euro bench-
mark bonds on the European capital market with
a total issue volume of € 3.75 billion, as well as
bonds on the US capital market with a total issue
volume of US$ 2.20 billion. Bonds were also issued in
British pounds, US dollars, Canadian dollars, Indian
rupees, South Korean won and Norwegian krone for
a total amount of € 1.17 billion. Private placements
totalling € 4.50 billion were also issued.
A total of twelve public ABS transactions were exe-
cuted in 2017, including three in China, two each
in Germany and the USA, and one each in Canada,
South Korea, South Africa, the UK and Switzerland,
with a total volume equivalent to € 6.9 billion. Fur-
ther funds were also raised via new ABS conduit
transactions in Japan, the UK and the USA totalling
€ 2.4 billion. Other transactions remain in place in
Germany, Switzerland, South Korea, South Africa
and Australia, amongst others.
The following table provides an overview of amounts*
utilised at 31 December 2017 in connection with the
BMW Group’s money and capital market programmes:
Programme
in € billion
Programme
framework
Amount
utilised*
Euro Medium Term Notes
Australian Medium Term Notes
Commercial Paper
50.0
1.6
13.0
34.7
0.3
4.4
* Measured at exchange rates at the relevant transaction dates.
At 31 December 2017, liquidity stood at a solid level
of € 14.5 billion.
The BMW Group also has access to a syndicated credit
line which was newly agreed in July 2017. The syn-
dicated credit line of € 8 billion has a minimum term
to July 2022 and is made available by a consortium of
44 international banks. The credit line was not being
utilised at 31 December 2017.
Further information with respect to financial liabilities
is provided in
notes 29, 33 and 37 of the Group
Financial Statements.
see
notes 29,
33 and 37
Combined Management Report Net assets
BMW Group condensed balance sheet at 31 December
• 53
81
in € million
Assets
Intangible assets
Property, plant and equipment
Leased products
Investments accounted for using the equity method
Other investments
Receivables from sales financing
Financial assets
Deferred and current tax
Other assets
Inventories
Trade receivables
Cash and cash equivalents
Total assets
equity A nd liABilities
Equity
Pension provisions
Other provisions
Deferred and current tax
Financial liabilities
Trade payables
Other liabilities
Total equity and liabilities
Group
2017
2016
Change in %
Currency adjusted
change* in %
Proportion of
balance sheet
total in %
2017
9,464
18,471
36,257
2,767
690
80,434
10,334
3,493
7,160
12,707
2,667
9,039
8,157
17,960
37,789
2,546
560
78,260
9,770
4,265
6,682
11,841
2,825
7,880
16.0
2.8
– 4.1
8.7
23.2
2.8
5.8
– 18.1
7.2
7.3
– 5.6
14.7
16.2
5.3
2.0
8.7
24.1
9.1
6.8
– 6.4
10.0
11.1
– 1.8
18.2
4.9
9.5
18.7
1.4
0.4
41.6
5.3
1.8
3.7
6.6
1.4
4.7
193,483
188,535
2.6
7.6
100.0
54,548
3,252
11,750
3,365
94,648
9,731
16,189
47,363
4,587
10,918
3,869
97,731
8,512
15,555
15.2
– 29.1
7.6
– 13.0
– 3.2
14.3
4.1
19.1
– 27.4
13.0
10.3
1.8
16.7
10.0
28.2
1.7
6.1
1.7
48.9
5.0
8.4
193,483
188,535
2.6
7.6
100.0
* The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year’s figures.
The balance sheet total of the BMW Group increased
slightly compared to 31 December 2016. Adjusted for
currency effects, the increase was solid. Currency
effects arose primarily from the period-end exchange
rates of the US dollar, Chinese renminbi and British
pound against the euro.
Intangible assets increased significantly compared
to the end of 2016. Within this item, the carrying
amount of capitalised development costs rose by
€ 1,188 million as a result of the continued product
offensive, vehicle electrification and development
work on autonomous driving.
Leased products decreased slightly compared to
31 December 2016. Adjusted for currency effects,
however, they increased slightly. The portfolio of
leasing contracts grew by 3.8 % to 1,744,297 contracts,
with increases recorded in particular in France, Spain
and Germany.
Receivables from sales financing were slightly higher
compared to 31 December 2016. Adjusted for currency
effects, however, there was a solid increase, particu-
larly in the UK and China. A total of 1,224,546 new
credit financing contracts were signed in 2017 and the
contract portfolio grew by 5.3 % to 3,181,931 contracts.
82
Report on
Economic Position
Results of Opera-
tions, Financial Posi-
tion and Net Assets
A solid increase in inventories was recorded compared
to the end of 2016. Adjusted for currency effects the
increase was significant. The increase was primarily due
to finished goods, mainly relating to stocking up effects
in connection with the introduction of new models,
amongst others, the 5 Series and the X3 and X1 models.
Financial assets increased solidly compared to
31 December 2016, mainly due to the positive devel-
opment of currency and commodity derivatives.
Cash and cash equivalents grew significantly by
€ 1,159 million, compared to one year earlier.
Balance sheet structure – Group
• 54
Balance sheet total in € billion
200
133
66
0
193
189
193
189
28 %
25 % Equity
Non-current assets 63 %
65 %
Current assets 37 %
thereof cash and cash equivalents 5 %
35 %
4 %
36 %
39 % Non-current provisions and liabilities
36 %
36 % Current provisions and liabilities
2017
2016
2017
2016
Balance sheet structure – Automotive segment
• 55
Balance sheet total in € billion
100
66
33
0
94
89
94
89
Non-current assets 46 %
Current assets 54 %
thereof cash and cash equivalents 8 %
48 %
52 %
5 %
42 %
18 %
41 % Equity
19 % Non-current provisions and liabilities
40 %
40 % Current provisions and liabilities
2017
2016
2017
2016
200
133
66
0
100
66
33
0
Combined Management Report Group equity rose by € 7,185 million to € 54,548 mil-
lion. Equity increased year-on-year mainly as a result
of the net profit attributable to shareholders of
BMW AG amounting to € 8,620 million, fair value gains
on derivative financial instruments amounting to
€ 1,914 million and the positive impact of remeasure-
ments of the net defined benefit liability for pension
plans amounting to € 693 million, due mainly to the
revaluation of plan assets. The dividend payment of
€ 2,300 million, negative currency translation effects
of foreign operations amounting to € 1,171 million
and deferred taxes on fair value changes recognised
directly in equity amounting to € 815 million had a
negative impact on equity.
83
31. 12. 2017
31. 12. 2016
Change in %pts
28.2
42.0
10.7
25.1
41.3
8.0
3.1
0.7
2.7
BMW Group equity ratio
• 56
in %
Group
Automotive segment
Financial Services segment
Pension provisions decreased significantly compared
to the end of the financial year 2016. The decrease
was mainly due to gains on plan assets as well as
gains from the closing of defined benefit plans in the
UK. A transfer from plan assets for pre-retirement
part-time working arrangements to plan assets for
pension plans brought about a further reduction in
pension provisions.
Financial liabilities fell slightly compared to 31 Decem-
ber 2016. Adjusted for currency effects, they increased
slightly. The increase was mainly due to the issue of
bonds and commercial paper. In addition, new ABS
transactions were concluded in various countries.
Changes in derivatives and lower liabilities to banks
kept down the increase in financial liabilities.
The significant increase in trade payables mainly
reflects higher production volumes and model start-
ups.
Overall, the results of operations, financial position
and net assets position of the BMW Group continued
to develop positively during the year under report.
84
Report on
Economic Position
Results of Opera-
tions, Financial Posi-
tion and Net Assets
Value added statement
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the net
value added calculation. The allocation statement
shows the value added of each of the participants
involved in the value added process. The bulk of
the net value added is related to employees. The
proportion remaining in the Group is retained to
finance future operations. The gross value added
amount treats depreciation as a component of value
added which, in the allocation statement, would be
treated as internal financing.
Net valued added by the BMW Group remained at a
high level in the financial year 2017.
BMW Group value added statement
• 57
Work perFormed
Revenues
Financial income
Other income
Total output
Cost of materials*
Other expenses
Bought-in costs
Gross value added
Depreciation and amortisation of total tangible,
intangible and investment assets
Net value added
AllocAtion
Employees
Providers of finance
Government / public sector
Shareholders
Group
Minority interest
Net value added
2017
in € million
2017
in %
2016
in € million
2016
in %
Change
in %
98,678
1,123
720
98.2
1.1
0.7
94,163
875
670
98.4
0.9
0.7
100,521
100.0
95,708
100.0
5.0
51,043
16,045
67,088
33,433
8,455
24,978
12,052
2,066
2,154
2,630
5,990
86
50.8
16.0
66.8
33.2
8.4
24.8
48.3
8.3
8.6
10.5
24.0
0.3
50,279
13,502
63,781
31,927
8,304
23,623
11,535
1,965
3,213
2,300
4,563
47
52.5
14.1
66.6
33.4
8.7
24.7
48.8
8.3
13.7
9.7
19.3
0.2
24,978
100.0
23,623
100.0
5.2
4.7
5.7
4.5
5.1
– 33.0
14.3
31.3
83.0
5.7
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
Combined Management Report
85
BMW Group value added 2017
• 58
in %
Depreciation and amortisation 8.4
16.0 Other expenses
Cost of materials 50.8
24.8 Net value added
48.3 % Employees
8.3 % Providers of finance
8.6 % Government / public sector
10.5 % Shareholders
24.0 % Group
0.3 % Minority interest
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and is
described in the Report on Economic Position section
of the Combined Management Report.
BMW AG develops, manufactures and sells automobiles
and motorcycles as well as spare parts and accessories
manufactured in-house, by foreign subsidiaries and by
external suppliers, and performs services related to
these products. Sales activities are carried out primar-
ily through branches, subsidiaries, independent deal-
erships and importers. In 2017, BMW AG increased
deliveries by 138,389 units to 2,494,115 units. This
figure includes 396,749 units relating to series sets
supplied to the joint venture BMW Brilliance Automo-
tive Ltd., Shenyang, an increase of 91,023 units over
the previous year. At 31 December 2017, BMW AG
employed a workforce of 87,940 people, 2,186 more
than one year earlier.
86
Report on
Economic Position
Comments on
Financial Statements
of BMW AG
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The comments on the
BMW Group and Automotive segment provided in
earlier sections apply to BMW AG, unless presented
differently in the following section. The Financial
Statements of BMW AG are drawn up in accordance
with the provisions of the German Commercial Code
(HGB) and the relevant supplementary provisions of
the German Stock Corporation Act (AktG).
The key financial and non-financial performance
indicators for BMW AG are essentially identical and
concurrent with those of the Automotive segment
of the BMW Group. These are described in detail
in the Report on Economic Position section of the
Combined Management Report.
Differences between the accounting treatment of the
German Commercial Code and International Financial
Reporting Standards (IFRS), according to which the
BMW Group Financial Statements are prepared, are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions, and the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
Combined Management Report Results of operations
BMW AG Income Statement
• 59
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
Income taxes
Profit after income tax
Other taxes
Net profit
Transfer to revenue reserves
Unappropriated profit available for distribution
87
2017
2016
79,215
– 62,817
16,398
– 3,958
– 2,733
– 5,168
– 303
1,081
– 541
– 1,563
3,213
– 16
3,197
– 567
2,630
75,350
– 60,946
14,404
– 3,635
– 2,504
– 4,504
– 137
1,015
– 35
– 1,308
3,296
– 19
3,277
– 977
2,300
Revenues rose by 5.1 % year-on-year, mainly reflecting
increased deliveries of the BMW 5 Series. In geograph-
ical terms, the increase mainly related to Asia and
Europe. Revenues amounted to € 79,215 million (2016:
€ 75,350 million), of which Group internal revenues
accounted for € 59,736 million (2016: € 56,412 million)
or 75.4 % (2016: 74.9 %).
Cost of sales increased by 3.1 % to € 62,817 million,
mostly due to the higher cost of materials. Gross profit
improved by € 1,994 million to € 16,398 million.
Selling and administrative expenses increased over-
all year-on-year, reflecting an increase in workforce,
IT projects and increased marketing costs.
Research and development expenses related mainly to
new vehicle models in conjunction with the product
offensive (including new X models), expenses for the
development of drivetrain systems and innovations,
for example in connection with the electrification of
vehicles and the further development of autonomous
driving. Compared to the previous year, research and
development expenses increased by 14.7 %.
The net amount of other operating income and
expenses deteriorated by € 166 million to € – 303 mil-
lion, with the year-on-year change mainly attributable
to higher net expenses for financial transactions as
well as legal disputes.
Results on investments benefited from higher profit
transfers from Group companies. By contrast, the
financial result deteriorated by € 506 million, mainly
due to higher interest expenses for pension liabilities
and lower income from the corresponding plan assets.
The reversal of impairment losses on the investment
in SGL Carbon SE, however, had a positive impact on
the financial result.
The expense for income taxes relates primarily to
current tax for the financial year 2017.
After deducting the expense for taxes, the Company
reported a net profit of € 3,197 million compared to
€ 3,277 million in the previous year.
88
Report on
Economic Position
Comments on
Financial Statements
of BMW AG
Financial and net assets position
BMW AG Balance Sheet at 31 December
• 60
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 A nd 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
2017
2016
288
11,455
3,676
15,419
4,643
766
7,641
2,827
4,185
4,218
310
11,163
3,238
14,711
4,260
667
6,001
2,525
3,846
2,676
24,280
19,975
483
1,290
430
1,183
41,472
36,299
658
2,153
9,605
2,630
657
2,127
9,038
2,300
15,046
14,122
29
139
8,469
8,608
965
5,619
8,187
333
30
93
7,606
7,699
995
5,030
5,951
406
15,104
12,382
2,685
41,472
2,066
36,299
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
amounted to € 2,628 million (2016: € 2,346 million),
up by 12.0 % compared to the previous year. Depre-
ciation and amortisation amounted to € 2,350 million
(2016: € 2,233 million).
The carrying amount of investments increased to
€ 3,676 million (2016: € 3,238 million), mainly as a
result of a share capital increase at BMW Automotive
Finance (China) Co., Ltd., Beijing. A previously rec-
ognised impairment loss of € 70 million on the invest-
ment in SGL Carbon SE, Wiesbaden, was reversed
in 2017, since the reasons for valuing the investment
at the lower market value no longer existed at the
balance sheet date.
Combined Management Report At € 4,643 million, inventories were higher than at the
end of the previous year (2016: € 4,260 million), due
to an increase in finished goods.
Receivables from subsidiaries, most of which relate to
intragroup financing receivables, rose to € 7,641 mil-
lion (2016: € 6,001 million).
The increase in other receivables and other assets to
€ 2,827 million (2016: € 2,525 million) was mainly due
to higher receivables from companies in which an
investment is held, as well as higher tax receivables.
Equity increased by € 924 million to € 15,046 million.
The equity ratio fell from 38.9 % to 36.3 %, mainly due
to the increased balance sheet total.
In order to secure pension obligations, investments
in fund assets totalling € 498 million were transferred
to BMW Trust e. V., Munich, in conjunction with a
Contractual Trust Arrangement (CTA). Fund assets are
offset against the related guaranteed obligations. The
resulting surplus of assets over liabilities is reported in
the BMW AG balance sheet on the line item Surplus of
pension and similar plan assets over liabilities.
Provisions for pensions increased from € 93 million
to € 139 million, after offsetting of pension liabilities
with pension assets.
Other provisions increased year on year, mainly due
to increased provisions for pre-retirement part-time
arrangements. With effect from 2017, fund assets
relating to pre-retirement part-time working arrange-
ments are secured by bank guarantees, with the result
that at the reporting date no offsetting amount was
recorded for corresponding assets. Also, provisions
were increased as a result of further additions to the
provision for litigation and liability risks.
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
Liabilities to subsidiaries comprise mainly intragroup
financial liabilities.
Deferred income increased by € 619 million to
€ 2,685 million and included mainly amounts relating
to services still to be performed related to service and
maintenance contracts.
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept. This involves concentrating a significant part
of the Group’s liquidity at BMW AG. An important
instrument in this context is the cash pool based at
BMW AG. The liquidity position reported by BMW AG
therefore reflects the global activities of BMW AG and
other Group companies.
89
Cash and cash equivalents increased by € 1,542 million
to € 4,218 million, mainly due to the surplus from
operational activities and the increase in financial
liabilities. Investment in tangible, intangible and
investment assets and in marketable securities, as
well as payment of the dividend from the previous
year, had an offsetting effect.
Risks and opportunities
BMW AG’s performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage.
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Account-
ing and Financial Reporting Processes within the
Combined Management Report.
Outlook
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG with
respect to its financial and non-financial performance
indicators correspond largely to the BMW Group’s
outlook for the Automotive segment. This is described
in detail in the Report on Outlook, Risks and Oppor-
tunities section of the Combined Management Report.
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin,
has issued an unqualified audit opinion on the finan-
cial statements of BMW AG, of which the balance sheet
and the income statement are presented here. The
BMW AG financial statements for the financial year
2017 will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. These
financial statements are available from BMW AG,
80788 Munich, Germany.
90
Report on Outlook,
Risks and
Opportunities
Outlook
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
Positive overall outlook for
global economy
Strong business performance
expected to continue in 2018
Outlook foresees increase in deliveries
and revenues
OUTLOOK
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the significant risks and opportunities, from a
Group management perspective. In line with the
Group’s internal management system, the outlook cov-
ers a period of one year. Risks and opportunities are
managed on the basis of a two-year assessment. The
report on risks and opportunities therefore addresses
a period of two years.
The report on outlook, risks and opportunities con-
tains forward-looking statements. These are based
on the BMW Group’s expectations and assessments
and are subject to uncertainty. As a result, actual out-
comes can deviate either positively or negatively – for
example on account of political and economic devel-
opments – from the expectations described below.
Further information is provided in the section Risks
and Opportunities.
Assumptions used in the outlook
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that time. The outlook takes
account of all information available at the time of
reporting and which could have an effect on the overall
performance of the Group. The expectations contained
in the outlook are based on the BMW Group’s forecasts
for 2018 and reflect its most recent status. The basis
and principal assumptions of the forecasts are set
out below. They represent a consensus of opinions
of leading organisations, such as economic research
institutes and banks. These assumptions flow into the
planning basis of the BMW Group.
The continuous forecasting process ensures the
BMW Group’s ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The risks and opportu-
nities discussed therein are relevant for all of the
BMW Group’s performance indicators and could result
in variances between the outlook and actual outcomes.
Combined Management Report 91
In 2018, China is likely to focus on reducing credit
growth and stimulating the services sector. Greater
diversification of economic sectors could lead to a
reduction in overcapacities. Against this backdrop,
GDP is forecast to rise by 6.5 %. Many Chinese indus-
trial companies are confronted with high debt levels,
a situation that could also threaten financial market
stability. Safeguarding market stability therefore
remains one of the most urgent tasks for the Chinese
government. The risk of a significant economic down-
turn in China cannot therefore be ruled out.
The Japanese economy is expected to grow by 1.3 %
in 2018. Moderate demand for capital goods as well
as consumer spending could help drive growth. The
weak yen is also likely to create momentum for exports.
If India succeeds in implementing further reforms
aimed at promoting growth, economic output could
rise by even more than the 7.3 % forecast for 2018.
Economic growth is also forecast for Russia (+ 1.9 %)
and Brazil (+ 2.5 %), supported by higher raw material
prices and solid corporate investment.
Economic outlook
Despite an array of uncertainties, particularly in
the area of international trade, the overall outlook
for the world economy is positive. Global economic
growth is forecast to be around 3.9 % in 2018. The
exit negotiations between the EU and the UK and the
current US administration’s future trade policy remain
factors that could at least significantly slow down the
current upward trend in the event of unfavourable
developments. Moreover, financial market stability
could be jeopardised by over-restrictive monetary
policies in the USA, high levels of corporate debt in
China and excessive sovereign debt in Japan as well
as some eurozone countries. Further information on
political and global economic risks is also available in
the section Risks and Opportunities.
After a year of robust expansion, economic growth
in the eurozone is forecast to slow down slightly to
2.2 % in 2018. Germany, Europe’s largest economy, is
expected to grow at a similar rate (+ 2.3 %). Economic
growth of the other member states in the eurozone
is also predicted to develop positively. France (+ 2.0 %)
and Italy (+ 1.4 %) are likely to see an increase in GDP
over the outlook period. Based on an expected growth
rate of 2.7 %, the Spanish economy is set to grow faster
than the eurozone average. The economies of both
Portugal and Greece are also expected to grow at
around 2.1 %, enabling a reduction in unemployment.
The UK’s economic performance in the outlook period
will be influenced significantly by the progress of EU
exit negotiations. In view of the official leaving date
in March 2019 and with negotiations making slow
progress to date, the UK economy is preparing for
various scenarios. British companies are considering,
amongst others, relocation of operations to the EU.
The lack of planning certainty is weighing on compa-
nies and private households alike. Consequently, the
economy is expected to slow further with a growth
rate of only 1.4 % for the current year.
In the USA, the administration’s tax-cutting pro-
gramme is likely to give companies greater flexibility
for investment and thereby boost business expansion.
These factors are expected to have a slightly positive
impact on the economy, which is expected to expand
by 2.6 % in 2018. The US Federal Reserve will most
likely continue pursuing a more restrictive monetary
policy. The prerequisite is that domestic demand in
private households as well as corporate and public
sectors remains robust and prices rise.
92
Report on Outlook,
Risks and
Opportunities
Outlook
Currency markets
Currencies of particular importance for the interna-
tional operations of the BMW Group are the US dollar,
the Chinese renminbi, the Japanese yen and the Brit-
ish pound. All of these major currencies are expected
to remain volatile in 2018.
A significantly more restrictive monetary policy
on the part of the US Federal Reserve as well as
economic stimulus through tax cuts for companies
and private households could raise the value of the
US dollar against the euro. However, a simultaneous
economic upturn in the eurozone, falling unemploy-
ment and rising inflation rates could lead the ECB
to gradually scale down its expansionary monetary
policy. As a result, the euro would probably remain at
a similar value against the US dollar as in the second
half of 2017.
The strong economic ties between China and the USA
make it likely that the Chinese renminbi will follow
a similar trend to the US dollar. As a result, the ren-
minbi / euro exchange rate is likely to move sideways
in 2018, subject to volatility.
The performance of the British pound will be deter-
mined largely by the progress made in negotiations
between the EU and the UK. If the negotiating parties
are able to agree on withdrawal terms and successfully
conclude talks on trade relations for the period after
March 2019 or for a transition period, the pound could
appreciate moderately against the euro. If, on the
other hand, planning uncertainty persists, the pound
may come under additional downward pressure.
The central bank in Japan continues to pursue a highly
expansionary monetary policy. For this reason, the
value of the yen against the euro is likely to be almost
unchanged compared to the year-end closing rate or
only slightly lower.
Currencies in numerous emerging economies are like-
ly to remain under pressure against the US dollar as a
result of the ongoing normalisation of US monetary
policy. This applies in particular to countries that
export raw materials, such as Russia, Brazil and South
Africa. By contrast, any increase in raw material prices
will tend to have a positive impact on these economies.
International automobile markets
New registrations are forecast to increase slightly
by around 1.5 % worldwide to 89.0 million units in
2018, with growth expected from emerging markets
in particular.
The automobile market in Europe is unlikely to benefit
from the global economic recovery, and registrations
are predicted to fall slightly overall (15.6 million
units; – 0.6 %). New registrations in Germany are
forecast to decrease by 1.2 % to 3.4 million units.
The French market is forecast to be flat (2.1 million
units; – 0.4 %). In Italy, the automobile market is set to
slow after a strong year, with growth in 2018 expected
at only 1.2 % (2.0 million units). In the UK the forecast
for new registrations is negative. A further fall of
approximately 4.5 % to around 2.4 million units is
expected here.
According to forecasts, the downward trend in the USA
is set to continue. New registrations are expected to
be down by 2.5 % to 16.8 million units.
In China, a 3.3 % increase is expected in passenger
car registrations to around 25.5 million units. The
automobile market in Japan is likely to see moderate
contraction in 2018. Registrations are forecast to be
down 2.7 % year-on-year to approximately 4.9 million
units.
Registrations in Russia are expected to rise by around
10 % in 2018 to 1.6 million units on the back of eco-
nomic recovery. In Brazil, registration figures are also
expected to increase in the current year by about 10 %
to 2.0 million units.
International motorcycle markets
The world’s motorcycle markets in the 250 cc plus class
are expected to remain stable overall in 2018, with
individual markets continuing to develop divergently.
In Europe, the BMW Group expects the major markets
of France, Italy and Spain to continue their positive
trend, while the German market is likely to show a
stable development compared to the previous year.
Markets in the UK and the USA could see a further
slight contraction after the previous year’s decline.
Combined Management Report 93
International interest rate environment
The global economic upturn is expected to gain further
momentum in 2018. While successive rises in bench-
mark interest rates seem likely in the USA, tightening
of monetary policies in other industrialised countries
is likely to be carried out with great caution.
The US Federal Reserve is expected to raise interest
rates in three or four increments in the course of 2018
in line with its policy of increasing interest rates.
The ECB is predicted to maintain its expansionary
monetary policy in 2018, while continuing to reduce
the volume of monthly bond purchases.
The uncertainty surrounding the ongoing Brexit nego-
tiations is expected to continue to weigh on the UK
economy in 2018. The Bank of England is expected
to adopt initially a cautious approach and intervene
where necessary.
see
note 5
Growth in China could weaken moderately in 2018.
Japan’s central bank is likely to maintain its ultra-
expansive monetary policy in order to drive inflation
and stimulate the economy.
Expected consequences for the BMW Group
Future developments on international automobile
markets have a direct impact on the BMW Group.
While competition could intensify in contracting mar-
kets, new opportunities may appear in growth regions.
Challenges in the competitive environment will have a
significant effect on sales volumes in some countries.
Due to its global business model, the BMW Group is
well placed at all times to exploit opportunities, even at
short notice. Coordination between the Group’s sales
and production networks also enables it to balance
out the impact of unforeseeable developments in the
various regions. Investments in markets important for
the future also form a basis for further growth, while
simultaneously strengthening the global presence of
the BMW Group. Thanks to its three premium brands –
BMW, MINI and Rolls-Royce – the BMW Group
expects to continue performing successfully in 2018.
* Adjusted in
accordance with
IFRS 15.
Outlook for the BMW Group
Application of International Financial Reporting
Standards IFRS 9 (Financial Instruments) and IFRS 15
(Revenue from Contracts with Customers) is mandato-
ry with effect from 1 January 2018. While application
of IFRS 15 requires adjusted comparative figures for
the financial year 2017, no adjustment of comparative
figures is required in the case of IFRS 9. In order to
ensure a transparent presentation of changes in key
financial performance indicators, the outlook shows
values adjusted in accordance with IFRS 15 as well as
those actually reported for 2017. With regard to key
financial performance indicators for 2018, the outlook
is based on values for 2017 adjusted in accordance
with IFRS 15. Further information on IFRS 9 and
note 5 of the Group Financial
IFRS 15 is provided in
Statements.
Group
Profit before tax expected at previous year’s level
Competition on international automobile markets
is set to remain intense during the current year.
Furthermore, political and economic developments
in Europe remain uncertain. Above all, this is due
to the unforeseeable effects of Brexit negotiations
between the EU and the UK. The economic policy
of the US administration also remains difficult to
predict. Further information is provided in Risks and
Opportunities in the section Macroeconomic risks
and opportunities.
Nevertheless, the BMW Group intends to continue
its strong business performance in 2018. Notable
contributions are likely to come from new vehicles
as well as successful established models. At the same
time, investments in future-oriented projects remain
high, including continued electrification of vehicles,
digitalisation and autonomous driving, amongst
others. The production network will also be further
expanded during the outlook period. Due to the
challenges, Group profit before tax is expected to be
in line with the previous year’s level (2017 adjusted:
€ 10,675 * million).
Workforce size at year-end: slight increase expected
The need for qualified staff across the BMW Group
will remain high in 2018. Above all, projects relating
to vehicle electrification and autonomous driving,
growth in the automobile and motorcycle business
and the expansion of financial and mobility services
will lead to a slight increase in the workforce, accord-
ing to current estimates (2017: 129,932 employees).
94
Report on Outlook,
Risks and
Opportunities
Outlook
eBit margin in target range between 8 and 10 %
expected
An EBIT margin again within a range of 8 to 10 %
is expected for the Automotive segment (2017
adjusted: 9.2 4 %).
Return on capital employed:
significant decrease expected
Segment RoCE is forecast to lie significantly below
the previous year’s level (2017 adjusted: 77.7 4 %).
The decrease is attributable, among other things, to
increasing investments in the electrification of the
vehicle fleet, digitalisation and the expansion and
renewal of the model portfolio. However, the long-
term target RoCE of at least 26 % for the Automotive
segment will be significantly surpassed.
In view of the introduction of IFRS 16 (Leases) as of
1 January 2019, the future significance of RoCE as a
performance indicator, as opposed to an operational
management tool, is under review.
Motorcycles segment
Deliveries to customers: solid increase expected
The BMW Group expects the positive trend in the
Motorcycles segment to continue. The renewal of the
product range in the previous year, and new models
introduced at the EICMA 2017, such as the F 750 GS,
F 850 GS and K 1600 Grand America, should all have
a positive impact. Furthermore, the Scooter C 400 X
expands the product range for urban environments.
Overall, a solid increase in deliveries of BMW motor-
cycles to customers is forecast (2017: 164,153 units).
eBit margin in target range between 8 and 10 %
expected
The segment EBIT margin in 2018 is expected to
lie within the target range between 8 and 10 %
(2017: 9.1 %).
Return on capital employed: slight increase
expected
The Motorcycles segment RoCE is expected to increase
slightly year-on-year (2017: 34.0 %). The long-term
target RoCE of 26 % for the Motorcycles segment will
therefore be surpassed.
4 Adjusted in
accordance with
IFRS 15.
1 Includes the
joint venture
BMW Brilliance
Automotive,
Shenyang Ltd.
(2017: 384,124
units).
Automotive segment
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in sales of BMW, MINI and Rolls-Royce
brand vehicles and aims to occupy a leading posi-
tion in the global premium segment again in 2018.
Balanced growth in major sales regions will help to
even out volatilities in individual markets. Assuming
economic conditions do not deteriorate, deliveries to
customers are forecast to rise slightly to a new high
(2017: 2,463,526 1 units).
Important contributions to sustained growth can be
expected, amongst others, from the new BMW 6 Series
Gran Turismo, the new BMW X3 (both launched in
November 2017) and the BMW X2 (available since
March 2018). The extended-wheelbase version of the
BMW 5 Series in China will also provide additional
impetus. The new BMW X4, model revisions of the
BMW 2 Series Active Tourer and Gran Tourer (includ-
ing the Active Tourer plug-in hybrid) (BMW 225xe
iPerformance Active Tourer: fuel consumption in
l / 100 km (combined) 2.5 – 2.3 / / CO2 emissions in
g / km (combined) 57 – 52 / / Electric power consump-
tion in kWh / 100 km (combined) 13.7 – 13.4) and the
BMW i8 Coupé (BMW i8 Coupé: fuel consumption in
l / 100 km (combined) 1.9 / / CO2 emissions in g / km
(combined) 42 / / Electric power consumption in
kWh / 100 km (combined) 14.0) will go on sale during
the spring. The launch of the new BMW i8 Roadster
(BMW i8 Roadster: fuel consumption in l / 100 km (com-
bined) 2.1 / / CO2 emissions in g / km (combined) 46 / /
Electric power consumption in kWh / 100 km (com-
bined) 14.5) and the BMW 8 Series Coupé are set
to follow later in the year. Model revisions of the
MINI Hatch (3- and 5-door) and MINI Convertible
should also boost demand. The eighth generation of
the Rolls-Royce Phantom has been available since
January 2018.
2 EU-28.
Fleet CO2 emissions 2: slight decrease expected
The BMW Group is continuing in its efforts to reduce
both fuel consumption and CO2 emissions. In addition,
the share of electrified vehicles in total deliveries is
expected to increase. Accordingly, CO2 emissions
across the vehicle fleet as a whole are expected to
decrease slightly during the outlook period, and
continue the trend seen in previous years (2017:
122 g CO2 / km).
Revenues: slight increase expected
Automotive segment revenues should benefit from
growth in deliveries. Accordingly, a slight increase in
segment revenues is forecast for 2018 (2017 adjusted:
€ 85,742 3 million).
3 Adjusted in
accordance with
IFRS 15.
Combined Management Report Financial Services segment
Return on equity: slight decrease expected
The BMW Group expects the Financial Services seg-
ment to continue its successful performance in 2018. In
view of increasing regulatory requirements worldwide,
more equity capital will be required in the segment
going forward. Accordingly, segment RoE is expected
to decrease slightly (2017: 18.1 %). In this context, with
effect from the 2018 financial year the sustainable
target return will be changed from its current level of
at least 18 % to a new level of at least 14 %.
Overall assessment by Group management
Business is expected to show a stable development in
the financial year 2018, with significant contributions
from numerous new automobile and motorcycle mod-
els as well as expansion of individual mobility-related
services. Group profit before tax is expected to be
in line with last yearʼs level, due to the challenges
described above. Automotive segment revenues
BMW Group key performance indicators
• 61
Group
Profit before tax
Workforce at year-end
Automotive seGment
Deliveries to customers 4
Fleet emissions 5
Revenues
EBIT margin
Return on capital employed
motorcycles seGment
Deliveries to customers
EBIT margin
Return on capital employed
FinAnciAl services seGment
Return on equity
1 Adjusted with effect from the financial year 2018.
2 Adjusted in accordance with IFRS 15.
3 Based on adjusted outlook.
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units).
5 EU-28.
95
should grow slightly based on the forecast of a slight
increase in deliveries to customers. At the same
time, fleet carbon dioxide emissions are forecast to
decrease slightly. The Group’s targets are to be met
with a slight increase in workforce. The Automotive
segment’s EBIT margin in 2018 is set to remain within
the target range of between 8 and 10 %, while its RoCE
is forecast to decrease significantly. A slight decrease
is also forecast for the RoE in the Financial Services
segment. However, both performance indicators will
be above their long-term targets of 26 % (RoCE) and
14 % (RoE 1) respectively. Deliveries to customers in
the Motorcycles segment are forecast to show a solid
increase, with an EBIT margin within the target range
of between 8 and 10 % and RoCE slightly up on the
previous year.
Depending on the political and economic situation
and the risks and opportunities described below,
actual business performance could differ from current
expectations.
2017
reported
2017
2
adjusted
2018
Outlook3
€ million
10,655
129,932
10,675
129,932
in line with last
year’s level
slight increase
units
2,463,526
2,463,526
slight increase
g CO2 / km
€ million
%
%
units
%
%
122
88,581
8.9
78.6
122
slight decrease
85,742
slight increase
9.2
between 8 and 10
77.7
significant decrease
164,153
164,153
solid increase
9.1
34.0
9.1
34.0
between 8 and 10
slight increase
%
18.1
18.1
slight decrease
96
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
RISKS AND
OPPORTUNITIES
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Groupʼs corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risk.
Management of opportunities and risks is essential for
the Group to react appropriately to changes in political,
economic, technical or legal conditions. Opportunities
and risks which are likely to materialise are taken into
account in the Outlook Report. The following sections
focus on potential future develop ments or events,
which could result in a positive (opportunity) or a
negative deviation (risk) from the BMW Groupʼs out-
look. The earnings impact of risks and opportunities is
assessed separately without offsetting. Opportunities
and risks are assessed with respect to a medium-term
period of two years.
Risk management in the BMW Group
• 62
As part of the risk management process, all individual
and cumulative risks that represent a threat to the
success of the business are monitored and managed.
Any risks capable of posing a threat to the going-
concern status of the BMW Group are generally
avoided. Where no specific reference is made, oppor-
tunities and risks relate to the Automotive segment.
The scope of entities consolidated in the Report on
Risks and Opportunities corresponds to the scope of
consolidated entities in the BMW Group Financial
Statements.
Risk management system
The objective of the risk management system, and the
main function of risk reporting, is to identify, record
and actively manage internal or external risks that
could threaten the attainment of the Groupʼs corpo-
rate targets. The risk management system covers all
significant and existential risks to the Group. Group
risk management focuses on the criteria of effective-
ness, practicability and completeness. Responsibility
for risk reporting is not allocated to a central function,
but is part of the task of each employee and manager,
according to their individual function. According to
Group-wide rules, every employee and manager has
a duty to report risks through the relevant reporting
channels.
Group-wide
risk management
Identification
Analysis and
Measurement
Effectiveness
Practicability
Compliance
Committee
Reporting /
Monitoring
Completeness
Risk
Management
Steering
Committee
Controlling
Supervisory
Board
Board of
Management
Measures
Group
Audit
Internal Control System
Combined Management Report Group risk management is organised formally as a
decentralised, company-wide network and is steered
by a centralised risk management function. Every
BMW Group division is represented within the risk
management organisation by Network Represen-
tatives. This formal structure reinforces the networkʼs
visibility and underlines the importance of risk
management within the BMW Group. Roles, respon-
sibilities and tasks of the central risk management
function and the Network Representatives are clearly
described, documented and understood. In view of
the dynamic growth of business and the increasingly
volatile environment, the BMW Group regularly
reviews its risk management system for effectiveness
and appropriateness.
Risk management as a whole comprises the Risk
Management Steering Committee, the Compliance
Committee, the Internal Control System and Group
Internal Audit.
Risk management process
The risk management process covers the entire Group
and comprises early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Risks are
classified according to the magnitude of impact on
the Groupʼs results of operations, financial position
and net assets. The magnitude of risk is measured in
each case after risk mitigation measures and according
to the probability of occurrence.
The risk management system is regularly examined by
Group Internal Audit. Regular monitoring of external
practice ensures that new insights are incorporated
in the risk management system of the BMW Group,
thus providing for continual improvement. Training
sessions, development programmes and information
events are regularly conducted across the BMW Group,
particularly within the risk management network.
These measures are essential ways of preparing those
involved in the process for new or additional demands.
97
In addition to comprehensive risk management,
sustainable business practice constitutes one of the
core strategic principles of the company. Risks or
opportunities relating to sustainability issues are
considered by the Sustainability Committee. Result-
ing strategic options and measures are put forward
to the Sustainability Board, which comprises the
entire Board of Management. Where necessary, risk
aspects may be integrated within the Group-wide risk
network. The composition of the Risk Management
Steering Committee and the Sustainability Committee
ensures that risk and sustainability management are
closely coordinated.
In order to comply with the CSR Directive Imple-
mentation Act, a review of risks with impact on
the non-financial aspects referred to in the law was
conducted as part of the reporting process for the
Groupʼs Non-Financial Declaration. Significant risks
within the meaning of the law are those relating
to business activities, business relationships and
products and services of the BMW Group which are
highly likely to have a serious adverse impact. No
significant risks were identified during the review.
The Groupʼs Non-Financial Declaration is provided in
the Sustainable Value Report 2017, which is available
on the internet at
https: / / www.bmwgroup.com / svr.
In the Financial Services segment risk management
also addresses regulatory requirements, such as Basel
III. Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards. The
risk strategy, in combination with a set of strategic
principles and guidelines, serves as the basis for risk
management in the Financial Services business. The
risk management process is ensured organisationally
through a clear division between front- and back-office
activities and a comprehensive internal control system.
The main instrument of risk management within the
Financial Services segment is ensuring the Groupʼs
risk-bearing capacity. At all times, risks in the sense of
unexpected losses must be covered. This is achieved by
means of an asset cushion in the form of equity capital
derived from the entityʼs risk appetite. Unexpected
losses are measured according to various value-at-risk
models, which are validated at regular intervals. Risks
are aggregated after taking account of correlation
effects. In addition to assessing the Groupʼs ability to
bear risk under normal circumstances, stress scenarios
are also examined. The segmentʼs risk-bearing capacity
is regularly controlled through an integrated limit
system for the various risk categories.
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Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
Risk measurement
Risks are classified as high, medium or low, based on
their significance with respect to results of operations,
financial position and net assets and to performance
indicators of the BMW Group. The impact of risks
is measured and reported net of risk mitigation
measures (net basis).
The overall impact of a riskʼs occurrence on the results
of operations, financial position and net assets for the
two-year assessment period is classified as follows:
Class
Low
Medium
High
Earnings impact
> €0 – 500 million
> €500 – 2,000 million
> €2,000 million
In the following sections, earnings impact is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
The risk amount is the basis for the classification of
risk levels at the BMW Group. The measurement of
risk amount takes account of both earnings impact
(net of appropriate countermeasures) and the proba-
bility of occurrence. In the case of risks measured on
the basis of value at risk and cash flow at risk models,
the risk amount is determined through approximation.
These approximations flow into the classification of
risk levels.
Overall, the following criteria apply for the purposes
of classifying the risk amount:
Class
Low
Medium
High
Risk amount
> € 0 – 50 million
> € 50 – 400 million
> € 400 million
Opportunity management system and
opportunity identification
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part of
the strategic planning process of the BMW Group. The
Groupʼs product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration.
The continuous optimisation of major business
processes and strict cost controls are essential for
ensuring strong profitability and return on capital
employed. Probable measures to increase profitability
are incorporated in the outlook. The implementation
of modular and common architectures, for instance,
allows identical components to be deployed increas-
ingly across models and product lines. This reduces
development costs and investment on the series devel-
opment of new vehicles and contributes positively to
profitability. In addition, it also supports economies
of scale in production costs and increases production
flexibility. Moreover, a more competitive cost basis
opens up opportunities to enter new market segments.
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories “significant” and “insignificant”.
Combined Management Report Risks and opportunities
The following table provides an overview of all risks
and opportunities and indicates their significance for
the BMW Group.
Risks and opportunities which could, from todayʼs
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described below.
99
Overall, no risks which could threaten the continued
existence of the BMW Group were identified either
at the balance sheet date or at the date on which the
Group Financial Statements were drawn up.
risks A nd opportunities
Macroeconomic risks and opportunities
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
Market developments
Risks and opportunities relating to operations
Production and technology
Purchasing
Sales and marketing
Information, data protection and IT
Financial risks and opportunities
Foreign currencies
Raw materials
Liquidity
Pension obligations
Risks and opportunities relating to the provision of financial services
Credit risk
Residual value
Interest rate changes
Operational risks
Legal risks
Risks
classification
Change compared
to prior year
Opportunities
classification
Change compared
to prior year
Stable
Insignificant
Stable
High
High
High
Increased
Insignificant
Stable
Insignificant
Medium
Decreased
Insignificant
High
Low
High
Medium
Low
Low
Medium
Medium
Medium
Low
Low
Medium
Increased
Insignificant
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Insignificant
Insignificant
Significant
Significant
–
Significant
Significant
Significant
Significant
–
–
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
–
Stable
Stable
Stable
Stable
–
–
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Risks and
Opportunities
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial position
and net assets of the BMW Group. Unforeseen dis-
ruptions in global economic relations can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions affected and lead to reduced demand for the
products and services offered by the BMW Group.
Macroeconomic risks could – due to sales volume
fluctuations – have a high earnings impact over the
two-year assessment period. Overall, the risk amounts
attached to macroeconomic risks are classified as high.
Macroeconomic risks are evaluated on the basis of
historical data and by means of a cash-flow-at-risk
approach, supplemented by scenario analyses.
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. For example, a
reorientation of the USAʼs economic policy, the
planned exit of the UK from the EU and possible elec-
tion wins for anti-globalisation parties in EU countries
could result in higher tariff and non-tariff barriers to
trade in the coming years.
A possible introduction of trade barriers, including
anti-dumping customs duties, by the US adminis-
tration could have an adverse impact on the
BMW Groupʼs operations through less favourable
conditions for importing vehicles. Moreover, counter-
measures by the USAʼs trading partners could slow
down global economic growth and have an adverse
impact on the export of vehicles produced in the USA.
The BMW Groupʼs “production follows the market”
strategy involves local production both in the USA
and with other important trade partners. Regional
production reduces the existing risk of trade barriers.
Nevertheless, any increase in trade barriers would
have an adverse impact on the BMW Group.
The planned Brexit could have a long-term adverse
impact on the BMW Group, particularly as a result of
increased trade barriers in the form of customs duties
in relation to the European single market. Any such
trade barriers could have a negative impact on volumes
and costs both for vehicles and components produced
in the EU for the UK as well as those produced in
the UK for the European market. In extreme cases,
this could lead to interruptions in production due
to the processing of customs formalities. In addition,
Brexit could lead to reduced customer spending in the
wake of weaker economic performance, particularly
in the UK. In the short and medium term, uncertainty
regarding the outcome of the negotiations with the
EU could exacerbate these factors and cause further
negative currency effects. A possible further economic
downturn within the EU could also potentially reduce
growth prospects for the BMW Group. European inte-
gration with a unified economic and currency area is
an important pillar of economic stability in Europe.
The ongoing transition in China from an invest-
ment-driven to a consumer-driven economy is
associated with slower growth rates and potentially
greater instability on financial markets. If the Chinese
economy were to grow at a significantly slower pace
than expected, the consequence would be not only
a decline in automobile sales, but also, potentially,
lower demand for raw materials, which would have a
negative impact above all on emerging economies such
as Brazil, Russia or South Africa. Any further drop in
raw material prices could result for the BMW Group
in lower demand from these countries. Turmoil on
the Chinese property, stock and banking markets
and an overly rapid increase in interest rates by the
US Federal Reserve could pose considerable risks for
global financial market stability.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
Combined Management Report The BMW Group addresses macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries
and regions. Flexible sales and production processes
within the BMW Group increase the ability to react
quickly to regional economic developments.
Should the global economy develop significantly better
than presented in the outlook, macroeconomic oppor-
tunities could arise for the BMW Groupʼs revenues
and earnings. Significantly stronger GDP growth in
China, consumer-oriented reforms within the euro-
zone, a cancellation of Brexit plans and intensified
trade relations between the EU and the UK, growth
stimulus through the tax reform in the USA or more
robust consumer spending in emerging markets due to
rising raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pricing.
Macroeconomic opportunities that could generate a
sustainable impact on earnings are currently classified
by the BMW Group as insignificant.
101
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legislation
and regulations, particularly with regard to emissions,
safety and consumer protection and regional vehicle-
related purchase and usage taxes, represents a signif-
icant risk for the automobile industry. Country- and
sector-specific trade barriers can also change at short
notice. A sudden tightening of regulations in any of
these areas can necessitate significantly higher invest-
ments and ongoing expenses or influence customer
behaviour. Risks from changes in legislation and
regulatory requirements could have a medium impact
on earnings over the two-year assessment period. The
risk amount attached to these risks is classified as
high. In particular, risks arising from the tightening
of emission laws have resulted in the assessment of
the risk level being raised.
At present, the BMW Group sees increasingly restric-
tive vehicle emissions regulations, particularly for
conventional drivetrain systems, not only in the devel-
oped markets of Europe and North America, but also
in growth markets such as China. The introduction of
new measurement procedures to represent standard
driving cycles, combined with significantly lower
emissions thresholds, represents a major challenge
for the automotive sector. The BMW Group is address-
ing this risk with its Efficient Dynamics concept and
is playing a pioneering role in reducing both fuel
consumption and emissions within the premium
segment. The product range has been increasingly
expanded with electric drivetrain systems in BMW i
vehicles since 2013 and plug-in-hybrid technologies in
a growing number of series models since 2015. These
technologies have contributed to fulfilment of legal
requirements with regard to CO2 emissions.
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses, but can also restrict imports
and exports of vehicles or parts.
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
have been, or are being, introduced, including entry
restrictions, congestion charges or, in some situations,
highly restrictive registration rules. These may affect
local demand for the BMW Group vehicles affected
and hence have a negative impact on sales, margins
and, possibly, the residual value of these vehicles. The
BMW Group addresses this risk by offering locally
emissions-free vehicles, such as the BMW i3, which
benefit from state subsidies and exemptions.
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby to realise significant
opportunities with respect to sales growth and pricing.
Further development of the product and mobility port-
folio and expansion in growth regions offer the most
important medium- to long-term growth opportunities
for the BMW Group. Continued growth depends above
all on the ability to develop innovative products and
bring them to market. The range of services on offer
was further expanded in 2017, particularly in the area
of electric mobility. ChargeNow customers have access
to more than 130,000 charging points in 29 countries.
A new digital business field was created under the
name BMW Energy Services. The BMW Group expects
these opportunities to have no significant earnings
impact over the two-year assessment period compared
to the assumptions made in the outlook.
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Opportunities
Risks and
Opportunities
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as autonomous driving, and for
scaling up the range of electric mobility offerings. For
BMW i and iPerformance vehicles with alternative
drivetrain systems a faster expansion of charging
infrastructure could increase acceptance and help
boost sales of planned or recently introduced prod-
uct innovations compared to forecast. This includes
implementation of the 360° ELECTRIC portfolio in
the field of electric mobility and collaboration with
Toyota on hydrogen fuel cell technology.
The BMW Groupʼs earnings could also be positively
affected in the short to medium term by changes in
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, and enable
products and services to be offered to customers at
lower prices. Further opportunities for the earnings
performance of the BMW Group from changes in
legislation and regulatory requirements compared
to the outlook are classified as insignificant.
Market development
In addition to the economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the emergence
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
Intense competition, particularly in Western Europe,
the USA, China, Japan and Korea is a potential cause
for lower demand and for fluctuations in the regional
distribution and composition of demand for BMW,
MINI and Rolls-Royce brand vehicles and for mobility
services. Greater competition could put pressure on
selling prices and margins. Changes in customer
behaviour can also be brought about by changes in
attitudes, values, environmental factors and fuel or
energy prices. For example, the ongoing political and
public discussion on diesel engines could adversely
affect demand for diesel vehicles. At the same time,
however, this could lead to increased demand for vehi-
cles with petrol engines or alternative drivetrains. In
order to determine price and margin risks, a scenario
approach is used. The BMW Groupʼs flexible sales and
production processes enable risks to be reduced and
newly arising opportunities in market and product
segments to be taken.
Combined Management Report 103
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new and
complex technologies. Opportunities could arise as a
result of further technological innovations related to
products or processes, as well as from organisational
changes which improve efficiency or increase com-
petitiveness. For example, the BMW Group has been
using since 2017 a fully automated quality control
system in the paint shop newly opened in 2017 at the
BMW Group plant in Munich. The data obtained pro-
vides valuable feedback on the precision of upstream
painting processes. These can be continuously opti-
mised, potential sources of error promptly identified
and rework avoided. Given the long lead times in
developing new products and processes, additional
opportunities within the reporting period are con-
sidered insignificant for the results of operations of
the BMW Group.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused
by the failure of a supplier as well as risks associated
with the quality of bought-in parts. Production prob-
lems incurred by suppliers could lead to increased
expenditure for the BMW Group through to interrup-
tions in production and a corresponding reduction
in sales. The increasing complexity of the supplier
network, especially at the level of lower tier suppliers,
whose operations can only be indirectly influenced
by the BMW Group, is a further potential cause of
downtimes at supplier locations. The increased threat
of IT attacks on the supplier network in particular
has resulted in a more critical assessment of the
risk situation. If purchasing risks materialised, they
could have a high earnings impact over the two-year
period. The risk amount attached to purchasing risks
is classified as high.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
Risks relating to production processes and technology
fields are particularly apparent in potential sources
of interruptions in production or additional costs to
comply with quality standards under changed market
conditions. If risks arising from production processes
and technologies were to materialise, they could have
a high earnings impact over the two-year assessment
period. The corresponding risk amounts are classified
as medium. By dealing with risk issues at the planning
stage and taking appropriate measures, the risk has
been reduced.
Production stoppages and downtimes due to fire,
machine and tooling breakdowns, IT disruptions,
damage to infrastructure, power failures, transporta-
tion and logistical disruptions represent risks which
the BMW Group addresses through appropriate pre-
cautions. Production structures and processes are
designed from the outset with measures to minimise
potential damage and the probability of occurrence.
Measures taken include technical fire protection,
land development with regard to flooding risks when
facilities are expanded or new buildings added, inter-
changeability of production facilities, preventative
maintenance, management of spare parts across sites,
and predictive planning of transportation alterna-
tives. Risk is also reduced through flexible working
hour models and working time accounts as well as
the ability to build individual split models or engine
types at other sites within the production network.
As a result, backlogs arising from production inter-
ruptions can be quickly recovered. Risks arising from
interruptions and production downtime due to fire are
also appropriately covered with insurance companies
of good credit standing.
In order to meet high standards in product quality and
achieve favourable external ratings (e. g. for product
safety), reduce statutory and non-statutory warranty
obligations and keep down follow-up costs arising
from other changes in planning assumptions, it may
be necessary to incur a higher level of expenditure
than originally forecast. In addition, availability of
products may be limited, particularly at the start of
production of new vehicles. These risks are mitigated
through regular audits and the continual improve-
ment of quality management, which ensures the high
standard of quality. The BMW Group also recognises
appropriate accounting provisions for statutory and
non-statutory warranty obligations. These reduce
the risk to earnings, as they are already taken into
account in the outlook. Further information on risks
related to provisions for statutory and non-statutory
warranty obligations is provided in
note 31 of the
Group Financial Statements.
see
note 31
At regular intervals, the BMW Group honours its
most inventive suppliers with the Supplier Innovation
Award. The BMW Group expects these opportuni-
ties to have no significant earnings impact over the
assessment period as compared to the assumptions
made in the outlook.
Risks and opportunities relating to
sales and marketing
In order to sell its products and services, the
BMW Group employs a global sales network, com-
prising primarily independent dealerships, branches,
subsidiaries and importers. Any threat to the contin-
ued activities of parts of the sales network would entail
risks for the BMW Group. The occurrence of sales
and marketing risks is associated with a low earnings
impact over the two-year assessment period. The risk
amount is classified as low.
New developments in the field of digital communi-
cation and connectivity in particular offer new oppor-
tunities for the BMW Groupʼs brands. BMW CarData
has made it possible since 2017 to provide customised
service offers to BMW drivers based on data from the
vehicle. If customers wish to use a specific service
and actively consent to the release of their telematics
data, requesting companies receive the data they need
for the service in encrypted form via BMWʼs secure
backend database. This information provides the basis
for customised, data-driven and innovative service
solutions. Additional opportunities could arise if new
sales channels contribute to greater brand reach to
customer groups than currently envisaged in the
outlook. Digital communication and connectivity
enables consumers to be reached on a more targeted
and individualised basis, thus strengthening long-
term relationships and brand loyalty. This can lead
to a more intense product and brand experience for
customers, which could lead to higher sales volume
and have a positive impact on revenues and earn-
ings. The BMW Group invests in advanced marketing
concepts in order to intensify customer relationships.
The BMW Group estimates the earnings impact as
insignificant over the two-year assessment period as
compared to the assumptions made in the outlook.
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Risks and
Opportunities
Close cooperation between carmakers and suppliers
in the development and production of vehicles and
the provision of services generates economic benefits,
but also increased dependency. Potential reasons for
the failure of individual suppliers include in particular
increased IT-related risk, non-compliance with sus-
tainability or quality standards, insufficient financial
strength of a supplier, the occurrence of natural haz-
ards, fires and insufficient supply of raw materials. As
part of supplier pre-selection, the BMW Group checks
for compliance with the sustainability standards
for the supplier network. This includes compliance
with internationally recognised human rights and
applicable labour and social standards. The principal
means for ensuring compliance with the Sustainability
Standard is a three-stage risk management system for
sustainability. In addition, the technical and financial
capabilities of suppliers are monitored, especially
where modular-based production is concerned.
Supplier sites are assessed for exposure to natural
hazards, such as floods or earthquakes, in order to
identify supply risks at an early stage and implement
appropriate precautions. Fire risks at series suppliers
are evaluated by means of questionnaires and selective
site inspections. In order to minimise supply risks, the
BMW Group draws up measures to reduce the use of
raw materials or to substitute alternative raw materials.
The BMW Group pays particular attention to the qual-
ity of parts built into its vehicles. In order to attain a
very high level of quality, it may become necessary to
invest in new technological concepts or discontinue
planned innovations, with the result that the cost of
materials could exceed levels accounted for in the
outlook. By monitoring and developing global sup-
plier markets, the BMW Group continuously strives
to optimise its competitiveness by working together
with the worldʼs best product and service providers.
Within the Purchasing and Supplier Network,
opportunities arise above all in the area of global
sourcing through increased efficiency and the use
of innovations developed by suppliers, which can
lead to a broader range of products. Making full
use of location-specific cost factors, in particular
through local supplier structures in close proximity
to new and existing BMW Group production plants
and the introduction of new, innovative production
technologies, could lead to lower cost of materials for
the BMW Group. The new supply centre opened in
Landshut in 2017 represents a further step in ensuring
efficient and flexible logistics processes. Integration of
previously unidentified innovations from the supplier
market in the Groupʼs product range could provide
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
Combined Management Report 105
security and data protection and the use of informa-
tion technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group entity
with the Board of Management or relevant manage-
ment team.
With the advance of digitalisation, the BMW Group
is improving the customer experience and its existing
lines of business. At the same time, new digital busi-
ness segments are emerging, which are mainly focused
on information technology. The development and
provision of digital services for customers, increased
vehicle connectivity and autonomous driving solu-
tions are opening up new opportunities. Through
BMW ConnectedDrive and BMW CarData the range of
services and apps on offer to customers is constantly
being expanded and updated. The BMW Group
expects these opportunities to have no significant
earnings impact over the assessment period compared
to the assumptions made in the outlook.
Information, data protection and it
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures, the risks in this area are
classified as high.
In addition to cyber attacks and direct physical
intervention, lack of awareness or misconduct on
the part of employees may also represent a danger
to the confidentiality, integrity and availability of
information, data and systems. Direct consequences
include expenditure required for rapid information,
data and systems recovery. Negative impacts on oper-
ational performance due to the non-availability of
products and services or disruptions in the production
of components or vehicles are also possible. A further
indirect result could be reputational damage.
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance against unauthorised access or misuse.
Data security is an integral component of business
processes and is aligned with the International
Standard ISO / IEC 27001. As part of risk management,
information security, data protection and IT risks are
systematically documented, allocated appropriate
measures by the departments concerned and contin-
uously monitored with regard to threat level and risk
mitigation. Regular analyses and controls as well as
rigorous security management ensure an appropriate
level of security. Despite continuous testing and
preventative security measures, it is impossible to
eliminate risks completely in this area. All employees
are required to treat with care information such as
confidential business, customer and employee data,
to use information systems securely and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising meas-
ures create a high level of security and risk awareness
among those involved. Employees receive training
to ensure compliance with the legal requirements
and internal rules. With regard to cooperations and
business partnerships, the BMW Group protects its
intellectual property as well as customer and employ-
ee data through clear instructions on information
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Opportunities
Financial risks and risks relating to the use of
financial instruments
Currency risks and opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Cash-flow-at-risk
models and scenario analyses are used to measure cur-
rency risks and opportunities. If currency risks were
to materialise, they could be associated with a high
earnings impact over the two-year assessment period.
The risk level attached to currency risks is medium.
Significant opportunities can arise if currency devel-
opments are favourable for the BMW Group.
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium
and long term) and operational level (short and
medium term). Medium- and long-term measures
include increasing production volumes and purchase
volumes in foreign currency regions (natural hedging).
Currency risks are managed in the short to medi-
um term and for operational purposes by means of
hedging on financial markets. The principal objective
of this currency management process is to increase
planning reliability for the BMW Group. Hedging
transactions are entered into only with financial
partners of good credit standing. Opportunities are
also secured through the use of options during specific
market phases.
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. The analysis of raw material price risk
is based on planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw material prices were to materialise, they
would likely have a low earnings impact over the two-
year assessment period. A low risk level is attached
to these risks. Significant opportunities could arise
if raw material prices developed favourably for the
BMW Group.
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives or supply contracts with fixed
pricing arrangements.
liquidity risks
The major part of the Financial Services segmentʼs
credit financing and leasing business is refinanced
on capital markets. Liquidity risks may arise in the
form of rising refinancing costs or from restricted
access to funds as a consequence of the general market
situation or the failure of individual banks. If liquidity
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount associated with liquidity risk,
including the risk of the BMW Groupʼs credit rating
being downgraded, which would lead to an increase
in financing costs, is classified as low.
Based on the experience of the financial crisis, a
minimum liquidity concept has been developed and
is rigorously adhered to. Use of the “matched funding
principle” to finance the Financial Services segmentʼs
operations eliminates liquidity risks to a large extent.
Solvency is assured at all times throughout the
BMW Group by maintaining a liquidity reserve and
by the broad diversification of refinancing sources.
Regular measurement and monitoring ensure that
cash inflows and outflows for the various maturities
and currencies offset each other. This approach is
incorporated in the BMW Groupʼs target liquidity
concept. The liquidity position is monitored contin-
uously and managed through Group-wide planning
of financial requirements and funding. A diversified
refinancing strategy reduces dependency on any spe-
cific type of instrument. Moreover, the BMW Groupʼs
solid financial and earnings position results in high
credit ratings from internationally recognised rating
agencies. A description of the methods applied for
risk measurement and hedging in conjunction with
currency and commodity risks is provided in
note 37
of the Group Financial Statements. If the relevant
recognition criteria are fulfilled, derivatives used by
the BMW Group as hedges are generally accounted for
as hedging relationships. Further information on risks
in conjunction with financial instruments is provided
note 37 of the Group Financial Statements.
in
see
note 37
see
note 37
Combined Management Report 107
Risks and opportunities relating to
pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. The risk amounts relating to pension obliga-
tions are classified as medium. Within a favourable
capital market environment, the return generated by
growth-oriented pension assets may exceed expecta-
tions and reduce the deficit of the relevant pension
plans. This could have a significantly favourable
impact on the net asset position of the BMW Group.
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. The BMW Groupʼs pension
obligations are mainly held in external pension funds
or trust arrangements with the related assets legally
separated from those of the Group. The amount of
funds required to finance pension payments out
of operations in the future is substantially reduced
by the fact that the Groupʼs pension obligations
are mainly settled out of pension fund assets. The
pension assets of the BMW Group comprise interest-
bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-return basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected development of
pension obligations. Remeasurements on the liability
and fund asset sides are recognised net of deferred
taxes in other comprehensive income and hence
directly in equity (within revenue reserves).
Further information on risks in conjunction with
pension provisions is provided in
note 30 of the
Group Financial Statements.
see
note 30
Risks and opportunities relating to
the Financial Services segment
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial
Services segment is included in the liquidity risk
category for the Group as a whole.
The segmentʼs total risk exposure was covered at all
times during the 2017 financial year by the available
risk-covering assets. As a result, the Financial Services
segmentʼs risk-bearing capacity was assured at all
times.
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e. g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over
the two-year assessment period. The risk amount
is classified as medium. The BMW Group classifies
potential opportunities in this area as significant.
As part of its credit and counterparty risk manage-
ment, the Financial Services segment uses rating
systems in order to assess the creditworthiness of
its contractual partners. Credit risks are managed at
the time of the initial credit decision on the basis of a
calculation of the present value of standard risk costs
and subsequently, during the term of the credit, by risk
provisioning to cover risks resulting from changes in
customer creditworthiness. Individual customers are
hereby classified by category each month on the basis
of their current contractual status, and appropriate
levels of allowance recognised in accordance with
that classification. If macroeconomic developments
are more favourable than assumed in the outlook,
credit losses may be reduced, leading to a positive
earnings impact.
Operational risks in the Financial
Services segment
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures (pro-
cess risks), people (personnel-related risks), systems
(infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as low.
108
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
Residual value risks and opportunities relating
to the Financial Services segment
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Groupʼs perspective over the two-
year assessment period. A high and medium earnings
impact would then arise for the affected Financial
Services and Automotive segments, respectively. The
risk amount is classified as medium for the Group
as a whole. Opportunities can arise out of a positive
deviation between the actual market value and the
original residual value forecast. The BMW Group
classifies potential residual value opportunities as
significant.
Each vehicleʼs estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period. As
part of the management of residual value risks, the
net present value of risk costs is calculated at con-
tract inception. Market developments are observed
throughout the contractual period and the risk assess-
ment updated.
Interest rate risks and opportunities relating
to the Financial Services segment
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest
rate periods do not match for assets and liabilities
recognised in the balance sheet. If risks relating to
interest rate risks were to materialise, they could
have a medium earnings impact over the two-year
assessment period. The risk amount is classified as
low. The BMW Group classifies potential interest rate
opportunities compared to the outlook as significant.
Interest rate risks in the Financial Services business
are managed by matching maturities for refinancing
and by employing interest-rate derivatives. If the
relevant recognition criteria are fulfilled, derivatives
used by the BMW Group are accounted for as hedging
instruments. Further information on risks in con-
junction with financial instruments is provided in
note 37 of the Group Financial Statements.
see
note 37
Combined Management Report 109
Possible risks for the BMW Group related to com-
petition and antitrust law cannot be predicted or
quantified at present. Further information on cur-
rent developments with regard to antitrust risks and
contingent liabilities can be found in
note 36 of the
Group Financial Statements.
see
note 36
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense.
Some risks, however, either cannot be estimated or
only to a limited extent, or may lead to costs only in
an unlikely event. Such items are reported as contin-
gent liabilities. It cannot be ruled out, however, that
damages could arise that are either not covered or not
fully covered by insurance policies or provisions or
reported as contingent liabilities. In accordance with
IAS 37 (Provisions, Contingent Liabilities and Contin-
gent Assets), the required information is not provided
if the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in
note 36 of
the Group Financial Statements.
see
note 36
Legal risks
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Applicable law provides
the binding framework for the BMW Groupʼs world-
wide activities. As a result of its global operations,
the BMW Group is exposed to various legal risks. If
legal risks were to materialise, they could have a high
earnings impact over the two-year assessment period.
The risk amount attached to significant identified legal
risks is classified as medium. However, it cannot be
ruled out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact for
the BMW Group.
The increasing globalisation of the BMW Groupʼs
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including increasingly import and
export regulations, give rise to an increased risk of
non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers and
staff consistently act in a lawful manner. Further
information on the BMW Groupʼs Compliance
Management System can be found in the section
Corporate Governance.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, claims
relating to warranties and product liability or rights
infringements and proceedings initiated by govern-
ment agencies. Any of these could, amongst others,
have an adverse impact on the Groupʼs reputation.
Such proceedings are essentially typical for the sector
or a consequence of realigning product or purchasing
strategies to changed market conditions. Particularly
in the US market, class action lawsuits and product
liability risks can have substantial financial conse-
quences and cause damage to the Groupʼs public
image. More rigorous application or interpretation
of existing regulations could result in a greater number
of recalls. The high quality of the Groupʼs products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
110
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
Internal Control
System Relevant for
Accounting and
Financial Reporting
Process
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. Exposure to risks in the individual risk categories
remains essentially stable. The combination of more
stringent emissions requirements worldwide and the
possibility that related laws and regulations may be
brought forward results in a higher risk level in that
area. In addition, the increased threat of IT attacks
in the supplier network has led to an increased esti-
mation of the risk in purchasing. By contrast, the risk
level for production has been reduced by the imple-
mentation of measures. Overall, there has been no
significant change in the overall risk or opportunities
level compared to the previous year.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Groupʼs
results of operations, financial position and net assets,
and its reputation. A comprehensive risk management
system is in place to ensure that the BMW Group
successfully manages these risks.
From todayʼs perspective, management does not see
any threat to the BMW Groupʼs status as a going
concern. As in the previous year, identified risks are
considered to be manageable, but could – like the
opportunities – have an impact on the BMW Groupʼs
outlook if they were to materialise. The BMW Groupʼs
financial position is stable and cash needs are currently
covered by available liquidity and credit lines.
Combined Management Report 111
INTERNAL CONTROL
SYSTEM* RELEVANT FOR
ACCOUNTING AND
FINANCIAL REPORTING
PROCESSES
* Disclosures
pursuant to
§ 289 (5) HGB
and § 315 (2)
no. 5 HGB.
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both correct and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design of
the components of the BMW Group’s internal control
system. The system comprises:
— Group-wide mandatory accounting guidelines,
— controls integrated into processes and
IT systems,
— organisational measures incorporating the
principle of separation of duties, and
— process-independent monitoring measures.
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group’s accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
Controls are integrated into the accounting and finan-
cial reporting processes, at both individual entity and
Group level. These are both preventive and detective
in nature and take account, where appropriate, of
the principle of the separation of duties. Important
accounting-related IT systems incorporate controls
which, amongst others, prevent business transactions
from being recorded incorrectly and ensure that
business transactions are recorded completely and
measured properly in accordance with applicable
requirements. Controls are also in place to test the
appropriateness of consolidation procedures. The
recording of items requiring disclosure is also per-
formed largely through IT systems.
As part of the ongoing development of accounting and
financial reporting processes at individual entity or
Group level, such controls are adapted to take account
of new requirements and opportunities arising with
advances in information technology. In addition, the
BMW Group uses data analysis tools to ensure that
any control weaknesses are quickly identified and
eliminated.
Responsibilities for ensuring the effectiveness of the
internal control system in relation to individual entity
and Group accounting and financial reporting pro-
cesses are clearly defined and allocated to the relevant
line and process managers. These report annually on
their assessment of the effectiveness of the internal
control system for accounting and financial reporting.
The assessment also includes the results of inter-
nal and external audits as well as of ongoing data
analysis. In this context, the Groupʼs units confirm
the effectiveness of the internal control system for
accounting and financial reporting. The results of
the assessment are gathered and documented with
the aid of tools. Weaknesses in the control system are
eliminated, taking into account their potential impact
on accounting processes. The Board of Management
and Audit Committee are briefed annually on the
assessment of the effectiveness of the internal control
system for accounting and financial reporting. The
Board of Management and, where applicable, the
Supervisory Board, are informed immediately in the
event of any significant changes in the effectiveness
of the internal control system.
112
Disclosures Relevant
for Takeovers
and Explanatory
Comments
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
* Disclosures pur-
suant to § 289 a
(1) HGB and
§ 315 a (1) HGB.
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to € 657,600,600 at 31 December 2017
(2016: € 657,109,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is subdivided
into 601,995,196 shares of common stock (91.54 %)
(2016: 601,995,196; 91.61 %) and 55,605,404 shares of
non-voting preferred stock (8.46 %) (2016: 55,114,404;
8.39 %), each with a par value of € 1. The Company’s
shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company’s Articles of Incorporation, the
www.bmwgroup.com. The
full text of which is available at
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each € 1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
The Company’s shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company’s unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
accruement
(b) payment of an additional dividend of € 0.02 per
€ 1 par value on non-voting preferred shares
(c) uniform payment of any other dividends on
shares of 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.
Further information can be found in the section
“Composition of subscribed capital”.
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section;
note 39 of the Group Financial
Statements).
see
note 39
Combined Management Report Direct or indirect investments in capital exceeding
10 % of voting rights
Based on the information available to the Company,
the following direct or indirect holdings exceeding
10 % of the voting rights at the end of the reporting
period were held at the stated reporting date: 1
113
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2017.
2 Controlled entities, of which 3 % or more are attributed: AQTON SE.
3 Controlled entities, of which 3 % or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3 % or more are attributed: Susanne Klatten Beteiligungs GmbH.
Direct share of
voting rights
Indirect share of
voting rights
0.2
17.4
16.4
0.2
12.6
17.4 2
16.43
12.6 4
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company’s shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
Shares with special rights which confer control
rights
There are no shares with special rights which confer
control rights.
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and / or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company’s Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 ff. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares exercised unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
114
Disclosures Relevant
for Takeovers
and Explanatory
Comments
Authorisations of the Board of Management in
particular with respect to the issuing or buying
back of shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, for example to avert serious and
imminent damage to the Company and / or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised up until 14 May 2019
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1 % of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10 % above
or below the market price of the stock determined
by the opening auction on the date of trading in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired own shares
of non-voting preferred stock for all legally admissible
purposes, specifically including the right to offer for
sale and transfer shares to persons employed by the
Company or one of its affiliated companies up to a
proportionate amount of € 5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts over several transactions.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is author-
ised, with the approval of the Supervisory Board, to
increase in return for cash contributions BMW AG’s
share capital during the period until 14 May 2019 by
up to € 3,654,383 for the purposes of an Employee
Share Programme by issuing new non-voting shares of
preferred stock, which carry the same rights as exist-
ing non-voting preferred stock (Authorised Capital
2014). Subscription rights of existing shareholders
are excluded. No conditional capital is in place at the
reporting date.
Significant agreements of the Company taking
effect in the event of change in control following a
takeover bid
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
— An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks to
give extraordinary notice to terminate the credit
line, such that all outstanding amounts, includ-
ing interest, would fall due immediately if one or
more parties jointly acquire direct or indirect
control of BMW AG. The term control is defined
as the acquisition of more than 50 % of the share
capital of BMW AG, or the right to receive more
than 50 % of the dividend or the right to direct
the affairs of the Company, or appoint the major-
ity of the members of the Supervisory Board.
— A cooperation agreement concluded with Peugeot
SA relating to the joint development and pro-
duction of a new family of small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquir-
ing control over the other contractual party and
if any concerns of the other contractual party
concerning the impact of the change of control
on the cooperation arrangements are not resolved
during the subsequent discussion process.
— BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating to
BMW Brilliance Automotive Ltd. in China. The
agreement grants an extraordinary right of ter-
mination to either joint venture partner in the event
that – either directly or indirectly – more than 25 %
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
Combined Management Report — Framework agreements are in place with financial
institutions and banks (ISDA Master Agreements)
relating to trading activities with derivative finan-
cial instruments. These agreements include an
extraordinary right of termination which triggers
the immediate settlement of all current trans-
actions in the event that the creditworthiness of
the party involved is significantly weaker follow-
ing a direct or indirect acquisition of beneficially
owned equity capital that confers the power to
elect a majority of the Supervisory Board of a con-
tractual party or any other ownership interest
that enables the acquirer to exercise control over
a contractual party, or which constitutes a
merger or a transfer of net assets.
— Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control of
BMW AG, if the EIB has reason to assume – after
the change in control or 30 days after it has
made a request to discuss the situation – that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financing
agreements as (i) holding or having control over
more than 50 % of the voting rights, (ii) the right
to appoint the majority of the members of the
Board of Management or Supervisory Board, (iii)
the right to receive more than 50 % of dividends
payable or (iv) any other comparable controlling
influence over BMW AG.
115
— BMW AG was until 11 January 2018 party to an
agreement with SGL Carbon SE, Wiesbaden,
relating to the joint operations SGL Automotive
Carbon Fibers LLC, Delaware, USA and SGL
Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement included call and put
rights in case – either directly or indirectly – 50 %
or more of the voting rights relating to the rele-
vant other shareholder of the joint operations were
acquired by a third party, or if 25 % of such voting
rights were acquired by a third party if that third
party was a competitor of the party unaffected
by the acquisition of the voting rights. In the event
of such acquisitions of voting rights by a third
party, the non-affected shareholder had the right
to purchase the shares of the joint operations from
the affected shareholder or to require the affected
party to acquire the other shareholder’s shares.
This agreement was revoked on 11 January 2018 in
conjunction with the sale, on the same date, of
BMW Group’s investment in SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich to
SGL Carbon SE, Wiesbaden.
— The framework cooperation agreement entered
into amongst others by BMW AG and Sixt SE,
relating to the foundation and operation of the
car-sharing joint venture DriveNow, may be ter-
minated by Sixt SE if a car hire company acquires
more than 50 % of the shares of common stock
of BMW AG. In the event of such a termina tion,
Sixt SE may, at its own discretion, stipulate the
sale of BMW’s interest in the joint venture to
Sixt SE or the purchase of Sixt’s interest in the
joint venture by BMW AG or one its subsidiaries.
On 29 January 2018, the BMW Group concluded
with Sixt SE a contract for the purchase of all
shares in DriveNow, which, subject to approval by
the antitrust authority, is expected to take effect
in March 2018. On completion, the framework
cooperation agreement ceases to be effective.
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
116
Disclosures Relevant
for Takeovers
and Explanatory
Comments
— Several supply and development contracts
between BMW AG and various industrial custom-
ers, all relating to the sale of components for
drivetrain systems, grant an extraordinary right
of termination to the relevant industrial cus-
tomer in specified cases of a change in control
at BMW AG (for example BMW AG merges with
a third party or is taken over by a third party; an
automobile manufacturer acquires more than
50 % of the voting rights or share capital of
BMW AG).
— BMW AG is party to the shareholder agreement
relating to THERE Holding B. V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in THERE
Holding B. V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person takes over
or loses control of BMW AG, with control defined
as (i) holding or having control over more than
50 % of the voting rights, (ii) the possibility to
control more than 50 % of voting rights exercisable
at Annual General Meetings on all or nearly all
matters, or (iii) the right to determine the majority
of members of the Board of Management or the
Supervisory Board. Furthermore, a change in
control occurs if competitors of the HERE Group
or certain potential competitors of the HERE
Group from the technology sector acquire more
than 25 % of BMW AG. If none of the other share-
holders acquire these shares, the other sharehold-
ers are entitled to resolve that THERE Holding B. V.
be dissolved.
— The development collaboration agreement
between BMW AG, Intel Corporation and
Mobileye Vision Technologies Ltd., relating to
the development of technologies used in highly
and fully automated vehicles, may be terminated
by any of the contractual parties if a competitor
of one of the parties acquires and subsequently
holds at least 30 % of the voting shares of one
of the contractual parties.
Combined Management Report GROUP FINANCIAL
STATEMENTS
Page 118 Income Statement
Page 118 Statement of Comprehensive Income
Page 120 Balance Sheet
Page 122 Cash Flow Statement
Page 124 Statement of Changes in Equity
Page 126 Notes to the Group Financial Statements
Page 126 Accounting Principles and Policies
Page 139 Notes to the Income Statement
Page 145 Notes to the Statement of Comprehensive Income
Page 146 Notes to the Balance Sheet
Page 167 Other Disclosures
Page 183 Segment Information
Page 188 List of Investments at 31 December 2017
3
3
Group Financial
Statements
Income Statement
Statement of
Comprehensive
Income
Balance Sheet
Cash Flow
Statement
Notes
118
BMW Group
Income Statement
Statement of Com-
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Income Statements for Group and Segments
• 63
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 €
Group
Automotive
(unaudited supplementary
information)
Motorcycles
(unaudited supplementary
information)
Financial Services
Other Entities
(unaudited supplementary
(unaudited supplementary
(unaudited supplementary
information)
information)
Eliminations
information)
Note
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
6
7
8
9
9
22
10
10
11
12
29
13
13
13
13
98,678
94,163
88,581
86,424
– 78,744
– 75,442
– 72,266
– 70,973
16,315
– 7,927
675
– 1,200
7,863
738
325
– 530
295
828
8,691
– 3,415
5,276
22
5,254
15,451
– 7,604
616
– 768
7,695
441
260
– 673
193
221
7,916
– 2,475
5,441
10
5,431
19,934
– 9,560
720
– 1,214
9,880
738
201
– 412
248
775
10,655
– 1,949
8,706
86
8,620
13.12
13.14
–
13.12
13.14
18,721
– 9,158
670
– 847
9,386
441
196
– 489
131
279
9,665
– 2,755
6,910
47
6,863
10.45
10.47
–
10.45
10.47
2,283
– 1,809
474
– 256
4
– 15
207
–
–
– 2
–
– 2
205
– 63
142
–
142
2,069
– 1,639
430
– 256
27
– 14
187
–
–
– 2
–
– 2
185
– 53
132
–
132
27,567
25,681
– 23,986
– 22,135
– 19,760
– 20,017
3,581
– 1,370
96
– 113
2,194
– 10
–
12
11
13
2,207
1,840
4,047
64
3,983
3,546
– 1,294
35
– 103
2,184
–
11
– 24
– 5
– 18
2,166
– 389
1,777
37
1,740
7
–
7
– 27
130
– 96
14
–
1,110
– 986
– 58
– 19
66
80
61
–
61
6
–
6
– 30
110
– 103
– 17
–
1,250
– 1,006
– 57
187
170
– 49
121
–
121
19,317
– 443
20
– 185
210
– 398
– 1,246
1,116
–
–
– 130
– 528
– 292
– 820
–
– 820
19,305
– 712
26
– 118
141
– 663
– 1,325
1,216
–
–
– 109
– 772
211
– 561
–
– 561
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit / loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit / loss before tax
Income taxes
Net profit / loss
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
• 64
in € million
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
2017
2016
8,706
693
– 218
475
39
1,914
– 30
– 597
– 1,171
155
630
9,336
86
9,250
6,910
– 1,858
529
– 1,329
40
2,008
43
– 721
– 230
1,140
– 189
6,721
47
6,674
30
17
29
Group Financial Statements
119
Group
(unaudited supplementary
(unaudited supplementary
Automotive
information)
Motorcycles
information)
Financial Services
(unaudited supplementary
information)
Other Entities
(unaudited supplementary
information)
Eliminations
(unaudited supplementary
information)
Note
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
27,567
25,681
– 23,986
– 22,135
3,581
– 1,370
96
– 113
2,194
–
12
– 10
11
13
2,207
1,840
4,047
64
3,983
3,546
– 1,294
35
– 103
2,184
–
11
– 24
– 5
– 18
2,166
– 389
1,777
37
1,740
7
–
7
– 27
130
– 96
14
–
1,110
– 986
– 58
66
80
– 19
61
–
61
6
–
6
– 30
110
– 103
– 17
–
1,250
– 1,006
– 57
187
170
– 49
121
–
121
– 19,760
– 20,017
19,317
– 443
20
– 185
210
– 398
–
– 1,246
1,116
–
– 130
– 528
– 292
– 820
–
– 820
19,305
– 712
26
– 118
141
– 663
–
– 1,325
1,216
–
– 109
– 772
211
– 561
–
– 561
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit / loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit / loss before tax
Income taxes
Net profit / loss
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 €
Income Statements for Group and Segments
• 63
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 €
98,678
94,163
88,581
86,424
– 78,744
– 75,442
– 72,266
– 70,973
6
7
8
9
9
22
10
10
11
12
29
13
13
13
13
19,934
– 9,560
720
– 1,214
9,880
738
201
– 412
248
775
10,655
– 1,949
8,706
86
8,620
13.12
13.14
–
13.12
13.14
18,721
– 9,158
670
– 847
9,386
441
196
– 489
131
279
9,665
– 2,755
6,910
47
6,863
10.45
10.47
–
10.45
10.47
16,315
– 7,927
675
– 1,200
7,863
738
325
– 530
295
828
8,691
– 3,415
5,276
22
5,254
15,451
– 7,604
616
– 768
7,695
441
260
– 673
193
221
7,916
– 2,475
5,441
10
5,431
Statement of Comprehensive Income for Group
• 64
in € million
Net profit
Deferred taxes
Remeasurement of the net defined benefit liability for pension plans
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
2,283
– 1,809
474
– 256
4
– 15
207
–
–
–
– 2
– 2
205
– 63
142
–
142
8,706
693
– 218
475
39
1,914
– 30
– 597
155
630
9,336
86
9,250
– 1,171
2,069
– 1,639
430
– 256
27
– 14
187
–
–
–
– 2
– 2
185
– 53
132
–
132
6,910
– 1,858
529
– 1,329
2,008
40
43
– 721
– 230
1,140
– 189
6,721
47
6,674
30
17
29
Note
2017
2016
120
BMW Group
Balance Sheet
at 31 December
BMW GROUP
BALANCE SHEET
AT 31 DECEMBER 2017
in € million
ASSetS
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
Total assets
equIty A nd lIAbIlItI eS
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
Group
Automotive
(unaudited supplementary
information)
Motorcycles
(unaudited supplementary
information)
Financial Services
Other Entities
(unaudited supplementary
(unaudited supplementary
(unaudited supplementary
information)
information)
Eliminations
information)
Note
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
19
20
21
22
23
24
12
26
27
28
23
24
25
26
29
29
29
29
29
30
31
12
33
34
31
32
33
35
34
9,464
18,471
36,257
2,767
690
48,321
2,369
1,927
1,635
8,157
17,960
37,789
2,546
560
48,032
2,705
2,327
1,595
8,981
18,050
–
2,767
4,985
–
1,302
3,079
3,671
7,705
17,566
–
2,546
5,195
–
1,287
4,310
4,043
121,901
121,671
42,835
42,652
12,707
2,667
32,113
7,965
1,566
5,525
9,039
11,841
2,825
30,228
7,065
1,938
5,087
7,880
71,582
66,864
12,103
2,354
–
5,578
714
23,124
7,157
51,030
11,344
2,502
–
4,862
1,000
21,561
4,794
46,063
57
388
–
–
–
–
–
–
32
477
580
160
–
–
–
5
8
46
365
–
–
–
–
–
–
28
439
492
144
–
–
–
2
–
44,285
45,134
– 8,028
– 7,345
48,321
48,032
425
33
–
2
176
442
3,082
96,766
24
152
32,113
1,531
55
5,331
1,856
405
29
–
3
221
389
3,093
97,306
5
178
30,228
1,504
44
5,417
3,046
7,160
6,585
– 11,457
– 11,223
1,089
130
26,628
35,008
1,780
263
27,120
35,749
– 198
– 1,724
– 583
– 2,635
– 31,778
– 32,689
– 53,185
– 54,475
1
–
–
–
–
–
1
–
1
–
–
–
–
–
1
–
– 307
– 630
1,163
797
1,329
894
18
40
45,963
44,782
– 68,898
– 66,675
753
638
41,062
40,422
47,942
47,046
– 69,205
– 67,305
193,483
188,535
93,865
88,715
1,230
1,077
137,828
137,728
82,950
82,795
– 122,390
– 121,780
Total assets
658
2,084
51,256
114
54,112
657
2,047
44,445
– 41
47,108
436
255
54,548
47,363
39,441
36,624
3,252
5,437
2,241
53,548
5,410
69,888
6,313
1,124
41,100
9,731
10,779
69,047
4,587
5,039
2,795
55,405
5,357
73,183
5,879
1,074
42,326
8,512
10,198
67,989
2,405
4,980
1,446
832
6,793
2,911
4,570
740
1,942
6,530
16,456
16,693
5,656
874
947
8,516
21,975
37,968
5,187
770
1,481
7,483
20,477
35,398
–
69
101
–
–
487
657
99
–
–
355
119
573
–
83
103
–
–
442
628
90
–
–
303
56
449
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
ASSetS
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
Financial assets
Current tax
Other assets
Cash and cash equivalents
Current assets
Receivables from sales financing
equIty A nd lIAbIlItI eS
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
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Current provisions and liabilities
14,740
11,049
18,102
16,744
– 17,735
– 17,054
35,095
36,328
– 3,545
– 198
– 4,748
– 583
601
– 30,903
– 31,629
72
356
4,302
17,819
28,835
51,384
549
233
24,853
849
45,220
71,704
77
353
6,755
17,718
29,413
54,316
599
255
27,368
702
43,439
72,363
706
–
38
198
9
17
11
1,516
13
48
3
49
24
15,607
14,107
– 307
– 630
13,167
28,811
13,362
27,545
– 69,702
– 67,136
– 70,009
– 67,766
36,037
38,506
– 34,646
– 36,960
Non-current provisions and liabilities
Total equity and liabilities
193,483
188,535
93,865
88,715
1,230
1,077
137,828
137,728
82,950
82,795
– 122,390
– 121,780
Total equity and liabilities
Group Financial Statements
Group
(unaudited supplementary
(unaudited supplementary
Automotive
information)
Motorcycles
information)
Financial Services
(unaudited supplementary
information)
Other Entities
(unaudited supplementary
information)
Eliminations
(unaudited supplementary
information)
Note
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
425
33
405
29
44,285
45,134
–
2
–
3
48,321
48,032
176
442
3,082
96,766
24
152
32,113
1,531
55
5,331
1,856
221
389
3,093
97,306
5
178
30,228
1,504
44
5,417
3,046
1
–
–
–
7,160
–
1,089
130
26,628
35,008
–
1
–
1,163
797
1
–
–
–
–
–
–
–
– 8,028
– 7,345
–
–
6,585
– 11,457
– 11,223
–
1,780
263
27,120
35,749
–
1
–
1,329
894
–
– 198
– 1,724
–
– 583
– 2,635
– 31,778
– 32,689
– 53,185
– 54,475
–
–
–
– 307
–
–
–
–
– 630
–
45,963
44,782
– 68,898
– 66,675
18
40
–
–
71,582
66,864
753
638
41,062
40,422
47,942
47,046
– 69,205
– 67,305
121
ASSetS
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
Total assets
193,483
188,535
93,865
88,715
1,230
1,077
137,828
137,728
82,950
82,795
– 122,390
– 121,780
Total assets
436
255
54,548
47,363
39,441
36,624
14,740
11,049
18,102
16,744
– 17,735
– 17,054
equIty A nd lIAbIlItI eS
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
72
356
4,302
17,819
28,835
51,384
549
233
24,853
849
45,220
71,704
77
353
6,755
17,718
29,413
54,316
599
255
27,368
702
43,439
72,363
706
–
38
1,516
13
48
35,095
36,328
–
–
–
–
– 3,545
– 198
– 4,748
– 583
198
601
– 30,903
– 31,629
36,037
38,506
– 34,646
– 36,960
Non-current provisions and liabilities
9
17
3
49
15,607
14,107
11
13,167
28,811
24
13,362
27,545
–
–
– 307
–
–
–
– 630
–
– 69,702
– 67,136
– 70,009
– 67,766
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Current provisions and liabilities
Total equity and liabilities
193,483
188,535
93,865
88,715
1,230
1,077
137,828
137,728
82,950
82,795
– 122,390
– 121,780
Total equity and liabilities
in € million
ASSetS
Intangible assets
Investments accounted for using the equity method
Property, plant and equipment
Leased products
Other investments
Receivables from sales financing
Financial assets
Deferred tax
Other assets
Non-current assets
Inventories
Trade receivables
Financial assets
Current tax
Other assets
Cash and cash equivalents
Current assets
Receivables from sales financing
equIty A nd lIAbIlItI eS
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
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Current provisions and liabilities
19
20
21
22
23
24
12
26
27
28
23
24
25
26
29
29
29
29
29
30
31
12
33
34
31
32
33
35
34
121,901
121,671
42,835
42,652
9,464
18,471
36,257
2,767
690
48,321
2,369
1,927
1,635
12,707
2,667
32,113
7,965
1,566
5,525
9,039
658
2,084
51,256
114
54,112
3,252
5,437
2,241
53,548
5,410
69,888
6,313
1,124
41,100
9,731
10,779
69,047
8,157
17,960
37,789
2,546
560
48,032
2,705
2,327
1,595
11,841
2,825
30,228
7,065
1,938
5,087
7,880
657
2,047
44,445
– 41
47,108
4,587
5,039
2,795
55,405
5,357
73,183
5,879
1,074
42,326
8,512
10,198
67,989
8,981
18,050
2,767
4,985
–
–
1,302
3,079
3,671
12,103
2,354
–
5,578
714
23,124
7,157
51,030
7,705
17,566
2,546
5,195
–
–
1,287
4,310
4,043
11,344
2,502
–
4,862
1,000
21,561
4,794
46,063
2,405
4,980
1,446
832
6,793
5,656
874
947
8,516
21,975
37,968
2,911
4,570
740
1,942
6,530
5,187
770
1,481
7,483
20,477
35,398
57
388
46
365
–
–
–
–
–
–
–
–
–
5
8
32
477
580
160
69
101
–
–
–
487
657
99
–
–
355
119
573
–
–
–
–
–
–
–
–
–
2
–
28
439
492
144
83
103
–
–
–
442
628
90
–
–
303
56
449
Non-current provisions and liabilities
16,456
16,693
122
BMW Group
Cash Flow Statement
BMW GROUP
CASH FLOW STATEMENT
in € million
Net profit
Reconciliation between net profit and cash inflow / outflow from operating activities
Current tax
Other interest and similar income / expenses 1
Depreciation and amortisation of 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 1
Cash inflow / outflow from operating activities
Investments in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Proceeds from the disposal of investment assets and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow / outflow from investing activities
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid 1
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
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
1 Interest relating to financial services business is classified as revenues / cost of sales.
2 Includes € 969 million from the sale of receivables from sales financing (multibrand portfolio) amounting to € 939 million and other receivables and
payables amounting to € 22 million (2016: € – million) as well as dividends received from investment assets amounting to € 258 million (2016: € 134 million).
Group
2017
2016
(unaudited supplementary
(unaudited supplementary
Automotive
information)
Financial Services
information)
2017
2016
2017
2016
8,706
6,910
5,276
5,441
4,047
1,777
2,558
65
4,822
696
– 1,134
– 7,440
– 609
– 249
– 43
– 738
166
– 1,293
45
1,414
1,285
– 2,301
125
5,909
2,670
131
4,998
883
– 2,526
– 8,368
85
– 15
– 4
– 441
– 104
– 749
– 93
738
1,229
– 2,417
142
3,173
– 7,112
– 5,823
– 6,972
– 5,699
– 15
– 10
Investments in intangible assets and property, plant and equipment
30
– 142
1,236 2
– 4,041
3,866
– 6,163
10
– 338
140
– 3,592
3,740
– 5,863
38
20
– 2,324
– 2,121
–
– 165
12,061
– 9,374
11,894
– 7,427
– 4,084
953
1,572
– 223
64
–
– 118
13,974
– 10,374
8,952
– 8,443
4,135
– 1,632
4,393
17
38
1,159
1,758
7,880
9,039
6,122
7,880
10,848
11,464
– 6,384
– 9,844
Cash inflow / outflow from operating activities
2,699
89
4,699
988
–
–
906
25
– 41
– 738
– 1,179
78
43
1,214
– 1,362
– 1,896
125
28
– 482
1,037
– 3,810
3,655
– 6,544
38
– 2,324
567
– 165
–
–
–
– 48
73
–
– 82
–
2,787
283
4,876
970
–
–
– 187
11
– 3
– 441
– 172
– 758
– 43
629
– 246
– 1,997
142
9
– 122
140
– 3,196
3,436
– 5,432
20
– 2,121
– 1,833
– 118
–
–
67
– 520
– 720
–
10
25
– 114
– 5
35
225
– 1,855
– 7,440
– 1,872
46
– 2
–
161
– 20
19
162
705
– 315
–
2
–
–
–
–
970
– 231
211
937
552
– 489
11,385
– 7,119
– 4,181
– 129
4,334
– 141
64
– 1,859
– 5,225
– 117
12
29
139
– 3,532
– 8,368
275
11
– 1
50
–
2
– 12
60
– 283
164
–
– 396
304
– 102
–
–
–
–
–
–
870
– 1,160
8,295
– 7,215
4,425
195
11,601
21
11
4,315
6,191
Reconciliation between net profit and cash inflow / outflow from operating activities
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income / expenses 1
Net profit
Current tax
Gain / loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
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 1
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Proceeds from the disposal of investment assets and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow / outflow from investing activities
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid 1
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
2,363
842
– 1,190
1,687
Change in cash and cash equivalents
4,794
7,157
3,952
4,794
3,046
1,856
1,359
3,046
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Group Financial Statements 123
Group
2017
2016
Automotive
(unaudited supplementary
information)
Financial Services
(unaudited supplementary
information)
2017
2016
2017
2016
8,706
6,910
5,276
5,441
4,047
1,777
Net profit
2,699
89
4,699
988
–
–
906
25
– 41
– 738
78
– 1,179
43
1,214
– 1,362
– 1,896
125
2,787
283
4,876
970
–
–
– 187
11
– 3
– 441
– 172
– 758
– 43
629
– 246
– 1,997
142
– 114
– 5
35
225
– 1,855
– 7,440
– 1,872
46
– 2
–
161
– 20
19
162
705
– 315
–
– 117
12
29
139
– 3,532
– 8,368
275
11
– 1
–
50
2
– 12
60
– 283
164
–
Reconciliation between net profit and cash inflow / outflow from operating activities
Other interest and similar income / expenses 1
Current tax
Depreciation and amortisation of 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 1
10,848
11,464
– 6,384
– 9,844
Cash inflow / outflow from operating activities
– 7,112
– 5,823
– 6,972
– 5,699
28
– 482
1,037
– 3,810
3,655
– 6,544
38
– 2,324
567
– 165
–
–
–
– 48
73
–
9
– 122
140
– 3,196
3,436
– 5,432
20
– 2,121
– 1,833
– 118
–
–
67
– 520
– 720
–
– 1,859
– 5,225
– 82
–
10
25
– 15
2
–
970
– 231
211
937
–
–
4,315
–
552
– 489
11,385
– 7,119
– 4,181
– 129
4,334
– 141
64
– 10
–
–
–
– 396
304
– 102
–
–
6,191
–
870
– 1,160
8,295
– 7,215
4,425
195
11,601
21
11
Investments in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Proceeds from the disposal of investment assets and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow / outflow from investing activities
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid 1
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
2,558
65
4,822
696
– 1,134
– 7,440
– 609
– 249
– 43
– 738
166
– 1,293
45
1,414
1,285
– 2,301
125
5,909
30
– 142
1,236 2
– 4,041
3,866
– 6,163
38
–
– 165
12,061
– 9,374
11,894
– 7,427
– 4,084
953
1,572
– 223
64
2,670
131
4,998
883
– 2,526
– 8,368
85
– 15
– 4
– 441
– 104
– 749
– 93
738
1,229
– 2,417
142
3,173
10
– 338
140
– 3,592
3,740
– 5,863
20
–
– 118
13,974
– 10,374
8,952
– 8,443
4,135
– 1,632
4,393
17
38
– 2,324
– 2,121
1 Interest relating to financial services business is classified as revenues / cost of sales.
2 Includes € 969 million from the sale of receivables from sales financing (multibrand portfolio) amounting to € 939 million and other receivables and
payables amounting to € 22 million (2016: € – million) as well as dividends received from investment assets amounting to € 258 million (2016: € 134 million).
The reconciliation of liabilities from financing activities is presented in note 33.
1,159
1,758
7,880
9,039
6,122
7,880
2,363
842
– 1,190
1,687
Change in cash and cash equivalents
4,794
7,157
3,952
4,794
3,046
1,856
1,359
3,046
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
in € million
Net profit
Current tax
Reconciliation between net profit and cash inflow / outflow from operating activities
Other interest and similar income / expenses 1
Depreciation and amortisation of tangible, intangible and investment assets
Gain / loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Income taxes paid
Interest received 1
Change in other operating assets and liabilities
Cash inflow / outflow from operating activities
Investments in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Proceeds from the disposal of investment assets and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow / outflow from investing activities
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid 1
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
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
124
BMW Group
Statement of
Changes in Equity
BMW GROUP
STATEMENT OF CHANGES IN EQUITY
in € million
1 January 2017
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Dividends paid
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2017
in € million
1 January 2016
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Dividends paid
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2016
Subscribed
capital
Capital
reserves
Revenue
reserves
Accumulated other equity
Equity
Derivative
attributable to
financial
shareholders
Securities
instruments
of BMW AG
Total
Minority
interest
657
2,047
44,445
78
47,108
255
47,363
Note
29
–
–
–
–
1
–
–
–
–
–
–
–
37
–
8,620
475
9,095
– 2,300
–
–
16
29
658
2,084
51,256
– 1,494
93
1,515
54,112
436
54,548
Subscribed
capital
Capital
reserves
Revenue
reserves
Accumulated other equity
Currency
translation
differences
Equity
Derivative
attributable to
financial
shareholders
Securities
instruments
of BMW AG
Total
Minority
interest
657
2,027
41,027
– 1,337
42,530
234
42,764
Note
29
–
–
–
–
–
–
–
–
–
–
–
–
20
–
6,863
– 1,329
5,534
– 2,102
–
–
– 14
29
657
2,047
44,445
– 171
78
47,108
Currency
translation
differences
– 171
– 1,323
– 1,323
–
–
–
–
–
132
–
– 303
– 303
–
–
–
–
52
–
41
41
–
–
–
–
24
–
28
28
–
–
–
–
52
1,437
1,437
–
–
–
–
–
–
1,415
1,415
–
–
–
–
8,620
630
9,250
– 2,300
1
37
16
6,863
– 189
6,674
– 2,102
–
20
– 14
86
–
86
–
–
–
95
47
–
47
–
–
–
– 26
255
8,706
630
9,336
– 2,300
1
37
111
6,910
– 189
6,721
– 2,102
–
20
– 40
47,363
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
1 January 2017
Net profit
Dividends paid
Other changes
31 December 2017
1 January 2016
Net profit
Dividends paid
Other changes
31 December 2016
Group Financial Statements
in € million
1 January 2017
Net profit
Dividends paid
in € million
1 January 2016
Net profit
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2017
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2016
Note
29
Subscribed
capital
Capital
reserves
Revenue
reserves
657
2,047
44,445
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
37
–
–
–
–
–
20
–
8,620
475
9,095
– 2,300
–
–
16
6,863
– 1,329
5,534
– 2,102
–
–
– 14
Note
29
Subscribed
capital
Capital
reserves
Revenue
reserves
657
2,027
41,027
29
657
2,047
44,445
Accumulated other equity
Currency
translation
differences
Securities
Derivative
financial
instruments
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
– 171
–
– 1,323
– 1,323
–
–
–
–
52
–
41
41
–
–
–
–
78
–
1,437
1,437
–
–
–
–
47,108
255
47,363
8,620
630
9,250
– 2,300
1
37
16
86
–
86
–
–
–
95
8,706
630
9,336
– 2,300
1
37
111
29
658
2,084
51,256
– 1,494
93
1,515
54,112
436
54,548
Accumulated other equity
Currency
translation
differences
Securities
Derivative
financial
instruments
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
132
–
– 303
– 303
–
–
–
–
– 171
24
–
28
28
–
–
–
–
52
– 1,337
42,530
234
42,764
–
1,415
1,415
–
–
–
–
6,863
– 189
6,674
– 2,102
–
20
– 14
78
47,108
47
–
47
–
–
–
– 26
255
6,910
– 189
6,721
– 2,102
–
20
– 40
47,363
125
1 January 2017
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Dividends paid
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2017
1 January 2016
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Dividends paid
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2016
126
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
ACCOUNTING PRINCIPLES
AND POLICIES
01
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial State-
ments) at 31 December 2017 have been drawn up in
accordance with International Financial Reporting
Standards (IFRS), as endorsed by the European Union,
and the supplementary requirements of § 315 a (1)
of the German Commercial Code (HGB). The Group
Financial Statements and Combined Management
Report will be submitted to the operator of the elec-
tronic version of the German Federal Gazette and
can be obtained via the Company Register website.
Bayerische Motoren Werke Aktiengesellschaft, which
has its seat at Petuelring 130, Munich, is registered
in the Commercial Register of the District Court of
Munich under the number HRB 42243.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
The BMW Group and segment income statements are
presented using the cost of sales method.
In order to provide a better insight into the results
of operations, financial position and net assets of
the BMW Group, and going beyond the require-
ments of IFRS 8 (Operating Segments), the Group
Financial Statements also include income statements
and balance sheets for the Automotive, Motorcycles,
Financial Services and Other Entities segments. The
Group Cash Flow Statement is supplemented by state-
ments of cash flows for the Automotive and Financial
Services segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant “Eliminations”
columns. A description of the nature of the business
and major operating activities of the BMW Group’s
segments is provided in
note 43 (“Explanatory notes
to segment information”).
On 15 February 2018, the Board of Management
granted approval for publication of the Group Finan-
cial Statements.
see
note 43
Group Financial Statements
127
gradual acquisition of the BMW Group’s 49 percent
shareholding. Accordingly, between the beginning
of 2018 and the end of 2020 at the latest, SGL Car-
bon SE will become the sole owner of the hitherto
joint operations. As a consequence of the transaction,
the joint operations will cease to be proportionately
consolidated in the BMW Group Financial Statements
with effect from the financial year 2018.
The BMW Group is also party to a cooperation with
Toyota Motor Corporation, Toyota City, for the devel-
opment of a sports car. This cooperation is accounted
for as a joint operation.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
Associated companies and joint ventures are account-
ed for using the equity method, with measurement on
initial recognition based on acquisition cost.
The following changes took place in the Group report-
ing entity in the financial year 2017:
Included at
31 December 2016
Included for the
first time in 2017
No longer included
in 2017
Included at
31 December 2017
Germany
Foreign
Total
21
1
1
178
199
20
11
21
12
21
187
208
02
Group reporting entity
and consolidation principles
The BMW Group Financial Statements include
BMW AG and all material subsidiaries over which
BMW AG – either directly or indirectly – exercises
control. This also includes 57 structured entities,
consisting of asset-backed securities entities and
special-purpose funds.
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group con-
siders contractual arrangements and other circum-
stances, as well as the structure and legal form of the
entity. Discretionary decisions may also be required.
If indications exist of a change in the judgement of
(joint) control, the BMW Group undertakes a new
assessment.
An entity is deemed to be controlled if BMW AG –
either directly or indirectly – has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
An entity is classified as an associated company if
BMW AG – either directly or indirectly – has the abil-
ity to exercise significant influence over the entity’s
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20 % or more of the entity’s voting power.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating
to the arrangement. Assets, liabilities, revenues
and expenses of a joint operation are recognised
proportionately in the Group Financial Statements
on the basis of the BMW Group entity’s rights and
obligations (proportionate consolidation). Together
with SGL Carbon SE, companies of the BMW Group
are party to joint operations for the manufacture of
carbon fibres and carbon fibre fabrics used in vehicle
production. In November 2017, an agreement was
signed with SGL Carbon SE concerning that entity’s
128
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
03
Foreign currency translation and measurement
The financial statements of consolidated companies
which are presented in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in “Accumulated other equity”.
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables
1 Euro =
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
Korean Won
04
Accounting policies; assumptions, judgements
and estimations
Revenues from the sale of products and services are
recognised when the risks and rewards of ownership
are transferred to the dealership or customer, provided
that the amount of revenue can be measured reliably,
it is probable that the economic benefits associated
with the transaction will flow to the entity and costs
incurred or to be incurred in respect of the sale can
be measured reliably. Revenues are stated net of set-
tlement discount, bonuses and rebates.
If the sale of products includes a determinable amount
for services (“multiple-component contracts”), the
related revenues are deferred and recognised as
income over the service period. Amounts are normally
recognised as income by reference to the pattern of
related expenditure.
Profits arising on the sale of vehicles for which a
Group company retains a repurchase commitment
(buyback agreements) are not recognised immediately.
The difference between the sales and buyback price is
accounted for as deferred income and recognised in
instalments as revenue over the contract term.
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on
settlement, are recognised in the income statement.
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
Closing rate
Average rate
31. 12. 2017
31. 12. 2016
1.20
0.89
7.80
1.06
0.85
7.34
2017
1.13
0.88
7.63
2016
1.11
0.82
7.35
134.93
123.34
126.68
120.25
1,281.41
1,274.34
1,276.47
1,283.86
Revenues relating to operating lease arrangements
are recognised on a straight-line basis over the lease
term. Interest income arising on finance leases and
on retail customer / dealership financing is recognised
using the effective interest method.
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost of
sales over the same periods as the costs occur which
they are intended to compensate.
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit after minority
interest, as attributable to each category of stock, by the
average number of outstanding shares. The net profit
is accordingly allocated to the different categories
of stock. The portion of the Group net profit for the
year which is not being distributed is allocated to each
category of stock based on the number of outstanding
shares. Profits available for distribution are determined
directly on the basis of the dividend resolutions passed
for common and preferred stock. Diluted earnings
per share are calculated and separately disclosed in
accordance with IAS 33.
Group Financial Statements
129
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no high-
er than the amortised acquisition or manufacturing
cost. Impairment losses on goodwill are not reversed.
As part of the assessment of recoverability, it is general-
ly necessary to apply estimations and assumptions – in
particular regarding future cash inflows and outflows
and the length of the forecast period – which could
differ from actual amounts. Actual amounts may differ
from the assumptions and estimations used if business
conditions develop differently to the expectations.
The BMW Group determines the value in use on
the basis of a present value calculation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These forecasts
are based on detailed forecasts drawn up at the oper-
ational level and, with a planning period of six years,
correspond roughly to the typical product life cycle of
vehicle projects. For the purposes of calculating cash
flows beyond the planning period, a residual value
is assumed which does not take growth into account.
Forecasting assumptions are continually adjusted to
current information and regularly compared with
external sources. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share development,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
reliably. Such assets are measured at acquisition
or manufacturing cost, as a general rule without
borrowing costs, and, to the extent that they have
a finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
Development costs for vehicle, module and architecture
projects are capitalised at manufacturing cost, to the
extent that attributable costs (including develop-
ment-related overhead costs) can be measured reliably
and both technical feasibility and successful marketing
are assured. It must also be sufficiently probable that
the development expenditure will generate future
economic benefits. Capitalised development costs are
amortised on a straight-line basis following the start
of production over the estimated product life cycle
(usually five to 12 years).
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition exceeds
the Group’s share of the net fair value of the assets
identified during the acquisition, liabilities and con-
tingent liabilities.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i. e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset’s carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset’s value in use or fair value less selling cost.
130
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Amounts are discounted on the basis of a market-re-
lated cost of capital rate. Impairment tests for the
Automotive and Motorcycles cash-generating units
are performed using a risk-adjusted pre-tax cost of
capital (WACC). In the case of the Financial Services
cash-generating unit, a pre-tax cost of equity capital
is used, as is customary in the sector. The following
discount factors were applied:
in %
2017
2016
Automotive
Motorcycles
Financial Services
12.0
12.0
13.4
12.0
12.0
13.4
The risk-adjusted discount rate, calculated using a
CAPM model, takes into account specific peer-group
information relating to beta-factors, capital structure
data and borrowing costs. In conjunction with the
impairment tests for cash-generating units, sensitivity
analyses are performed for the main assumptions, in
order to rule out that possible changes to the assump-
tions used to determine the recoverable amount would
result in the requirement to recognise an impairment
loss.
Items of property, plant and equipment are measured at
acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The
carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation – as a general
rule on a straight-line basis – over the useful lives of
the assets. Depreciation is recorded as an expense in
the income statement.
The following useful lives are applied throughout the
BMW Group:
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Plant and machinery
Other equipment, factory and office equipment
8 to 50
3 to 21
2 to 25
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
With respect to lease arrangements of the BMW Group,
use of judgement is required, in particular with regard
to the transfer of economic ownership of a leased item.
Leased items of property, plant and equipment whose
economic ownership is attributed to the BMW Group
(finance leases) are measured on initial recognition
at fair value or, if lower, at the net present value of
minimum lease payments. The assets are depreciated
using the straight-line method over their estimated
useful lives or, if shorter, over the contractual lease
period. The obligations for future lease payments are
recognised at their net present value in other financial
liabilities.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the peri-
od of the lease using the straight-line method down to
their expected residual value. Where the recoverable
amount of a lease exceeds the asset’s carrying amount,
changes in residual value expectations are recognised
by adjusting scheduled depreciation prospectively
over the remaining term of the lease. If the recoverable
amount is lower than the asset’s carrying amount, an
impairment loss is recognised for the shortfall. A test
is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years
no longer exists or has decreased. In such cases, the
carrying amount of the asset is increased to the recov-
erable amount, at maximum up to the amount of the
asset’s amortised cost.
Assumptions and estimations are required regarding
future residual values, since these represent a sig-
nificant part of future cash inflows. Relevant factors
to be considered include the trend in market prices
and demand on the pre-owned vehicle market. The
assumptions are based on internally available histor-
ical and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are
regularly validated by comparison with external data.
Group Financial Statements 131
Assessments are regularly made as to whether mate-
rial objective evidence indicates that a financial asset
or portfolio of assets is impaired. For the purposes
of assessing possible impairment, the BMW Group
takes account of all available information, such as
market conditions and prices as well as the duration
and magnitude of the decline in value. In the case of
equity instruments that are listed on a stock market,
it is assumed that an item is impaired if, for example,
its fair value falls below acquisition cost significantly
(more than 20 %) or on a prolonged basis (more than
5 % over nine months).
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables arising on vehicle finance
leases. Impairment allowances are recognised both on
a specific-item and a group basis. For these purposes,
the main factors taken into consideration are past
experience and current market data (such as the level
of arrears), as well as information on rating classes
and scoring. Consideration is also given to current
market data and macroeconomic conditions that could
have an impact on the general creditworthiness of
customers as well as the overall market environment
for pre-owned vehicles. The market value of vehicles
which serve as collateral changes when prices on pre-
owned vehicle markets fall. Specific allowances are
recognised if there is objective evidence of impairment.
In the retail credit financing and leasing business,
the existence of overdue balances or the incidence
of similar events in the past are examples of such
evidence. In the event of overdue receivables, allow-
ances are always recognised individually based on
the duration of the arrears. In the case of dealership
financing receivables, the allocation to a correspond-
ing rating category also represents objective evidence
of impairment. If no objective evidence of impairment
exists, allowances are recognised using a portfolio
approach based on similar groups of assets. Company-
specific loss probabilities and loss ratios, derived from
historical data, are used to measure allowances on
similar groups of assets.
Investments accounted for using the equity method are rec-
ognised at the Group’s share of their revalued equity
capital, provided no impairment has been recognised.
Financial assets reported as other investments are recog-
nised and measured at their fair value in accordance
with the requirements of IAS 39. If this value is not
available or cannot be determined reliably, they are
measured at cost. Subsidiaries, joint arrangements
and associated companies included in other invest-
ments, but which are not material to the BMW Group,
do not fall within the scope of IAS 39.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets
are accounted for on the basis of the settlement date.
On initial recognition, financial assets are measured
at their fair value. Transaction costs are included
unless the financial assets are allocated to the category
“financial assets measured at fair value through profit
or loss”.
The Group’s financial assets are allocated to either
cash funds or to the categories “loans and receivables”,
“available-for-sale”, “held for trading” or “fair value
option”.
The fair value option is applied by the BMW Group
for non-current marketable securities with embed-
ded derivatives and non-current loans receivable
from third parties. The related gains and losses are
presented in the income statement line item Other
financial result. Related interest income and expenses
are presented in net interest result.
Subsequent to initial recognition, financial assets
which are available-for-sale or held-for-trading or for
which the fair value option is applied, are measured at
their fair value. The fair values shown are determined
on the basis of market information available at the
balance sheet date, prices quoted by the contract
partners or appropriate measurement methods, e. g.
discounted cash flow models.
Those non-derivative financial assets that are not
classified as “loans and receivables” or “held-to-
maturity investments” or as items measured “at
fair value through profit and loss” are classified as
“available-for-sale”. Financial assets that are classified
as loans and receivables are measured at amortised
cost using the effective interest method. All financial
assets for which published price quotations in an active
market are not available and whose fair value cannot
be determined reliably are measured at cost.
be applied, the gains or losses arising on the fair value
measurement of derivative financial instruments are
recognised in the income statement.
Deferred taxes are recognised on all temporary dif-
ferences between the tax and accounting bases of
assets and liabilities and on consolidation procedures.
The recoverability of deferred tax assets is assessed
at each balance sheet date on the basis of planned
taxable income in future financial years. If with a
probability of more than 50 percent future tax ben-
efits will not be realised, either in part or in total, a
valuation allowance is recognised on the deferred tax
assets. The calculation of deferred tax assets requires
assumptions to be made with regard to the level of
future taxable income and the timing of recovery of
deferred tax assets. These assumptions take account of
forecast operating results and the impact on earnings
of the reversal of taxable temporary differences. Since
future business developments cannot be predicted
with certainty and to an extent cannot be influenced
by the BMW Group, the measurement of deferred tax
assets is subject to uncertainty. Deferred taxes are cal-
culated on the basis of tax rates which are applicable or
expected to apply in the relevant national jurisdictions
when the amounts are recovered.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
132
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
The recognition of allowances on receivables relating
to the industrial business is also based, as far as pos-
sible, on the same procedures applied in the financial
services business. The impairment allowances are
recorded in separate accounts and are derecognised
at the same time the corresponding written-down
receivables are derecognised.
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks arising from operating activities and the relat-
ed financing requirements. All derivative financial
instruments are measured at their fair value. The
fair values of derivative financial instruments are
determined using measurement models and are
therefore subject to the risk that they could differ
from realisable market prices on disposal. Observ-
able financial market price spreads are taken into
account in the measurement of derivative financial
instruments. The supply of data for the model used
to calculate fair values also takes account of tenor
and currency basis spreads.
In addition, the Group’s own credit risk and that of
counterparties is taken into account on the basis of
credit default swap values for market contracts with
matching terms. The BMW Group applies the option
of measuring the credit risk for a group of financial
assets and financial liabilities on the basis of the net
exposure of long and short positions. Portfolio-based
value adjustments to the individual financial assets
and financial liabilities are allocated using the relative
fair value approach (net method).
Where hedge accounting is applied, changes in fair val-
ue are recognised in the income statement or in other
comprehensive income as a component of accumulat-
ed other equity, depending on whether the hedging
relationship is classified as a fair value hedge or a
cash flow hedge. In the case of a fair value hedge, the
results of the fair value measurement of the derivative
financial instruments and the related hedged items
are recognised in the income statement. Fair value
hedges are mainly used to hedge the market prices of
bonds, other financial liabilities and receivables from
sales financing. In the case of a cash flow hedge, the
effective portion of the fair value gain or loss on the
derivative financial instrument is recognised directly
in accumulated other equity. The ineffective portion of
the fair value gain or loss is recognised in the income
statement. Amounts recorded in accumulated other
equity are recognised in the income statement when
the hedged item or external revenue item is recognised
in the income statement. If, contrary to the usual prac-
tice within the BMW Group, hedge accounting cannot
Group Financial Statements Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-
related overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Financ-
ing costs are not included in the acquisition or man-
ufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months, and are measured at face value.
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in
accordance with IFRS 5 if the carrying amount of the
relevant assets will be recovered principally through
a sale transaction rather than through continuing
use. This applies only in cases in which the assets
can be sold immediately in their present condition,
the sale is expected to be completed within one year
from the date of classification and the sale is highly
probable. At the date of classification, property, plant
and equipment, intangible assets and disposal groups
which are being held for sale are measured at the
lower of their carrying amount and their fair value
less costs to sell, and are no longer subject to sched-
uled depreciation / amortisation. This does not apply,
however, to items within the disposal group which
are not covered by the measurement rules contained
in IFRS 5. At the same time, liabilities directly related
to the sale are presented separately on the equity and
liabilities side of the balance sheet as Liabilities in
conjunction with assets held for sale.
Provisions for pensions are measured using the pro-
jected unit credit method. Under this method, not
only obligations relating to known vested benefits
at the reporting date are recognised, but also the
effect of future expected increases in pensions and
salaries. The calculation is based on independent
actuarial valuations which take into account relevant
biometric factors.
133
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates,
salary trends, employee fluctuation and the life expec-
tancy of employees. Discount rates are determined by
reference to market yields at the end of the reporting
period on high quality fixed-interest corporate bonds.
The salary trend relates to the expected future rate of
salary increase which is estimated annually based on
inflation and the career development of employees
within the Group.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
income statement.
Past service cost arises when a BMW Group compa-
ny introduces a defined benefit plan or changes the
benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
134
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Other provisions are recognised when the BMW Group
has a present legal or factual obligation towards a
third party arising from past events, the settlement
of which is probable, and when the amount of the
obligation can be reliably estimated. Provisions with
a remaining term of more than one year are measured
at their net present value.
The measurement of provisions for statutory and non-
statutory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manu-
facturer warranties prescribed by law, the BMW Group
offers various categories of guarantee depending on
the product and sales market. These provisions are
recognised when the risks and rewards of ownership
of the goods are transferred to the dealership or
retail customer or when a new category of warranty
is introduced. With respect to the level of the provi-
sion, estimations are made in particular based on past
experience of damage claims and processes. Future
potential repair costs and price increases per product
and market are also taken into account. Specific and
expected warranty items, such as vehicle recalls, are
also included. Provisions for warranties for all compa-
nies of the BMW Group are adjusted regularly to take
account of new information, with the impact of any
changes recognised in the income statement. Similar
estimates are made in conjunction with the measure-
ment of expected reimbursement claims, which are
presented as separate assets.
The recognition of provisions for litigation and liability
risks necessitates making assumptions in order to
determine the probability of liability, the amount
of claim and the duration of the legal dispute. The
assumptions made, especially the assumption about
the outcome of legal proceedings, are subject to a
high degree of uncertainty. The appropriateness of
assumptions is regularly reviewed, based on assess-
ments undertaken both by management and external
experts, such as lawyers. If new developments arise
in the future that result in a different assessment,
provisions are adjusted accordingly.
see
notes 38
and 44
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
see
note 39
Financial liabilities are measured on first-time recog-
nition at their fair value. Transaction costs are also
taken into account, except in the case of financial
liabilities allocated to the category “measured at fair
value through profit or loss”. Subsequent to initial
recognition, liabilities are – with the exception of
derivative financial instruments – measured at amor-
tised cost using the effective interest method.
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
provided in
note 38 and in the list of investments
disclosed in
note 44.
Share-based remuneration programmes which are expect-
ed to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
as personnel expense in the income statement over
the vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
in
note 39.
Group Financial Statements 05
Financial reporting rules
(a) Standards and Revised Standards significant for
the bMW Group applied for the first time in the
financial year 2017:
Standard / Interpretation
135
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
IAS 7
Disclosures Initiative – Reconciliation of Liabilities From Financing Activities
(Amendments to IAS 7)
29. 1. 2016
1. 1. 2017
1. 1. 2017
The amendments to IAS 7 (Statement of Cash Flows)
require a reconciliation between the opening and
closing balances of liabilities arising from financing
activities, for which cash inflows and outflows are
presented in the Statement of Cash Flows. The rec-
onciliation is presented in
note 33.
see
note 33
(b) Financial reporting pronouncements issued by
the IASb that are significant for the bMW Group,
but have not yet been applied:
Standard / Interpretation
IFRS 9
IFRS 15
Financial Instruments
Revenue from Contracts with Customers
Date of
mandatory
application
IASB
1. 1. 2018
1. 1. 2018
Date of
mandatory
application
EU
1. 1. 2018
1. 1. 2018
Date of
issue by
IASB
24. 7. 2014
28. 5. 2014
11. 9. 2015
12. 4. 2016
IFRS 16
Leases
13. 1. 2016
1. 1. 2019
1. 1. 2019
IFRS 9 (Financial Instruments) contains new require-
ments for the classification and measurement of
financial assets that are based on the reporting entity’s
business model for the management of these financial
instruments and the characteristics of its contractual
cash flows (“Solely Payments of Principal and Inter-
est” (SPPI) criterion). IFRS 9 also gives rise to a new
model for determining impairment, which is based on
expected credit losses. To date, impairments have been
recognised when corresponding objective evidence
existed. Furthermore, the requirements for hedge
accounting were revised with the aim of bringing
the accounting treatment more into line with risk
management activities.
The BMW Group will apply IFRS 9 for the first time
with effect from 1 January 2018. An exception is made
in the accounting treatment of fair value hedging of
a portfolio against interest rate risk, for which the
requirements of IAS 39 will continue to be applied.
IFRS 9 requires retrospective application in the areas
of classification and measurement, while the new
rules for hedge accounting are required to be applied
prospectively, with few exceptions. The BMW Group
will apply the exemption contained in IFRS 9, allowing
unadjusted comparative information for prior periods.
The new requirements for the classification and
measurement of financial assets and financial lia-
bilities result in a number of cases to a change in
measurement category for the BMW Group. In future,
changes in the value of equity instruments falling
within the scope of IFRS 9 which are held at the date
of adoption, will be recognised through the income
statement. Due to the change in the measurement
category, an increase in the revenue reserves amount-
ing to approximately € 78 million is recognised at the
date of adoption of the new rules, net of the deferred
tax effect of approximately € 1 million. This includes
approximately € 76 million for equity instruments
which gives rise to a reduction in accumulated other
equity of the same amount.
136
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Implementation of the new impairment model has
required substantial modifications to existing process-
es and systems, especially for the Financial Services
segment. Receivables from sales financing have been
measured using the three-stage model stipulated by
IFRS 9. Operating lease receivables represent an
exception, in which the simplified approach has
been applied. For these receivables, expected losses
are calculated for the remaining term. The transfer
criteria for the three-stage impairment model is based
in principle on a comparison of default probabilities
pursuant to the definitions used in the internal risk
management system for each financial instrument.
In addition, qualitative indicators are taken into
account in the transfer criteria, such as overdue period
or significant changes in the internal credit rating.
Impairment allowances are calculated in a central
application. The risk models used were determined
on the basis of internal historical default information
and macroeconomic factors.
At the date of the first-time application, the new
accounting requirements for interest rate hedging
instruments will result in an increase in revenue
reserves of approximately € 18 million, net of deferred
tax effects of approximately € 6 million.
The new Standard IFRS 15 (Revenue from Contracts
with Customers) is aimed to assimilate the numerous
existing requirements and interpretations relating to
revenue recognition into a single Standard. The new
Standard also stipulates uniform revenue recognition
principles for all sectors and all categories.
The Standard will be applied retrospectively in its
entirety with effect from 1 January 2018, meaning that
all comparative information for prior periods will be
adjusted in accordance with IFRS 15. The exemption
provision, allowing contracts fulfilled prior to 1 Janu-
ary 2017 not to be newly assessed in accordance with
IFRS 15, has been applied.
For trade receivables, the simplified approach has
been applied. The parameters used to calculate impair-
ment allowances are determined specifically for each
portfolio.
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with
customers. Revenues are required to be recognised
either over time or at a specific point in time.
A major difference to the previous Standard is the
increased scope of discretion for estimates and the
introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
As a result of the accounting treatment of buyback
arrangements and rights of return for sales of vehicles
which the Financial Services segment will subsequently
lease to customers, intragroup eliminations within
the BMW Group will be subject to earlier recognition.
The application of IFRS 15 results in a retrospective
decrease in Group revenue reserves as at 1 Janu-
ary 2017 amounting to approximately € 499 million,
net of deferred taxes of approximately € 239 million
(1 January 2018: reduction of revenue reserves by
approximately € 553 million, net of deferred taxes of
approximately € 192 million). No significant impact
is expected to arise during the period of first-time
application.
Overall, the introduction of the new impairment
model across the BMW Group with effect from
1 January 2018 results in a reduction in impairment
allowances and an increase in revenue reserves of
approximately € 82 million net of deferred tax effects
of approximately € 31 million. Of this amount, approx-
imately € 86 million relates to receivables from sales
financing net of deferred tax effects of approximately
€ 33 million.
With regard to the accounting treatment of hedging
relationships, it is expected that it will be possible in
future to apply hedge accounting rules to the majority
of commodity hedging instruments. Moreover, chang-
es in the time value of options are required to be
recognised as “cost of hedging” in accumulated other
equity during the hedging period. These changes are
expected to result in a significant reduction in the
volatility of amounts reported for financial result and
Group earnings.
In future, costs arising in conjunction with hedging
will be reported in total in the income statement as
part of the profit before financial result (EBIT). As the
cost of options to hedge foreign currency exposures
is currently reported in the financial result, this will
have a negative impact on the Automotive segment’s
EBIT. The scale of the impact will depend on the future
volume of option contracts. The volume of option
contracts at 31 December 2017 is not material.
Group Financial Statements 137
In the case of multi-component contracts with variable
consideration components, changes in the allocation
of transaction prices will result for the Automotive
segment in higher amounts being recognised for
vehicle sales and a lower level of amounts deferred
for service contracts. The shift in the timing of rev-
enue recognition results in a retrospective increase
in Group revenue reserves as at 1 January 2017 of
approximately € 89 million, net of deferred taxes of
approximately € 38 million (1 January 2018: increase
in revenue reserves of approximately € 112 million, net
of deferred taxes of approximately € 42 million). The
shift is not expected to have a significant impact on
the income statement during the period of first-time
application.
In accordance with IFRS 15, costs relating to sales
promotion measures in the Automotive segment,
such as sales support or residual value subsidies are
to be treated as variable components of consideration
and will therefore in future be recognised as revenue
deductions. A part of these costs have been reported
to date within cost of sales. The change in presenta-
tion in the income statement will result in a decrease
in both revenues and cost of sales. For the financial
year 2017, the amount subject to changed accounting
presentation in the Automotive segment amounts
to approximately € 2.9 billion, and is insignificant
for the Group.
As a result of the adjustments described above, the
Automotive segment’s EBIT margin for 2017 will
improve by 0.3 percentage points to 9.2 %.
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recognition.
The resulting impact is not expected to be significant.
Buyback arrangements between the Automotive and
Financial Services segments are not reflected in the
internal management system or reporting and there-
fore, in accordance with IFRS 8, do not result in any
changes in the presentation of segment information.
The following table shows a summary of the estimated
effect on revenue reserves of the first-time application
of IFRS 9 and IFRS 15.
in € million
Amendment
1. 1. 2017
2017
1. 1. 2018
Segment
Impact on
revenue reserves
Impact on
net profit
Impact on
revenue reserves
Elimination of buyback arrangements and rights
– 499
– 54
– 553
IFRS 15
IFRS 15
IFRS 9
IFRS 9
IFRS 9
Change in transaction prices relating to
multi-component contracts 1
Change in measurement category
Introduction of impairment model
Hedge accounting
Eliminations
Automotive
89
–
–
–
23
–
–
–
112
78
82
18
Automotive / Other
Automotive / Financial Services
Financial Services / Other
Total impact of first-time application
– 410
– 31 2
– 263
1 Includes the effect of the adjustment relating to entities accounted for using the equity method.
2 Includes effects relating to the reduction of the US federal corporate tax rate from 35 % to 21 % with effect from 1 January 2018. The pre-tax profit impact amounts to € + 20 million.
138
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Notes to the
Income Statement
The new Standard IFRS 16 (Leases) sets out a new
approach to accounting for leases by lessees. While
under IAS 17, the accounting treatment of a lease was
determined on the basis of the transfer of risks and
rewards incidental to ownership of the asset, in the
future, all leases in general are to be accounted for by
the lessee in a similar way to finance leases.
The BMW Group will use the grandfather clause
available for existing leases and apply the available
exemptions regarding the recognition of short-
term leases and low value leasing assets. The new
Standard will be applied for the first time using the
modified retrospective method. Intragroup leasing
arrangements are not reflected in the internal man-
agement system or in internal reporting pursuant
to IFRS 16 and therefore, in accordance with IFRS 8,
do not result in any changes in the presentation of
segment information. Early adoption of IFRS 16 is
not planned.
The accounting requirements for lessors, particularly
in relation to the requirement to classify leases, will
remain largely unchanged.
The impact on the BMW Group’s results of operations,
financial position and net assets is currently being
analysed as part of a Group-wide implementation
project. A reliable quantitative measurement of the
impact is not possible at present, in particular because
the compilation and assessment of contracts across the
Group has not yet been completed. The BMW Group
expects a slight increase in the balance sheet total and
the result before financial result, as well as a slight
improvement in the net cash flow from operating
activities and a slight deterioration in the net cash
flow from financing activities.
Other financial reporting standards issued by the IASB
and not yet applied are not expected to have a signif-
icant impact on the BMW Group Financial Statements.
Group Financial Statements 139
NOTES TO THE INCOME
STATEMENT
06
Revenues
Revenues by activity comprise the following:
in € million
2017
2016
Sales of products and related goods
71,443
68,681
Sales of products previously
leased to customers
Income from lease instalments
Interest income on loan financing
Other income
Revenues
10,208
9,816
3,720
3,491
9,258
9,507
3,455
3,262
98,678
94,163
An analysis of revenues by segment and region is
shown in the segment information in
note 43.
see
note 43
07
Cost of sales
Cost of sales comprises:
Research and development expenditure was as follows:
in € million
2017
2016
Research and development expenses
Amortisation
New expenditure for capitalised
development costs
Total research and development
expenditure
4,920
– 1,236
4,294
– 1,222
2,424
2,092
6,108
5,164
08
Selling and administrative expenses
Selling expenses amounted to € 6,167 million (2016:
€ 6,030 million) and comprise mainly marketing,
advertising and sales personnel costs.
Administrative expenses amounted to € 3,393 million
(2016: € 3,128 million) and relate mainly to personnel
and IT costs.
09
Other operating income and expenses
Other operating income and expenses comprise the
following items:
in € million
2017
2016
in € million
2017
2016
Income from the reversal of provisions
Exchange gains
Manufacturing costs
43,877
43,175
Cost of sales relating to financial services
business
thereof: Interest expense relating
to financial services business
Research and development expenses
Service contracts, telematics and roadside
assistance
Warranty expenditure
Other cost of sales
Cost of sales
22,932
20,723
1,801
4,920
2,081
2,041
2,893
1,638
4,294
2,018
2,165
3,067
78,744
75,442
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to € 61 million
(2016: € 69 million).
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
Sundry operating expenses
Other operating expenses
282
138
8
80
212
720
– 246
– 580
– 29
– 359
– 1,214
262
115
51
46
196
670
– 249
– 303
– 28
– 267
– 847
Other operating income and expenses
– 494
– 177
140
Notes to the Group
Financial Statements
Notes to the
Income Statement
Income from the reversal of and expenses for the rec-
ognition of impairment losses and write-downs relate
primarily to impairment allowances on receivables.
The expense for additions to provisions includes liti-
gation and other legal risks. Income from the reversal
of provisions includes legal disputes that have been
resolved.
10
Net interest result
12
Income taxes
Taxes on income of the BMW Group comprise the
following:
in € million
2017
2016
Current tax expense
Deferred tax expense (+) /
deferred tax income (–)
thereof relating to temporary
differences
thereof relating to tax loss
carryforwards and tax credits
2,558
2,670
– 609
– 553
– 56
85
80
5
in € million
2017
2016
Income taxes
1,949
2,755
Other interest and similar income
thereof from subsidiaries:
Interest and similar income
Expense relating to interest impact
on other long-term provisions
Net interest expense on the net defined
benefit liability for pension plans
Other interest and similar expenses
thereof subsidiaries:
Interest and similar expenses
201
9
201
196
12
196
– 66
– 84
– 81
– 265
– 2
– 412
– 78
– 327
– 4
– 489
Net interest result
– 211
– 293
11
Other financial result
in € million
2017
2016
Income from investments in subsidiaries
and participations
thereof from subsidiaries:
Impairment losses on investments in
subsidiaries and participations
Result on investments
Income (+) and expenses (–) from
financial instruments
Sundry other financial result
Other financial result
14
13
–
14
234
234
248
13
13
– 192
– 179
310
310
131
Current tax expense includes tax income of € 104 mil-
lion (2016: € 174 million) relating to prior periods.
The tax expense was reduced by € 91 million (2016:
€ 49 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
The tax expense resulting from the change in the val-
uation allowance on deferred tax assets relating to tax
losses available for carryforward and temporary dif-
ferences amounted to € 67 million (2016: € 38 million).
Deferred taxes are determined on the basis of tax
rates which are are currently applicable or expected
to apply in the relevant national jurisdictions when
the amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 425.0 % (2016: 425.0 %), the underlying income tax
rate for Germany was as follows:
in %
2017
2016
Corporation tax rate
Solidarity surcharge
Corporation tax rate including solidarity
surcharge
Municipal trade tax rate
German income tax rate
15.0
5.5
15.8
14.9
30.7
15.0
5.5
15.8
14.9
30.7
Group Financial Statements
Deferred taxes for non-German entities are calculat-
ed on the basis of the relevant country-specific tax
rates. These range in the financial year 2017 between
9.0 % and 45.0 % (2016: between 12.5 % and 45.0 %).
Changes in tax rates resulted in deferred tax income
of € 824 million (2016: € 70 million). The principal
reason for this development was the reduction in the
US federal corporate income tax rate from 35.0 % to
21.0 % with effect from 1 January 2018.
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
141
in € million
Profit before tax
Tax rate applicable in Germany
Expected tax expense
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
2017
2016
10,655
30.7 %
3,271
– 1,071
58
– 104
– 205
1,949
18.3 %
9,665
30.7 %
2,967
– 119
78
– 174
3
2,755
28.5 %
Variances due to different tax rates were influenced in
particular by the reduction in the US federal corporate
income tax rate, which was required to be taken into
account in the measurement of deferred taxes as of
31 December 2017. This resulted in a reduction in tax
expense of € 977 million.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income decreased
compared to one year earlier. As in the previous year,
tax increases as a result of non-tax-deductible expenses
were attributable mainly to the impact of non-recover-
able withholding taxes and transfer price issues.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
Other variances comprise various reconciling items,
including the Group’s share of earnings of companies
accounted for using the equity method.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
in € million
Intangible assets
Property, plant and equipment
Leased products
Other investments
Sundry other assets
Tax loss carryforwards and capital losses
Provisions
Liabilities
Eliminations
Valuation allowances on tax loss carryforwards and capital losses
Netting
Deferred taxes
Net
Deferred tax assets
Deferred tax liabilities
2017
2016
2017
2016
18
88
473
3
613
608
5,192
2,431
3,016
13
26
467
3
1,448
536
4,966
2,760
3,481
2,593
195
4,655
10
3,629
–
78
403
691
2,234
305
6,987
17
2,861
–
184
298
797
12,442
13,700
12,254
13,683
– 502
– 10,013
1,927
–
– 485
– 10,888
2,327
–
–
– 10,013
2,241
314
–
– 10,888
2,795
468
142
Notes to the Group
Financial Statements
Notes to the
Income Statement
Tax loss carryforwards – for the most part usable with-
out restriction – amounted to € 928 million (2016:
€ 637 million). This includes an amount of € 548 million
(2016: € 464 million), for which a valuation allowance
of € 186 million (2016: € 158 million) was recognised on
the related deferred tax asset. For entities with tax loss-
es available for carryforward, a net surplus of deferred
tax assets over deferred tax liabilities is reported at
31 December 2017 amounting to € 131 million (2016:
€ 90 million). Deferred tax assets are recognised on the
basis of the management’s assessment that there is
material evidence that the entities will generate future
taxable profits, against which deductible temporary
differences can be offset.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
decreased to € 1,854 million (2016: € 1,926 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses – amounting to
€ 315 million at the end of the reporting period (2016:
€ 327 million) – were fully written down since they can
only be utilised against future capital gains.
Netting relates to the offset of deferred tax assets and
liabilities within individual entities or tax groups to
the extent that they relate to the same tax authorities.
Deferred taxes recognised directly in equity amounted
to € 997 million (2016: € 1,812 million).
Changes in deferred tax assets and liabilities during
the reporting period can be summarised as follows:
in € million
2017
2016
Deferred taxes at 1 January (assets (–) / liabilities (+))
Deferred tax expense (+) / income (–) recognised through income statement
Change in deferred taxes recognised directly in equity
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (–) / liabilities (+))
468
– 609
772
591
181
– 317
314
171
85
163
724
– 561
49
468
As a result of currency translation, deferred taxes
recognised directly in equity in the financial year
decreased by € 43 million (2016: € 29 million).
Deferred taxes are not recognised on retained prof-
its of € 42.8 billion (2016: € 38.7 billion) of foreign
subsidiaries, as it is intended to invest these profits
to maintain and expand the business volume of the
relevant companies. No calculation was made of the
potential impact of income taxes on the grounds of
proportionality.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities.
Taking account of numerous factors – including
interpretations, commentaries and legal decisions
relating to the various tax jurisdictions as well as past
experience – adequate provision has been made, to the
extent identifiable and probable, for potential future
tax obligations.
Group Financial Statements 13
Earnings per share
143
2017
2016
Net profit attributable to the shareholders of BMW AG
€ million
8,619.9
6,862.9
€ million
€ million
7,895.9
724.0
6,289.2
573.7
number
601,995,196
601,995,196
number
55,114,290
54,809,375
€
€
€
€
13.12
13.14
4.00 *
4.02 *
10.45
10.47
3.50
3.52
The average number of employees during the year was:
2017
2016
Employees
119,611
115,842
thereof at
proportionately-consolidated entities
Apprentices and students gaining work
experience
thereof at
proportionately-consolidated entities
182
204
7,913
7,913
1
1
Average number of employees
127,524
123,755
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
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.
Earnings per share of preferred stock are calculated
on the basis of the number of shares of preferred stock
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
14
Personnel expenses
The income statement includes personnel expenses
as follows:
in € million
2017
2016
Wages and salaries
Pension and welfare expenses
Social insurance expenses
Personnel expenses
10,022
1,211
819
9,581
1,152
802
12,052
11,535
Personnel expenses include € 54 million (2016:
€ 61 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to € 105 million
(2016: € 90 million). Employer contributions paid to
state pension insurance schemes totalled € 630 million
(2016: € 607 million).
144
Notes to the Group
Financial Statements
Notes to the
Income Statement
Notes to the
Statement of
Comprehensive
Income
15
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2017 for the Group auditor
and its network of audit firms amounted to € 25 million
(2016: € 23 million) and consists of the following:
in € million
2017
2016*
Audit of financial statements
17
16
16
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to € 30 million (2016: € 31 million)
and € 112 million (2016: € 126 million) respectively,
was recognised in the income statement in 2017.
These amounts mainly relate to public sector grants
aimed at the promotion of regional structures as well
as subsidies received for plant expansions.
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other attestation services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Fee expense
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
* Prior year figures have been adjusted.
5
4
3
2
–
2
1
4
4
4
2
–
1
–
25
9
23
8
Services provided by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, on behalf of BMW AG and sub-
sidiaries under its control relate to the audit of the
financial statements, other attestation services, tax
advisory services and other services.
The audit of financial statements comprises mainly the
audit of the Group financial statements and Company
financial statements of BMW AG and its subsidiaries,
and, following the introduction of new regulations,
all work related thereto, including the review of the
Group Interim Financial Statements.
Other attestation services include mainly project-relat-
ed audits, comfort letters as well as legally prescribed,
contractually agreed or voluntarily commissioned
attestation work.
Tax advisory services were performed particularly in
conjunction with tax compliance.
Other services include mainly preparation of studies.
Group Financial Statements
145
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
17
Disclosures relating to the statement of
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
2017
2016
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
Other comprehensive income for the period after tax
Deferred taxes on components of other comprehen-
sive income are as follows:
693
– 218
475
39
83
– 44
1,914
2,017
– 103
– 30
– 597
– 1,171
155
630
– 1,858
529
– 1,329
40
79
– 39
2,008
1,458
550
43
– 721
– 230
1,140
– 189
in € million
2017
2016
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
693
39
1,914
– 30
– 1,171
– 218
2
– 568
– 31
475
41
1,346
– 61
–
– 1,171
– 1,858
40
2,008
43
– 230
529
– 12
– 680
– 29
–
1,445
– 815
630
3
– 192
– 1,329
28
1,328
14
– 230
– 189
Other comprehensive income arising from equity
accounted investments is reported in the Statement
of Changes in Equity within currency translation
differences with an amount of € – 152 million
(2016: € – 73 million) and within derivative finan-
cial instruments used for hedging purposes with an
amount of € 91 million (2016: € 87 million).
146
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
NOTES TO THE BALANCE SHEET
18
Analysis of changes in Group tangible, intangible and investment assets 2017
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2017 1
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12. 2017
1. 1. 2017 1
Current year
adjustments3
Disposals
31. 12. 2017
31. 12. 2017
31. 12. 2016
Translation
differences
Reclas si-
fications
Value
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
Other facilities, factory and office equipment
11,484
386
1,530
13,400
10,940
35,924
2,674
–
– 1
– 37
– 38
– 299
– 681
– 91
2,424
–
286
2,710
271
2,123
314
1,694
4,402
Advance payments made and construction in progress
Property, plant and equipment
2,255
– 97
51,793
– 1,168
Leased products
45,595
– 3,047
18,281
Investments accounted for using
the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
2,546
–
639
501
710
28
1,239
– 8
– 7
–
– 15
74
118
–
192
1 Including first-time consolidation.
2 Including assets under construction of € 2,010 million.
3 Including € 3 million recognised through the income statement and € 76 million directly in equity.
Analysis of changes in Group tangible, intangible and investment assets 2016
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
10,522
369
1,455
12,346
10,458
35,497
2,606
1,600
50,161
–
–
– 2
– 2
– 15
– 185
22
23
– 155
2,092
–
100
2,192
300
1,510
234
1,587
3,631
Leased products
42,334
316
18,339
Investments accounted for using
the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including first-time consolidation.
2 Including assets under construction of € 1,760 million.
2,233
233
656
28
917
–
2
–
–
2
513
321
56
–
377
–
–
–
–
228
1,027
70
943
–
29
972
52
1,560
168
12,965
385
1,750
15,100
11,088
36,833
2,799
– 1,325
2
2,525
–
–
–
–
–
–
–
1,782
53,245
16,686
44,143
418
2,767
129
1
–
438
820
28
130
1,286
–
–
–
–
231
691
32
1,130
11,484
–
58
369
1,495
1,188
13,348
34
1,589
222
10,940
35,924
2,672
– 954
3
2,253
–
–
–
–
–
–
–
1,848
51,789
15,401
45,588
200
2,546
56
2
–
58
500
710
28
1,238
678
– 3
–
–
–
596
690
33,830
– 708
3,395
1,743
34,774
18,471
17,960
Property, plant and equipment
7,801
– 379
3,633
3,169
7,886
36,257
37,789
Leased products
943
–
28
971
37
1,548
158
5
1,075
5,636
4,966
27,838
1,970
4,556
8,409
7,221
380
675
364
572
9,464
8,157
Development costs
Goodwill
Other intangible assets
Intangible assets
6,122
8,995
829
6,154
8,832
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
721 Other facilities, factory and office equipment
–
2,525 2
2,253
Advance payments made and
construction in progress
–
2,767
2,546
Investments accounted for using
the equity method
189
408
– 1
249
412
29
308
226
26
560
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
1,130
4,263
7,221
6,351
Development costs
–
58
5
923
364
572
364
657
1,188
5,191
8,157
7,372
Goodwill
Other intangible assets
Intangible assets
26
1,566
214
4,786
27,092
1,951
6,154
8,832
721
5,915
9,593
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
660 Other facilities, factory and office equipment
–
2,253 2
1,591
Advance payments made and
construction in progress
4,263
5
928
5,196
4,786
27,092
1,952
–
–
192
484
2
4,171
5
797
4,973
4,516
25,891
1,942
2
–
76
411
2
489
–
–
– 16
– 16
– 115
– 531
– 62
– 3
– 28
– 100
–
–
–
–
–
–
3
3
9
–
–
–
–
–
1,236
–
191
1,427
337
2,820
238
–
–
–
–
–
1,222
–
181
1,403
320
2,865
218
–
–
116
76
–
– 5
–
–
–
–
5
–
–
–
–
–
–
–
–
–
–
–
–
4
2
–
–
–
–
–
–
– 4
– 2
– 76
– 3
– 79
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3
–
32,351
– 119
3,403
1,806
33,829
17,960
17,759
Property, plant and equipment
7,308
19
3,306
2,834
7,799
37,789
34,965
Leased products
–
2,546
2,233
Investments accounted for using
the equity method
192
484
2
308
226
26
157
245
26
428
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
–
192
–
3
678
560
Other investments
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2016 1
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12. 2016
1. 1. 2016 1
Current year
adjustments
Disposals
31. 12. 2016
31. 12. 2016
31. 12. 2015
Translation
differences
Reclas si-
fications
Value
Group Financial Statements
147
Development costs
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2017 1
Additions
Disposals
31. 12. 2017
Translation
differences
Reclassi-
fications
1. 1. 2017 1
Translation
differences
Current year
Reclas si-
fications
Value
adjustments3
Disposals
31. 12. 2017
31. 12. 2017
31. 12. 2016
Advance payments made and construction in progress
Property, plant and equipment
2,255
– 97
51,793
– 1,168
– 1,325
2
2,525
1,782
53,245
4,263
5
928
5,196
4,786
27,092
1,952
–
–
– 16
– 16
– 115
– 531
– 62
1,236
–
191
1,427
337
2,820
238
–
–
–
33,830
– 708
3,395
Leased products
45,595
– 3,047
18,281
16,686
44,143
7,801
– 379
3,633
–
192
484
2
–
– 3
–
–
–
–
–
–
–
–
–
–
– 5
5
–
–
–
–
–
–
–
–
3 Including € 3 million recognised through the income statement and € 76 million directly in equity.
678
– 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 76
– 3
– 79
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
Other facilities, factory and office equipment
Investments accounted for using
the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including first-time consolidation.
2 Including assets under construction of € 2,010 million.
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
Investments accounted for using
the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including first-time consolidation.
2 Including assets under construction of € 1,760 million.
11,484
386
1,530
13,400
10,940
35,924
2,674
–
– 1
– 37
– 38
– 299
– 681
– 91
943
–
29
972
52
1,560
168
12,965
385
1,750
15,100
11,088
36,833
2,799
228
1,027
70
2,546
–
639
418
2,767
501
710
28
1,239
– 8
– 7
–
– 15
74
118
–
192
129
1
–
438
820
28
130
1,286
10,522
369
1,455
12,346
10,458
35,497
2,606
1,600
50,161
2,233
233
656
28
917
–
–
– 2
– 2
– 15
– 185
22
23
– 155
–
2
–
–
2
1,130
11,484
–
58
369
1,495
1,188
13,348
231
691
32
34
1,589
222
10,940
35,924
2,672
– 954
3
2,253
1,848
51,789
200
2,546
56
2
–
58
500
710
28
1,238
2,424
–
286
2,710
271
2,123
314
1,694
4,402
2,092
–
100
2,192
300
1,510
234
1,587
3,631
513
321
56
–
377
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Leased products
42,334
316
18,339
15,401
45,588
7,308
19
3,306
4,171
5
797
4,973
4,516
25,891
1,942
2
–
–
3
3
– 28
– 100
9
–
1,222
–
181
1,403
320
2,865
218
–
32,351
– 119
3,403
–
–
–
–
–
116
76
–
–
–
–
–
4
2
– 4
– 2
–
–
–
–
–
–
–
76
411
2
489
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
192
–
–
–
–
–
–
–
3
–
4,556
8,409
7,221
380
675
364
572
9,464
8,157
943
–
28
971
37
1,548
158
5
1,075
5,636
4,966
27,838
1,970
6,122
8,995
829
6,154
8,832
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
721 Other facilities, factory and office equipment
–
–
2,525 2
2,253
Advance payments made and
construction in progress
1,743
34,774
18,471
17,960
Property, plant and equipment
3,169
7,886
36,257
37,789
Leased products
–
2,767
2,546
Investments accounted for using
the equity method
189
408
– 1
249
412
29
–
596
690
308
226
26
560
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
1,130
4,263
7,221
6,351
Development costs
–
58
5
923
364
572
364
657
1,188
5,191
8,157
7,372
Goodwill
Other intangible assets
Intangible assets
26
1,566
214
4,786
27,092
1,951
6,154
8,832
721
5,915
9,593
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
660 Other facilities, factory and office equipment
–
–
2,253 2
1,591
Advance payments made and
construction in progress
1,806
33,829
17,960
17,759
Property, plant and equipment
2,834
7,799
37,789
34,965
Leased products
–
2,546
2,233
Investments accounted for using
the equity method
192
484
2
308
226
26
3
678
560
157
245
26
428
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2016 1
Additions
Disposals
31. 12. 2016
Translation
differences
Reclassi-
fications
1. 1. 2016 1
Translation
differences
Current year
Reclas si-
fications
Value
adjustments
Disposals
31. 12. 2016
31. 12. 2016
31. 12. 2015
148
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
19
Intangible assets
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
Other intangible assets include a brand-name right
amounting to € 41 million (2016: € 42 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The year-on-year change
is solely due to currency effects. Intangible assets also
include goodwill of € 33 million (2016: € 33 million)
allocated to the Automotive cash-generating unit
(CGU) and goodwill of € 347 million (2016: € 331 mil-
lion) allocated to the Financial Services CGU.
20
Property, plant and equipment
No impairment losses were recognised in 2017, as in
the previous year.
As in the previous year, no borrowing costs were
recognised as a cost component of property, plant
and equipment in 2017.
Property, plant and equipment include an amount of
€ 94 million (2016: € 107 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). Leases to
which BMW AG is party, with a carrying amount of
€ 78 million (2016: € 90 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options.
Intangible assets amounting to € 41 million (2016:
€ 42 million) are subject to restrictions on title.
Minimum lease payments are as follows:
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2017.
As in the previous year, no borrowing costs were
recognised as a cost component of intangible assets
in 2017.
in € million
31. 12. 2017
31. 12. 2016
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
19
73
100
192
10
32
40
82
9
41
60
110
23
73
127
223
11
36
50
97
12
37
77
126
Group Financial Statements
21
Leased products
Minimum lease payments of non-cancellable oper-
ating leases amounting to € 17,982 million (2016:
€ 17,850 million) fall due as follows:
in € million
31. 12. 2017
31. 12. 2016
within one year
between one and five years
later than five years
8,586
9,383
13
8,692
9,154
4
Minimum lease payments
17,982
17,850
Contingent rents of € 52 million (2016: € 46 million),
based principally on the distance driven, were rec-
ognised in income. The agreements have, in part,
extension and purchase options.
Impairment losses amounting to € 148 million (2016:
€ 384 million) were recognised on leased products in
2017 as a consequence of changes in residual value
expectations. No income was recognised in 2017 from
the reversal of impairment losses (2016: € – million).
22
Investments accounted for using the equity method
Investments accounted for using the equity
method comprise the joint venture BMW Brilliance
Automotive Ltd. (BMW Brilliance), the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow), the joint venture
IONITY Holding GmbH & Co. KG (IONITY) and
the interest in the associated company THERE
Holding B. V. (THERE).
BMW Brilliance produces mainly BMW brand models
for the Chinese market and also has engine manufac-
turing facilities, which supply the joint venture’s two
plants with petrol engines.
The BMW Group maintains the joint ventures
DriveNow GmbH & Co. KG and DriveNow Verwal-
tungs GmbH together with Sixt SE, Pullach. DriveNow
offers car-sharing services in major German cities and
abroad. In January 2018, the BMW Group signed an
agreement with Sixt SE for the complete acquisition
of the shares in DriveNow. The agreement was signed
subject to the approval of the antitrust authorities.
DriveNow is valued at € 418 million in total. Apart
from a one-time positive earnings impact, the pur-
chase is not expected to have a significant impact on
the results of operations, financial position or net
assets of the BMW Group.
149
During the financial year under report, the
BMW Group, Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company and the Volkswagen Group,
each with equal shareholdings, founded the joint
venture IONITY Holding GmbH & Co. KG. IONITY’s
business model envisages the construction and opera-
tion of high- performance charging stations for battery
electric vehicles in Europe. The plan is to build some
400 fast-charging stations by 2020 in order to support
electric mobility on long-haul routes and thereby
establish the market.
In the financial year 2015, BMW AG, Daimler AG
and AUDI AG, Ingolstadt (Audi AG) jointly acquired
the mapping and location-based services business
(HERE Group) of Nokia Corporation, Helsinki. HERE’s
digital maps are laying the foundations for the next
generation of mobility and location-based services,
providing the basis for new assistance systems and,
ultimately, fully automated driving.
In December 2016, THERE signed contracts relating
to the sale of shares in HERE International B. V.,
Amsterdam (HERE). The sale of 15 % of the shares to
Intel Holdings B. V., Schiphol-Rijk was completed on
31 January 2017. The sale of the shares resulted in a
loss of control, as defined by IFRS 10, at the level of
THERE. For this reason, at 31 December 2016 THERE
reported its investment in HERE as “held-for-sale”.
Since THERE continues to have a significant influ-
ence over HERE, the latter is included in THERE’s
consolidated financial statements as an associated
company using the equity method. The loss of control
and the subsequent deconsolidation of HERE and its
subsidiaries led to a positive earnings effect at the
level of THERE. The BMW Group portion amounted
to € 183 million, which was recognised in the result
from equity accounted investments.
It was planned to sell a 10 % stake in HERE to a consor-
tium consisting of NavInfo Co. Ltd., Beijing, Tencent
Holdings Ltd., Shenzhen, and GIC Private Ltd. of
Singapore. The sale will not be completed, howev-
er, as no practicable approach was found to obtain
approval from the relevant authorities during a regu-
latory review process. The transaction will therefore
not be pursued.
In December 2017, BMW AG, Audi AG and Daimler AG
signed contracts for the sale of shares in THERE. It
is planned to sell 5.9 % stakes each to Robert Bosch
Investment Nederland B. V., Boxtel, and Continental
Automotive Holding Netherlands B. V., Maastricht.
The sale is to be executed in equal parts by BMW AG,
Audi AG and Daimler AG. Completion of the transac-
tion depends on approval from the relevant authori-
ties and is expected to take place in the first quarter
of 2018. The sale is expected to have no significant
150
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
impact on the results of operations, financial position
and net assets of the BMW Group.
Financial information relating to equity accounted
investments is summarised in the following tables:
in € million
2017
2016
2017
2016
2017
2016
2017
2016
BMW Brilliance
THERE
DriveNow
IONITY
dISCloSureS relAtInG to
the InCoMe S tAteMent
Revenues
Scheduled depreciation
Profit / loss before financial result
Interest income
Interest expenses
Income taxes
Profit / loss after tax
thereof from continuing operations
thereof from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received by the Group
14,628
12,991
637
1,619
46
–
454
1,337
–
–
– 121
1,216
258
486
1,328
30
2
363
1,031
–
–
30
1,061
134
71*
–
– 1
–
–
–
362
– 151
513
2
364
1,240
52
– 149
1
22
3
– 167
– 1
– 166
– 4
– 171
–
–
71
–
– 17
–
–
–
58
–
– 15
–
–
–
–
–
– 12
–
–
2
– 17
– 15
– 10
–
–
–
– 17
–
–
–
–
– 15
–
–
–
–
– 10
–
–
–
–
–
–
–
–
–
–
–
–
–
* Revenues relate only to the month of January up to the time of loss of control of HERE.
in € million
2017
2016
2017
2016
2017
2016
2017
2016
BMW Brilliance
THERE
DriveNow
IONITY
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
5,910
2,617
5,212
5,377
–
962
6
5,779
2,106
4,405
4,678
–
670
87
Current provisions and liabilities
4,783
4,835
1,906
289
289
2,195
–
–
–
–
reConCIlIAtIon of
AGGreGAted fInAnCIAl
InforMAtIon
Assets
Provisions and liabilities
Net assets
Group’s interest in net assets
Eliminations
Carrying amount
11,122
10,183
2,195
5,745
5,377
2,689
– 666
5,505
4,678
2,339
– 414
2,023
1,925
–
2,195
732
–
732
2,802
209
592
1,832
525
1,044
73
518
3,394
1,562
1,832
611
–
611
–
9
26
4 1
–
–
–
22
26
22
4
2 2
–
2
–
20
33
15 1
–
–
–
18
33
18
15
10 2
–
10
4
45
46
40
–
–
–
10
50
10
40
10
–
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Corresponds to the consolidated equity capital provided by the shareholders of DriveNow GmbH & Co. KG and its subsidiaries.
2 The BMW Group holds 52.8 % (2016: 67.2 %) of the net assets at 31 December 2017. Due to the allocation of voting power within the decision-making
bodies of the two entities, operations remain subject to joint control.
Group Financial Statements 151
23
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
in € million
31. 12. 2017
31. 12. 2016
Credit financing for retail customers
and dealerships
Finance lease receivables
Receivables from
sales financing
62,401
18,033
61,602
16,658
80,434
78,260
Non-guaranteed residual values that fall to the ben-
efit of the lessor amounted to € 140 million (2016:
€ 118 million).
In December 2017, the Financial Services segment
sold a multi-brand portfolio amounting to € 939 mil-
lion for strategic reasons.
Impairment allowances
in € million
31. 12. 2017
31. 12. 2016
Gross carrying amount of items with
impairment allowances recognised
on a specific-item basis
Impairment allowances recognised
on a specific-item basis
thereof for finance lease receivables
Gross carrying amount of items with
impairment allowances recognised
on a group basis
Impairment allowances recognised
on a group basis
Carrying amount without impairment
allowances
Net carrying amount
12,983
14,440
– 701
– 105
– 934
– 141
59,588
52,951
– 446
– 467
9,010
80,434
12,270
78,260
Allowances on receivables from sales financing, which
arise only within the Financial Services segment,
developed as follows:
2017
Allowance for impairment
recognised on a
in € million
specific
item basis
group basis
Total
Balance at 1 January*
Allocated (+) / reversed (–)
Utilised
Exchange rate impact
and other changes
Balance at 31 December
943
143
– 337
– 48
701
469
2
– 8
– 17
446
1,412
145
– 345
– 65
1,147
* Balance at 1 January adjusted due to initial consolidation of entities.
2016
Allowance for impairment
recognised on a
in € million
specific
item basis
group basis
Total
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact
and other changes
Balance at 31 December
963
248
– 304
27
934
535
– 25
– 41
– 2
467
1,498
223
– 345
25
1,401
The estimated fair value of collateral for receivables
on which impairment losses were recognised totalled
€ 35,060 million (2016: € 30,542 million) at the report-
ing date. This collateral related primarily to vehicles.
The carrying amount of assets held as collateral and
taken back as a result of payment default amounted
to € 45 million (2016: € 153 million).
152
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Finance leases are analysed as follows:
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
in € million
31. 12. 2017
31. 12. 2016
in € million
31. 12. 2017
31. 12. 2016
Fixed income securities
Stocks and other equity
capital instruments
Other debt securities
Marketable securities and
investment funds
4,662
4,449
534
251
734
104
5,447
5,287
The contracted maturities of debt securities are as
follows:
in € million
31. 12. 2017
31. 12. 2016
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
628
4,034
780
3,669
251
–
104
–
4,913
4,553
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
6,122
13,772
21
5,921
12,574
32
19,915
18,527
5,655
12,358
20
5,348
11,278
32
18,033
16,658
Unrealised interest income
1,882
1,869
24
Financial assets
Financial assets comprise:
in € million
31. 12. 2017
31. 12. 2016
Marketable securities and
investment funds
Derivative instruments
Credit card receivables
Loans to third parties
Other
Financial assets
thereof non-current
thereof current
5,447
4,341
248
114
184
5,287
3,922
287
129
145
10,334
9,770
2,369
7,965
2,705
7,065
With effect from the financial year 2017, credit
balances arising in conjunction with pre-retirement
part-time working arrangements are secured by
bank guarantees. For this reason, the corresponding
assets are not reported at the balance sheet date. In
the previous year, the amount by which the value of
investment funds exceeded obligations for part-time
working arrangements (€ 17 million) was reported
under other financial assets.
Group Financial Statements
153
Allowances for impairment and credit risk
Receivables relating to credit card business comprise
the following:
in € million
31. 12. 2017
31. 12. 2016
Gross carrying amount
Allowance for impairment
Net carrying amount
258
– 10
248
296
– 9
287
Allowances for impairment losses on receivables
relating to credit card business developed as follows
during the year under report:
2017
Allowance for impairment
recognised on a
in € million
specific
item basis
group basis
Total
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact and
other changes
Balance at 31 December
9
11
– 9
– 1
10
–
–
–
–
–
9
11
– 9
– 1
10
2016
Allowance for impairment
recognised on a
in € million
specific
item basis
group basis
Total
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact
and other changes
Balance at 31 December
8
8
– 8
1
9
–
–
–
–
–
8
8
– 8
1
9
25
Income tax assets
Income tax assets totalling € 1,566 million (2016:
€ 1,938 million) include claims amounting to € 364 mil-
lion (2016: € 351 million), which are expected to be
settled after more than one year. Claims may be
settled earlier than this depending on the timing of
proceedings.
26
Other assets
Other assets comprise:
in € million
31. 12. 2017
31. 12. 2016
Prepayments
Other taxes
Receivables from companies in which
an investment is held
Expected reimbursement claims
Collateral receivables
Receivables from subsidiaries
Sundry other assets
Other assets
thereof non-current
thereof current
2,018
1,537
1,914
1,135
1,334
1,217
847
316
276
832
779
387
422
828
7,160
6,682
1,635
5,525
1,595
5,087
Prepayments relate mainly to prepaid interest, com-
mission paid to dealerships and amounts paid in
advance to suppliers and contract manufacturers.
Prepayments of € 1,136 million (2016: € 1,018 million)
have a maturity of less than one year.
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of
receivables.
154
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
27
Inventories
Inventories comprise the following:
in € million
31. 12. 2017
31. 12. 2016
Finished goods and goods for resale
Work in progress, unbilled contracts
Raw materials and supplies
Inventories
10,436
1,125
1,146
9,684
1,157
1,000
12,707
11,841
Out of the total amount recognised for inventories
at 31 December 2017, inventories measured at net
realisable value amounted to € 541 million (2016:
€ 871 million). Write-downs to net realisable value
amounting to € 27 million (2016: € 101 million) were
recognised in 2017.
The expense recorded in conjunction with inven-
tories during the financial year 2017 amounted to
€ 55,969 million (2016: € 55,129 million).
28
Trade receivables
Trade receivables comprise the following:
in € million
31. 12. 2017
31. 12. 2016
Gross carrying amount
Allowance for impairment
Net carrying amount
2,723
– 56
2,667
2,882
– 57
2,825
Impairment allowances on trade receivables devel-
oped during the year under report as follows:
2017
Allowance for impairment
recognised on a
in € million
specific
item basis
group basis
Total
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact
and other changes
Balance at 31 December
46
8
– 4
– 1
49
11
– 2
– 1
– 1
7
57
6
– 5
– 2
56
2016
Allowance for impairment
recognised on a
in € million
specific
item basis
group basis
Total
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact and
other changes
Balance at 31 December
84
– 21
– 19
2
46
12
–
– 1
–
11
96
– 21
– 20
2
57
In addition, trade receivables exist which are overdue
but for which no impairment allowance has been rec-
ognised. Receivables that are overdue by between one
and 30 days do not normally result in bad debt losses
since the overdue nature of the receivables is mainly
due to the timing of receipts. Overdue balances fall
into the following time windows:
in € million
31. 12. 2017
31. 12. 2016
1 – 30 days overdue
31 – 60 days overdue
61 – 90 days overdue
91 – 120 days overdue
More than 120 days overdue
Balance at 31 December
187
43
19
25
75
349
174
23
29
17
64
307
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very limited.
Group Financial Statements
29
Equity
number of shares issued
Shares issued / in circulation at 1 January
55,114,404
54,809,404
601,995,196
601,995,196
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and re-issued
Shares issued / in circulation at 31 December
491,114
305,029
114
29
–
–
–
–
55,605,404
55,114,404
601,995,196
601,995,196
Preferred stock
Common stock
2017
2016
2017
2016
155
All Company stock is issued to bearer and each share
has a par value of € 1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of € 0.02 per share.
In 2017, a total of 491,114 shares of preferred stock
was sold to employees at a reduced price of € 55.05 per
share in conjunction with the Company’s Employee
Share Programme. These shares are entitled to receive
dividends for the first time with effect from the finan-
cial year 2018.
Issued share capital increased by € 0.5 million as a
result of the issue to employees of 491,000 shares of
non-voting preferred stock. BMW AG is authorised up
to 14 May 2019 to issue 5 million shares of non-voting
preferred stock amounting to nominal € 5.0 million.
At the end of the reporting period, 3.7 million of
these shares amounting to nominal € 3.7 remained
available for issue.
In addition, 114 previously issued shares of preferred
stock were acquired and re-issued to employees.
Capital reserves
Capital reserves include premiums arising from the
issue of shares and totalled € 2,084 million (2016:
€ 2,047 million). The change related to the share
capital increase arising in conjunction with the issue
of shares of preferred stock to employees amounting
to € 37 million.
revenue reserves
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group financial
statements. In addition, remeasurements of the net
defined benefit liability for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of
BMW AG for the financial year 2017 amounting
to € 2,630 million according to HGB be utilised as
follows:
— Distribution of a dividend of € 4.02 per share of
preferred stock (€ 222 million).
— Distribution of a dividend of € 4.00 per share of
common stock (€ 2,408 million).
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial
instruments and marketable securities and the related
deferred taxes.
156
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Capital management disclosures
The BMW Group’s objectives with regard to capital
management are to safeguard over the long-term the
Group’s ability to continue as a going concern and to
provide an adequate return to shareholders.
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
In order to manage its capital structure, the
BMW Group uses various instruments, including the
amount of dividends paid to shareholders and share
buybacks. Moreover, the BMW Group actively manag-
es its debt capital, carrying out funding activities with
a target debt structure in mind. A key aspect in the
selection of financial instruments is the objective to
achieve matching maturities for the Group’s financing
requirements. In order to reduce non-systematic risk,
the BMW Group uses a variety of financial instru-
ments available on the world’s capital markets to
achieve diversification.
The capital structure at the end of the reporting period
was as follows:
in € million
31. 12. 2017
31. 12. 2016
Equity attributable to shareholders
of BMW AG
Proportion of total capital
Non-current financial liabilities
Current financial liabilities
Total financial liabilities
Proportion of total capital
54,112
36.4 %
53,548
41,100
94,648
63.6 %
47,108
32.5 %
55,405
42,326
97,731
67.5 %
Total capital
148,760
144,839
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
3.9 percentage points, primarily reflecting the increase
in revenue reserves.
Group Financial Statements 157
30
Pension provisions
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to present
and past employees. Defined benefit plans may be
covered by provisions or pension assets. Pension
commitments in Germany are mostly covered by
assets contributed to BMW Trust e. V., Munich, in
conjunction with a contractual trust arrangement
(CTA). Funded plans also exist in the UK, the USA,
Switzerland, Belgium and Japan. In the meantime,
most defined benefit plans have been closed to new
entrants.
The assumptions stated below, which depend on the
economic situation in the relevant country, are used
to measure the defined benefit obligation of each
pension plan. The following weighted average values
have been used for Germany, the United Kingdom
and other countries:
in %
Discount rate
Pension level trend
Weighted duration of all pension obligations in years
Germany
United Kingdom
Other
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
1.79
1.82
20.8
1.80
1.78
21.3
2.34
2.44
21.3
2.51
2.55
20.9
3.13
–
18.3
3.70
–
17.6
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Germany
United Kingdom
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50 %)
S2PA tables and S2PA light tables with weightings
In Germany, the so-called “pension entitlement trend”
(Festbetragstrend) also represents a significant actuari-
al assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0 %.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group’s pension plans:
in € million
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
Germany
United Kingdom
Other
Total
Present value of defined benefit
obligations
Fair value of plan assets
Effect of limiting net defined benefit
asset to asset ceiling
11,641
9,604
11,112
8,643
9,594
8,908
–
–
Carrying amounts at 31 December
2,037
2,469
thereof pension provision
thereof assets
2,037
2,469
–
–
10,311
8,714
–
1,597
1,597
–
1,475
965
1,476
958
22,710
19,477
22,899
18,315
3
513
513
–
3
521
521
–
3
3
3,236
4,587
3,252
– 16
4,587
–
–
686
702
– 16
united Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum funding
requirements. Benefits paid in conjunction with these
plans comprise old-age retirement pensions as well
as invalidity and surviving dependants’ benefits. On
30 September 2017, the defined benefit plans were
closed for all plan participants, with vested benefits
remaining in place. New benefits will be covered by
contributions made to a defined contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which
act independently of the BMW Group. BMW (UK)
Trustees Limited, Hams Hall, is represented by nine
trustees, and BMW Pension Trustees Limited, Hams
Hall, by five trustees. A minimum of one third of the
trustees must be elected by plan participants. The
trustees represent the interests of plan participants
and decide on investment strategies. Funding con-
tributions are determined in agreement with the
BMW Group.
158
Numerous defined benefit plans exist within the
BMW Group.
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
The most significant of the BMW Group’s pension
plans are described below.
Germany
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependants’ benefits.
The defined benefit plans have been closed to new
entrants. With effect from 1 January 2014, new
employees receive a defined contribution entitlement
with a minimum rate of return. In addition, employees
are given the option of transferring deferred remuner-
ation to a “deferred remuneration retirement plan”.
The fact that the plan involves a minimum rate of
return means that both the defined contribution
entitlement and the deferred remuneration retire-
ment plan are classified in accordance with IAS 19 as
defined benefit plans. In the case of defined benefit
plans involving the payment of a pension, the amount
of benefits to be paid is determined by multiplying a
fixed amount by the number of years of service.
The assets of the German pension plans are adminis-
tered by BMW Trust e. V., Munich, in accordance with
a CTA. The representative bodies of this entity are the
Board of Directors and the Members’ General Meeting.
BMW Trust e. V., Munich, currently has seven mem-
bers and three members of the Board of Directors
elected by the Members’ General Meeting. The Board
of Directors is responsible for investments, drawing
up and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The
members of the association can be employees, senior
executives and members of the Board of Directors. An
ordinary Members’ General Meeting takes place once
every calendar year, and deals with a range of matters,
including receiving and approving the association’s
annual report, ratifying the activities of the Board of
Directors and adopting changes to the association’s
statutes.
Group Financial Statements The change in the net defined benefit liability for pension
plans can be derived as follows:
in € million
1 January 2017
ExpEnSE / incomE
Current service cost
Interest expense (+) / income (–)
Past service cost
Gains (–) or losses (+) arising from settlements
reMeASureMentS
Gains (–) or losses (+) on plan assets, excluding amounts included
in interest income
Gains (–) or losses (+) arising from changes in financial assumptions
Gains (–) or losses (+) arising from changes in demographic assumptions
Gains (–) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2017
thereof pension provision
thereof assets
in € million
1 January 2016
ExpEnSE / incomE
Current service cost
Interest expense (+) / income (–)
Past service cost
Gains (–) or losses (+) arising from settlements
reMeASureMentS
Gains (–) or losses (+) on plan assets, excluding amounts included
in interest income
Gains (–) or losses (+) arising from changes in financial assumptions
Gains (–) or losses (+) arising from changes in demographic assumptions
Gains (–) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2016
thereof pension provision
thereof assets
159
Defined
benefit
obligation
Plan assets
Total
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
22,899
– 18,315
4,584
581
489
– 2
– 212
–
322
– 152
– 134
–
–
86
– 619
– 548
–
– 408
–
–
– 590
–
–
–
–
581
81
– 2
– 212
– 590
322
– 152
– 134
–
– 1,165
– 1,165
– 86
637
450
–
18
– 98
3,233
22,710
– 19,477
3
–
–
–
–
–
–
–
–
–
–
–
–
–
3
4,587
581
81
– 2
– 212
– 590
322
– 152
– 134
–
– 1,165
–
18
– 98
3,236
3,252
– 16
Defined
benefit
obligation
Plan assets
Total
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
19,926
– 16,930
2,996
557
557
– 171
– 8
–
4,093
– 40
– 118
–
–
85
– 643
– 1,339
22,899
–
– 479
–
–
557
78
– 171
– 8
– 1,836
– 1,836
–
–
–
–
– 827
– 85
676
1,166
– 18,315
4,093
– 40
– 118
–
– 827
–
33
– 173
4,584
3
–
–
–
–
–
–
–
–
–
–
–
–
–
3
2,999
557
78
– 171
– 8
– 1,836
4,093
– 40
– 118
–
– 827
–
33
– 173
4,587
4,587
–
Allocations to pension plans in the financial year 2017
include a transfer from plan assets for pre-retirement
part-time working arrangements to plan assets for
pension plans amounting to € 353 million.
160
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Gains on plan settlements resulted from the closure of
defined benefit plans in the UK. Vested benefits from
these plans will be increased in line with inflation in
the future. Compensation amounting to € 140 million
was paid in conjunction with the closure of the plans.
The net gain arising on plan settlement amounted to
€ 72 million.
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in various investment classes.
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
2017
2016
2017
2016
2017
2016
2017
2016
Germany
United Kingdom
Other
Total
CoMponentS of plAn ASSetS
Equity instruments
Debt instruments
thereof investment grade
thereof non-investment grade
Real estate funds
Money market funds
Absolute return funds
Other
1,682
5,668
3,231
2,437
–
–
–
–
1,726
5,439
3,752
1,687
–
–
–
–
478
6,354
5,734
620
–
191
51
–
611
6,071
5,564
507
–
26
82
–
222
469
434
35
93
42
–
5
235
458
422
36
25
11
–
5
2,382
12,491
9,399
3,092
93
233
51
5
2,572
11,968
9,738
2,230
25
37
82
5
Total with quoted market price
7,350
7,165
7,074
6,790
831
734
15,255
14,689
Debt instruments
thereof investment grade
thereof mixed funds
(funds without a rating)
thereof non-investment grade
Real estate
Cash and cash equivalents
Absolute return funds
Other
935
198
737
–
240
16
708
354
543
195
348
–
183
17
419
316
404
–
404
–
662
10
617
141
408
2
179
227
697
9
745
65
Total without quoted market price
2,253
1,478
1,834
1,924
1
–
–
1
–
1
47
86
135
3
1
–
2
123
1
46
51
224
1,340
198
1,141
1
902
27
1,372
581
4,222
954
198
527
229
1,003
27
1,210
432
3,626
31 December
9,603
8,643
8,908
8,714
966
958
19,477
18,315
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
Employer contributions to plan assets are expected to
amount to € 573 million in the coming year.
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actu-
arial parameters, such as expected rates of inflation,
also have an impact on pension obligations. In order
to reduce currency exposures, a substantial portion
of plan assets is either invested in the same currency
as the underlying plan or hedged by means of cur-
rency derivatives. As part of the internal reporting
procedures and for internal management purposes,
financial risks relating to the pension plans are report-
ed using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
Group Financial Statements 161
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
in %
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
Germany
United Kingdom
Other
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
66.6
28.3
5.1
67.3
27.8
4.9
23.9
45.0
31.1
26.7
43.1
30.2
78.5
17.8
3.7
79.1
17.5
3.4
100.0
100.0
100.0
100.0
100.0
100.0
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
It is only possible, however, to aggregate sensitivities
to a limited extent. Since the change in obligation
follows a non-linear pattern, estimates made on the
basis of the specified sensitivities are only possible
with this restriction. The calculation of sensitivities
using ranges other than those specified could result
in a disproportional change in the defined benefit
obligation.
Change in defined benefit obligation
31. 12. 2017
31. 12. 2016
in € million
in %
in € million
in %
– 13.5
– 2,939
– 12.8
Discount rate
Pension level trend
Average life expectancy
increase of 0.75 %
decrease of 0.75 %
increase of 0.25 %
decrease of 0.25 %
increase of 1 year
decrease of 1 year
increase of 0.25 %
– 3,055
3,878
712
– 672
856
– 855
162
17.1
3.1
– 3.0
3.8
– 3.8
0.7
4,031
747
– 713
853
– 854
165
Pension entitlement trend
decrease of 0.25 %
– 155
– 0.7
– 158
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
17.6
3.3
– 3.1
3.7
– 3.7
0.7
– 0.7
162
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
31
Other provisions
Other provisions changed during the year as follows:
in € million
1.1.2017
Translation
differences
Additions
Reversal of
discounting
Utilised
Reversed
31. 12. 2017
thereof due
within one year
Statutory and non-statutory warranty
obligations, product guarantees
Obligations for personnel and
social expenses
Other obligations
Other obligations for ongoing
operational expenses
Other provisions
4,813
– 307
2,221
43
– 1,875
– 70
4,825
1,300
2,191
2,200
1,714
10,918
– 19
– 81
– 119
– 526
2,261
1,110
755
6,347
–
–
–
– 1,624
– 459
– 27
– 247
2,782
2,523
– 614
– 116
1,620
43
– 4,572
– 460
11,750
1,933
1,738
1,342
6,313
32
Income tax liabilities
Current income tax liabilities totalling € 1,124 million
(2016: € 1,074 million) include liabilities of € 68 million
(2016: € 33 million) which are expected to be settled
after more than twelve months. Liabilities may be
settled earlier than this depending on the timing of
proceedings.
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty
or guarantee obligations over the whole period of
the warranty or guarantee. Expected reimbursement
claims at 31 December 2017 amounted to € 847 million
(2016: € 779 million).
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
Provisions for other obligations cover numerous spe-
cific risks and uncertain obligations, in particular for
litigation and liability risks.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
Income from the reversal of other provisions amount-
ing to € 322 million (2016: € 480 million) is recorded
in cost of sales and in selling and administrative
expenses.
Group Financial Statements
33
Financial liabilities
Financial liabilities of the BMW Group comprises the
following:
163
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Commercial paper
Derivative instruments
Other
Financial liabilities
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Commercial paper
Derivative instruments
Other
Financial liabilities
31. 12. 2017
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
11,132
6,037
10,144
8,440
4,461
373
513
25,887
10,818
3,296
3,170
–
544
150
7,861
–
132
1,048
–
173
469
Total
44,880
16,855
13,572
12,658
4,461
1,090
1,132
41,100
43,865
9,683
94,648
31. 12. 2016
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
9,242
6,765
10,063
10,251
3,852
1,656
497
25,496
9,683
9,709
3,316
3,997
–
1,496
130
–
133
644
–
179
622
Total
44,421
16,474
13,512
14,892
3,852
3,331
1,249
42,326
44,144
11,261
97,731
Customer deposit liabilities arise in the BMW Group’s
own banks, notably in Germany and the USA, which
offer deposit and investment products.
Liabilities related to financing activities can be rec-
onciled as follows:
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Commercial paper
Financial liabilities towards companies in which an
investment is held
Other (excluding interest payable)
1. 1. 2017
Cash inflows /
outflows
Changes due to
the acquisition
or disposal of
companies
Changes due to
exchange rate
factors
Changes in
fair values
Other changes
31. 12. 2017
44,421
16,474
13,512
14,892
3,852
615
811
2,687
1,338
656
– 1,579
953
124
– 156
–
–
–
–
–
–
151
151
– 1,901
– 328
– 957
– 596
– 655
– 344
–
– 88
–
–
–
–
–
–
1
–
–
–
–
–
–
44,880
16,855
13,572
12,658
4,461
739
718
– 4,541
– 328
1
93,883
Liabilities relating to financing activities
94,577
4,023
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
164
Bonds comprise:
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Issuer
BMW Finance N. V.
BMW US Capital, LLC
BMW Canada Inc.
Interest
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
variable
fixed
variable
variable
fixed
fixed
fixed
EUR 6,519 million
GBP 220 million
USD 40 million
AUD 490 million
USD 300 million
CNH 1,300 million
EUR 17,450 million
GBP 1,900 million
HKD 1,842 million
JPY 19,100 million
NOK 2,400 million
SEK 1,750 million
EUR 1,500 million
NZD 30 million
USD 958 million
AUD 130 million
EUR 2,500 million
GBP 300 million
HKD 334 million
JPY 30,000 million
USD 9,270 million
CAD 300 million
CAD 1,850 million
AUD 500 million
GBP 925 million
CNY 2,000 million
INR 8,000 million
GBP 250 million
2.1
1.1
2.0
5.9
4.0
3.0
6.8
6.2
4.2
5.8
3.8
5.0
3.0
3.0
3.9
3.5
7.6
5.0
3.0
3.0
6.1
3.0
4.2
3.0
1.8
3.0
2.0
4.5
0.0
0.6
2.1
3.8
2.6
4.3
1.5
2.3
2.0
0.4
1.9
1.9
0.1
1.9
1.4
2.8
3.2
2.0
2.0
0.2
2.1
2.2
2.0
2.5
0.8
3.3
8.0
1.1
2.7
Other
fixed
KRW 380,000 million
3.6
The following details apply to commercial paper:
Issuer
BMW Finance N. V.
BMW International Investment B. V.
BMW US Capital, LLC
BMW India Financial Services Private Ltd.
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in days)
Weighted average
nominal interest rate
(in %)
EUR 1,125 million
GBP 450 million
USD 3,325 million
INR 4,500 million
60
59
22
155
– 0.4
0.5
1.4
7.1
Group Financial Statements
165
31. 12. 2017
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
2,427
4,276
471
934
934
505
744
129
75
5,031
10,779
122
–
346
–
–
23
160
–
–
5
–
–
–
7
4,927
483
31. 12. 2016
Total
7,174
1,056
934
856
744
129
98
5,198
16,189
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
2,599
4,238
419
7,256
847
807
501
615
99
71
4,659
10,198
130
–
387
–
–
21
147
4,923
–
–
5
–
–
–
977
807
893
615
99
92
10
434
4,816
15,555
34
Other liabilities
Other liabilities comprise the following items:
in € million
Deferred income
Advance payments from customers
Other taxes
Deposits received
Payables to other companies in which an investment is held
Payables to subsidiaries
Social security
Other
Other liabilities
in € million
Deferred income
Advance payments from customers
Other taxes
Deposits received
Payables to other companies in which an investment is held
Payables to subsidiaries
Social security
Other
Other liabilities
Sundry other liabilities include mainly bonuses for
services already performed as well as sales promotions,
commission payable and credit balances on customers’
accounts.
166
Deferred income comprises the following items:
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Other Disclosures
in € million
Deferred income relating to service contracts
Deferred income from lease financing
Grants
Other deferred income
Deferred income
31. 12. 2017
31. 12. 2016
Total
thereof due
within one year
4,167
2,361
332
314
1,371
973
28
55
Total
4,412
2,241
382
221
thereof due
within one year
1,474
1,037
30
58
7,174
2,427
7,256
2,599
Deferred income relating to service contracts com-
prises service and repair work as well as telematics
services and roadside assistance agreed to as part of
the sale of a vehicle (in some cases multi-component
arrangements). Deferred income from lease financing
relates primarily to down payments on leases.
Grants comprise mainly public sector funds to support
regional structures and which have been invested
in the production plants in Brazil, Mexico, Leipzig
and Berlin. The grants are partly subject to holding
periods for the assets concerned of up to five years
and / or minimum employment figures. Grant income
is recognised in the income statement over the useful
lives of the assets to which they relate.
35
Trade payables
Trade payables have the following maturities:
in € million
31. 12. 2017
31. 12. 2016
Maturity within one year
9,731
8,512
Maturity between one and five years
Maturity later than five years
Trade payables
–
–
–
–
9,731
8,512
Group Financial Statements
OTHER DISCLOSURES
36
Contingent liabilities and other financial
commitments
Contingent liabilities
The following contingent liabilities existed at the
balance sheet date:
in € million
31. 12. 2017
31. 12. 2016
Investment subsidies
Litigation
Guarantees *
Other
Contingent liabilities
* Prior year's figure has been adjusted.
399
204
10
203
816
26
199
11
249
485
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
The BMW Group determines its best estimate of con-
tingent liabilities on the basis of information available
at the reporting date. This assessment may change
over time and is adjusted regularly on the basis of
new information and circumstances. A part of risks
is covered by insurance.
In June 2016, Germanyʼs Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including BMW AG, in relation to the purchase of steel.
The respective official investigations have not yet been
completed. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
In July 2017, cartel allegations against five German car
manufacturers appeared in the press. The BMW Group
subsequently launched an internal investigation,
which has not yet been completed. In October 2017,
the European Commission began an inspection at the
BMW Group. A number of class action lawsuits were
brought in the USA and Canada. Possible risks for the
BMW Group cannot be quantified at present; further
disclosures pursuant to IAS 37.86 cannot be provided
at present.
167
Regulatory agencies have ordered the BMW Group
to recall various vehicle models in connection with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
other financial commitments
In addition to liabilities, provisions and contingent
liabilities, other financial commitments consist in
particular of rental and leasing contracts for buildings,
property, machinery, tools, offices and other facilities.
Contracts have a term of between one and 84 years
and include in part renewal and purchase options
or price adjustments in the form of index-linked or
graduated rent, for example to compensate inflation.
In 2017, an expense amounting to € 430 million (2016:
€ 432 million) was recognised for payments on oper-
ating leases.
The total minimum future leasing payments from
uncancellable rental contracts and operating leases
is represented by maturity as follows:
in € million
31. 12. 2017
31. 12. 2016
due within one year
due between one and five years
due later than five years
Other financial obligations
446
1,179
849
2,474
447
1,102
895
2,444
In addition, the following commitments exist for the
BMW Group at the reporting date:
in € million
31. 12. 2017
31. 12. 2016
Purchase commitments for
property, plant and equipment
Purchase commitments for
intangible assets
4,137
3,141
1,804
1,363
168
Notes to the Group
Financial Statements
Other Disclosures
37
Financial instruments
The carrying amounts of financial instruments are
assigned to IAS 39 categories and cash funds as fol-
lows:*
in € million
ASSetS
Other 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
Total
lIAbIlItIeS
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which an investment is held
Other
Total
Cash funds
Loans and receivables
Available for sale
Fair value option
Other liabilities
Held for trading
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
–
–
366
534
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,039
7,880
80,434
78,260
–
–
–
–
112
248
184
–
–
–
–
–
129
287
145
–
–
–
–
219
–
–
–
–
287
–
2,667
2,825
276
1,334
–
422
1,217
–
1,108
1,124
–
–
–
–
–
–
–
–
5,447
5,287
–
–
–
–
–
–
–
–
–
–
–
–
–
–
97
–
100
–
9,258
8,167
86,363
84,409
5,910
5,921
26
4,341
3,922
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29
–
26
–
2,187
814
1,340
1,758
949
1,215
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
44,880
12,658
13,572
4,461
16,855
–
–
–
1,132
9,731
129
744
44,421
14,892
13,512
3,852
16,474
–
–
–
1,249
8,512
99
615
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31
–
–
–
–
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
190
571
329
1,694
870
767
5,949
5,535
–
110,111
109,161
1,090
3,331
Other derivative instruments
Marketable securities and investment funds
ASSetS
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Receivables from companies in which an investment is held
Receivables from subsidiaries
Collateral receivables
Other
Total
lIAbIlItIeS
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Other
Total
Payables to other companies in which an investment is held
* The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
Group Financial Statements
Cash funds
Loans and receivables
Available for sale
Fair value option
Other liabilities
Held for trading
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
169
80,434
78,260
366
534
29
–
26
–
–
–
–
–
2
–
–
–
–
–
–
–
–
31
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
44,880
12,658
13,572
4,461
16,855
–
–
–
1,132
9,731
129
744
44,421
14,892
13,512
3,852
16,474
–
–
–
1,249
8,512
99
615
5,949
5,535
–
–
2,187
814
1,340
–
–
–
–
–
–
–
–
–
–
–
–
1,758
949
1,215
–
–
–
–
–
–
–
–
–
–
4,341
3,922
–
–
–
–
–
190
571
329
–
–
–
–
–
–
–
–
–
–
1,694
870
767
–
–
–
–
–
110,111
109,161
1,090
3,331
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 companies in which an investment is held
Receivables from subsidiaries
Collateral receivables
Other
Total
lIAbIlItIeS
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which an investment is held
Other
Total
in € million
ASSetS
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Other derivative instruments
Marketable securities and investment funds
Receivables from subsidiaries
Receivables from companies in which an investment is held
Collateral receivables
Other
Total
lIAbIlItIeS
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Other
Total
Payables to other companies in which an investment is held
5,447
5,287
9,039
7,880
2,667
2,825
112
248
184
–
276
1,334
–
129
287
145
–
422
1,217
–
219
–
287
1,108
1,124
97
–
100
9,258
8,167
86,363
84,409
5,910
5,921
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
* The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
170
Notes to the Group
Financial Statements
Other Disclosures
The following table shows the fair values and carry-
ing amounts of financial assets and liabilities that
are measured at cost or amortised cost and whose
carrying amounts differ from their fair value. For
some balance sheet items it is assumed, due to their
generally short maturity, that their fair value corre-
sponds to the carrying amount.
in € million
Fair value
Carrying amount
Fair value
Carrying amount
31. 12. 2017
31. 12. 2016
Receivables from sales financing
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Asset-backed financing transactions
83,853
45,566
12,724
13,588
17,005
80,434
44,880
12,658
13,572
16,855
81,621
45,140
14,942
13,545
16,556
78,260
44,421
14,892
13,512
16,474
Fair value measurement of financial instruments
The following interest rate curves were used to dis-
count financial instruments at 31 December 2017:
in %
Interest rate for six months
Interest rate for one year
Interest rate for five years
Interest rate for ten years
ISO Code
EUR
USD
GBP
JPY
CNY
– 0.33
– 0.26
0.32
0.91
1.82
1.88
2.24
2.40
0.86
0.65
1.04
1.29
– 0.08
0.03
0.12
0.33
4.87
4.71
4.74
4.88
Interest rates taken from interest rate curves were
adjusted, where necessary, to take account of the
credit quality and risk of the underlying financial
instrument.
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
are
Commodity derivatives were measured on the basis
of the following quoted market prices:
1. measured at their fair values in an active market
for identical financial instruments (Level 1),
Raw material
Copper
Aluminium
Palladium
Platinum
Coking coal
Iron ore
31. 12. 2017
31. 12. 2016
USD / t
USD / t
USD / oz
USD / oz
USD / t
USD / t
7,212.25
5,537.00
2,258.75
1,695.13
1,057.00
925.00
265.00
72.40
680.96
903.50
230.00
79.65
2. measured at their fair values in an active market
for comparable financial instruments or using
measurement models whose main input factors
are based on observable market data (Level 2), or
3. using input factors not based on observable
market data (Level 3).
Group Financial Statements 171
31. 12. 2017
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
5,544
284
–
–
–
–
–
–
–
–
–
–
–
1,797
2,008
534
–
778
221
91
–
105
2
–
–
–
2
–
–
–
31. 12. 2016
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
5,387
213
–
–
–
–
–
–
–
–
–
–
–
1,933
1,842
147
–
1,402
1,479
450
–
–
–
–
–
–
–
–
–
–
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
in € million
Marketable securities, investment funds and collateral assets – available-for-sale
Other investments – available-for-sale / fair value option
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw materials price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw materials price risks
in € million
Marketable securities, investment funds and collateral assets – available-for-sale
Other investments – available-for-sale / fair value option
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw materials price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw materials price risks
As in the previous year, there were no reclassifica-
tions within the level hierarchy during the financial
year 2017.
In situations where a fair value was required for dis-
closure purposes only, this was determined using the
discounted cash flow method and taking account of
the BMW Groupʼs own credit risk. For this reason,
the fair values calculated can be allocated to Level 2.
172
Financial instruments recognised at fair value for
which no market price is available are allocated to
Level 3. Fair values are determined in accordance with
the following table:
Notes to the Group
Financial Statements
Other Disclosures
in € million
Fair value
31.12.2017
Valuation method
Input Parameter
Unquoted equity instruments
105
Last financing round
Price per share
Convertible bonds
Options on unquoted equity instruments
Milestone analysis (quantitative and
qualitative factors)
Company performance
Contractual rights by share class
2
2
Last financing round
Price per share
Milestone analysis (quantitative and
qualitative factors)
Company performance
Contractual rights by share class
Last financing round
Price per share
Milestone analysis (quantitative and
qualitative factors)
Company performance
Consideration of exercise price
Contractual rights by share class
Exercise price
Level 3 financial assets relate to investments within a
private equity fund that was newly established dur-
ing the financial year under report. Private equity
companies are valued on the basis of net asset value,
which is determined using relevant information that
is not available in the public domain. The fund man-
ager assesses the underlying individual companies
in accordance with the guidelines for international
private equity and venture capital valuations (IPEV).
Detailed listing and quantification of potential sen-
sitivities of the input parameters is not considered
meaningful in view of the valuation methodology
applied. An increase in input parameters would
generally also lead to a similar increase in valuation.
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
in € million
1. January 2017
Additions
Disposals
Gains (+) / losses (–) recognised in accumulated other equity
Gains (+) / losses (–) recognised in the income statement
Currency translation differences
31. December 2017
No Level 3 financial instruments existed at the end
of the previous financial year.
Unquoted equity
instruments
Convertible bonds
Options on
unquoted equity
instruments
Financial Instru-
ments Level 3
–
103
–
8
–
– 6
105
–
2
–
–
–
–
2
–
–
–
–
3
– 1
2
–
105
–
8
3
– 7
109
Group Financial Statements
173
offsetting of financial instruments
In the BMW Group, offsetting of financial assets and
liabilities relating to derivative financial instruments is
generally to be considered. No offsetting is recognised
in the financial statements, however, as the necessary
criteria are not met. Since legally enforceable master
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:
in € million
31. 12. 2017
31. 12. 2016
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
4,341
– 835
3,506
1,090
– 835
255
3,922
– 1,169
2,753
3,331
– 1,169
2,162
Gains and losses on financial instruments
The following table shows the net gains and losses
arising for each of the categories of financial instru-
ment defined by IAS 39:
in € million
Held for trading
Gains / losses from the use of derivative instruments
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 in subsidiaries
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
2017
2016
961
1,265
3
48
14
52
41
– 44
93
– 162
– 94
–
– 155
13
24
28
– 39
52
– 210
– 38
162
586
Gains / losses from the use of derivatives relate primari-
ly to fair value gains or losses arising on stand-alone
derivatives.
In the case of financial instruments for which the
fair value option is applied, no significant changes in
fair values arose in the financial year 2017 or on an
accumulated basis which were attributable to changes
in the default risk. Such credit-risk related changes in
fair values are calculated as a general rule by deducting
changes relating to the market risk from the change
in fair value.
Net interest expenses from interest rate and interest
rate / currency swaps amounted to € 108 million (2016:
€ 120 million).
174
Notes to the Group
Financial Statements
Other Disclosures
No impairment losses were recorded in the income
statement during the year under report (2016:
€ 76 million) on available-for-sale marketable securities
reported as investments for which value changes are
recognised directly in equity. Reversals of impairment
losses on marketable securities reported as invest-
ments amounting to € 67 million (2016: € – million)
were recognised directly in equity.
The disclosure of interest income resulting from the
unwinding of discount on future expected receipts
applies at BMW Group only where assets have been
discounted as part of the process of determining
impairment losses of financial assets. Due to the
assumption that the major part of income that is
subsequently recovered is received within one year,
the discounted interest is considered insignificant and
is not taken into account in determining impairment
losses.
cash flow hedges
The impact of cash flow hedges on accumulated other
equity is shown as follows:
in € million
2017
2016
Balance at 1 January
Total changes during the year
thereof reclassified to the income
statement
Balance at 31 December
78
1,437
– 103
1,515
– 1,337
1,415
550
78
Fair value gains and losses recognised on derivatives
and recorded initially in accumulated other equity
are reclassified to cost of sales when the derivatives
mature.
No effects were recognised in financial result in 2017
in connection with forecasting errors and resulting
overhedging (2016: losses of € 2 million). Gains due
to the ineffective portion of cash flow hedges amount-
ing to € 17 million were recognised in financial result
(2016: losses of € 11 million). As in the previous year,
no effects were recognised in financial result in con-
nection with forecasting errors relating to cash flow
hedges for commodities. Losses attributable to the
ineffective portion of cash flow hedges amounting to
€ 1 million were recognised in financial result (2016:
gains of € 17 million).
At 31 December 2017, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions. These derivative
instruments are intended to hedge forecast sales
denominated in a foreign currency over the coming
32 months (2016: 44 months). The income statement
impact of the hedged cash flows will be recognised as
a general rule in the same periods in which external
revenues are recognised. It is expected that € 336 mil-
lion of net gains, recognised in equity at the end of
the reporting period, will be reclassified to profit
and loss in the new financial year (2016: net losses
of € 113 million).
As in the previous year, the BMW Group held no
derivative financial instruments at 31 December 2017
which were designated as cash flow hedges to hedge
against interest rate risks.
At 31 December 2017, the BMW Group held deriva-
tive financial instruments, mainly commodity swaps,
with terms of up to 46 months (2016: 58 months) to
hedge raw materials price risks. The income statement
impact of the hedged cash flows will be recognised
as a general rule in the same periods in which the
derivative instruments mature. It is expected that
€ 55 million of net gains, recognised in equity at the
end of the reporting period, will be reclassified to
profit and loss in the new financial year (2016: net
losses of € 94 million).
fair value hedges
The following table shows gains and losses from fair
value hedge relationships on hedging instruments
and hedged items:
in € million
31. 12. 2017
31. 12. 2016
Gains / losses on hedging instruments
designated as part of a fair value hedge
relationship
Gains / losses from hedged items
Ineffectiveness of fair value hedges
– 335
328
– 7
– 158
134
– 24
The difference between the gains / losses on hedging
instruments, mainly interest rate swaps and combined
interest rate / currency swaps, and the results recog-
nised on the underlying hedged items represents the
ineffective portion of fair value hedges.
Group Financial Statements 175
The credit risk relating to derivative financial instru-
ments is minimised by the fact that the Group only
enters into such contracts with parties of first-class
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore considered to be insignificant.
A concentration of credit risk with particular borrow-
ers or groups of borrowers has not been identified in
conjunction with financial instruments.
Further disclosures relating to credit risk – in particu-
lar with regard to the amounts of impairment losses
recognised – are provided in the explanatory notes
to the relevant categories of receivables in
notes 23,
24 and 28.
see
notes 23, 24
and 28
Credit risk
Notwithstanding the existence of collateral, the
carrying amounts of financial assets generally take
account of the maximum credit risk arising from
the possibility that counterparties will not be able
to fulfil their contractual obligations. The maximum
credit risk for irrevocable credit commitments
amounts to € 1,217 million for the credit card busi-
ness (2016: € 1,461 million) and € 27,953 million (2016:
€ 27,494 million) for dealership financing.
In the case of all relationships underlying primary
financial instruments, in order to minimise the cred-
it risk and depending on the nature and amount of
exposure, collateral is required, credit information and
references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
Within the financial services business, in the retail
customer and dealership areas, financed items, for
example vehicles, equipment and property, serve
as first-ranking collateral with a recoverable value.
Security is also put up in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. If an item previously accepted as collat-
eral is acquired, it undergoes a multi-stage process
of repossession and disposal in accordance with the
legal situation prevailing in the relevant market. As
the assets involved are mainly vehicles, they can be
converted into cash at any time through the dealership
organisation.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodol-
ogy is provided in the section on accounting policies
note 4.
see
note 4
Creditworthiness testing is an important aspect of
the BMW Group’s credit risk management. Every
borrower’s creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the acquisition process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations.
176
Notes to the Group
Financial Statements
Other Disclosures
Liquidity risk
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
in € million
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
Trade payables
Commercial paper
Derivative instruments
Other financial liabilities
Total
in € million
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
Trade payables
Commercial paper
Derivative instruments
Other financial liabilities
Total
The cash flows comprise principal repayments and
the related interest. The amounts disclosed for deriv-
ative instruments comprise only cash flows relating
to derivatives that have a negative fair value at the
balance sheet date. At 31 December 2017, irrevocable
credit commitments to dealerships which had not
been called upon at the end of the reporting period
amounted to € 8,812 million (2016: € 9,194 million).
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world’s financial markets, with the aim to minimise
risk by matching maturities with financing require-
ments and in alignment with a dynamic target debt
structure. The BMW Group enjoys favourable access
to capital markets as a result of its continued solid
financial position and a diversified refinancing strategy.
31. 12. 2017
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
11,735
7,087
9,546
10,225
9,731
4,463
466
110
27,201
10,901
3,656
3,418
–
–
637
191
8,285
–
771
130
–
–
111
451
Total
47,221
17,988
13,973
13,773
9,731
4,463
1,214
752
53,363
46,004
9,748
109,115
31. 12. 2016
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
9,954
7,161
11,238
10,140
8,512
3,853
1,983
72
26,766
9,938
4,234
3,446
–
–
2,395
178
10,089
–
558
133
–
–
187
601
Total
46,809
17,099
16,030
13,719
8,512
3,853
4,565
851
52,913
46,957
11,568
111,438
This is supported by the longstanding long- and short-
term ratings issued by Moody’s and Standard & Poor’s.
Depending on financing requirements and market
conditions, the BMW Group issues commercial paper
and corporate bonds in various currencies. Asset-
backed securities also continue to be issued in various
currencies. Refinancing is supplemented by customer
deposits at the Group’s own banks and loans from
international banks.
As a further reduction of risk, a syndicated credit
line totalling € 8 billion (2016: € 6 billion) assured by
a consortium of international banks is available to
the BMW Group. Intra-group cash flow fluctuations
are balanced out by the use of daily cash pooling
arrangements.
Group Financial Statements
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 remaining after netting. Financial instruments
are used exclusively to hedge underlying positions or
planned transactions.
The scope of action, responsibilities, financial report-
ing procedures and control mechanisms used for
financial instruments are set out in detailed internal
guidelines. This includes, in particular, a clear sepa-
ration of duties between trading and processing of
transactions. Currency, interest rate and raw materi-
als price risks of the BMW Group are managed at a
corporate level.
Further information is provided in the “Report on
outlook, risks and opportunities” section of the Com-
bined Management Report.
currency risks
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. Since a
significant portion of Group revenues is generated
outside the euro currency region and procurement of
production materials and funding is also carried out
on a worldwide basis, currency risk is an extremely
important factor for Group earnings.
In order to hedge currency risks, the BMW Group
holds, as at 31 December 2017, derivative financial
instruments mostly in the form of forward currency
contracts.
A description of the management of this risk is pro-
vided in the Combined Management Report. The
BMW Group measures currency risk using a cash-
flow-at-risk model.
177
The starting point for analysis of currency risk in this
model are the planned foreign currency transactions
or “exposures”. At the end of the reporting period,
the main exposures for the relevant coming year were
as follows:
in € million
31. 12. 2017
31. 12. 2016
Euro / Chinese Renminbi
10,160
10,467
Euro / British Pound
Euro / Korean Won
Euro / Japanese Yen
Euro / US Dollar
4,425
2,460
1,618
1,152
4,785
1,926
1,510
3,319
These exposures are compared to all hedges that
are in place. The net cash flow surplus represents
an uncovered risk position. The cash-flow-at-risk
approach involves allocating the impact of potential
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to determine the
relevant probability distributions.
The potential negative impact on earnings is calculated
at the reporting date for each currency for the follow-
ing financial year on the basis of current market prices
and exposures with a confidence level of 95 % and a
holding period of up to one year. The risk mitigating
effect of correlations between the various currencies
is taken into account when the risks are aggregated.
The following table shows the potential negative
impact for the BMW Group resulting from unfavour-
able changes in exchange rates, measured on the
basis of the cash-flow-at-risk approach. The impact
for the main currencies, in each case for the following
financial year, is as follows:
in € million
31. 12. 2017
31. 12. 2016
Euro / Chinese Renminbi
Euro / British Pound
Euro / Japanese Yen
Euro / US Dollar
Euro / Korean Won
193
154
98
50
35
249
134
70
278
30
Currency risk for the BMW Group is concentrated on
the currencies referred to above.
178
Notes to the Group
Financial Statements
Other Disclosures
Interest rate risks
The BMW Group’s financial management involves
the use of standard financial instruments such as
short-term deposits, investments in variable and
fixed-income securities as well as securities funds.
The BMW Group is therefore exposed to risks resulting
from changes in interest rates.
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. All items subject to interest are exposed to
interest rate risk. Interest rate risks can affect either
side of the balance sheet.
The 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. 2017
31. 12. 2016
28,374
15,454
5,262
4,326
691
28,063
14,340
5,708
3,124
571
Interest rate risks can be managed by the use of inter-
est rate derivatives. The interest rate contracts used
for hedging purposes comprise mainly swaps, which,
if hedge accounting is applied, are accounted for as
fair value hedges. A description of the management
of interest rate risks is provided in the Combined
Management Report.
As stated there, the BMW Group applies a value-at-risk
approach throughout the Group for internal reporting
purposes and to manage interest rate risks. This is
based on an advanced historical simulation, in which
the potential future fair value losses of the interest
rate portfolios compared to expected amounts are
measured throughout the Group on the basis of a
holding period of 250 days and a confidence level
of 99.98 %. Through the aggregation, risk reduction
effects are identified which are due to correlations
between the various portfolios.
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, meas-
ured on the basis of the value-at-risk approach:
in € million
Euro
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
31. 12. 2017
31. 12. 2016
557
504
253
29
19
532
545
244
16
14
raw material price risk
The BMW Group is exposed to the risk of price fluc-
tuations for raw materials. A description of the man-
agement of these risks is provided in the Combined
Management Report.
The starting point for the analysis of raw materials
price risk are planned purchases of raw materials or
components containing raw materials, i. e. the expo-
sure. At the reporting date exposures for the following
financial year amounted to:
in € million
31. 12. 2017
31. 12. 2016
Raw material price exposures
3,969
3,150
These exposures are compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves allocating the impact of potential fluctuations
in raw material prices to operating cash flows on the
basis of probability distributions. Volatilities and
correlations serve as input factors to determine the
relevant probability distributions.
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95 % and a holding period of up to one year. The risk
mitigating effect of correlations between the various
categories of raw materials is taken into account when
the risks are aggregated.
Group Financial Statements The following table shows the potential negative
cost impact for the BMW Group resulting from
fluctuations in prices across all categories of raw
materials, measured on the basis of the cash-flow-
at-risk approach. The risk at the reporting date for
the following financial year was as follows:
in € million
31. 12. 2017
31. 12. 2016
Cash flow at risk
409
135
179
38
Related parties
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business of each of the parties concerned
and at market conditions.
A significant proportion of the BMW Group’s transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
in € million
2017
2016
2017
2016
2017
2016
2017
2016
Supplies and services
performed
Supplies and services
received
Receivables
at 31 December
Payables
at 31 December
BMW Brilliance Automotive Ltd.
5,946
5,316
63
50
1,333
1,215
739
615
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG. He is
also the sole shareholder and Chairman of the Super-
visory Board of DELTON AG, Bad Homburg v. d. H.,
which, via its subsidiaries, performed logistic-related
services for the BMW Group during the financial year
2017. In addition, companies of the DELTON Group
acquired vehicles from the BMW Group by way of
leasing.
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden. A
cooperation exists between BMW Group and SOLAR-
WATT GmbH, Dresden, within the field of electric
mobility. The focus of the cooperation is the provision
of complete photovoltaic solutions for rooftop systems
and carports to BMW i customers. In 2017, SOLAR-
WATT GmbH, Dresden, acquired vehicles from the
BMW Group by way of leasing.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2017,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2017,
the BMW Group bought in services from Unterne-
hmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2017, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
180
Notes to the Group
Financial Statements
Other Disclosures
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
in € thousand
2017
2016
2017
2016
2017
2016
2017
2016
Supplies and services
performed
Supplies and services
received
Receivables
at 31 December
Payables
at 31 December
DELTON AG
SOLARWATT GmbH
ALTANA AG
UnternehmerTUM GmbH
Entrust Datacard Corp.
3,393
36
2,421
27
106
3,546
309
2,690
29
97
29,816
22,554
–
296
1,435
–
458
1,227
–
–
94
5
360
–
5
64
1
337
–
5
4,464
1,331
–
36
255
–
–
50
585
–
Apart from vehicle leasing and financing contracts
at usual conditions, companies of the BMW Group
concluded no further transactions with members of
the Board of Management or Supervisory Board of
BMW AG. This also applies to close members of the
families of those persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pen-
sions in Germany and is therefore a related party
of the BMW Group in accordance with IAS 24. This
entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG
bears expenses on an immaterial scale and performs
services for BMW Trust e. V., Munich.
For disclosures relating to key management personnel,
note 41 and the Compensation Report.
please see
see
note 41
39
Share-based remuneration
The BMW Group provides three share-based pro-
grammes: the Employee Share Programme for enti-
tled employees of the BMW Group, a share-based
remuneration programme for members of the Board
of Management and a share-based remuneration pro-
gramme for senior heads of department of BMW AG.
As part of the Employee Share Programme, non-voting
shares of preferred stock in BMW AG were granted
in 2017 to qualifying employees at favourable con-
ditions (see
note 29 for the number and price of
issued shares). The holding period for these shares is
up to 31 December 2020. In the financial year 2017,
the BMW Group recorded a personnel expense of
€ 10 million (2016: € 7 million) for the Employee Share
Programme, corresponding to the difference between
the market price and the reduced price of the shares
of preferred stock purchased by employees. The Board
of Management reserves the right to decide anew each
year with respect to an Employee Share Programme.
see
note 29
Group Financial Statements
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
The total expense recognised in 2017 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was € 1,642,936 (2016: € 1,443,227).
181
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was € 2,311,946 (2016: € 1,950,853), based
on a total of 25,694 shares (2016: 21,201 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price on the grant date.
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial year 2017.
40
Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is reproduced in the Annual Report 2017 of
the BMW Group and is also permanently available
to shareholders on the BMW Group website at
www.bmwgroup.com / ir.
Each member of the Board of Management is required
to invest 20 % of his or her total bonus after tax in
shares of BMW AG common stock, which are record-
ed in a custodian account of the member concerned
(annual tranche). Each annual tranche is subject to a
holding period of four years. On completion of the
holding period, BMW AG grants one additional share
of BMW AG common stock for every three held or pays
the equivalent amount in cash (share-based remuner-
ation component). Separate rules apply in the case of
death or invalidity of a Board of Management member
or early termination of the contractual relationship
before fulfilment of the holding period.
With effect from the financial year 2012, qualifying
senior heads of department are also entitled to select
a share-based remuneration component, which is
largely comparable to the share-based remuneration
arrangements for Board of Management members.
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
The cash-settlement for the share-based remuneration
component is measured at its fair value at the balance
sheet date (based on the closing price of BMW AG
common stock on the Xetra system at 31 Decem-
ber 2017).
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2017 was
€ 6,301,785 (2016: € 5,473,219).
42
Events after the end of the reporting period
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
182
Notes to the Group
Financial Statements
Other Disclosures
Segment Information
41
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2017 in
accordance with IFRS comprised the following:
in € million
2017
2016
Compensation to members of the
Board of Management
Fixed remuneration
Variable remuneration
Share-based remuneration component
Allocation to pension provisions
Benefits in conjunction with the
termination of an employment relationship
Compensation to members of the
Supervisory Board
Fixed compensation and attendance fees
Variable compensation
Total expense
thereof due within one year
40.2
7.7
31.7
0.8
3.1
0.9
5.6
2.0
3.6
49.8
45.9
37.6
7.8
29.0
0.8
2.8
1.1
5.4
2.0
3.4
46.9
43.3
The total remuneration of former members of the
Board of Management and their dependants amount-
ed to € 6.7 million (2016: € 6.5 million).
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to € 22.0 million (2016: € 23.6 million), determined in
accordance with IAS 19 (Employee Benefits). Pen-
sion obligations to former members of the Board of
Management and their surviving dependants, also
determined in accordance with IAS 19, amounted to
€ 90.1 million (2016: € 86.4 million).
The compensation systems for members of the
Supervisory Board include no stock options, value
appreciation rights comparable to stock options or
other stock-based compensation components. Apart
from vehicle lease and financing contracts at custom-
ary conditions, no advances or loans were granted
to members of the Board of Management and the
Supervisory Board of BMW AG or its subsidiaries, nor
were any contingent liabilities entered into on their
behalf.
Further details on the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report,
which is part of the Combined Management Report.
Group Financial Statements
183
Internal management and reporting
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle are
the treatment of inter-segment warranties, the earn-
ings impact of which is allocated to the Automotive
and Financial Services segments on the basis used
internally to manage the business, and cross-segment
impairment losses on investments in subsidiaries.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated upon
consolidation. Inter-segment sales take place at mar-
ket prices.
The role of “chief operating decision maker” with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(RoCE). The relevant measure of segment earnings
is therefore profit before financial result. Capital
employed is the corresponding measure of segment
assets used to assess allocation of resources and com-
prises all current and non-current operational assets
after deduction of liabilities used operationally which
are not subject to interest (e. g. trade payables).
The success of the Financial Services segment is meas-
ured on the basis of return on equity (RoE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
SEGMENT INFORMATION
43
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). The segmentation follows the internal
management and reporting system and takes account
of the organisational structure of the BMW Group
based on the various products and services of the
reportable segments.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled mainly by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA, China, Korea, Italy and Russia via subsidiary
companies and elsewhere by independent, authorised
dealerships.
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
Automobile leasing, fleet business, multi-brand busi-
ness, retail and dealership financing, customer deposit
business and insurance activities are the main activities
allocated to the Financial Services segment.
Holding and Group financing companies are report-
ed in the Other Entities segment. This segment also
includes operating companies BMW Services Ltd.,
BMW (UK) Investments Ltd. and Bavaria Lloyd Rei-
sebüro GmbH, which are not allocated to one of the
other segments.
184
Notes to the Group
Financial Statements
Segment Information
Segment information by operating segment is as
follows:
in € million
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
SeGMent InforMAtIon
by operAtInG SeGMent
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
70,546
18,035
88,581
7,863
738
6,972
67,977
18,447
86,424
7,695
441
5,699
2,272
11
2,283
207
–
125
2,062
7
2,069
187
–
114
25,857
1,710
27,567
2,207
–
25,024
Depreciation and amortisation on non-current assets
4,699
4,702
88
75
9,992
24,122
1,559
25,681
2,166
–
25,105
9,606
3
4
7
–
–
2
4
6
–
–
–
–
98,678
94,163
– 19,760
– 20,017
–
–
– 19,760
– 20,017
98,678
94,163
80
170
298
–
– 553
10,655
–
738
– 6,728
– 6,756
25,393
9,665
441
24,162
8,112
SeGMent InforMAtIon
by operAtInG SeGMent
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
–
–
– 6,324
– 6,271
8,455
Depreciation and amortisation on non-current assets
in € million
Segment assets
Investments accounted for using the equity method
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
11,072
2,767
9,411
2,546
618
–
600
14,740
11,049
–
–
–
75,121
75,363
91,932
92,112
193,483
188,535
Segment assets
–
–
–
–
2,767
2,546
Investments accounted for using the equity method
Group Financial Statements in € million
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
185
3
4
7
80
–
–
–
2
4
6
170
–
–
–
–
–
98,678
94,163
– 19,760
– 20,017
–
–
– 19,760
– 20,017
98,678
94,163
298
–
– 553
10,655
–
738
– 6,728
– 6,756
25,393
– 6,324
– 6,271
8,455
9,665
441
24,162
8,112
SeGMent InforMAtIon
by operAtInG SeGMent
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Investments accounted for using the equity method
11,072
2,767
9,411
2,546
618
–
600
14,740
11,049
–
–
–
75,121
75,363
91,932
92,112
193,483
188,535
Segment assets
–
–
–
–
2,767
2,546
Investments accounted for using the equity method
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
31. 12. 2017
31. 12. 2016
70,546
18,035
88,581
7,863
738
6,972
67,977
18,447
86,424
7,695
441
5,699
2,272
11
2,283
207
–
125
2,062
7
2,069
187
–
114
25,857
1,710
27,567
2,207
–
25,024
24,122
1,559
25,681
2,166
–
25,105
9,606
Depreciation and amortisation on non-current assets
4,699
4,702
88
75
9,992
SeGMent InforMAtIon
by operAtInG SeGMent
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
in € million
Segment assets
186
Notes to the Group
Financial Statements
Segment Information
Write-downs on inventories to their net realisable
value amounting to € 27 million (2016: € 101 million)
were recognised by the Automotive segment in the
financial year 2017. The write-downs recorded in the
previous year related mainly to accidents and natural
disasters.
Financial Services segment result was negatively
impacted by impairment losses totalling € 215 million
(2016: € 384 million) recognised on leased products.
Income from the reversal of impairment losses on leased
products totalled € 11 million (2016: € 211 million).
The Other Entities’ segment result includes interest
and similar income amounting to € 1,110 million (2016:
€ 1,250 million) and interest and similar expenses
amounting to € 986 million (2016: € 1,006 million).
The segment result includes no impairment losses
on other investments (2016: € 18 million).
The information disclosed on capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
in € million
2017
2016
Reconciliation of segment result
Total for reportable segments
10,357
10,218
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
826
– 528
10,655
219
– 772
9,665
Total for reportable segments
Elimination of inter-segment items
32,121
– 6,728
30,918
– 6,756
Total Group capital expenditure
on non-current assets
25,393
24,162
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
14,779
– 6,324
14,383
– 6,271
Total Group depreciation and
amortisation on non-current assets
8,455
8,112
in € million
31. 12. 2017
31. 12. 2016
Reconciliation of segment assets
Total for reportable segments
101,551
96,423
Non-operating assets –
Other Entities segment
Total liabilities –
Financial Services segment
7,829
7,432
123,088
126,679
Non-operating assets –
Automotive and Motorcycles segments
48,193
45,923
Liabilities of Automotive
and Motorcycles segments
not subject to interest
35,212
33,858
Elimination of inter-segment items
– 122,390
– 121,780
Total Group assets
193,483
188,535
Group Financial Statements In the information by region, external sales are based
on the location of the customer. Revenues with major
customers were not material overall. The information
disclosed for non-current assets relates to property,
plant and equipment, intangible assets and leased
products. Eliminations disclosed for non-current
assets relate to leased products.
187
Information by region
in € million
Germany
China
USA
Rest of Europe
Rest of Asia
Rest of the Americas
Other regions
Eliminations
Group
External revenues
Non-current assets
2017
2016
2017
2016
13,553
18,295
17,110
31,473
11,434
3,838
2,975
–
13,776
16,619
16,000
30,544
10,466
3,507
3,251
–
98,678
94,163
31,678
85
20,766
14,807
1,588
2,941
355
– 8,028
64,192
29,741
23
23,249
13,910
1,439
2,628
261
– 7,345
63,906
188
Notes to the Group
Financial Statements
List of Investments
at 31 December 2017
LIST OF INVESTMENTS AT
31 DECEMBER 2017
44
List of investments at 31 December 2017
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Disclosures for
equity and earnings and for investments are not made
if they are of “minor significance” for the results
of operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in
the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard
to the publication of annual financial statements
and the drawing up of a management report and / or
notes to the financial statements (footnotes 5 and 6).
The Group Financial Statements of BMW AG serve
as exempting consolidated financial statements for
these companies.
Affiliated companies (subsidiaries) of BmW AG at 31 December 2017
• 65
Companies
DomESTic 1, 12
BMW Beteiligungs GmbH & Co. KG, Munich 6
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Bank GmbH, Munich 3
BMW Finanz Verwaltungs GmbH, Munich
BMW Verwaltungs GmbH, Munich 3,6
Alphabet International GmbH, Munich 4,5,6
Alphabet Fuhrparkmanagement GmbH, Munich 4
Parkhaus Oberwiesenfeld GmbH, Munich
BMW Hams Hall Motoren GmbH, Munich 4,5,6
BMW High Power Charging Beteiligungs GmbH, Munich 4,6,11
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bürohaus Petuelring GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3,5,6
BAVARIA-LLOYD Reisebüro GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4,5,6
BMW Vermögensverwaltungs GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
FoREiGn 2
Europe 12
BMW Holding B. V., The Hague
BMW International Holding B. V., Rijswijk 10
BMW Österreich Holding GmbH, Steyr
BMW (UK) Holdings Ltd., Farnborough
BMW España Finance S. L., Madrid
BMW Financial Services (GB) Ltd., Farnborough
BMW Motoren GmbH, Steyr
BMW (Schweiz) AG, Dielsdorf
BMW Malta Ltd., Floriana
BMW (UK) Manufacturing Ltd., Farnborough
BMW Coordination Center V. o. F., Bornem
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
5,289
3,558
1,988
326
153
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 5
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16,655
1,959
7,913
3,026
1,489
999
894
879
794
728
603
594
15
824
413
110
261
172
45
29
94
2
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Group Financial Statements
BMW Finance S. N. C., Guyancourt
BMW Italia S. p. A., San Donato Milanese
BMW (UK) Ltd., Farnborough
BMW Belgium Luxembourg S. A. / N. V., Bornem
ALPHABET (GB) Ltd., Farnborough
BMW France, Montigny-le-Bretonneux
BMW Financial Services Scandinavia AB, Sollentuna
BMW Iberica S. A., Madrid
BMW Finance N. V., The Hague
BMW Austria Leasing GmbH, Salzburg
Rolls-Royce Motor Cars Ltd., Farnborough
Alphabet Nederland B. V., Breda 10
BMW Russland Trading OOO, Moscow
BMW i Ventures SCS SICAV-RAIF, Senningerberg 11
BMW Austria Bank GmbH, Salzburg
Alphabet Belgium Long Term Rental NV, Aartselaar
BMW International Investment B. V., The Hague
BMW Vertriebs GmbH, Salzburg
Bavaria Reinsurance Malta Ltd., Floriana
APD Industries plc, Farnborough
BMW Austria Ges.m. b. H., Salzburg
Alphabet UK Ltd., Glasgow
BMW Bank OOO, Moscow
Alphabet España Fleet Management S. A. U., Madrid
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Northern Europe AB, Stockholm
BMW Financial Services Belgium S. A. / N. V., Bornem
Swindon Pressings Ltd., Farnborough
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services B. V., Rijswijk
BMW Norge AS, Fornebu
Alphabet France Fleet Management S. N. C., Rueil-Malmaison
BMW Services Ltd., Farnborough
Alphabet Italia Fleet Management S. p. A., Rome
BMW Portugal Lda., Porto Salvo
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
BMW Retail Nederland B. V., Delft
BMW Hellas Trade of Cars A. E., Kifissia
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Nederland B. V., Rijswijk
BMW Financial Services Polska Sp. z o. o., Warsaw
BMW Automotive (Ireland) Ltd., Dublin
Alphabet France SAS, Rueil-Malmaison
BMW Amsterdam B. V., Amsterdam
Alphabet Polska Fleet Management Sp. z o. o., Warsaw
BMW Financial Services Denmark A / S, Copenhagen
Park Lane Ltd., Farnborough
BMW Distribution S. A. S., Montigny-le-Bretonneux
BMW Services Belgium N. V., Bornem
BMW Renting (Portugal) Lda., Porto Salvo
BMW Roma S. r. l., Rome
BMW Danmark A / S, Copenhagen
Oy BMW Suomi AB, Helsinki
BMW Den Haag B. V., The Hague
189
419
360
330
298
244
223
218
210
154
136
135
131
130
115
115
113
107
102
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
56
15
77
22
50
23
11
19
20
13
24
41
150
– 3
12
17
7
27
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
190
Notes to the Group
Financial Statements
List of Investments
at 31 December 2017
BMW Madrid S. L., Madrid
BMW Milano S. r. l., San Donato Milanese
Société Nouvelle WATT Automobiles SARL, Rueil-Malmaison
Alphabet Luxembourg S. A., Leudelange
BMW (UK) Investments Ltd., Farnborough
BMW Malta Finance Ltd., Floriana
BiV Carry I SCS, Senningerberg 11
BMW (UK) Capital plc, Farnborough
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BLMC Ltd., Farnborough
Bavarian Sky FTC, Pantin 14
Bavarian Sky UK 1 PLC, London 14
Bavarian Sky UK A Limited, London 14
Bavarian Sky S. A., Compartment German Auto Loans 3, Luxembourg 14
Bavarian Sky S. A., Compartment German Auto Loans 4, Luxembourg 14
Bavarian Sky S. A., Compartment German Auto Loans 5, Luxembourg 14
Bavarian Sky S. A., Compartment German Auto Loans 6, Luxembourg 14
Bavarian Sky S. A., Compartment German Auto Loans 7, Luxembourg 14
Bavarian Sky S. A., Compartment German Auto Leases 4, Luxembourg 14
Bavarian Sky S. A., Compartment A, Luxembourg 14
Bavarian Sky S. A., Compartment B, Luxembourg 14
Bavarian Sky Europe S. A. Compartment A, Luxembourg 14
Bavarian Sky Europe S. A., Luxembourg 14
The Americas
BMW Financial Services NA, LLC, Wilmington, Delaware
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co., LLC, Wilmington, Delaware
BMW Bank of North America, Inc., Salt Lake City, Utah
Financial Services Vehicle Trust, Wilmington, Delaware
BMW US Capital, LLC, Wilmington, Delaware
BMW do Brasil Ltda., São Paulo
BMW SLP, S. A. de C. V., Villa de Reyes
BMW of North America, LLC, Wilmington, Delaware
BMW Extended Service Corporation, Wilmington, Delaware
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
BMW Auto Leasing, LLC, Wilmington, Delaware
BMW Facility Partners, LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW Acquisitions Ltda., São Paulo
BMW Leasing de Mexico S. A. de C. V., Mexico City
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
BMW Leasing do Brasil, S. A., São Paulo
BMW de Argentina S. A., Buenos Aires
BMW Financial Services de Mexico S. A. de C. V. SOFOM, Mexico City
BMW de Mexico, S. A. de C. V., Mexico City
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,444
2,280
1,431
1,358
1,135
333
226
187
– 288
2,320
220
303
121
247
41
10
– 84
– 679
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
100
0
0
0
0
0
0
0
0
0
0
0
0
0
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Group Financial Statements
BMW Financeira S. A. Credito, Financiamento e Investimento, São Paulo
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Receivables Limited Partnership, Richmond Hill, Ontario
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW of Manhattan, Inc., Wilmington, Delaware
BMW Canada Inc., Richmond Hill, Ontario
BMW Vehicle Lease Trust 2015-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-1, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-1, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-A, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-A, Wilmington, Delaware 14
BMW Vehicle Owner Trust 2014-A, Wilmington, Delaware 14
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware 14
BMW Floorplan Master Owner Trust, Wilmington, Delaware 14
BMW Canada 2015-A, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2015, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2016, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 14
Africa
BMW (South Africa) (Pty) Ltd., Pretoria
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
Bavarian Sky South Africa (RF) Ltd., Johannesburg 14
SuperDrive Investments (RF) Limited, Cape Town 14
Asia
BMW Automotive Finance (China) Co., Ltd., Beijing
BMW China Automotive Trading Ltd., Beijing
BMW Financial Services Korea Co., Ltd., Seoul
BMW Japan Finance Corp., Chiba
BMW Japan Corp., Tokyo
BMW Korea Co., Ltd., Seoul
BMW India Financial Services Private Ltd., Gurgaon
BMW (Thailand) Co., Ltd., Bangkok
BMW Manufacturing (Thailand) Co., Ltd., Rayong
Herald International Financial Leasing Co., Ltd., Tianjin 11
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
BMW Leasing (Thailand) Co., Ltd., Bangkok
BMW India Private Ltd., Gurgaon
BMW China Services Ltd., Beijing
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokyo Corp., Tokyo
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
Bavarian Sky Korea Auto Receivable 1 Pte. Ltd., Singapore 14
Bavarian Sky Korea 2016-1, Seoul 14
Bavarian Sky Korea 2017-1, Seoul 14
Bavarian Sky China 2016-1, Beijing 14
191
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
721
167
–
–
1,860
799
475
414
280
214
122
114
106
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
54
– 6
–
–
289
752
68
63
0
16
10
88
63
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
0
0
0
0
0
0
0
0
0
0
0
0
0
0
100
100
0
0
58
100
100
100
100
100
100
100
100
100
51
100
74
100
100
100
100
100
100
100
100
100
0
0
0
0
192
Notes to the Group
Financial Statements
List of Investments
at 31 December 2017
Bavarian Sky China 2016-2, Beijing 14
Bavarian Sky China 2017-1, Beijing 14
Bavarian Sky China 2017-2, Beijing 14
Bavarian Sky China 2017-3, Beijing 14
2014-2 ABL, Tokyo 14
2015-1 ABL, Tokyo 14
2015-2 ABL, Tokyo 14
2016-1 ABL, Tokyo 14
2016-2 ABL, Tokyo 14
2017-1 ABL, Tokyo 14
2017-2 ABL, Tokyo 14
2017-3 ABL, Tokyo 14
Oceania
BMW Australia Finance Ltd., Mulgrave
BMW Australia Ltd., Melbourne
BMW Financial Services New Zealand Ltd., Auckland
BMW New Zealand Ltd., Auckland
BMW Sydney Pty. Ltd., Sydney
BMW Melbourne Pty. Ltd., Melbourne
BMW Australia Trust, Mulgrave, Victoria 14
bMW AG’s non-consolidated companies at 31 december 2017
• 66
Companies
DomESTic 7
Alphabet Fleetservices GmbH, Munich
BMW i Ventures GmbH, Munich
Automag GmbH, Munich
Digital Charging Solutions GmbH, Munich
BMW Car IT GmbH, Munich 4
ParkNow GmbH, Munich
PM Parking Ventures GmbH, Munich
FoREiGn 7
Europe
Alphabet Insurance Services Polska Sp. z o. o., Warsaw
BMW (GB) Ltd., Farnborough
BMW (P + A) Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW Car Club Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Group Benefit Trust Ltd., Farnborough
BMW i Ventures B. V., The Hague
BMW Motorsport Ltd., Farnborough
Cobalt Holdings Ltd., Basingstoke
Cobalt Telephone Technologies Ltd., Basingstoke
Content4all BV, Amsterdam
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
OOO BMW Leasing, Moscow
–
–
–
–
–
–
–
–
–
–
–
–
380
134
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13
15
–
–
–
–
–
0
0
0
0
0
0
0
0
0
0
0
0
100
100
100
100
100
100
0
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Group Financial Statements
BMW Russland Automotive OOO, Kaliningrad
Park-line Aqua B. V., The Hague
Park-line B. V., The Hague
Park-line Holding B. V., The Hague
Parkmobile International Holding B. V., Utrecht
Parkmobile International B. V., Utrecht
Parkmobile (UK) Ltd., Basingstoke
Parkmobile Belgium BvBa, Antwerpen
Parkmobile Benelux B. V., Amsterdam
ParkNow France SAS, Versailles
Parkmobile Group BV, Amsterdam
Parkmobile Group Holding BV, Amsterdam
Parkmobile Hellas SA, Athens
Parkmobile Licenses B. V., Amsterdam
Parkmobile Ltd., Basingstoke
Parkmobile Software BV, Amsterdam
ParkNow Suisse SA, Bulle
U. T. E. Alphabet España-Bujarkay, Sevilla
The Americas
217-07 Northern Boulevard Corporation, Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures, LLC, Wilmington, Delaware
BMW i Ventures, Inc., Wilmington, Delaware
BMW Leasing de Argentina S. A., Buenos Aires
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corporation, Wilmington, Delaware
Designworks / USA, Inc., Newbury Park, California
MINI Business Innovation, LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV, LLC, Wilmington, Delaware
ReachNow, LLC, Wilmington, Delaware
Parkmobile Montgomery County, LLC, Baltimore, Maryland 13
Parkmobile, LLC, Wilmington, Delaware 13
Parkmobile USA, Inc., Atlanta, Georgia
Parkmobile Electronic Parking Solutions Canada, Inc., Vancouver
Toluca Planta de Automoviles, S. A. de C. V., Mexico City
Africa
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
Asia
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Limited, Hong Kong
BMW Hong Kong Services Limited, Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW India Leasing Pvt. Ltd., Gurgaon
BMW India Foundation, Gurgaon
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Philippines Corp., Manila
Herald Hezhong (Beijing) Automotive Trading Co., Ltd., Beijing
THEPSATRI Co., Ltd., Bangkok 9
Oceania
Parkmobile International (Australia) Pty. Ltd., Sydney
193
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
100
60
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100
100
65
65
100
100
100
100
100
100
100
51
100
100
100
100
100
70
100
49
–
–
100
194
bMW AG’s associated companies, joint ventures and joint operations at 31 december 2017
• 67
Notes to the Group
Financial Statements
List of Investments
at 31 December 2017
Companies
Joint ventures – equity accounted
doMeStIC
DriveNow GmbH & Co. KG, Munich 8
DriveNow Verwaltungs GmbH, Munich 8
IONITY Holding GmbH & Co. KG, Munich 8
foreIGn
BMW Brilliance Automotive Ltd., Shenyang 8
Associated companies – equity accounted
foreIGn
THERE Holding B. V., Amsterdam 8
Joint operations – proportionately consolidated entities
doMeStIC
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich 8
foreIGn
SGL Automotive Carbon Fibers, LLC, Dover, Delaware 8
Not equity accounted or proportionately consolidated entities
DomESTic 7
Encory GmbH, Unterschleißheim
Digital Energy Solutions GmbH & Co. KG, Munich
The Retail Performance Company GmbH, Munich
Abgaszentrum der Automobilindustrie GbR, Weissach
PDB – Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
FoREiGn 7
BMW Albatha Leasing LLC, Dubai
BMW Albatha Finance PSC, Dubai
BMW AVTOTOR Holding B. V., Amsterdam
Stadspasparkeren B. V., Deurne
IP Mobile N. V., Brussels
DSP Concepts, Inc., Dover, Delaware
Bavarian & Co. Ltd., Incheon
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
42
–
39
– 2
–
– 11
5,377
1,337
50
50
25
50
2,195
362
33
52
41
–
–
–
–
–
–
–
–
–
–
–
9
2
–
–
–
–
–
–
–
–
–
–
–
–
–
49
49
50
50
50
25
20
40
40
50
30
25
20
20
Group Financial Statements
bMW AG’s participations at 31 december 2017
• 68
Companies
DomESTic 7
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Hubject GmbH, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Joblinge gemeinnützige AG Berlin, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
RA Rohstoffallianz GmbH i. L., Berlin
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
FoREiGn 7
Gios Holding B. V., Oss
195
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.6
3.1
17.8
18.9
9.8
16.7
6.2
10.5
9.1
18.3
–
12.0
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
3 Profit and Loss Transfer Agreement with BMW AG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
9 Including power to appoint representative bodies.
10 Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
11 First-time consolidation.
12 Deconsolidation in the financial year 2017: BMW Osaka Corp., Tokyo, MITEC Mikroelektronik Mikrotechnik Informatik GmbH, Munich (merger).
13 100 % acquisition on 3 January 2018.
14 Control on basis of economic dependence.
196
Notes to the Group
Financial Statements
List of Investments
at 31 December 2017
Munich, 15 February 2018
Bayerische motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich
Pieter Nota
Dr. Nicolas Peter
Peter Schwarzenbauer
Oliver Zipse
Group Financial Statements CORPORATE
GOVERNANCE
Page 198 Statement on Corporate Governance
(Part of the Combined Management Report)
Information on the Company’s Governing Constitution
Page 198
Page 199 Declaration of the Board of Management and
of the Supervisory Board pursuant to § 161 AktG
Page 200 Members of the Board of Management
Page 201 Members of the Supervisory Board
Page 204 Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
Page 206 Composition and Work Procedures of the Super visory Board
of BMW AG and its Committees
Page 213 Disclosures pursuant to the Act on Equal Gender Participation
Page 214
Information on Corporate Governance
Practices Applied beyond Mandatory Requirements
Page 216 Compliance in the BMW Group
Page 221 Compensation Report
(Part of the Combined Management Report)
Page 239 Responsibility Statement by the Company’s
Legal Representatives
Page 240
Independent Auditor’s Report
4
4
Corporate
Governance
Company’s Govern-
ing Constitution
Board of
Management
Supervisory Board
Compliance
Compensation
Report
198
Information on the
Company’s
Governing
Constitution
STATEMENT ON
CORPORATE
GOVERNANCE
Good corporate governance – acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis – is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, trustful cooperation
both of the Board of Management and the Supervisory
Board as well as among employees, and compliance
with applicable law. The Board of Management and
Supervisory Board report in this statement on impor-
tant aspects of corporate governance pursuant to
§§ 289 f, § 315 d HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
Information on the Company’s
Governing Constitution
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
its group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the
Articles of Incorporation of BMW AG. Shareholders,
as the owners of the business, exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
certain capital measures, and elects the shareholders’
representatives to the Supervisory Board. The Board of
Management is responsible for managing the Company
and is monitored and advised by the Supervisory
Board. The Supervisory Board appoints the members
of the Board of Management and can, for an important
reason, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehensively,
in line with the principles of conscientious and faithful
accounting and in accordance with the law and the
reporting duties determined by the Supervisory Board.
The Board of Management requires the approval of
the Supervisory Board for certain major transactions.
The Supervisory Board is not, however, authorised to
undertake management measures itself.
The close interaction between Board of Management
and Supervisory Board in the interests of the Company
as described above is also known as a “two-tier board
structure”.
Statement on Corporate Governance 199
4. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information
pertaining to management board compensation
be disclosed in the Compensation Report. These
recommendations have not been and will not be
complied with, due to uncertainties as to whether
the supplementary use of model tables – particularly
in view of the transition from one remuneration
system to a new system – would be instrumental
in making the BMW AG’s Compensation Report
transparent and generally understandable in
accordance with generally applicable financial
reporting requirements (see section 4.2.5 sen-
tence 3 of the Code).
Munich, December 2017
Bayerische motoren Werke
Aktiengesellschaft
On behalf of the
Supervisory Board
On behalf of the
Board of Management
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
Harald Krüger
Chairman
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommen-
dations of the “Government Commission on the
German Corporate Governance Code” pursuant to
§ 161 German Stock Corporation Act
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
(“BMW AG”) declare the following regarding the
recommendations of the “Government Commission
on the German Corporate Governance Code”:
1. Since issuance of the last Declaration in Decem-
ber 2016, BMW AG has complied with all of the
rec ommendations published officially on 12 June
2015 in the Federal Gazette (Code version dated
5 May 2015), with the exception – as previously
reported – of section 4.2.5 sentences 5 and 6.
2. BMW AG will in future comply with all of the recom-
mendations published officially on 24 April 2017 in
the Federal Gazette (Code version dated 7 February
2017), with the exception of section 4.2.3 sentence 9
and section 4.2.5 sentences 5 and 6.
3. It is recommended in section 4.2.3 sentence 9 of
the Code that subsequent amendments to per-
formance targets or comparison parameters for
variable remuneration components be excluded.
BMW AG remains committed to this principle.
A one-off departure from the recommendation is,
however, planned for the financial year 2018 in
conjunction with the implementation of a new
remuneration system for the Board of Manage-
ment: in order to implement the new remuneration
system with effect from the coming financial
year 2018 – rather than with effect from the finan-
cial year 2020 – it is intended to cancel the targets
previously set for the variable remuneration com-
ponents for the financial years 2018 and 2019
and to replace them for the financial year 2018
onwards with targets based on the target system
specified in the new remuneration system.
200
Members of the
Board of
Management
Members of the
Supervisory Board
MEMBERS OF THE
BOARD OF MANAGEMENT
dr. nicolas peter (*1962)
Finance
Mandates
harald Krüger (*1965)
Chairman
Milagros Caiña Carreiro-Andree (*1962)
Human Resources, Industrial Relations Director
Markus duesmann (*1969)
Purchasing and Supplier Network
Klaus fröhlich (*1960)
Development
Mandates
HERE International B. V. (until 28 February 2018)
pieter nota (*1964)
Sales and Brand BMW, Aftersales BMW Group
(since 1 January 2018)
BMW Brilliance Automotive Ltd.
(Deputy Chairman)
BMW Nederland B. V. (until 14 February 2017)
Dr. ian Robertson (HonDSc) (*1958)
Sales and Brand BMW,
Aftersales BMW Group
(until 31 December 2017)
Mandates
Weybourne Limited (from 3 January 2017
until 19 October 2017)
Weybourne Group Limited
Weybourne Investments Holdings
(until 19 October 2017)
Weybourne Management Limited
peter Schwarzenbauer (*1959)
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and
Digital Business Innovation BMW Group
Mandates
Scout24 AG (since 8 June 2017)
Rolls-Royce Motor Cars Limited (Chairman)
oliver Zipse (*1964)
Production
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
General Counsel:
dr. Jürgen reul
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Statement on Corporate Governance MEMBERS OF THE
SUPERVISORY BOARD
Dr.-ing. Dr.-ing. E. h. norbert Reithofer (*1956)
Member since 2015
Chairman
Former Chairman of the Board of
Management of BMW AG
Mandates
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders’ Committee)
manfred Schoch 1 (*1955)
Member since 1988
Deputy Chairman
Chairman of the European
and General Works Council
Industrial Engineer
Stefan quandt (*1966)
Member since 1997
Deputy Chairman
Entrepreneur
Mandates
DELTON AG (Chairman)
AQTON SE (Chairman)
Entrust Datacard Corp.
Stefan Schmid 1 (*1965)
Member since 2007
Deputy Chairman
Chairman of the Works Council, Dingolfing
201
Dr. jur. Karl-Ludwig Kley (*1951)
Member since 2008
Deputy Chairman
Chairman of the Supervisory Board of the E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Mandates
E.ON SE (Chairman)
Deutsche Lufthansa Aktiengesellschaft
(Chairman, since 25 September 2017)
Verizon Communications Inc. (until 3 May 2018)
christiane Benner 2 (*1968)
Member since 2014
Second Chairman of IG Metall
franz haniel (*1955)
Member since 2004
Entrepreneur
Mandates
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
TBG Limited
Ralf Hattler 3 (*1968)
Member since 2017
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
dr.-Ing. heinrich hiesinger (*1960)
Member since 11 May 2017
Chairman of the Board of Management
of thyssenkrupp AG
Mandates
thyssenkrupp Elevator AG (Chairman)
thyssenkrupp Steel Europe AG (Chairman)
thyssenkrupp (China) Ltd. (Chairman)
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.
202
Members of the
Supervisory Board
prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (*1957)
Member since 2008
Chairman of the Executive Board
of Helmholtz-Zentrum Potsdam
Deutsches GeoForschungsZentrum – GFZ
University Professor
Dr. h. c. Robert W. Lane (*1949)
Member since 2009
Former Chairman and Chief Executive Officer of
Deere & Company
Mandates
General Electric Company (until 8 October 2017)
Horst Lischka 2 (*1963)
Member since 2009
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH
MAN Truck & Bus AG
Städtisches Klinikum München GmbH
Willibald Löw 1 (*1956)
Member since 1999
Chairman of the Works Council, Landshut
Simone Menne (*1960)
Member since 2015
Former Member of Management of
Boehringer Ingelheim Gruppe
Mandates
Deutsche Post AG
prof. Dr. rer. nat. Dr.-ing. E. h.
henning Kagermann (*1947)
Member from 2010 until 11 May 2017
President of acatech – Deutsche Akademie der
Technikwissenschaften e. V.
Mandates
Deutsche Bank AG
Deutsche Post AG
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
Susanne Klatten (*1962)
Member since 1997
Entrepreneur
Mandates
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
prof. dr. rer. pol. renate Köcher (*1952)
Member since 2008
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Mandates
Allianz SE (until 3 May 2017)
Infineon Technologies AG
Nestlé Deutschland AG
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.
Statement on Corporate Governance
203
Dr. Dominique mohabeer 1 (*1963)
Member since 2012
Member of the Works Council, Munich
Brigitte Rödig 1 (*1963)
Member since 2013
Member of the Works Council, Dingolfing
Jürgen Wechsler 2 (*1955)
Member since 2011
Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (Deputy Chairman)
Werner Zierer 1 (*1959)
Member since 2001
Chairman of the Works Council, Regensburg
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
204
Composition and
Work Procedures
of the Board of
Management of
BMW AG and its
Committees
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
The Board of Management manages the enterprise
under its own responsibility, acting in the interests
of the BMW Group with the aim of achieving sustain-
able growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance
within the BMW Group can be found in the Corporate
Governance section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
During their period of employment for BMW AG,
members of the Board of Management are bound by
a comprehensive non-competition clause. They are
required to act in the enterprise’s best interests and
may not pursue personal interests in their decisions
or take advantage of business opportunities intended
for the enterprise. They may only undertake ancillary
activities, in particular supervisory board mandates
outside the BMW Group, with the approval of the
Supervisory Board’s Personnel Committee. Each
member of the Board of Management of BMW AG is
obliged to disclose conflicts of interest to the Super-
visory Board without delay and inform the other
members of the Board of Management accordingly.
Following the appointment of a new member to the
Board of Management, the BMW Group Corporate
Governance Officer informs the new member of the
framework conditions under which the Board mem-
ber’s duties are to be carried out – in particular those
enshrined in the BMW Group’s Corporate Govern-
ance Code – as well as the duty to cooperate when a
transaction or event triggers reporting requirements
or requires the approval of the Supervisory Board.
The Board of Management consults and takes
decisions as a collegiate body in meetings of the
Board of Management, the Sustainability Board,
the Operations Committee and the Committee for
Executive Management Matters. At its meetings, the
Board of Management defines the overall framework
for business strategies and the use of resources, takes
decisions regarding the implementation of strategies
and deals with issues of particular importance to the
BMW Group. The full Board also takes decisions at a
basic policy level relating to the Group’s automobile
product strategies and product projects inasmuch as
these are relevant for all brands. The Board of Man-
agement and its committees may, as required and
depending on the subject matters being discussed,
invite non-voting advisers to participate at meetings.
Terms of reference approved by the Board of Man-
agement contain a planned allocation of divisional
responsibilities between the individual Board mem-
bers. These terms of reference also incorporate the
principle that the full Board of Management bears
joint responsibility for all matters of particular impor-
tance and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case rules
can be put in place for cross-divisional projects. Board
members continually provide the Chairman of the
Board of Management with all information regarding
major transactions and developments within their
area of responsibility. The Chairman of the Board
of Management coordinates cross-divisional matters
with the overall targets and plans of the BMW Group,
involving other Board members to the extent that divi-
sions within their area of responsibility are affected.
In the financial year 2017, the Board of Management
made its decisions at meetings generally held on a
weekly basis which were convened, coordinated and
headed by the Chairman of the Board of Management.
At the request of the Chairman, decisions can also
be taken outside of Board meetings if none of the
Board members object to this procedure. A meeting
is quorate if all Board of Management members are
invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be
subsequently confirmed in writing. Except in urgent
cases, matters relating to a division for which the
responsible Board member is not present will only
be discussed and decided upon with that member’s
consent.
Unless stipulated otherwise by law or in BMW AG’s
statutes, the Board of Management makes decisions
on the basis of a simple majority of votes cast at meet-
ings. Outside of Board meetings, decisions are taken
on the basis of a simple majority of Board members.
In the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the Board’s terms of reference must be passed
Statement on Corporate Governance unanimously. A Board meeting may only be held if
more than half of the Board members are present.
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the Board responsible for
Finance will represent him.
Minutes are taken of all meetings and the Board of
Management’s resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
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 represent-
ed in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full Board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
A secretariat for Board of Management matters has
been established to assist the Chairman and other
Board members with the preparation and follow-up
work connected with Board meetings.
At meetings of the Operations Committee (general-
ly held every two weeks), decisions are reached in
connection with automobile product projects, based
on the strategic orientation and decision framework
stipulated at Board of Management meetings. The
Operations Committee comprises the Board of
Management member responsible for Development
(who also chairs the meetings), together with the
Board members responsible for the following areas:
Purchasing and Supplier Network; Production; Sales
and Brand BMW, Aftersales BMW Group (until 28 Feb-
ruary 2018); and MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business Innovation
BMW Group (until 28 February 2018). If the committee
chairman is not present or unable to attend a meeting,
the member of the Board responsible for Production
represents him. Resolutions taken at meetings of the
Operations Committee are made online.
The full Board usually convenes up to twice a year in
its function as Sustainability Board in order to define
strategy with regard to sustainability and decide upon
measures to implement that strategy. The Head of
Corporate Affairs and the Representative for Sus-
tainability and Environmental Protection participate
in these meetings in an advisory capacity.
The Board’s Committee for Executive Management
Matters deals with enterprise-wide issues affecting
executive managers of the BMW Group, either in
205
their entirety or individually (such as the executive
management structure, potential candidates for exec-
utive management, nominations for or promotions to
senior management positions). This committee has,
on the one hand, an advisory and preparatory role
(e. g. making suggestions for promotions to the two
remuneration groups below Board level and preparing
decisions to be taken at Board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decision-making
function on the other (e. g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full Board). The
Committee has two members who are entitled to vote
at meetings, namely the Chairman of the Board of
Management (who also chairs the meetings) and the
Board member responsible for Human Resources. The
Head of Human Resources Management and Services
as well as the Head of Human Resources Executive
Management also participate in these meetings in an
advisory function. At the request of the Chairman,
resolutions may also be passed outside of committee
meetings by casting votes in writing, by fax or by
telephone if the other member entitled to vote does
not object immediately. The Committee for Executive
Management Matters convenes up to six times a year.
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by law, the Board of Management
submits its reports to the Supervisory Board in writing.
To the extent possible, documents required as a basis
for taking decisions are sent to the members of the
Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental
importance, the Supervisory Board has resolved
that a specific approval from the Supervisory Board
is required. Whenever necessary, the Chairman of
the Board of Management obtains the approval of
the Supervisory Board and ensures that reporting
duties to the Supervisory Board are complied with. In
order to fulfil these tasks, the Chairman is supported
by all members of the Board of Management. The
fundamental principle followed when reporting to
the Supervisory Board is that the latter should be kept
informed regularly, without delay and comprehen-
sively of all significant matters relating to planning,
business performance, risk exposures, risk manage-
ment and compliance, as well as any major variances
between actual business development and plans and
targets, and the relevant reasons.
206
Composition and
Work Procedures of
the Supervisory
Board of BMW AG
and its Committees
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
BMW AG’s Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
reasons.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half the mem-
bers of whom it is required to comprise participate
in the vote. A resolution relating to an agenda item
not included in the invitation is only valid if none of
the members of the Supervisory Board who were not
present at the meeting object to the resolution and if
a minimum of two-thirds of the members are present.
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determina-
tion Act contains specific legal requirements with regard
to majorities and technical procedures, particularly with
regard to the appointment and removal of management
Board members and the election of Chairman or Deputy
Chairman of the Supervisory Board. In the event of a
tied vote in the Supervisory Board, the Chairman of
the Supervisory Board has two votes in a renewed vote,
assuming it also results in a tie.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote via another Supervisory Board member
in written, fax or electronic form. This rule also applies
for the second vote of the Chairman of the Supervisory
Board. The Chairman of the Supervisory Board can also
grant a period of time in which all members not present
at a meeting may retrospectively vote. In special cases,
resolutions may also be passed outside of meetings, in
particular in writing, by fax or by electronic means.
Resolutions and meetings are recorded in minutes,
which are signed by the relevant Chairman.
Following its meetings, the Supervisory Board generally
requests information on new vehicle models in the form
of a short presentation.
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
Members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
Statement on Corporate Governance 207
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
see Report of
the Supervisory
Board for the
number of
meetings during
the year 2017
The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year.
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees are quorate only when all members par-
ticipate. Committee resolutions are passed by a simple
majority, unless otherwise stipulated by law.
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Supervi-
sory Board office to support the chairpersons in their
coordination work.
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
see “Overview
of Supervisory
Board commit-
tees and their
composition”
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
The Supervisory Board has stated specific targets
for its composition, agreed to a diversity concept and
determined a competency profile.
see section
“Composition
targets for the
Supervisory
Board”
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
Taking into account the specific circumstances of
the BMW Group and the number of Board members,
the Supervisory Board has set up a Presiding Board
and four committees: the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee. These serve to raise the efficiency
of the Supervisory Board’s work and facilitate handling
of complex issues. Establishment and function of a
mediation committee is prescribed by law. Committee
chairpersons report in detail on committee work at each
plenary meeting of the Supervisory Board.
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members’ votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
208
Composition and
Work Procedures of
the Supervisory
Board of BMW AG
and its Committees
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also prepares decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, in particular acceptance
of non-BMW Group supervisory board mandates.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, internal audit system and compliance as well
as the performance of Supervisory Board duties in
connection with audits pursuant to § 32 of the German
Securities Trading Act (WpHG). It also oversees the
audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor at
the Annual General Meeting, makes a relevant recom-
mendation, issues the audit engagement and agrees on
additional areas of audit focus as well as the auditor’s fee.
The Audit Committee prepares the Supervisory Board’s
resolution relating to the Company and Group Financial
Statements and discusses interim reports with the Board
of Management prior to publication. Additionally, the
Audit Committee deals with the non-financial report-
ing, prepares the audit of the Supervisory Board and
the engagement of an external auditor and issues the
audit engagement. The Audit Committee also decides
on the Supervisory Board’s agreement on the use of
Authorised Capital 2014 (Article 4 no. 5 of the Articles
of Incorporation) and on amendments to the Articles
of Incorporation which only affect its wording.
Statement on Corporate Governance overview of Supervisory Board committees
and their composition
Principal duties, basis for activities
Members
209
preSIdInG boArd
— preparation of Supervisory Board meetings to the extent that the subject matter to be
— activities based on terms of reference
discussed does not fall within the remit of a committee
perSonnel CoMMIttee
— preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compen sation and the regular review of the
Board of Management’s compensation system
— conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
— decisions relating to the approval of ancillary activities of Board of Manage ment
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e. g. loans
to Board of Management or Supervisory Board members)
— set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
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 § 32 of the German Securities Trading Act (WpHG)
— supervision of external audit, in particular auditor independence and additional work
— preparation of proposals for election of external auditor at Annual General Meeting,
performed by external auditor
engagement of external auditor and compliance of audit engagement, determination of
additional areas of audit emphasis and fee agreements with external auditor
Norbert Reithofer 1
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Norbert Reithofer 1
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Karl-Ludwig Kley 1, 2
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
Group Financial Statements
— preparation of Supervisory Board’s resolution on Company and
— discussion of interim reports with Board of Management prior to publication
— preparation of the Supervisory Board’s audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
— 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 Corpo-
rate Governance Code, activities based on terms of reference
Norbert Reithofer 1
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
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
Norbert Reithofer
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.)
1 Chair.
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
210
Composition and
Work Procedures of
the Supervisory
Board of BMW AG
and its Committees
Board of Management succession planning,
diversity concept
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their assess-
ment of candidates for Board of Management posi-
tions, the underlying suitability criteria applied by the
Supervisory Board are expertise in the relevant function,
outstanding leadership qualities, proven track record
and knowledge of the Company. The Supervisory Board
has adopted a diversity concept for the composition
of the Board of Management, which is also aligned
with recommendations of the German Corporate
Governance Code. In considering which individuals
would best complement the Board of Management, the
Supervisory Board also takes diversity into account. The
criteria diversity is taken by the Supervisory Board to
encompass in particular different, mutually comple-
mentary profiles, professional and life experiences also
at the international level and an appropriate gender
representation. In reaching its decisions, the Supervi-
sory Board also considers the following:
— The members of the Board of Management should
have a long-standing track record of manage-
ment experience, ideally with experience in
different professional fields.
— At least two members should have international
management experience.
— At least two members of the Board of Manage-
ment should have a technical background.
— The Board of Management should collectively
have extensive experience in the fields of deve-
lopment, production, sales and marketing, fi-
nances and human resources.
— The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Mana gement. This is outlined in the section
“Disclosures pursuant to the Act on Equal
Gender Participation”. The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
se nior management positions, in particular at
executive levels.
— In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age mix
within the Board of Management.
When selecting an individual for a particular Board
of Management position, the Supervisory Board
decides in the best interests of the Group and after
due consideration of all relevant circumstances. The
Personnel Committee takes into account the diversity
concept described above when selecting candidates,
in order to ensure that the Board of Management has
a diverse composition. In the Supervisory Board’s
opinion, the composition of the Board of Management
as at 31 December 2017 is in line with the defined
diversity concept. For ease of comparison with the
diversity concept, the curricula vitae of members of
the Board of Management are available on the inter-
net. In particular, the Board of Management has one
female member and the various work, educational
and life experiences of the members of the Board of
Management complement each other.
Composition objectives of the Supervisory Board,
competency profile, diversity concept
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
To this end, the Supervisory Board of BMW AG has
approved the following objectives for its composition,
including a competency profile. These objectives also
describe the concept for achieving diversity in the com-
position of the Supervisory Board (diversity concept):
— Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
Statement on Corporate Governance 211
— No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable law, mem-
bers of the Supervisory Board are to take care
that no persons will be nominated for election
for whom a significant, non-temporary conflict
of interests could arise due to other activities
and functions carried out by them outside the
BMW Group, in particular advisory activities
or directorships with customers, suppliers, credi-
tors or other business partners.
— An age limit for membership of the Supervisory
Board of 70 years is generally to be applied. In
exceptional cases, members may remain on the
Board until the end of the next Annual General
Meeting after reaching the age of 73, in order to
fulfil legal requirements or to facilitate smooth
succession in the case of key roles or specialist
qualifications.
— As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member’s activities for the 14th financial year
after the beginning of the member’s first period
of office. This excludes the financial year in which
the first period of office began. This rule does
not apply to natural persons who either directly
or indirectly hold significant investments in the
Company. In the Company’s interest, deviation
from the general maximum period is possible,
for instance in order to work towards another
composition target, in particular diversity of
gender and technical, professional and personal
backgrounds.
— The Supervisory Board should include if possible
seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
— Three of the shareholder representatives in the
Supervisory Board should if possible be entrepre-
neurs or persons who have previous experience in
the management or supervision of another
medium or large-sized company.
— Three members of the Supervisory Board should
if possible be persons from the fields of business,
science or research who have experience in areas
relevant to the BMW Group, for example chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, for example
customer requirements, mobility, resources or
sustain ability.
— When seeking qualified individuals for the Super-
visory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the
Board as a whole, consideration is also to be
given to diversity. When preparing nominations,
the extent to which the work of the Supervisory
Board benefits from diversified professional and
personal backgrounds (including international
aspects) and from an appropriate gender repre-
sentation is also to be taken into account. It is
the joint responsibility of all those participating
in the nomination and election process to ensure
that qualified women are considered for Super-
visory Board mem ber ship.
— Of the 20 members of the Supervisory Board at
least 12 should be independent members within
the meaning of section 5.4.2 of the German
Corporate Governance Code, including at least
six as representatives of the Company’s share-
holders.
— Two independent members of the Supervisory
Board should have expert knowledge of accoun t-
ing or auditing.
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, nei-
ther ownership of a substantial shareholding in the
Company, or office as an employee representative, or
previous membership of the Board of Management,
rules out independence of a Supervisory Board mem-
ber. A substantial and not merely temporary conflict
of interests within the meaning of section 5.4.2 of the
German Corporate Governance Code does not apply
to any of the Supervisory Board members. Employees
holding office in the Supervisory Board are protected
by applicable law when performing their duties. All
other Supervisory Board members have a sufficient
degree of economic independence from the Company.
Business with entities, in which the members of the
Supervisory Board carry out a significant function, is
conducted on an arm’s length basis. The Supervisory
Board has therefore concluded that all of its mem-
bers are independent. These are: Dr.-Ing. Norbert
Reithofer, Manfred Schoch, Stefan Quandt, Stefan
Schmid, Dr. Karl-Ludwig Kley, Christiane Benner,
Franz Haniel, Ralf Hattler, Dr.-Ing. Heinrich
Hiesinger, Prof. Dr. Reinhard Hüttl, Susanne Klatten,
Prof. Dr. Renate Köcher, Dr. Robert W. Lane, Horst
Lischka, Willibald Löw, Simone Menne, Dr. Dominique
Mohabeer, Brigitte Rödig, Jürgen Wechsler and Werner
Zierer. At least two members meet the requirements
of an independent financial expert. These are
Dr. Karl-Ludwig Kley and Simone Menne. At the end
of the reporting period, the Supervisory Board had six
female members (30 %), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70 %),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30 % female members applicable in Germany
since 1 January 2016. At present, no member of the
Supervisory Board is older than 70 years.
212
Composition and
Work Procedures of
the Supervisory
Board of BMW AG
and its Committees
Disclosures pursuant
to the Act on Equal
Gender Participation –
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2018. The nomination
committee of the Supervisory Board already takes
into account the composition targets in its proposal
of potential candidates as representatives of the share-
holders. This enables diversity in the composition of
the Supervisory Board and ensures that the Super-
visory Board collectively possesses the knowledge,
skills and experience required to properly perform
its duties. Proposals for nomination made by the
Supervisory Board to the Annual General Meeting –
insofar as they apply to shareholder Supervisory Board
members – should take account of these objectives in
such a way that they can be achieved with the support
of the appropriate resolutions of the Annual General
Meeting. The Annual General Meeting is not bound
by proposed nominations for election. The voting
freedom of employees in the vote for the employee
members of the Supervisory Board is also protected.
Under the rules stipulated by the German Co-Determi-
nation Act, the Supervisory Board does not have
the right to nominate employee representatives for
election. The objectives which the Supervisory Board
has set itself with regard to its composition are there-
fore not intended to be instructions to those entitled
to vote or restrictions on their voting freedom.
In the Supervisory Board’s opinion, its composition
as at 31 December 2017 fulfilled the composition
objectives detailed above. For ease of comparison
with composition targets, brief curricula vitae of
the current members of the Supervisory Board are
available on the Company’s website at
www.bmwgroup.com.
Information relating to members’ practised profes-
sions and mandates in other statutory supervisory
boards and equivalent national or foreign company
boards, including the length of periods of service on
the Supervisory Board, is provided in the section
Statement on Corporate Governance. Based on this
information, it is evident that the Supervisory Board of
BMW AG is highly diversified, with significantly more
than the targeted four members having international
experience or specialist knowledge with regard to one
or more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the Company are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board – including employee representatives – have
experience in supervising another medium-sized or
large company. Moreover, more than three members of
the Supervisory Board have experience and specialist
Statement on Corporate Governance 213
Management level is defined in terms of functional
level and follows a comprehensive job evaluation
system based on Mercer.
proportion of female executives within
management / function levels i and ii
at bMW AG
• 69
8.0
7.5
in %
10
5
0
Function level I
Function level II
Diversity contributes to greater competitiveness and
innovation at the BMW Group. Working together in
mixed, complementary teams raises performance
levels and increases customer focus. Promoting
an appropriate gender ratio is seen as an essential
component of the BMW Groupʼs diversity concept.
Increasing the proportion of women therefore remains
an objective of the Board of Management.
The proportion of women in the workforce as a whole
increased again during the financial year under report,
as a result of long-term measures, dialogue and infor-
mation events. Further information on the topic of
diversity within the BMW Group can be found in the
section “Workforce”.
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION –
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
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.
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise,
the Board of Management of BMW AG is required to
establish targets for the two executive management
levels below the Board of Management and a time
frame for attaining these targets. As its target for
the Board of Management for the time frame from
1 January 2017 to 31 December 2020, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues
to comprise eight members, this would correspond to
a proportion of at least 12.5 %. At 31 December 2017,
the Board of Management had one female member
(12.5 %). The Supervisory Board considers it desirable
to increase the proportion of women on the Board of
Management and fully supports the Board of Man-
agement’s endeavours to increase the proportion of
women at the highest executive management levels
within the BMW Group.
For the time frame from 11 January 2017 to 31 Decem-
ber 2020, the Board of Management has set a target
range of 10.2 % to 12.0 % for the first level of executive
management and 8.0 % to 10.0 % for the second. At
31 December 2017, the proportion of women within
the first executive management level stood at 8.0 %
and at 7.5 % within the second.
214
Information on Cor-
porate Governance
Practices Applied
Beyond Mandatory
Requirements
INFORMATION ON
COR PORATE GOVERNANCE
PRACTICES APPLIED
BEYOND MANDATORY
REQUIREMENTS
Core values
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
Responsibility
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
Appreciation
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
Transparency
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
trust
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
openness
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
www.oecd.org and
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 openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD’s guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at
www.iccwbo.org.
The Board of Management signed the United Nations
Global Compact in 2001 and, in 2005, together with
employee representatives, issued a “Joint Declaration
on Human Rights and Working Conditions in the
BMW Group”. This Joint Declaration was reconfirmed
in 2010. With the signature of these documents, we
have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). These include in particular
freedom of employment, the principle of non-dis-
crimination, freedom of association and the right to
collective bargaining, the prohibition of child labour,
appropriate remuneration, regulated working times
and compliance with work and safety regulations.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at
www.unglobalcompact.org and
www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at
www.bmwgroup.com under the menu items
“Downloads” and “Responsibility”.
Statement on Corporate Governance 215
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees’ awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The “Compliance Contact” helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group’s worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
Further information on social responsibility towards
employees can be found in the section “Workforce”.
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system – including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers – in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that
the BMW Group’s sustainability criteria are also
adhered to by their sub-suppliers. A spot check of
supplier facilities is conducted with sustainability
audits and assessments. In 2017, the Human Rights
Contact Supply Chain was established for reporting of
sustainability infringements in the supply chain. Pur-
chasing terms and conditions and other information
relating to purchasing can be found in the publicly
available section of the BMW Group Partner Portal
at
https: / / b2b.bmw.com.
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
216
Compliance in the
BMW Group
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
all employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws
and regulations. The BMW Group expects its competi-
tors and business partners to do the same.
In order to protect itself systematically against com-
pliance-related and reputational risks, the Board of
Management created a Compliance Committee several
years ago and mandated the establishment of a Com-
pliance Management System within the BMW Group.
The BMW Group Compliance Management System
consists of a programme of instruments and measures,
employed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures to
avoid risks relating to antitrust legislation, corruption
and money laundering.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate
Audit, Group Reporting, Organisational Development
and Corporate Human Resources. It manages and
monitors activities necessary to avoid violations of
the law. These include communication and training
measures, compliance controls and subsequent sanc-
tions in cases of non-compliance.
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and cor-
rective or preventative measures implemented. This
also ensures that the Board of Management is imme-
diately notified of any cases of particular significance.
BmW Group compliance management System
• 70
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 Instruments and
Measures of the bMW Group
Compliance
Risk Analysis
Compliance
Investigations
and Controls
Compliance
Reporting
Compliance
Contact and
SpeakUP Line
Legal Compliance Code
and Regulations
Compliance
Communication
Compliance
Training
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 advice
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
Statement on Corporate Governance 217
The Chairman of the BMW Group Compliance
Committee reports to the Audit Committee of the
Supervisory Board on the current status of compliance
activities within the BMW Group, both on a regular
and a case-by-case basis.
The decisions taken by the BMW Group Compliance
Committee are drafted in concept, and implemented
operationally, by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Com-
mittee Office comprises 14 employees and reports
organisationally to the Chairman of the Board of
Management.
The BMW Group Compliance Committee Office is
supported by local compliance functions, especially
in connection with operational implementation of
compliance topics. Establishment of 72 local compli-
ance functions was completed in 2017. Their activities
follow a standardised management process with
clearly defined tasks and responsibilities. The heads
of these functions serve as the Compliance Officer
for the respective organisational unit.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable to all BMW Group
organisational units worldwide. The BMW Group
Legal Compliance Code forms the core of the Group’s
Compliance Management System, in which the Board
of Management affirms its joint commitment to com-
pliance (“tone from the top”). The Code also explains
the significance of legal compliance and provides an
overview of the various areas of relevance for the
BMW Group. It is available both as a printed brochure
and for download in German and English. In addition,
translations into nine other languages are available
in the BMW Group intranet.
The BMW Group Legal Compliance Code is supple-
mented by a range of internal policies, guidelines and
instructions, which in part reflect applicable legal
requirements. The BMW Group Policy “Corruption
Prevention” and the BMW Group Instruction “Corpo-
rate Hospitality and Gifts” deserve particular mention:
these documents explain lawful handling of gifts and
benefits and define appropriate assessment criteria
and approval procedures. The BMW Group Policy
“Antitrust Compliance” establishes binding rules of
conduct for all employees across the BMW Group
to prevent unlawful restriction of competition. In
response to the entry into force of the EU’s Fourth
Anti-Money-Laundering Directive, specific anti-
money- laundering rules have been revised or intro-
duced locally in 13 organisational units.
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment that is updated annually. Measures are
realised with the aid of a regionally structured com-
pliance management team, covering all parts of the
BMW Group and oversees a network of more than
210 compliance responsibles with 72 local compliance
functions.
More than 41,000 managers and staff worldwide have
received training in essential compliance matters since
the introduction of the BMW Group Compliance Man-
agement System. The training material is available on
an Internet-based training platform in German and
English and includes a final test. Successful comple-
tion of the training programme, which is documented
by a certificate, is mandatory for all BMW Group man-
agers. Appropriate human resources processes are in
place to ensure that all newly recruited managers and
promoted staff undergo compliance training. In this
way, the BMW Group ensures full training coverage
for its managers in compliance matters.
In addition to basic learning, training for specific
target groups is also provided on special compliance
issues, such as antitrust compliance. Since 2011, a
total of more than 24,000 managers and staff whose
functions or specific tasks involve exchange with com-
petitors have completed online training in antitrust
compliance.
Additional classroom training has also been provid-
ed to make employees who participate in meetings
with competitors or work with suppliers or sales
partners sufficiently aware of antitrust risks. In 2017,
over 1,900 managers and staff attended these face-to-
face training sessions.
Additional compliance coaching has also been imple-
mented for international sales and financial service
units in local markets. These multi-day classroom
seminars strengthen the awareness in selected organ-
isational units and enhance cooperation between the
central BMW Group Compliance Committee Office
and the local compliance functions. In 2017, mar-
ket coaching was conducted in Australia, Belgium,
China, Ireland, the Netherlands, Austria, Poland,
Switzerland, Thailand, the UK and the US.
The BMW Group held its first global Compliance Con-
ference in 2017. The event was attended by around
120 Compliance Officers and staff with compliance-re-
lated responsibilities from roughly 50 organisational
units. The main focus was on strengthening the
compliance network and sharing ideas on current
and future compliance topics.
The BMW Group also uses an IT-based Business
Relations Compliance programme aimed at ensur-
ing the reliability of its business relations. Relevant
business partners are checked and evaluated with a
view to identifying potential compliance risks. These
procedures are particularly relevant for relations with
sales partners and service providers, such as agencies
and consultants. Depending on the results of the eval-
uation, appropriate measures are taken to prevent
compliance risks, such as communication measures,
training and possible monitoring.
As part of expanded anti-money-laundering measures,
an IT system has been developed to verify customer
integrity and introduced in around 30 organisational
units.
Through the group-wide compliance reporting system,
compliance responsibles throughout the BMW Group
provide information on compliance-relevant issues to
the Compliance Committee on a regular basis, and, if
necessary, on an ad hoc basis. This includes reporting
on the compliance status of the relevant organisa-
tional units, on identified legal risks or incidences of
non-compliance, as well as sanctions and corrective
or preventative measures implemented.
Observation and implementation of compliance rules
and processes are audited regularly by Corporate
Audit and subject to control checks by Corporate
Security and the BMW Group Compliance Commit-
tee Office. As part of its regular activities, Corporate
Audit carries out on-site audits. The BMW Group
Compliance Committee also engages Corporate Audit
to perform compliance-specific checks. In addition,
two BMW Group Compliance spot checks – sam-
ple tests specifically designed to identify potential
corruption and antitrust risks – were carried out in
2017. Compliance control activities are coordinated
by the BMW Group Panel Compliance Controls. Any
necessary follow-up measures are organised by the
BMW Group Compliance Committee Office.
218
Compliance in the
BMW Group
Any member of staff with questions or concerns
relating to compliance may discuss these matters
with their managers and with the relevant depart-
ments within the BMW Group, in particular Legal
Affairs, Corporate Audit and Corporate Security. The
BMW Group Compliance Contact serves as a further
point of contact for both employees and external
partners for any questions regarding compliance.
Communication with the BMW Compliance Contact
may remain anonymous, if preferred.
Employees also have the opportunity to submit infor-
mation about possible compliance violations within
the company – anonymously and confidentially – via
the BMW Group SpeakUP Line. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in all
countries in which BMW Group employees are in
operation.
All compliance-related queries and concerns are
documented and processed by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be consulted to assist with
investigations.
Various internal channels and means of communi-
cation, including newsletters, employee newspapers
and intranet portals, are used to keep BMW Group
employees fully up-to-date with the instruments and
measures employed by the Compliance Management
System. The central communications channel is the
compliance website within the BMW Group intranet,
where employees can find compliance-related infor-
mation, training materials and where they can access
trainings in both German and English. The website
contains a special service area where various practical
tools are made available to employees to help them
deal with typical compliance-related situations. A
group-wide communications campaign was launched
in 2017 to boost employee awareness of the impor-
tance of creating a culture of transparency and trust.
In addition to these communications measures, appro-
priate IT systems also support BMW Group employees
with the assessment, approval and documentation of
compliance-relevant matters.
For example, since 2017, all exchanges with compet-
itors must be documented and approved in a special
compliance IT system. All employees can also use IT
tools to verify legal admissibility and documentation
of benefits, especially in connection with corporate
hospitality.
Statement on Corporate Governance 219
To ensure that the BMW Group complies with reg-
ulations relating to insider information, the Board
of Management established an Ad-hoc Committee
back in 1994, consisting of representatives of various
specialist departments, whose members determine
whether information displays the characteristics of
insider information, which is required to be disclosed,
and handle the publication and legal notices required
by law. All persons who perform duties on behalf of
BMW AG through which they have access to insid-
er information are included on an insider list and
informed of the duties arising from insider rules.
Managers have a particular responsibility and role
model function with regard to preventing infringe-
ments. Managers throughout the BMW Group
acknowledge this principle by signing a written
declaration and undertaking to inform their staff of
the content and significance of the Legal Compliance
Code, to convey the values it embodies and make
employees aware of legal risks. Managers must, at
regular intervals and on their own initiative, verify
compliance with the law and communicate with staff
on this issue. They signal to employees that they take
compliance risks seriously and that relevant infor-
mation is extremely valuable. In their dealings with
staff members, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously
investigated.
It is essential for compliance in the BMW Group that
employees are aware of and comply with applicable
legal requirements. The BMW Group does not tolerate
any violations of the law by its employees. Culpable
violations of the law result in employment law-related
sanctions and may lead to personal liability of relevant
employees.
The BMW Group is committed to respecting interna-
tionally recognised human rights, in particular as set
out in the ten principles of the UN Global Compact
and the ILO Core Labour Conventions. The Com-
pany’s due diligence process is aligned with the UN
Guiding Principles on Business and Human Rights,
focusing on topics and areas of activity where it can
leverage its influence as a commercial enterprise.
The BMW Group clarified its position back in 2005,
with the Joint Declaration on Human Rights and
Working Conditions at the BMW Group. This was
followed by systematic introduction and continuous
upgrading of measures to protect human rights. These
measures, which were already firmly established
within the organisation, were integrated into the
BMW Group’s group-wide Compliance Management
System in 2016. A group-wide human rights compli-
ance assessment was conducted in 2017.
Compliance is also an important factor in safeguard-
ing the future of the BMW Group workforce. With
this in mind, the Board of Management and the
national and international employee representative
bodies of the BMW Group have agreed on a binding
set of Joint Principles for Lawful Conduct. In doing
so, all parties involved made a commitment to the
principles contained in the BMW Group Legal Com-
pliance Code and to trustful cooperation in matters
relating to compliance. Employee representatives are
therefore regularly consulted in the process of refining
compliance measures within the BMW Group.
Under the terms of the Employee Share Programme,
in 2017 employees were entitled to acquire packages
of between seven and 17 shares of non-voting pre-
ferred stock with a discount of € 20.00 (2016: € 22.72)
per share compared to the market price (average
closing price in Xetra trading during the period from
8 to 13 November 2017: € 75.05). All employees of
BMW AG and its (directly or indirectly) wholly owned
German subsidiaries (if agreed to by the directors
of those entities) were entitled to participate in the
programme. Employees were required to have been
in an uninterrupted employment relationship with
BMW AG or the relevant subsidiary for at least one
year at the date on which the allocation for the year
was announced. Shares of preferred stock acquired in
conjunction with the Employee Share Programme are
subject to a blocking period of four years, starting from
1 January of the year in which the employees acquired
the shares. A total of 491,114 (2016: 305,018) shares of
preferred stock were acquired by employees under the
programme in 2017; 491,000 (2016: 305,000) of these
shares were drawn from Authorised Capital 2014, the
remainder were acquired via the stock exchange or
as a result of cancelled employee purchases relating
to the previous year. Every year the Board of Man-
agement of BMW AG decides whether the scheme is
to be continued. Further information is provided in
notes 29 and 39 to the Group Financial Statements.
220
Compliance in the
BMW Group
Compensation
Report
Reportable securities transactions
(“Managers’ transactions”)
Pursuant to Article 19 of the EU Market Abuse Regu-
lation (MAR), members of the Board of Management
and the Supervisory Board and any persons closely
related to those members are required to give notice
to BMW AG and the Federal Agency for the Super-
vision of Financial Services (BaFin) of transactions
with equity or debt instruments of BMW AG or with
related derivatives or other financial instruments, if
the total sum of such transactions reaches or exceeds
an amount of € 5,000 during any given calendar year.
BMW AG publishes such information without delay
and communicates it to the Companies Register
for archiving. Notice of publication is issued to the
Federal Agency for the Supervision of Financial Ser-
vices. Securities transactions notified to BMW AG
during the financial year 2017 are also reported on
the Company’s website.
Share-based compensation programmes for
employees and members of the Board of
Management
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise’s success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the “Share-based
remuneration” section in the Compensation Report
and
note 39 to the Group Financial Statements).
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20 %
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a min-
imum of four years. In return for this commitment,
BMW AG pays 100 % of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive – for
each three common stock shares held and at the
Company’s option – one further share of common
stock or the equivalent amount in cash.
see
notes
29 and 39
see
note 39
Statement on Corporate Governance COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
The following section describes the principles govern-
ing the compensation of the Board of Management
for the financial year 2017 and, in its revised form, for
financial years from 2018 onwards. A description of the
stipulations set out in the statutes relating to the com-
pensation of the Supervisory Board is also provided.
In addition to explaining the system of compensation,
details of components of compensation are also pro-
vided with figures. Furthermore, the compensation of
each individual member of the Board of Management
and the Supervisory Board for the financial year 2017
is disclosed with its component parts.
1. board of Management compensation
responsibilities
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The preparation for these tasks is
undertaken by the Supervisory Board’s Personnel
Committee.
principles of compensation
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development
of the BMW Group. A further principle of the remu-
neration system at BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, individually and in total,
and do not encourage the Board of Management to
take inappropriate risks for the BMW Group. At the
same time, the compensation model for the Board of
Management needs to be attractive for highly qualified
executives in a competitive environment.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are
the tasks and exercise of mandate of the member of
the Board of Management, the economic situation
and the performance and future prospects of the
BMW Group. The Supervisory Board sets ambitious
221
and relevant parameters as the basis for variable
compensation. It also ensures that variable compo-
nents based on multi-year criteria take account of
both positive and negative developments and that
the overall incentive is on the long term. As a general
rule, targets and comparative parameters may not
be changed retrospectively. In conjunction with the
revised compensation system for the Board of Manage-
ment (see the section “Revised Board of Management
compensation system for financial years from 2018
onwards”), the targets originally set for the variable
compensation components for the financial years 2018
and 2019 were revoked exceptionally and replaced
by the more ambitious targets stipulated in the new
compensation system. The Supervisory Board reviews
the appropriateness of the compensation system
annually. In preparation, the Personnel Committee
also consults remuneration studies. In order to check
that the compensation system is in line with peers, the
Supervisory Board compares compensation paid by
other DAX companies. For a vertical view, it compares
Board compensation with the salaries of executive
managers and with the average salaries of employees
of BMW AG based in Germany, also with regard to the
development over time. Recommendations made by
an independent external remuneration expert and
suggestions made by investors and analysts are also
considered in the consultative process.
compensation system, compensation components
up to the financial year 2017
The compensation of the Board of Management com-
prises both fixed and variable elements as well as a
share-based component. Provisions are also in place
for retirement and surviving dependants’ entitlements.
fixed remuneration
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of company cars, insurance
premiums and contributions towards security sys-
tems). Members of the Board of Management are also
entitled to purchase vehicles and other products and
services of the BMW Group at conditions that also
apply for employees.
The base salary of members of the Board of Mana-
ge ment remained unchanged in 2017 from the
previous year. The base salary is € 0.75 million p. a.
for a Board member during the first period of office,
€ 0.9 million p. a. for a Board member from the second
period of office or the fourth year of mandate and
€ 1.5 million p. a. for the Chairman of the Board of
Management.
The performance-related bonus is derived by multi-
plying the target amount set for each member of the
Board of Management by a performance factor. The
Supervisory Board sets the performance factor on
the basis of a detailed assessment of the contribution
made by members of the Board of Management to
sustainable and long-term oriented business devel-
opment. In setting the factor, consideration is given
to performance and decisions over the previous
three financial years, as well as strategic decisions
affecting the future development of the business,
the effectiveness and efficiency of measures taken in
response to changing external conditions and other
activities aimed at safeguarding the future viability
of the business which cannot be directly measured
in values. Accordingly, performance factor criteria
include innovation (economic and ecological, for
example the reduction of carbon dioxide emissions),
customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, con-
tributions to the Group’s attractiveness as an employer,
progress in implementing the diversity concept and
activities that foster corporate social responsibility.
The target bonus and the criteria used to determine
the earnings-related bonus are fixed in advance for a
period of three financial years. During this time, as
a general rule, target bonuses and the key criteria
applied may not be amended retrospectively.
Share-based remuneration programme
The compensation system also includes a share-based
remuneration programme, which is based on the
amount of bonus paid. The system is aimed at creating
further long-term incentives to encourage sustainable
governance.
222
Compensation
Report
Variable remuneration
The variable remuneration of Board of Management
members comprises variable cash remuneration and
a share-based remuneration component.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a bonus and a
cash component for investment in BMW AG common
stock equivalent to 20 % of a Board member’s total
bonus after taxes, which the Board member receives
from the Company along with the related taxes and
social insurance. Furthermore, up to 31 Decem-
ber 2017, the Supervisory Board could, in justified
cases, stipulate the payment of a discretionary addi-
tional bonus.
The bonus comprises two components, each equally
weighted: an earnings-related bonus and a perfor-
mance-related bonus. The target bonus (100 %) for a
Board of Management member in the first period of
office is € 1.5 million p. a. in total for the two compo-
nents of variable compensation and € 1.75 million p. a.
from the second period of office or the fourth year
of mandate. For the Chairman of the Board of Man-
agement the amount is € 3 million p. a. The bonus is
capped for all Board of Management members at 200 %
of the respective target bonus.
The earnings-related bonus is based on Group
net profit and post-tax return on sales, which are
combined in a single earnings factor, and – up to
the financial year 2017 – on the dividend (common
stock). The earnings-related bonus is derived from a
target amount defined for each member of the Board
of Management multiplied by the earnings factor and
the dividend factor. In exceptional circumstances, for
instance major acquisitions or disposals, the Super-
visory Board may adjust the earnings-related bonus.
An earnings factor and dividend factor of 1.0 would
give rise to an earnings-related bonus of € 0.75 million
for a member of the Board of Management in the first
period of office, € 0.875 million from the second period
of office or the fourth year of mandate and € 1.5 mil-
lion for the Chairman of the Board of Management.
The earnings factor is 1.0 for example in the event of a
Group net profit of € 3.1 billion and a post-tax return
on sales of 5.6 %. The dividend factor is 1.0 when the
dividend paid on shares of common stock is between
101 and 110 cents. If the Group net profit were below
€ 2 billion or the post-tax return on sales below 2 %, the
earnings factor for 2017 would be zero. In this case,
no earnings-related bonus would be payable.
Statement on Corporate Governance This programme specifies that each member of the
Board of Management is required to invest in BMW AG
common stock an amount equivalent to 20 % of the
Board member’s total bonus after taxes, which the
Board member receives as an additional cash compo-
nent from the Company with the related taxes and
social insurance. As a general rule, the shares must
be held for four years. Under a matching plan, at the
end of the holding period the Board of Management
members receive from the Company, for every three
shares of common stock held, either one additional
share of common stock or an equivalent cash amount,
to be decided at the discretion of the Company
(share-based remuneration component / matching
component). Special rules apply in the case of death
or invalidity of a Board of Management member or
premature termination of the contractual relationship
before fulfilment of the holding period.
Revised system of Board of management compensa-
tion for financial years from 2018 onwards
In December 2017, the Supervisory Board resolved
to revise the compensation system for financial years
from 2018 onwards. A focus was to align the remuner-
ation structure even more strongly with sustainable
Company development. The base salary, which had
remained at the same level since 1 January 2012, was
raised. The bonus was revised, both in terms of its
structure and target setting. Targets values for the
parameters Group net income and post-tax return on
sales used to determine the earnings-related bonus
were adjusted in line with the Group’s current business
plan and revised. The dividend is no longer included
as a parameter, thus ensuring that the earnings-related
bonus is even more closely aligned to business per-
formance. A new multi-year and future-oriented com-
ponent was introduced in the form of a performance
cash plan, in order to further strengthen the long-term
orientation of the compensation system. The overall
upper limits remain unchanged. The appropriateness
of the planned levels of compensation was reviewed
by an independent external compensation expert.
The changes apply to all members of the Board of
Management with effect from the financial year 2018.
Service contracts of the Board of Management have
been modified in agreement with Board members
with effect from 1 January 2018.
223
compensation system, compensation components
for financial years from 2018 onwards
As previously, Board of Management compensation
comprises fixed and variable cash elements as well as
a share-based component. The compensation compo-
nents are described in more detail below. Retirement
and surviving dependants’ benefits remain unchanged
in the new compensation system applicable from
1 January 2018.
overview of compensation system financial year
2017: simplified depiction of split of cash remu-
neration (target remuneration)*
• 71
in %
Share-based remuneration
approx. 15
Performance-
related bonus
approx. 28
Base salary
approx. 29
Earnings-
related bonus
approx. 28
overview of compensation system financial year
2018: simplified depiction of split of cash remu-
neration (target remuneration)*
• 72
in %
Share-based remuneration
approx. 17
Performance
Cash Plan
approx. 25
Base salary
approx. 29
Earn-
ings-based
component of
the bonus
approx. 9
Performance component
of the bonus approx. 20
* Simplified depiction of target amounts for the cash remuneration of the Chairman of the
Board of Management. Excludes other remuneration. Based on the assumption that the
share price remains unchanged for the calculation of the matching component.
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30 % of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit and
post-tax return on sales are achieved. The degree of
achievement is expressed in an earnings factor. The
underlying measurement values are determined in
advance for a period of three financial years and may
not be changed retrospectively. The earnings factor is
capped at a maximum value of 1.8.
An earnings factor of 1.0 would give rise to an earn-
ings-related component of € 0.255 million for a mem-
ber of the Board of Management in the first period of
office, € 0.3 million from the second period of office or
the fourth year of mandate, and € 0.54 million for the
Chairman of the Board of Management. The earnings
factor is 1.0, for instance, in the event of Group net
profit of € 5.3 billion and a post-tax return on sales of
5.6 %. If the Group net profit were below € 3 billion or
the post-tax return on sales below 3 %, the earnings
factor would be zero. In this case, an earnings-related
component would not be paid. The maximum value of
the earnings factor is reached in the event of a Group
net profit of € 11 billion and a post-tax return on sales
of 9 %. As before, in exceptional circumstances, for
instance major acquisitions or disposals, the Super-
visory Board may adjust the earnings factor.
224
Compensation
Report
fixed remuneration
Fixed remuneration consists, as before, of a base
salary, which is paid monthly, and fringe benefits
(other remuneration elements such as the use of
company cars, the payment of insurance premiums
and contributions towards security systems). From
the financial year 2018, the base salary of Board of
Management members amounts to € 0.8 million p. a.
during the first period of office, € 0.95 million p. a.
from the second period of office or the fourth year of
mandate and € 1.8 million p. a. for the Chairman of
the Board of Management.
Variable remuneration
The variable remuneration of the Board of Manage-
ment comprises in future three components:
— bonus,
— Performance Cash Plan and
— share-based remuneration.
The weighting of individual components included
in the target is shown in the overview. The new
compensation system does not include the option of
paying a discretionary additional bonus. An upper
limit has been set for each component of variable
remuneration (see “Overview of compensation system
and compensation components for financial years
from 2018 onwards”).
bonus
The structure and target amounts of the previous
bonus system have been revised and the weighting
of the earnings-related and performance-related com-
ponents included in the target changed. In future, for
100 % target achievement, the bonus will comprise
an earnings-related component of 30 % and perfor-
mance-related component of 70 %. Compared to the
bonus payable in the previous compensation system,
the target bonus (100 %) for a member of the Board
of Management in the first period of office has been
reduced for both components of the bonus to a total
of € 0.85 million p. a. and to a total of € 1.0 million p. a.
from the second period of office or the fourth year of
mandate. In future, the bonus payable to the Chairman
of the Board of Management will amount to € 1.8 mil-
lion p. a. The upper limit has been reduced for all Board
members to 180 % of the respective target bonus.
Statement on Corporate Governance The performance-related component is calculated
using a performance factor which the Supervisory
Board sets for each member of the Board of Manage-
ment and which is multiplied by 70 % of the target
bonus amount. The Supervisory Board sets the perfor-
mance factor on the basis of a detailed evaluation of
the contribution made by Board members to sustaina-
ble and long-term business development over a period
of at least three financial years. The evaluation by the
Supervisory Board is based on predefined criteria that
take into account the Group’s long-term success, the
interests of shareholders, the interests of employees
and social responsibility.
bonus overview
• 73
225
The criteria correspond to the measurement values
used previously for the performance bonus and
include in particular innovation (economic and
ecological, for example in the reduction of carbon
dioxide emissions), the Group’s market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion of
compliance and integrity, contribution to the Group’s
attractiveness as an employer, progress in implement-
ing the diversity concept, and activities that foster
corporate social responsibility. The performance factor
lies between zero and a maximum of 1.8.
eArnInGS CoMponent bonuS
Earnings factor
x 0.3 of target amount
+ perforMAnCe CoMponent
Performance factor
x 0.7 of target amount
= totAl
— Cash payment
— Capped at 180 %
of target amount
Basis for earnings factor:
— Group net profit
— Group post-tax return on sales
— Value between 0 – 1.8
Basis for performance factor:
— Contribution to sustainable and long-term
business development over a period of
at least three financial years
— Qualitative, mainly non-financial parameters
— Value between 0 – 1.8
performance Cash plan
With effect from the financial year 2018, variable
cash compensation will include a multi-year and
future-oriented Performance Cash Plan (PCP). The
PCP is calculated at the end of a three-year evaluation
period, by multiplying a predefined target amount by
a factor that is based on multi-year target achievement
(the PCP factor). PCP entitlements are paid in cash.
The PCP target amount (100 %) amounts to € 0.85 mil-
lion p. a. for a Board member in the first period of
office, € 0.95 million p. a. for a Board member from the
second period of office or the fourth year of mandate.
The target amount for the Chairman of the Board
of Management is € 1.6 million p. a. The maximum
amount that can be paid to a Board member is capped
at 180 % of the PCP target amount p. a.
The PCP evaluation period comprises three years, the
grant year and the two subsequent years. The PCP is
paid out after the end of the three-year evaluation
period.
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
value of 1.8.
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year. The
maximum earnings factor is 1.8.
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year per-
formance factor after the end of the evaluation period.
To this end, the Supervisory Board takes account in
particular of the business development during the
evaluation period, the forecast trend in the business
development, the Board member’s individual contri-
bution to profitability and the status of compliance
within the Board member’s area of responsibility.
The multi-year performance factor can be between
0.9 and 1.1.
226
Compensation
Report
performance Cash plan overview
• 74
pCp fACtor
x tArGet AMount
= CASh pAyMent
— Cash payment at end of evaluation period
— Capped at 180 % of target amount
pCp factor overview
• 75
MultI-yeAr eArnInGS fACtor
— Average earnings factor
— Based on Group net profit and
Group post-tax return on sales
— Value between 0 – 1.8
x MultI-yeAr perforMAnCe fACtor = pCp fACtor
Measurement based on
multi-year performance factor:
— Trend in business development
— Status of compliance in each Board member’s
— Individual contribution to profitability
— Forecast trend in business development
— Value between 0.9 – 1.1
area of responsibility
In accordance with a mutually agreed modification to
their contracts with effect from 1 January 2018, Board
members will receive advance payments out of the
Performance Cash Plan 2018 and the Performance
Cash Plan 2019 in the years 2019 and 2020. At the end
of the evaluation period, the advance payment will be
set off or reclaimed, depending on the amount then
determined. The advance payment for each year will
be € 0.5 million for a member of the Board of Mana-
ge ment in the first period of office and € 0.6 million
from the second period of office or the fourth year of
mandate. For the Chairman of the Board of Manage-
ment the amount is € 0.9 million p. a.
Statement on Corporate Governance 227
Retirement and surviving dependants’ benefits
With effect already from 1 January 2010, the provision
of retirement and surviving dependants’ benefits
for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return. Commitments previously made are
in part subject to legal protection, therefore Board
members appointed for the first time prior to 1 Jan-
uary 2010 were given the option to choose between
the previous system and the new one. Retirement and
surviving dependants’ benefits remain unchanged as
part of the new compensation system from 1 Janu-
ary 2018 onwards, as they are appropriate and in line
with customary market practice.
In the event of termination of mandate, a member
of the Board of Management appointed for the first
time prior to 1 January 2010 has pension entitlements
based on the older (defined benefit) pension plan.
The entitlement to receive benefits under the defined
benefit plan arises at the earliest on reaching the age
of 60 or in the case of invalidity. The amount of the
pension comprises a basic monthly amount of € 8,000
plus an additional fixed amount. The fixed amount is
€ 400 for each full year of service on the Board up to a
maximum of 15 years. Pension payments are adjusted
in line with the adjustment of civil servants’ pensions
following an increase of more than 5 % in the pay
group B6 (excluding allowances) or in accordance
with the Company Pension Act.
Share-based remuneration
Members of the Board of Management continue to
receive a cash compensation (investment component)
for the specific purpose of investment after tax and
contributions in BMW AG common stock. In future,
the investment component will correspond to 45 % of
the gross bonus. Shares of common stock purchased
in this way by members of the Board of Management
are to be held, as before, for a period of four years.
As before, at the end of the holding period, Board
members receive from the Company, for every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to
be decided at the Company’s discretion (matching
component). Upper limits have been defined for both
the investment component and the matching compo-
nent (see “Compensation system and compensation
components for financial years from 2018 onwards”).
other
In the event of death or invalidity, special rules apply
for early payment of performance cash plans and
share-based remuneration components based on
the target amounts. Insofar as the service contract
is prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company’s agreement,
entitlements to amounts as yet unpaid relating to per-
formance cash plans and share-based remuneration
are forfeited.
A one-year post-contractual non-competition clause
has been agreed with Board members for specified
cases. During that one-year period, the former Board
member is entitled to receive monthly compensation
equivalent to 60 % of his or her previous monthly basic
remuneration, reduced by any amount of other income
exceeding 40 % of the basic remuneration. The Compa-
ny may unilaterally waive the requirement to comply
with the post-contractual non-competition clause.
228
overview of compensation system and compensation
components for the financial year 2017
Compensation
Report
Component
Parameter / measurement base
BASE SALARY p. A.
VArIAble reMunerAtIon
Bonus
(sum of earnings-related bonus and performance-related bonus)
a) Earnings-related bonus
(at 100 % target achievement corresponds to 50 % of target amount)
b) Performance-related bonus
(at 100 % target achievement corresponds to 50 % of target amount)
Member of the Board of Management:
— € 0.75 million (1st period of office)
— € 0.90 million (from 2nd period of office or 4th year of mandate)
Chairman of the Board of Management:
— € 1.50 million
Target amount p. a. (at 100 % target achievement):
— € 1.50 million (1st period of office)
— € 1.75 million (from 2nd period of office or 4th year of mandate)
— € 3.00 million (Chairman of the Board of Management)
— Capped at 200 % of target amount
— Quantitative criteria, fixed in advance for a period of three financial years
— Formula: 50 % target amount x earnings factor x dividend factor (common stock)
— Earnings factor is derived from Group net profit and Group post-tax return on sales
— The earnings factor is 1.0, for instance in the event of a Group net profit of € 3.1 billion
and a post-tax return on sales of 5.6 %
— Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board members’ contribution to sustainable and long-term
business development over a period of at least three financial years
— Formula: 50 % target amount x performance factor
— Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group’s market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group’s attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
Possible special bonus payment
Payment possible in justified cases on basis of appropriateness, contractual basis,
no entitlement
Share-based remuneration programme
a) Cash compensation component
b) Share-based remuneration component
(matching component)
other reMunerAtIon
— Requirement for Board of Management members to each invest an amount equivalent to
20 % of their total bonus (after tax) in BMW AG common stock
— Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
— Once the four-year holding period requirement is fulfilled, Board of Management members
receive for each three common stock shares held either – at the Company’s option – one
further share of common stock or the equivalent amount in cash
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems
Statement on Corporate Governance overview of compensation system and compensation
components for the financial year 2018 onwards
Component
Parameter / measurement base
BASE SALARY p. A.
Member of the Board of Management:
— € 0.80 million (1st period of office)
— € 0.95 million (from 2nd period of office or 4th year of mandate)
Chairman of the Board of Management:
— € 1.8 million
229
VArIAble reMunerAtIon
Bonus
(sum of earnings component and performance component)
a) Earnings-related bonus
(at 100 % target achievement corresponds to 30 % of target amount)
b) Performance component
(at 100 % target achievement corresponds to 70 % of target amount)
Possible special bonus payments
Performance Cash Plan
a) Multi-year earnings factor
b) Multi-year performance factor
Share-based remuneration programme
a) Cash remuneration component
b) Share-based remuneration component
(matching component)
other reMunerAtIon
Target amount p. a. (at 100 % target achievement):
— € 0.85 million (1st period of office)
— € 1.0 million (from 2nd period of office or 4th year of mandate)
— € 1.8 million (Chairman of the Board of Management)
— Capped at 180 % of target amount
— Quantitative criteria fixed in advance for a period of three financial years
— Formula: 30 % target amount x earnings factor
— Earnings factor is derived from Group net profit and Group post-tax return on sales
— The earnings factor is 1.0 in the event of a Group net profit of € 5.3 billion and a post-tax
— Earnings factor may not exceed 1.8
— Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed
at measuring the Board member’s contribution to the sustainable and long-term develop-
ment and the future viability of the Company over a period of at least three financial years
return on sales of 5.6 %
— Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group’s market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group’s attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
— Formula: 70 % target amount x performance factor
— Performance factor may not exceed 1.8
No longer applicable
Target amount p. a. (at 100 % target achievement):
— € 0.85 million (1st period of office)
— € 0.95 million (from 2nd period of office or 4th year of mandate)
— € 1.6 million (Chairman of the Board of Management)
— 3-year evaluation period
— Capped at 180 % of target amount
— Formula: PCP factor x target amount
— PCP factor: multi-year earnings factor x multi-year performance factor
— PCP factor may not exceed 1.8
— Earnings factor for each year of three-year evaluation period derived from Group net profit
— Earnings factor for each year may not exceed 1.8
— Average for evaluation period calculated
— Determined by Supervisory Board at end of evaluation period
— Criteria include in particular the trend in business development during the evaluation peri-
od, the forecast trend in business development, individual contribution to profitability and
the status of compliance within the Board member’s area of responsibility
and Group post-tax return on sale
— Multi-year performance factor can be between 0.9 and 1.1
— Requirement for Board of Management members to invest an amount of 45 % of the
gross bonus after tax and contributions in BMW AG common stock
— Earmarked cash remuneration amounting to 45 % of the gross bonus
— Once the four-year holding period requirement is fulfilled, Board of Management members
receive for each three common stock shares held either – at the Company’s option – one
further share of common stock or the equivalent amount in cash
Contractual agreement, main points: use of Company car, insurance premiums, contributions
towards security systems
230
Compensation
Report
overview of compensation system and compensation
components for the financial year 2017
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)
b) Defined contribution system with guaranteed minimum rate of return
Principal features
Pension of € 120,000 p. a. plus fixed amounts based on length of Company
and Board service
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
REmunERATion cApS (mAximum REmunERATion)
in € p. a.
Member of the Board of Management
in the first period of office
Member of the Board of Management
in the second period of office or from fourth year of mandate
Chairman of the Board of Management
Share-based compensation programme
Cash compen-
sation for share
acquisition
Monetary value
of matching
component
Bonus
Possible
special bonus
Total*
3,000,000
700,000
700,000
1,000,000
4,925,000
3,500,000
6,000,000
800,000
800,000
1,400,000
1,400,000
1,200,000
1,500,000
5,500,000
9,850,000
* Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
If a mandate is terminated, the new defined con-
tribution system provides, in the case of death or
invalidity, for amounts accumulated on individual
pension accounts to be paid out as a one-off amount
or in instalments. The option to receive payment as a
lifelong pension or in a combined form only applies to
entitlements arising before 2016. Former members of
the Board of Management are entitled to receive the
retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member’s individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of bene-
fit payments, a surviving spouse or registered partner,
or otherwise surviving children – in the latter case
depending on their age and education – are entitled
to receive benefits as surviving dependants.
In the case of death or invalidity, a minimum benefit is
payable based on the number of annual contributions
possible up to the age of sixty (up to a maximum
of ten). Furthermore, in the case of a commitment
made before 2016 and election of a lifelong pension,
a 60 % widow’s pension is paid following the death of
a retired member of the Management Board. Pensions
are increased annually by at least 1 %.
Depending on the length of membership in the Board
of Management and previous activities, the annual
contribution paid by the Company for each member
of the Board of Management is between € 350,000 and
€ 400,000, and € 500,000 for the Chairman of the Board
of Management. The guaranteed minimum rate of
return p. a. corresponds to the maximum interest rate
used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies).
When granting pension entitlements, the Supervisory
Board considers the targeted level of pension provision
in each case as well as the resulting expense for the
BMW Group.
Statement on Corporate Governance 231
overview of compensation system and compensation
components for the financial year 2018 onwards
retIreMent And SurVIVInG dependAntS’ benefItS
Model
a) Defined benefit
(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)
b) Defined contribution system with guaranteed minimum rate of return
Principal features
Pension of € 120,000 p. a. plus fixed amounts based on length of Company
and Board service
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
REmunERATion cApS (mAximum REmunERATion)
in € p. a.
Member of the Board of Management
in the first period of office
Member of the Board of Management
in the second period of office or from fourth year of mandate
Chairman of the Board of Management
Share-based compensation programme
Bonus
Performance
Cash Plan
Cash compen-
sation for share
acquisition
Monetary value
of matching
component
Total*
1,530,000
1,530,000
688,500
344,500
4,925,000
1,800,000
3,240,000
1,710,000
2,880,000
810,000
1,458,000
405,000
729,000
5,500,000
9,850,000
* Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against pension
entitlements. In addition, certain circumstances have
been specified, in the event of which the Company no
longer has any obligation to pay benefits. Transitional
payments are no longer provided.
In the event of the death of a member of the Board
of Management during the service contract term, the
base salary for the month of death and a maximum
of three further calendar months are paid to entitled
surviving dependants.
Board of Management members who retire imme-
diately after their service on the Board are entitled
to acquire vehicles and other BMW Group products
and services at conditions that also apply to BMW
pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of department. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of department, and depending on availability
and against payment, use BMW chauffeur services.
232
Compensation
Report
Termination benefits on premature termination of
Board activities, benefits paid by third parties
In conjunction with the agreed early termination of
Dr Robertson’s Board of Management mandate with
effect from 31 December 2017, the Company also
agreed with Dr Robertson on an amendment to his
service contract, which ends on 30 June 2018. For the
period from the termination of his Board mandate
through to 30 June 2018, he continues to receive fixed
compensation totalling € 0.45 million. During this
time, Dr Robertson is supporting the Company as
a BMW Group ambassador in the UK. An amount of
€ 0.875 million, payable in 2018, was agreed to settle all
further compensation entitlements for the remainder
of the contractual period. The Company will make a
final pension contribution of € 0.2 million on behalf
of Dr Robertson for the financial year 2018.
In accordance with the recommendation of the German
Corporate Governance Code, Board of Management
service contracts provide for severance pay to be paid
to the Board member in the event of premature ter-
mination by the Company without important reason,
the amount of which is limited to a maximum of two
years’ compensation (severance payment cap). If the
remaining term of the contract is less than two years,
the severance payment is reduced proportionately.
For these purposes, annual compensation comprises
the basic remuneration, the target bonus amount and
the target PCP amount for the last full financial year
before termination.
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member’s mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2017 on account of their activities
as members of the Board of Management.
remuneration caps
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of Board of Management members in
total. These upper limits are shown in the tables Over-
view of compensation system and compensation com-
ponents for the financial year 2017 and Overview of
compensation system and compensation components
for financial years from 2018 onwards. The overall
upper limits have not been changed in conjunction
with the revised compensation system for financial
years from 2018 onwards.
total compensation of the board of Management for
the financial year 2017 (2016)
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2017 amounted to € 40.3 million (2016: € 37.6 mil-
lion), of which € 7.7 million (2016: € 7.8 million) relates
to fixed components including other remuneration.
Variable components amounted to € 31.7 million (2016:
€ 29.0 million) and the share-based remuneration com-
ponent amounted to € 0.9 million (2016: € 0.8 million).
As in the previous year, the option of paying a special
bonus in 2017 was not exercised.
2017
2016
in € million
Amount
Proportion in %
Amount
Proportion in %
Fixed compensation
Variable cash compensation
Share-based compensation component*
Total compensation
7.7
31.7
0.9
40.3
19.1
78.7
2.2
100.0
7.8
29.0
0.8
37.6
20.8
77.1
2.1
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.
Statement on Corporate Governance 233
Compensation of the individual members
of the board of Management for the
financial year 2017 (2016)
in € or
number of matching shares
Fixed compensation
Base salary
Other
compensation
Variable cash
compensation
Share-based
compensation component
(matching component) 1
Compensation
Total
Total value of
benefits
allocated in
financial year 2
Total
Number Monetary value
Harald Krüger
1,500,000
21,464
1,521,464
6,679,776
2,017
181,490
8,382,730
8,295,070
(1,500,000)
(18,719)
(1,518,719)
(5,947,178)
(1,752)
(161,622)
(7,627,519)
(7,545,122)
Milagros Caiña Carreiro-Andree
900,000
75,775
975,775
3,896,565
1,263
113,645
4,985,985
4,915,446
(900,000)
(74,461)
(974,461)
(3,469,214)
(1,097)
(101,198)
(4,544,873)
(4,443,675)
Markus Duesmann
750,000
102,468
852,468
3,339,913
(187,500)
(13,929)
(201,429)
(743,403)
Klaus Fröhlich
750,000
65,883
815,883
3,339,888
(750,000)
(57,311)
(807,311)
(2,973,589)
Nicolas Peter
750,000
92,250
842,250
3,339,888
–
–
–
–
1,083
(288)
1,008
(876)
1,008
–
97,448
4,289,829
4,192,381
(21,629)
(966,461)
(944,832)
90,700
4,246,471
4,155,771
(80,811)
(3,861,711)
(3,780,900)
90,700
4,272,838
4,182,138
–
–
–
Ian Robertson 3
900,000
17,158
917,158
3,896,565
1,263
113,645
4,927,368
4,914,391
(900,000)
(18,735)
(918,735)
(3,469,214)
(1,097)
(101,198)
(4,489,147)
(4,483,005)
Peter Schwarzenbauer
900,000
40,954
940,954
3,896,565
1,263
113,645
4,951,164
4,837,519
(862,500)
(32,689)
(895,189)
(3,345,313)
( 1,058)
(97,601)
(4,338,103)
(4,240,502)
Oliver Zipse
750,000
25,752
775,752
3,339,888
(750,000)
(114,694)
(864,694)
(2,973,589)
Total 4
7,200,000
441,704
7,641,704
31,729,048
1,008
(876)
9,913
90,700
4,206,340
4,115,640
(80,811)
(3,919,094)
(3,838,283)
891,973
40,262,725
39,608,356
(7,425,000)
(385,391)
(7,810,391)
(28,992,624)
(8,964)
(821,990)
(37,625,005)
(37,172,944)
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 39 to the Group Financial Statements for a description of the accounting treatment of the share-based compensation component.
2 Value of benefits granted for work performed on the Board of Management during the financial year 2017 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
3 Member of the Board of Management until 31 December 2017.
4 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2016.
An expense of € 3.1 million (2016: € 2.8 million) was
recognised in the financial year 2017 for current
members of the Board of Management for the period
after the end of their service relationship. This relates
to the expense for allocations to pension provisions.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2017 amounted to € 6.7 million (2016:
€ 6.5 million).
Pension obligations to former members of the Board of
Management and their surviving dependants are cov-
ered by pension provisions amounting to € 90.1 million
(2016: € 86.4 million), recognised in accordance with
IAS 19.
234
Compensation
Report
Share-based component of the individual members
of the board of Management for the
financial year 2017 (2016)
in €
Harald Krüger
Milagros Caiña Carreiro-Andree
Markus Duesmann
Klaus Fröhlich
Nicolas Peter
Ian Robertson 2
Peter Schwarzenbauer
Oliver Zipse
Total 3
Expense in 2017
in accordance with
HGB and IFRS
Provision at
31.12. 2017 in
accordance with
HGB and IFRS1
54,038
(279,932)
63,120
(15,276)
41,001
(2,130)
162,436
(76,878)
29,175
–
141,903
(68,865)
186,278
(95,615)
122,484
(61,370)
800,435
515,677
(557,844)
303,169
(284,247)
43,131
(2,130)
273,688
(111,253)
29,175
–
474,439
(435,753)
382,640
(196,362)
193,769
(71,285)
2,215,688
(829,579)
(2,614,266)
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 29 December 2017 (€ 86.83) (fair value at reporting date)
2 Member of the Board of Management until 31 December 2017.
3 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2016.
Statement on Corporate Governance pension entitlements
in €
Harald Krüger
Milagros Caiña Carreiro-Andree
Markus Duesmann
Klaus Fröhlich
Nicolas Peter
Ian Robertson 3
Peter Schwarzenbauer
Oliver Zipse
Total 4
235
Service cost in
accordance with
IFRS for the
financial year 20171
Service cost in
accordance with
HGB for the
financial year 20171
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
with IFRS2
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
with HGB2
505,281
(507,444)
355,527
(358,490)
355,840
(87,500)
353,136
(354,365)
350,000
(–)
508,865
(424,411)
354,117
(357,203)
353,536
(355,045)
510,702
5,558,607
5,558,200
(510,811)
(4,764,941)
(4,763,838)
359,275
2,347,166
2,346,906
(360,785)
(1,879,851)
(1,879,263)
359,521
(87,500)
356,949
1,020,053
1,018,857
(622,236)
(620,307)
2,373,842
2,373,842
(356,743)
(1,935,142)
(1,935,142)
350,000
1,757,459
1,757,454
(–)
(–)
(–)
407,941
4,965,162
4,052,788
(408,564)
(4,469,741)
(3,502,860)
357,918
1,893,252
1,893,216
(359,548)
(1,481,134)
(1,480,940)
357,339
2,071,748
2,071,560
(357,410)
(1,621,507)
(1,620,978)
3,136,302
3,059,645
21,987,289
21,072,823
(2,634,212)
(2,849,067)
(23,630,940)
(21,425,612)
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
2 Based on a legal right to receive the benefits already promised to them, one member of the Board of Management appointed for the first time prior to 1 January 2010 was given the option of choosing between
the previous defined benefit model and the new defined contribution model.
3 Member of the Board of Management until 31 December 2017.
4 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2016.
236
Compensation
Report
2. Supervisory Board compensation
responsibilities, provisions of Articles of
Incorporation
The compensation of the Supervisory Board is speci-
fied by resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and are
set out in Article 15 of BMW AG’s Articles of Incorpo-
ration, which can be viewed and / or downloaded at
www.bmwgroup.com / ir under the menu items “Facts about
the BMW Group” and “Corporate Governance”.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-re-
lated compensation component, which is oriented
toward sustainable growth. The earnings-related
component is based on average earnings per share
of common stock for the remuneration year and the
two preceding financial years.
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation of
Supervisory Board members is appropriate in relation
to the tasks of Supervisory Board members and the
Company’s financial condition and also takes account
of the Company’s performance over several years.
In accordance with the Articles of Incorporation, each
member of BMW AG’s Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of € 70,000, payable at the end of the
year, as well as earnings-related compensation of € 170
for each full € 0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceed a minimum amount of € 2.00, payable
after the Annual General Meeting held in the fol-
lowing year. An upper limit corresponding to twice
the amount of the fixed compensation is in place for
the Group performance-related compensation. The
limit for a member of the Supervisory Board with no
additional compensation-relevant function is there-
fore set at € 140,000.
With fixed compensation elements and an earnings-re-
lated compensation component oriented toward sus-
tainable growth, the compensation structure in place
for BMW AG’s Supervisory Board complies with the
recommendation on supervisory board compensation
contained in section 5.4.6 paragraph 2 sentence 2 of
the German Corporate Governance Code, in the
version dated 7 February 2017.
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered in the
compensation.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Dep-
uty Chairman shall receive twice the amount of the
remuneration of a Supervisory Board member. Each
chairman of the Supervisory Board’s committees
receives twice the amount and each member of a
committee receives one-and-a-half times the amount
of the remuneration of a Supervisory Board mem-
ber, provided the relevant committee convened for
meetings on at least three days during the financial
year. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the
compensation is measured only on the basis of the
function that is remunerated with the highest amount.
In addition, each member of the Supervisory Board
receives an attendance fee of € 2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member’s remuneration. The
amounts disclosed below are net amounts.
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
Statement on Corporate Governance Total compensation of the Supervisory Board for the
financial year 2017
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2017 totalled
€ 5.6 million (2016: € 5.4 million). This includes fixed
compensation of € 2.0 million (2016: € 2.0 million)
and variable compensation of € 3.6 million (2016:
€ 3.4 million). The earnings-related compensation for
the financial year 2017 was capped at the maximum
amount stipulated in the Articles of Incorporation.
237
in € million
Fixed compensation
Variable compensation
Total compensation
Supervisory Board members did not receive any fur-
ther compensation or benefits from the BMW Group
for advisory or agency services personally rendered.
2017
2016
Amount
Proportion in %
Amount
Proportion in %
2.0
3.6
5.6
35.7
64.3
100.0
2.0
3.4
5.4
37.0
63.0
100.0
238
Compensation
Report
Responsibility
Statement by the
Company’s Legal
Representatives
compensation of the individual members of the Supervisory Board for the financial year 2017 (2016)
Fixed
compensation
Attendance fee
Variable
compensation
in €
Norbert Reithofer (Chairmann)
Manfred Schoch (Deputy Chairmann) 1
Stefan Quandt (Deputy Chairmann)
Stefan Schmid (Deputy Chairmann) 1
Karl-Ludwig Kley (Deputy Chairmann)
Christiane Benner 1
Franz Haniel
Ralf Hattler
Heinrich Hiesinger 2
Reinhard Hüttl
Henning Kagermann 3
Susanne Klatten
Renate Köcher
Robert W. Lane
Horst Lischka 1
Willibald Löw 1
Simone Menne
Dominique Mohabeer 1
Brigitte Rödig 1
Jürgen Wechsler 1
Werner Zierer 1
Total 5
210,000
(210,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
70,000
(70,000)
70,000
(70,000)
70,000
(–)
44,785
(–)
70,000
(70,000)
25,403
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
1,820,188
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(8,000)
6,000
(10,000)
10,000
(8,000)
10,000
(–)
6,000
(–)
10,000
(10,000)
2,000
(8,000)
10,000
(10,000)
10,000
(10,000)
8,000
(8,000)
10,000
(10,000)
10,000
(10,000)
8,000
(10,000)
10,000
(10,000)
10,000
(8,000)
8,000
(8,000)
10,000
(10,000)
188,000
Total
640,000
(610,660)
430,000
(410,440)
430,000
(410,440)
430,000
(410,440)
430,000
(408,440)
216,000
(210,220)
220,000
(208,220)
220,000
(–)
420,000
(390,660)
280,000
(260,440)
280,000
(260,440)
280,000
(260,440)
280,000
(260,440)
140,000
(130,220)
140,000
(130,220)
140,000
(–)
89,570
140,355
(–)
109,780 4
(130,220)
50,806
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
140,000
(130,220)
(–)
189,780
(210,220)
78,209
(208,220)
220,000
(210,220)
220,000
(210,220)
218,000
(208,220)
220,000
(210,220)
220,000
(210,220)
218,000
(210,220)
220,000
(210,220)
220,000
(208,220)
218,000
(208,220)
220,000
(210,220)
3,610,156
5,618,344
1 These employee representatives have – in line with the guidelines of the Deutsche Gewerkschaftsbund – requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of Supervisory Board since 11 May 2017.
3 Member of Supervisory Board until 11 May 2017.
4 Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that this would exceed the amount of € 200,000 (excluding value added tax) p. a.
The share of the Supervisory Board compensation for the 2016 financial year, which exceeds this amount and should therefore be reimbursed, has been offset against the earnings-related component of
Supervisory Board compensation for the 2017 financial year.
5 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2016.
(1,820,000)
(188,000)
(3,385,720)
(5,393,720)
3. other
Apart from vehicle lease and financing contracts
entered into on customary market conditions, no
advances or loans were granted to members of the
Board of Management and the Supervisory Board by
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
Statement on Corporate Governance
239
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, 15 February 2018
Bayerische motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich
Pieter Nota
Dr. Nicolas Peter
Peter Schwarzenbauer
Oliver Zipse
240
Independent
Auditor’s Report
INDEPENDENT
AUDITOR’S REPORT
To Bayerische motoren Werke
Aktiengesellschaft, Munich
Report on the Audit of the Consoli-
dated Financial Statements and the
Group Management Report
Opinions
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktien-
gesellschaft, Munich, and its subsidiaries (Group or
BMW Group, respectively), comprising the balance
sheet for group, income statement for group and
statement of comprehensive income for group, group
statement of changes in equity, cash flow statement
for group and the notes to the group financial state-
ments including accounting principles and policies. In
addition, we have audited the combined management
report (subsequently referred to as group manage-
ment report) for the financial year from 1 January to
31 December 2017. In accordance with the German
legal requirements we have not audited the content
of the statement on Corporate Governance which is
included in section “Statement on Corporate Gov-
ernance (§ 289 f HGB)” [Handelsgesetzbuch: German
Commercial Code] of the group management report.
In our opinion, on the basis of the knowledge obtained
in the audit,
— the accompanying consolidated financial state-
ments comply, in all material respects, with the
IFRSs as adopted by the EU, and the additional
requirements of German commercial law pursu-
ant to Section 315 e (1) HGB and, in compliance
with these requirements, give a true and fair view
of the assets, liabilities, and financial position
of the Group as at 31 December 2017, and of its
financial performance for the financial year from
1 January to 31 December 2017, and
— the accompanying group management report as
a whole provides an appropriate view of the
Group’s position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our opinion on the group
management report does not cover the contents
of the corporate governance statement men-
tioned above.
Pursuant to Section 322 (3) sentence 1 HGB, we declare
that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial
statements and of the group management report.
Basis for the Opinions
We conducted our audit of the consolidated financial
statements and of the group management report in
accordance with Section 317 HGB and the EU Audit
Regulation No. 537 / 2014 (referred to subsequently
as “EU Audit Regulation”) and in compliance with
German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those
requirements and principles are further described
in the “Auditor’s Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report” section of our auditor’s
report. We are independent of the group entities in
accordance with the requirements of European law
and German commercial and professional law, and we
have fulfilled our other German professional respon-
sibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) point (f)
of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe
that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions on the
consolidated financial statements and on the group
management report.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Key audit matters are those matters that, in our pro-
fessional judgment, were of most significance in our
audit of the consolidated financial statements for the
financial year from 1 January to 31 December 2017.
These matters were addressed in the context of our
audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters.
Statement on Corporate Governance Valuation of residual values of leased products
The “accounting principles and policies” are disclosed
in the notes to the consolidated financial statements
in note 4. Disclosure of “leased products” is provided
in the notes to the consolidated financial statements
in note 21.
Financial statement risk
BMW Group leases vehicles to end customers as part
of operating leases. As at the reporting date, the value
of leased products amounted to EUR 36,257 million.
The key estimated value for the purposes of subse-
quent measurement is the expected residual value at
the end of the lease term.
The estimation of future residual values is subject
to judgement and complex due to the large number
of assumptions to be made and the amount of data
incorporated in the determination. For the residual
value forecasts, BMW Group uses internally avail-
able data on historical values, current market data
as well as forecasts from external market research
institutes.
There is a risk for the financial statements that the
residual values expected for the end of the lease terms
are not appropriately assessed and the impairment
losses or reversal of impairment losses required for
the leased products are not recognised in sufficient
amounts.
Our audit approach
By means of inquiries, inspecting internal calcula-
tion methods and analysing the disposal proceeds
of vehicles, among other methods, we obtained an
understanding of the development of leased prod-
ucts, the underlying residual value risks as well as
the business processes for the identification, man-
agement, monitoring and measurement of residual
value risks.
We reviewed the appropriateness and effectiveness of
the internal control system, particularly in relation to
the determination of expected residual values. This
included the audit of the compliance of the relevant IT
systems as well as the implemented interfaces therein
by our IT specialists.
In addition, we evaluated the appropriateness of
the forecasting methods, the model assumptions as
well as the parameters used for the determination of
the residual values based on the validations carried
out by BMW Group. For this purpose, we inquired
with BMW Group’s experts responsible for the
management and monitoring of residual value risks
and inspected the internal analysis on residual value
241
developments and residual value forecasts as well as
the validation results. Furthermore, we evaluated the
processes for processing external forecast values from
market research institute. We ensured the computa-
tional accuracy of the forecast values by verifying key
calculation steps.
Our conclusions
The methods and processes for determining the
expected residual values of the leased products under-
lying the valuation are appropriate. The assumptions
and parameters incorporated in the forecast model for
the residual value are appropriate as a whole.
Valuation of receivables from sales financing
The “accounting principles and policies” as well as the
assumptions, judgements and estimations made are
disclosed in the notes to the consolidated financial
statements in note 4. Disclosure of “sales financing”
is provided in the notes to the consolidated financial
statements in note 23.
Financial statement risk
BMW Group offers end customers, dealerships and
importers various financing models for vehicles
and other assets. In this regard, current and non-
current receivables from sales financing totalling
EUR 80.434 million were recognised as at the reporting
date. Impairment losses amounting to EUR 1,147 mil-
lion were recognised on these receivables as at the
reporting date.
The determination of impairment losses requires
considerable judgement due to a number of value
determinants such as risk classifications, the deter-
mination of default probabilities as well as loss rates.
There is a risk for the financial statements that the
creditworthiness of the dealerships, importers and
end customers, as well as any loss rates, is estimated
incorrectly, the risk provisioning parameters are
derived incorrectly and an impairment loss required
on receivables from sales financing is not recognised
or not recognised in a sufficient amount.
Our audit approach
By means of inquiries, inspecting internal calcula-
tion methods and analysis, among other methods,
we obtained a comprehensive understanding of the
development of credit portfolios, the associated
counterparty-related risks and the business processes
for the identification, management, monitoring and
measurement of counterparty risks.
242
Independent
Auditor’s Report
We audited the appropriateness and effectiveness of the
internal control system in relation to the risk classifica-
tion procedures. In addition, we evaluated the relevant
IT systems and internal processes. The audit included
a review by our IT specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit
of automated controls for data processing.
A key component of our audit was to assess the appro-
priateness of the risk classification procedures as well
as the risk provisioning parameters used, which are
derived from historical default probabilities and loss
rates. We also analysed the validations of parameters
that are regularly conducted. To assess the default
risk, we also used purposive sampling of individual
cases to verify that the attributes for assignment to the
respective risk categories were suitably available and
the impairment losses had been calculated using the
parameters defined for these risk categories.
Our conclusions
The assumptions and parameters incorporated in the
determination of receivables from sales financing are
appropriate as a whole.
Valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees
The “accounting principles and policies” as well as the
assumptions, judgements and estimations made are
disclosed in the notes to the consolidated financial
statements in note 4. Disclosure of “Other provisions”
is provided in the notes to the consolidated financial
statements in note 31.
Financial statement risk
Provisions for statutory and non-statutory warranty
obligations and product guarantees are included in
the consolidated financial statements of BMW Group
as a significant component in “Other provisions”. The
provisions for statutory and non-statutory warranty
obligations and product guarantees amounted to
EUR 4,825 million on 31 December 2017.
BMW Group is responsible for the legally prescribed
product liability and the warranty in the respective
sales market. Moreover, additional warranties are
granted to differing extents. In order to assess the
liabilities arising from warranty, guarantee and
goodwill for vehicles sold, information on the type
and volume of damages arising and on remedial
measures is recorded and evaluated at vehicle model
level. The expected amount of obligations arising
from warranty claims is extrapolated from costs of
the past and provided for. For specific or anticipated
individual circumstances, for example recalls, addi-
tional provisions are set aside provided they have not
already been taken into account. The determination
of provisions is associated with unavoidable estima-
tion uncertainties, is complex and is subject to a high
degree of risk of change, depending on factors such
as detected deficiencies becoming known and claims
made by vehicle owners.
There is a risk for the financial statements that the
valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees is not
appropriate.
Our audit approach
In order to evaluate the appropriateness of the val-
uation method used for the determination of the
provisions for statutory and non-statutory warranty
obligations and product guarantees including the
assumptions and parameters, through discussions
with the departments responsible, we primarily
obtained an understanding of the process for deter-
mining the assumptions and parameters. We audited
the appropriateness and effectiveness of controls to
determine the assumptions and parameters. With
the involvement of our IT specialists, we reviewed
the IT systems utilised to verify their appropriateness.
We compared the amount of provisions from prior
year with expenses selected according to risk and
which actually arose for damage claims, as well as with
technical measures, in order to arrive at a conclusion
on the forecast accuracy.
Selecting specific vehicle models, the computational
accuracy of the valuation model used across the Group
including a tool for rate-based planning was verified
with the support of our actuaries. The measurement
parameters included therein, such as cost items, were
reconciled with actual costs. We evaluated the assump-
tions concerning the extent to which the historical
values are representative for the expected damage
susceptibility, for the expected value of damage per
vehicle in terms of material and labour cost and for
the anticipated claim.
Our conclusions
The method for the valuation of provisions for statu-
tory and non-statutory warranty obligations and
product guarantees is appropriate and has been
applied consistently. The measurement parameters
and assumptions applied are appropriate as a whole.
Valuation for current income tax liabilities in
relation to transfer pricing risks
The “accounting principles and policies” as well as
the assumptions, judgements and estimations made
are disclosed in the notes to the consolidated finan-
cial statements in note 4. Disclosure of “income tax
liabilities” is provided in the notes to the consolidated
financial statements in note 32.
Statement on Corporate Governance 243
Other information
The legal representatives are responsible for the other
information. Other information includes:
— the Statement on Corporate Governance and
— the remaining parts of the annual report, with
the exception of the audited consolidated
financial statements and group management
report as well as our Independent
Auditor’s Report
Our opinions on the consolidated financial statements
and on the group management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance
conclusion thereon.
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
— is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
— otherwise appears to be materially misstated.
Financial statement risk
In the consolidated financial statements of BMW Group,
current income tax liabilities in the amount of
EUR 1,124 million are reported as at 31 December 2017,
which also include risks arising from transfer pricing.
The business operations of BMW Group in respect of
the production and sale of vehicles require extensive
cross-border relationships with affiliated companies.
In this regard, the varying requirements under tax
legislation as well as the specifications of the respon-
sible tax authorities for the respective countries must
be observed; the corresponding tax determinations
are subject to review by the competent tax authorities
over several years.
Transfer pricing is calculated by exercising judgement
on the determination of the related parameters and
requires discretionary interpretation of the prevailing-
regulatory frameworks of countries concerned in
respect of the transfer pricing utilised.
There is a risk for the financial statements that the
current income tax liabilities in relation to transfer
pricing were not measured at an appropriate amount.
Our audit approach
In order to audit the current income tax liabilities in
relation to transfer pricing, we involved staff special-
ising in transfer pricing law and those specialising in
national and international tax law.
Using inquiries, we obtained an understanding of the
parameters set. We compared arm’s length values with
available benchmark studies, empirical values and the
results of past tax audits, as well as with completed
mutual agreement procedures. Furthermore, we
inspected the correspondence with tax authorities
related to concluded mutual agreement procedures
and tax audits and evaluated whether their consid-
eration in the determination of transfer pricing was
appropriate.
For sales companies selected according to risk, we
examined whether risks that had not previously
been considered in the determination of the current
income tax liabilities could be identified on the basis
of the margins generated. We mathematically verified
the income tax liabilities amount resulting from the
difference between the margin and the arm’s length
values.
Our conclusions
The parameters underlying the measurement for
current income tax liabilities in relation to transfer
pricing risk are appropriate as a whole.
244
Independent
Auditor’s Report
Responsibilities of Management and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
Management is responsible for the preparation of the
consolidated financial statements that comply, in all
material respects, with IFRSs as adopted by the EU and
the additional requirements of German commercial
law pursuant to Section 315e (1) HGB and that the
consolidated financial statements, in compliance
with these requirements, give a true and fair view of
the assets, liabilities, financial position, and financial
performance of the Group. In addition, management
is responsible for such internal controls as they have
determined necessary to enable the preparation of
consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements,
management is responsible for assessing the Group’s
ability to continue as a going concern. They also
have the responsibility for disclosing, as applicable,
matters related to going concern. In addition, they
are responsible for financial reporting based on the
going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations,
or there is no realistic alternative but to do so.
Furthermore, management is responsible for the
preparation of the group management report that, as
a whole, provides an appropriate view of the Group’s
position and is, in all material respects, consistent
with the consolidated financial statements, complies
with German legal requirements, and appropriately
presents the opportunities and risks of future devel-
opment. In addition, management is responsible for
such arrangements and measures (systems) as they
have considered necessary to enable the preparation
of a group management report that is in accordance
with the applicable German legal requirements, and
to be able to provide sufficient appropriate evidence
for the assertions in the group management report.
The Supervisory Board is responsible for overseeing
the Group’s financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Group Management Report
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the
group management report as a whole provides an
appropriate view of the Group’s position and, in all
material respects, is consistent with the consolidated
financial statements and the knowledge obtained in
the audit, complies with the German legal require-
ments and appropriately presents the opportunities
and risks of future development, as well as to issue
an auditor’s report that includes our opinions on the
consolidated financial statements and on the group
management report.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with Section 317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) will always
detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these consolidated financial
statements and this group management report.
We exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
— Identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our opinions. The risk
of not detecting a material misstatement result-
ing from fraud is higher than for one resulting
from error, as fraud may involve collusion, for-
gery, intentional omissions, misrepresentations,
or the override of internal control.
— Obtain an understanding of internal control
relevant to the audit of the consolidated finan-
cial statements and of arrangements and meas-
ures (systems) relevant to the audit of the group
management report in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of these systems.
Statement on Corporate Governance 245
— Perform audit procedures on the prospective in-
formation presented by management in the
group management report. On the basis of suf-
ficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used
by management as a basis for the prospective
information, and evaluate the proper derivation
of the prospective information from these as-
sumptions. We do not express a separate opin-
ion on the prospective information and on the
assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will dif-
fer materially from the prospective information.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter.
— Evaluate the appropriateness of accounting pol-
icies used by management and the reason-
ableness of estimates made by management
and related disclosures.
— Conclude on the appropriateness of manage-
ment’s use of the going concern basis of account-
ing and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant
doubt on the Group’s ability to continue as a go-
ing concern. If we conclude that a material un-
certainty exists, we are required to draw attention
in the auditor’s report to the related disclosures
in the consolidated financial statements and in
the group management report or, if such disclo-
sures are inadequate, to modify our respective
opinions. Our conclusions are based on the
audit evidence obtained up to the date of our au-
ditor’s report. However, future events or condi-
tions may cause the Group to cease to be able to
continue as a going concern.
— Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the under-
lying transactions and events in a manner that
the consolidated financial statements give a true
and fair view of the assets, liabilities, financial
position and financial performance of the Group
in compliance with IFRSs as adopted by the EU
and the additional requirements of German com-
mercial law pursuant to Section 315e (1) HGB.
— Obtain sufficient appropriate audit evidence re-
garding the financial information of the entities
or business activities within the Group to express
opinions on the consolidated financial statements
and on the group management report. We are
responsible for the direction, supervision and per-
formance of the group audit. We remain solely
responsible for our opinions.
— Evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with [German] law,
and the view of the Group’s position it pro-
vides.
246
Independent
Auditor’s Report
Other Legal and Regulatory
Requirements
Further Information pursuant to Article 10 of the
EU Audit Regulation
We were elected as group auditor by the annual
general meeting on 11 May 2017 for the financial
year from 1 January to 31 December 2017 and on
22 June 2017 we were engaged by the audit commit-
tee of the supervisory board. Taking into consider-
ation the Article 41 (1) EU APrVO we have been the
group auditor of the Bayerische Motoren Werke
Aktiengesellschaft without interruption for more
than 30 years.
We declare that the opinions expressed in this audi-
tor’s report are consistent with the additional report
to the audit committee pursuant to Article 11 of the
EU Audit Regulation (long-form audit report).
Certified Public Auditor Responsible
for the Engagement
The Certified Public Auditor responsible for the
engagement is Andreas Feege.
Munich, 26 February 2018
KpMG AG
Wirtschaftsprüfungsgesellschaft
Sailer
Wirtschaftsprüfer
Feege
Wirtschaftsprüfer
[Certified Public Auditor]
[Certified Public Auditor]
Statement on Corporate Governance OTHER
INFORMATION
Page 248 BMW Group Ten-year Comparison
Page 250 Glossary – Explanation of Key Figures
Page 252 Index
Page 254 Index of Graphs
Page 255 Financial Calendar
Page 256 Contacts
5
5
Other
Information
Ten-year
Comparison
Glossary –
Explanation
of Key Figures
Index
Index of Graphs
Financial Calendar
Contacts
248
BMW Group
Ten-year
Comparison
BMW GROUP
TEN-YEAR COMPARISON
Deliveries
Automobiles
Motorcycles 1
ProDuction volume
Automobiles
Motorcycles 1
Financial services
Contract portfolio
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
units
units
units
units
2,463,526
2,367,603
2,247,485
2,117,965
164,153
145,032
136,963
123,495
1,963,798
1,845,186
1,668,982
1,461,166
1,286,310
1,435,876
115,215
106,358
104,286
98,047
87,306
101,685
2,505,741
2,359,756
2,279,503
2,165,566
185,682
145,555
151,004
133,615
2,006,366
1,861,826
1,738,160
1,481,253
1,258,417
1,439,918
110,127
113,811
110,360
99,236
82,631
104,220
contracts
5,380,785
5,114,906
4,718,970
4,359,572
4,130,002
3,846,364
3,592,093
3,190,353
3,085,946
3,031,935
Business volume (based on balance sheet carrying amounts)
€ million
124,719
123,394
111,191
96,390
84,347
80,974
75,245
66,233
61,202
60,653
Business volume (based on balance sheet carrying amounts)
income statement
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Return on sales (earnings before tax / revenues)
Income taxes
Effective tax rate
Net profit for the year
Balance sheet
Non-current assets
Current assets
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure / revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
cash Flow statement
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
Personnel
Workforce at year-end 2
Personnel cost per employee
DiviDenD
Dividend total
€ million
98,678
94,163
92,175
80,401
76,059
76,848
68,821
60,477
50,681
53,197
%
€ million
€ million
%
€ million
%
€ million
€ million
€ million
€ million
%
%
€ million
€ million
€ million
20.2
9,880
10,655
10.8
1,949
18.3
8,706
19.9
9,386
9,665
10.3
2,755
28.5
6,910
19.7
9,593
9,224
10.0
2,828
30.7
6,396
121,901
121,671
110,343
71,582
4,688
4.8
28.2
69,888
69,047
66,864
3,731
4.0
47,363
25.1
73,183
67,989
61,831
3,826
4.2
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
4,601
5.7
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
4,967
6.5
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
4,151
5.4
30,606
23.2
52,834
48,395
21.1
8,018
7,383
10.7
2,476
33.5
4,907
74,425
49,004
2,720
4.0
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
2,312
3.8
23,930
21.7
46,100
40,134
10.5
289
413
0.8
203
49.2
210
62,009
39,944
2,383
4.7
19,915
19.5
45,119
36,919
11.4
921
351
0.7
21
6.0
330
62,416
38,670
2,980
5.6
20,273
20.1
41,526
39,287
193,483
188,535
172,174
154,803
138,377
131,835
123,429
110,164
101,953
101,086
€ million
54,548
€ million
€ million
9,039
4,459
7,880
5,792
6,122
5,404
7,688
3,481
7,671
3,003
8,370
3,809
7,776
3,166
7,432
4,471
7,767
1,456
7,454
197
129,932
124,729
122,244
116,324
€
100,760
99,575
97,136
92,337
110,351
105,876
100,306
89,869
89,161
84,887
95,453
83,141
96,230
72,349
100,041
75,612
€ million
2,630
2,300
2,102
1,904
1,707
1,640
1,508
852
197
197
Dividend per share of common stock / preferred stock
€
4.00 3 / 4.02 3
3.50 / 3.52
3.20 / 3.22
2.90 / 2.92
2.60 / 2.62
2.50 / 2.52
2.30 / 2.32
1.30 / 1.32
0.30 / 0.32
0.30 / 0.32
Dividend per share of common stock / preferred stock
1 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
3 Proposal by management.
Deliveries
Automobiles
Motorcycles 1
ProDuction volume
Automobiles
Motorcycles 1
Financial services
Contract portfolio
income statement
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Income taxes
Effective tax rate
Net profit for the year
Balance sheet
Non-current assets
Current assets
Return on sales (earnings before tax / revenues)
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure / revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
cash Flow statement
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
Personnel
Workforce at year-end 2
Personnel cost per employee
DiviDenD
Dividend total
Other Information
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2,463,526
2,367,603
2,247,485
2,117,965
164,153
145,032
136,963
123,495
1,963,798
1,845,186
1,668,982
1,461,166
1,286,310
1,435,876
115,215
106,358
104,286
98,047
87,306
101,685
2,505,741
2,359,756
2,279,503
2,165,566
185,682
145,555
151,004
133,615
2,006,366
1,861,826
1,738,160
1,481,253
1,258,417
1,439,918
110,127
113,811
110,360
99,236
82,631
104,220
contracts
5,380,785
5,114,906
4,718,970
4,359,572
4,130,002
3,846,364
3,592,093
3,190,353
3,085,946
3,031,935
249
delIVerIeS
Automobiles
Motorcycles 1
produCtIon VoluMe
Automobiles
Motorcycles 1
fInAnCIAl SerVICeS
Contract portfolio
Business volume (based on balance sheet carrying amounts)
€ million
124,719
123,394
111,191
96,390
84,347
80,974
75,245
66,233
61,202
60,653
Business volume (based on balance sheet carrying amounts)
€ million
98,678
94,163
92,175
80,401
76,059
76,848
68,821
60,477
50,681
53,197
20.1
7,978
7,893
10.4
2,564
32.5
5,329
86,193
52,184
4,967
6.5
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
4,151
5.4
30,606
23.2
52,834
48,395
21.1
8,018
7,383
10.7
2,476
33.5
4,907
74,425
49,004
2,720
4.0
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
2,312
3.8
23,930
21.7
46,100
40,134
10.5
289
413
0.8
203
49.2
210
62,009
39,944
2,383
4.7
19,915
19.5
45,119
36,919
11.4
921
351
0.7
21
6.0
330
62,416
38,670
2,980
5.6
20,273
20.1
41,526
39,287
193,483
188,535
172,174
154,803
138,377
131,835
123,429
110,164
101,953
101,086
€ million
€ million
9,039
4,459
7,880
5,792
6,122
5,404
7,688
3,481
7,671
3,003
8,370
3,809
7,776
3,166
7,432
4,471
7,767
1,456
7,454
197
129,932
124,729
122,244
116,324
€
101,139
99,575
97,136
92,337
110,351
105,876
100,306
89,869
89,161
84,887
95,453
83,141
96,230
72,349
100,041
75,612
€ million
2,630
2,300
2,102
1,904
1,707
1,640
1,508
852
197
197
InCoMe StAteMent
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Return on sales (earnings before tax / revenues)
Income taxes
Effective tax rate
Net profit for the year
bAlAnCe Sheet
Non-current assets
Current assets
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure / revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
CASh floW StAteMent
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
perSonnel
Workforce at year-end 2
Personnel cost per employee
dIVIdend
Dividend total
Dividend per share of common stock / preferred stock
€
4.00 3 / 4.02 3
3.50 / 3.52
3.20 / 3.22
2.90 / 2.92
2.60 / 2.62
2.50 / 2.52
2.30 / 2.32
1.30 / 1.32
0.30 / 0.32
0.30 / 0.32
Dividend per share of common stock / preferred stock
1 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
3 Proposal by management.
units
units
units
units
%
%
%
€ million
€ million
€ million
€ million
€ million
€ million
€ million
%
%
€ million
€ million
€ million
20.2
9,880
10,655
10.8
1,949
18.3
8,706
71,582
4,688
4.8
28.2
69,888
69,047
19.9
9,386
9,665
10.3
2,755
28.5
6,910
66,864
3,731
4.0
47,363
25.1
73,183
67,989
19.7
9,593
9,224
10.0
2,828
30.7
6,396
61,831
3,826
4.2
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
4,601
5.7
37,437
24.2
58,288
59,078
121,901
121,671
110,343
€ million
54,548
delIVerIeS
Automobiles
Motorcycles 1
Automobiles
Motorcycles 1
produCtIon VoluMe
fInAnCIAl SerVICeS
Contract portfolio
InCoMe StAteMent
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Income taxes
Effective tax rate
Net profit for the year
bAlAnCe Sheet
Non-current assets
Current assets
Return on sales (earnings before tax / revenues)
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure / revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
CASh floW StAteMent
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
perSonnel
Workforce at year-end 2
Personnel cost per employee
dIVIdend
Dividend total
250
Glossary –
Explanation
of Key Figures
GLOSSARY – EXPLANATION
OF KEY FIGURES
Asset-backed financing transactions
A form of corporate financing involving the sale of
receivables to a financing company.
Bond
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Business volume in balance sheet terms
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing” (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Capital expenditure ratio
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
revenues.
Capitalisation rate
Capitalised development costs as a percentage of
research and development expenditure.
Cash flow
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Commercial paper
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Consolidation
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Credit default swap (CDS)
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Earnings per share (EPS)
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
EBIT
Abbreviation for “Earnings Before Interest and Taxes”,
equivalent in the BMW Group income statement to
“Profit / loss before financial result”.
Cash flow at risk
Similar to “value at risk” (see definition below).
EBIT margin
Profit / loss before financial result as a percentage of
revenues.
Cash flow hedge
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
Effective tax rate
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Other Information 251
Return on capital employed (RoCE)
RoCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on equity (RoE)
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Value at risk
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Equity ratio
Equity capital as a percentage of the balance sheet
total.
Fair value
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm’s length transaction.
Fair value hedge
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
Goodwill
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Gross margin
Gross profit as a percentage of Group revenues.
Liquidity
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
Post-tax return on sales
Group net profit as a percentage of Group revenues.
Pre-tax return on sales
Group profit / loss before tax as a percentage of Group
revenues.
Research and development expenditure
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
252
Index
INDEX
A
Accounting policies
Apprentices
Automotive segment
66
B
Balance sheet structure
Bonds
80, 164
128 et seq.
52 et seq.
82
F
Financial assets
Financial instruments
Financial liabilities
Financial reporting rules
Financial result
74, 87
Financial Services segment
82, 88, 152 et seq.
168 et seq.
80, 83, 163 et seq.
135 et seq.
59 et seq.
G
Group tangible, intangible and investment
assets
146 et seq.
I
72, 87, 118 et seq., 139 et seq.
Income statement
Income taxes
Intangible assets
Inventories
Investments accounted for using the equity method
and other investments
74, 140 et seq., 162
129, 148
82, 89, 154
149 et seq.
C
5, 74 et seq.
77 et seq., 122 et seq.
4, 49, 70, 94 et seq.
221 et seq.
5, 78 et seq., 122 et seq.
Capital expenditure
Cash and cash equivalents
Cash flow
CO2 fleet emissions
Compensation Report
Compliance
Connected Drive
Consolidated companies
Consolidation principles
Contingent liabilities
Corporate Governance
Cost of materials
Cost of sales
216 et seq.
32
73, 139
84 et seq.
167
198 et seq.
D
31, 64
Dealer organisation /dealerships
Declaration with respect to the
Corporate Governance Code
32, 61, 64
Digitalisation
Dividend
26, 143 et seq.
Dow Jones Sustainability Index World
199
127
127
K
Key data per share
27
L
Lease business
Leased products
Locations
List of investments
38 et seq.
59 et seq.
149
188 et seq.
M
Mandates of members of the Board of Management
70
200
Mandates of members of the Supervisory Board
201 et seq.
Marketable securities
Motorcycles segment
78, 131
58
E
Earnings per share
5, 143
EBIT margin / return on sales
50 et seq., 74 et seq., 94 et seq.
Efficient Dynamics
Employees
Equity
Exchange rates
83, 155 et seq.
32
4, 30, 49, 66 et seq., 93
45 et seq., 91 et seq., 106, 128, 177 et seq.
5 et seq., 41 et seq.,
N
Net profit
5
Other Information O
140
Other financial result
Other investments
Other operating income and expenses
Other provisions
Outlook
90 et seq.
171
162
T
Tangible, intangible and investment assets
139 et seq.
146 et seq.
Trade payables
Trade receivables
166
154
253
P
83, 89, 157 et seq.
4 et seq., 40 et seq., 49 et seq.,
143
Pension provisions
Performance indicators
93 et seq.
Personnel expenses
Production
Production network
Profit before financial result
Profit before tax
Property, plant and equipment
Purchasing
54 et seq.
63
38 et seq., 54 et seq.
5 et seq., 74
5 et seq., 49, 72, 74, 93, 95
148
R
151 et seq.
179 et seq.
8 et seq.
32 et seq., 61 et seq.
221 et seq.
26
79 et seq.
Rating
Receivables from sales financing
Refinancing
Related party relationships
Remuneration system
Report of the Supervisory Board
Research and development
Revenue reserves
Revenues
Risks and opportunities
RoCE
RoE
5, 40 et seq., 50 et seq., 94
5, 40 et seq., 51, 95
155
5, 50 et seq., 72 et seq., 75 et seq., 87, 94 et seq., 139
96 et seq.
S
4, 49 et seq., 52 et seq., 58, 94 et seq.
183 et seq.
Sales volume
Segment information
Selling and administrative expenses
Statement of Comprehensive Income
Stock
Sustainability
34, 68 et seq.
24 et seq.
74, 139
118, 145
254
Index of Graphs
Financial Calendar
INDEX OF GRAPHS
Finances
BMW Group in figures
6
Development of BMW stock
BMW Group value drivers
Contract portfolio of Financial Services segment
24, 25
40
59
59
BMW Group new vehicles financed or leased by
Financial Services segment
Contract portfolio retail customer financing of
Financial Services segment 2017
Development of credit loss ratio
Regional mix of BMW Group purchase volumes
2017
BMW Group change in cash and cash equivalents
60
61
63
78
BMW Group Financial liabilities by maturity
Balance sheet structure – Group
Balance sheet structure – Automotive segment
BMW Group value added 2017
85
Risk management in the BMW Group
82
96
80
82
Sales volume and locations
BMW Group locations
BMW Group – key automobile markets 2017
BMW Group deliveries of motorcycles
58
BMW Group – key motorcycle markets 2017
38 et seq.
52
58
Workforce
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG
67
Proportion of female employees in management
functions at BMW AG / BMW Group
Proportion of female executives within manage-
213
ment / function levels I and II at BMW AG
66
67
Sustainability
Materiality matrix
69
Further information
Exchange rates compared to the euro
Oil price trend
Precious metals price trend
Steel price trend
BMW Group Compliance Management System
45
46
47
46
216
Overview of compensation system of the Board of
Management
223
Other Information FINANCIAL CALENDAR
255
2018
21 March 2018
Annual Accounts Press Conference
22 March 2018
Analyst and Investor Conference
4 May 2018
Quarterly Report to 31 March 2018
17 May 2018
Annual General Meeting
2 August 2018
Quarterly Report to 30 June 2018
7 November 2018
Quarterly Report to 30 September 2018
2019
20 March 2019
Annual Report 2018
20 March 2019
Annual Accounts Press Conference
21 March 2019
Analyst and Investor Conference
7 May 2019
Quarterly Report to 31 March 2019
16 May 2019
Annual General Meeting
1 August 2019
Quarterly Report to 30 June 2019
6 November 2019
Quarterly Report to 30 September 2019
256
Contacts
CONTACTS
Business and Finance Press
Telephone + 49 89 382-2 45 44
+ 49 89 382-2 41 18
+ 49 89 382-2 44 18
presse@bmwgroup.com
Fax
E-mail
Investor Relations
Telephone + 49 89 382-3 16 84
+ 49 89 382-2 53 87
+ 49 89 382-1 46 61
ir@bmwgroup.com
Fax
E-mail
www.bmwgroup.com.
The BMW Group on the Internet
Further information about the BMW Group is
available online at
Investor Relations information is available directly
at
Information about the various BMW Group brands
is available at
and
www.bmw.com,
www.rolls-roycemotorcars.com.
www.bmwgroup.com / ir.
www.mini.com
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al FSC® Standard: the pulp is sourced from sustainably managed forests.
The corresponding CO2 emissions were compensated by additional environmental and cli-
mate protection measures as part of a reforestation project in collaboration with Bergwald-
projekt e. V. (certificate number: DE-250-830816).
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
Other Information
P U B L I S H E D B Y
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0