A N N U A L R E P O R T 2 0 1 9
Power of Choice
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 22 BMW AG Stock and Capital Markets in 2019
Page 24 Financial Calendar
Page 24 Contacts
2
COMBINED
MANAGEMENT REPORT
Page 26 General Information and Group Profile
Page 26 Organisation and Business Model
Page 44 Management System
Page 48 Report on Economic Position
Page 48 General and Sector-specific Environment
Page 52 Overall Assessment by Management
Comparison of Forecasts for 2019 with Actual Results in 2019
Page 53
Page 64 Review of Operations
Page 76 Comments on Financial Statements of BMW AG
Page 82 Report on Outlook, Risks and Opportunities
Page 82 Outlook
Page 88 Risks and Opportunities
Page 101 Internal Control System Relevant for Accounting and
Financial Reporting Processes
Page 102 Disclosures Relevant for Takeovers and
Explanatory Comments
3
GROUP FINANCIAL
STATEMENTS
Page 108 Income Statement
Page 108 Statement of Comprehensive Income
Page 110 Balance Sheet
Page 112 Cash Flow Statement
Page 114 Statement of Changes in Equity
Page 116 Notes to the Group Financial Statements
Page 116 Accounting Principles and Policies
Page 133 Notes to the Income Statement
Page 141 Notes to the Statement of Comprehensive Income
Page 142 Notes to the Balance Sheet
Page 164 Other Disclosures
Page 184 Segment Information
Page 190 List of Investments at 31 December 2019
4
CORPORATE
GOVERNANCE
Page 200 Corporate Governance
(Part of the Combined Management Report)
Information on the Company’s Governing Constitution
Page 200
Page 201 Board of Management
Page 201 Supervisory Board
Page 202 Shareholders and Annual General Meeting
Page 202 Declaration of Compliance
Page 202 Corporate Governance Statement
Page 203 Members of the Board of Management
Page 204 Members of the Supervisory Board
Page 207 Overview of Supervisory Board committees
and their composition
Page 208 Compliance and Human Rights in the BMW Group
Page 211 Compensation Report
(Part of the Combined Management Report)
Page 242 Glossary – Explanation of Key Figures
Page 246 Responsibility Statement by the
Company’s Legal Representatives
Page 247 Independent Auditor’s Report
5
OTHER INFORMATION
Page 256 BMW Group Ten-year Comparison
T A D A M I S A C H I K O
J A P A N
Our customers
across the globe
have different
mobility demands.
Ultimately, they
decide for
themselves what
they want and
desire. That’s the
Power of Choice.
R O B V A N R O O N
N E T H E R L A N D S
F A I T H M K H O M B E
S O U T H A F R I C A
Discover the Power of Choice from Rob, Faith and
Sachiko as well as our financial year 2019 in our
digital Annual Report.
annualreport.bmwgroup.com / 2019
The figures for fuel consumption, CO2 emissions and power consumption are calculated
based on the measurement methods stipulated in the current version of Regulation
(EU) 715 / 2007. This information is based on a vehicle with basic equipment in Germany;
ranges take into account differences in wheel and tire size selected as well as optional
equipment and can change based on configuration. Fuel consumption and CO2 emissions
information are available on page 70.
The figures have been calculated based on the new WLTP test cycle and adapted to NEDC
for comparison purposes. In these vehicles, different figures than those published here may
apply for the assessment of taxes and other vehicle-related duties which are (also) based
on CO2 emissions.
For further details of the official fuel consumption figures and official specific CO2 emissions
of new cars, please refer to the “Manual on fuel consumption, CO2 emissions and power
consumption of new cars”, available at www.dat.de /co2 /.
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 22 BMW AG Stock and Capital Markets in 2019
Page 24 Financial Calendar
Page 24 Contacts
1
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
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, 3
Fleet emissions in g CO2 / km 4, 5
motorcycles seGment
Deliveries
2015
2016
2017
2018
2019
Change in %
122,244
124,729
129,932
134,682
133,778
– 0.7
2,257,851
2,352,440
2,468,658
2,483,292
2,538,367
127
124
128
128
127
2.2
– 0.8
136,963
145,032
164,153
165,566
175,162
5.8
Further non-financial performance figures
• 02
Automotive seGment
Deliveries
BMW 2, 3
MINI 3
Rolls-Royce 3
Total 2, 3
Production volume
BMW 6
MINI
Rolls-Royce
Total 6
motorcycles seGment
Production volume
BMW
FinAnciAl services seGment
2015
2016
2017
2018
2019
Change in %
1,913,213
1,989,817
2,093,026
2,114,963
2,185,793
340,880
3,758
358,586
4,037
372,194
3,438
364,135
4,194
347,474
5,100
2,257,851
2,352,440
2,468,658
2,483,292
2,538,367
1,933,647
2,002,997
2,123,947
2,168,496
2,205,841
342,008
3,848
352,580
4,179
378,486
3,308
368,685
4,353
352,729
5,455
2,279,503
2,359,756
2,505,741
2,541,534
2,564,025
3.3
– 4.6
21.6
2.2
1.7
– 4.3
25.3
0.9
151,004
145,555
185,682
162,687
187,116
15.0
New contracts with retail customers
1,655,961
1,811,157
1,828,604
1,908,640
2,003,782
5.0
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time working arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units).
3 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group’s most important markets
(China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section “Comparison of Forecasts for 2019
with Actual Results in 2019”.
4 EU-28.
5 From 2018, adjusted value based on planned conversion to WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
6 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units).
To Our Shareholders 5
Key financial performance indicators
• 03
Group
Profit before tax 1 in € million
Automotive seGment
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
RoE in % (change in %pts)
Further financial performance figures
• 04
2015
2016
2017
2018
2019
Change in %
9,224
9,665
10,675
9,627
7,118
– 26.1
9.2
72.2
9.1
31.6
8.9
74.3
9.0
33.0
9.2
77.7
9.1
34.0
7.2
49.8
8.1
28.4
4.9
29.0
8.2
29.4
20.2
21.2
18.1
14.8
15.0
– 2.3
– 20.8
0.1
1.0
0.2
in € million
2015
2016
2017
2018
2019
Change in %
Total capital expenditure 2
Depreciation and amortisation
Free cash flow Automotive segment
Group revenues 1
Automotive
Motorcycles
Financial Services 1
Other Entities
Eliminations 1
Group profit before financial result (EBIT) 1
Automotive
Motorcycles
Financial Services 1
Other Entities
Eliminations 1
Group profit before tax (EBT) 1
Automotive
Motorcycles
Financial Services 1
Other Entities
Eliminations 1
Group income taxes 1
Profit / loss from continuing operations 1
Profit / loss from discontinued operations
Group net profit 1
Earnings per share 1 in €
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
98,282
85,742
2,272
27,567
7
8,013
5,113
2,713
96,855
85,846
2,173
27,705
6
7,784
6,017
2,567
104,210
91,682
2,368
29,598
5
– 19,097
– 20,017
– 17,306
– 18,875
– 19,443
9,593
7,836
182
1,981
169
– 575
9,224
7,523
179
1,975
211
– 664
– 2,828
6,396
–
6,396
9,386
7,695
187
2,184
– 17
– 663
9,665
7,916
185
2,166
170
– 772
– 2,755
6,910
–
6,910
9,899
7,888
207
2,194
14
– 404
10,675
8,717
205
2,207
80
– 534
– 2,000
8,675
–
8,675
8,933
6,182
175
2,172
– 27
431
9,627
6,977
169
2,143
– 45
383
– 2,530
7,097
– 33
7,064
7,411
4,499
194
2,312
29
377
7,118
4,467
187
2,272
– 96
288
– 2,140
4,978
44
5,022
– 2.9
17.7
– 5.4
7.6
6.8
9.0
6.8
– 16.7
– 3.0
– 17.0
– 27.2
10.9
6.4
–
– 12.5
– 26.1
– 36.0
10.7
6.0
–
– 24.8
15.4
– 29.9
–
– 28.9
9.70 / 9.72
10.45 / 10.47
13.07 / 13.09
10.60 / 10.62
7.47 / 7.49
– 29.5 / – 29.5
Pre-tax return on sales 1, 3 in % (change in %pts)
10.0
10.3
10.9
9.9
6.8
– 3.1
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
3 Group profit before tax as a percentage of Group revenues.
6
BMW Group
in Figures
BMW Group deliveries of automobiles 1, 2
• 05
BMW Group revenues
• 07
in 1,000 units
in € billion
2,600
2,257.9 2,352.4
2,468.7 2,483.3 2,538.4
1,300
0
110
55
0
92.2
94.2
98.3
96.9
104.2
2015
2016
2017
2018
2019
2015
2016
2017
2018 3
2019
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units,
2019: 538,612 units).
2 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group’s most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section “Comparison
of Forecasts for 2019 with Actual Results in 2019”.
BMW Group profit before financial result (EBIT)
• 06
BMW Group profit before tax
• 08
in € million
in € million
11,000
9,593
9,386
9,899
8,933
7,411
11,000
9,224
9,665
10,675
9,627
7,118
5,500
0
5,500
0
2015
2016
2017
2018 3
2019
2015
2016
2017
2018 2
2019
3 Prior year’s figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for
the prior year have been adjusted due to changes in presentation of selected items, which
are not material overall.
To Our Shareholders
REPORT OF THE
SUPERVISORY BOARD
STATEMENT OF THE
CHAIRMAN OF THE
BOARD OF MANAGEMENT
BMW AG STOCK AND
CAPITAL MARKETS IN 2019
FINANCIAL CALENDAR
CONTACTS
1
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG 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 faced numerous challenges in 2019. Despite retaining its leading position in
the premium segment in terms of delivery volumes, it did not generate the level of earnings
we aspire to. In our capacity as Supervisory Board, we stand firmly behind the Board of Man-
agement’s objective of increasing profitability again in the coming years and continuing in the
long and highly successful tradition of the BMW Group despite the difficult global economic
conditions. Customer focus is always our highest priority. At the same time, the BMW Group
is committed to assuming a pioneering role in the field of sustainability. The importance we
attach to this topic is most evident in the rapid expansion of our range of electrified vehicles
driven by the BMW Group’s new model offensive this year.
With its product portfolio firmly on the right track, the BMW Group is well positioned to meet
the challenges posed by technological change.
Focus of the Supervisory Board’s activities during the past financial year
The Supervisory Board performed the duties incumbent upon it with the utmost diligence.
In 2019, we made major decisions regarding the leadership of the BMW Group, with
Mr Oliver Zipse designated as new Chairman of the Board of Management and two new
members appointed to the Board.
The Supervisory Board continuously monitored the running of the business in a thorough
manner and advised the Board of Management on matters relating to the management and
further development of the BMW Group. In five meetings of the full Supervisory Board
(including one two-day meeting), we deliberated in detail with the Board of Management on
the performance of the BMW Group. The Board of Management also kept the Supervisory
Board well informed on matters of particular significance between meetings. Furthermore, the
Chairman of the Supervisory Board was in frequent direct contact with the Chairman of the
Board of Management, as was the Chairman of the Audit Committee with the Chief Financial
Officer regarding current topics.
The work of the Supervisory Board focused in particular on the strategic development of the
BMW Group against the backdrop of digitalisation and electrification, including the core topic
of automated driving. Key cooperations, such as the joint venture with Daimler in the field of
mobility services, were subject to intensive scrutiny.
The Audit Committee and the full Supervisory Board also deliberated at great length on the
challenges posed by trade conflicts as well as the various Brexit scenarios.
I personally held a number of individual discussions with investor representatives on Super-
visory Board- related matters, especially in light of the planned changes to the German Cor-
porate Governance Code. The main topics discussed were the compensation of the Board of
Management, the independence of Supervisory Board members and the planned change in
the compensation system for the Supervisory Board.
10
Report of the
Supervisory Board
In its regular reports on the BMW Group’s current situation, the Board of Management report-
ed to the Supervisory Board on new models and model revisions in the Automotive and
Motorcycles segments, delivery volumes (in particular of electrified models) and the competitive
situation, as well as the development of new and total business volume in the Financial Services
segment. Any variances from budget were also brought to the Supervisory Board’s attention.
The Board of Management’s status reports also covered changes in the workforce size as well
as economic developments in key markets.
The Board of Management also informed us about important current topics such as the opening
of the BMW plant in Mexico, the Battery Cell Competence Centre in Munich and the new
#NEXTGen technology and future fair held at the BMW Welt site in Munich. The Board of
Management also reported on the state of negotiations with FC Bayern and the BMW Group’s
participation at the IAA in Frankfurt. Moreover, the Board of Management kept the Supervisory
Board well informed on matters of product quality, the joint venture with Great Wall Motor
and the cooperation with Northvolt in the field of battery cell production.
The Supervisory Board also deliberated at length on important issues arising in the Board of
Management’s various areas of responsibility. For instance, the Board of Management
presented the core elements of the Group’s Finance function, including a description of its
financing strategy. We also considered the strategy and risk profile of the Financial Services
segment. In addition to strategy realignment within the sales organisation, a further topic
of focus was the contribution of the Purchasing and Supplier Network to the profitability
and future viability of the BMW Group. The Board of Management reported in detail on the
current status of and overall strategy regarding the BMW brand.
We paid particular attention to the implementation of Strategy NUMBER ONE > NEXT.
The Board of Management elaborated on the current status, highlighting changes in the market
environment attributable to trade conflicts, regulatory issues – especially fleet CO2 emis-
sions – as well as corporate social responsibility considerations. Together with the Board of
Management, we discussed in detail the decisions reached and measures taken to implement
the strategy over the past 12 months. The Board of Management reported in detail on its
strategies adopted for brands and design, for products as well as for customer experience
and services, focusing in particular on the expansion of the Group’s electrified product
portfolio and the luxury segment. The strategic fields of technology and digitalisation were
also the subject of intensive debate, specifically focusing on the core topics of electric mobility
and automated driving.
In the third quarter, the Supervisory Board conferred extensively on the BMW Group’s fore-
casts for the period from 2020 to 2025. In this context, the Board of Management outlined
the currently volatile nature of external business conditions, highlighting in particular risks
arising from trade policies and weaker economic forecasts for certain markets. The potential
impact of a range of risk scenarios on forecasts was also discussed at length. After a thorough
examination, the Supervisory Board approved the BMW Group’s long-term corporate forecast.
Based on this long-term assessment, the Board of Management presented the annual budget
for the financial year 2020, which the Supervisory Board likewise deliberated upon at length.
The Board of Management also reported on the current status of diversity concepts for
the Group.
To Our Shareholders 11
With regard to Board of Management compensation, the Supervisory Board spent a significant
amount of time addressing issues related to the Act on the Implementation of the Second Share-
holder Rights Directive (ARUG II) and the new version of the German Corporate Governance
Code as well as assessing any resulting need for change at the BMW Group. We intend to revise
the compensation system for the Board of Management during the financial year 2020 and
will put forward the revised system for shareholder approval at the Annual General Meeting
to be held in the financial year 2021.
For the financial year 2019, the Supervisory Board examined the structure and level of compen-
sation paid to the members of the Board of Management. In this context, we took into account
trends in Group business performance, executive manager compensation and the remuneration
of BMW Group employees in Germany. Based on comparative studies conducted by an external
compensation consultant, we concluded that the compensation of the members of the Board
of Management is commensurate. Detailed information on the compensation of the Board of
Management is contained in the Compensation Report.
We also addressed the compensation of the Supervisory Board, which has remained unchanged
since 2013, and spoke in favour of changing to a purely fixed compensation model. A corresponding
proposal will be submitted for shareholder approval at the Annual General Meeting 2020.
We also deliberated intensively on corporate governance within the BMW Group and the
application of the recommendations contained in the German Corporate Governance Code.
In December, the Board of Management and the Supervisory Board issued their Declaration of
Compliance with the German Corporate Governance Code. We intend to fully comply with all
recommendations made in the Code in the version dated 7 February 2017, which was valid at
the date of the Declaration. The wording of the Declaration of Compliance is available in the
Statement on Corporate Governance on our website.
We also reviewed current targets for the composition of the Supervisory Board and the com-
petency profile set out for its members. We concluded that the composition of the Supervisory
Board at 31 December 2019 was in line with the targets stipulated in the diversity concept, the
competency profile and other composition targets. In view of the major strategic importance
of automated driving, we have decided to expand our competency profile to include the fields
of digitalisation and artificial intelligence. The composition targets for the financial year 2020
were further developed in line with the recommendations contained in the draft version of the
new German Corporate Governance Code. An overview of the members of the Supervisory
Board, describing their specific fields of expertise, is available in the Statement on Corporate
Governance on our website.
No conflicts of interest pertaining to members of the Supervisory Board arose during the year
under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including their close relatives and intermediary entities, were
examined on a quarterly basis.
We reviewed the efficiency of our work on the Supervisory Board and prepared for the related
deliberations within the full Supervisory Board based on a questionnaire and detailed individual
discussions between the Chairman and all members. Overall, the work of the Supervisory
Board was deemed efficient and given a positive assessment. Valuable feedback and suggestions
relating to the work of the Supervisory Board were welcomed and will be taken up in the
new financial year.
12
Report of the
Supervisory Board
Description of Presiding Board and committee work
The Supervisory Board has established a Presiding Board and four committees, whose work
during the financial year 2019 was reported on by their respective chairpersons at the subsequent
meetings of the full Supervisory Board. You can read more about the tasks, the composition
and the working methods of the Presiding Board and the various committees of the Supervisory
Board in the Statement on Corporate Governance on our website.
The Presiding Board convened four times during the year under report. Its focus was on
preparing the detailed agenda of full Supervisory Board meetings, unless a committee was
responsible for doing so. Working closely with the Board of Management and senior heads of
department, we made suggestions for topics to be reported on at Supervisory Board meetings.
Furthermore, the Presiding Board devoted time to following the latest developments regarding
corporate governance.
The Audit Committee held five meetings and two telephone conference calls during the
financial year 2019.
The meeting held in February 2019 focused primarily on preparing for the Supervisory Board
meeting at which the financial statements and on the planned change of the Group auditor
were examined. The committee recommended to the full Supervisory Board that Pricewa-
terhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) be elected as Company and
Group auditor at the Annual General Meeting 2019. Prior to this, PwC issued a Declaration
of Independence, and the planned scope of non-audit services to be provided by PwC was
discussed. In connection with the audits of the financial statements for the financial year 2018,
which were performed for the last time by KPMG Wirtschaftsprüfungsgesellschaft mbH, the
Audit Committee considered the scope of non-audit services provided by KPMG entities to the
BMW Group in 2018. There were no indications of conflicts of interest, grounds for exclusion
or lack of independence on the part of the auditor.
The Audit Committee discussed PwC’s fee proposal for the audits of the Company and Group
Financial Statements 2019 and for the review of the Half-Year Financial Report, and deemed
it appropriate. Following the approval at the Annual General Meeting held in May 2019, the
Audit Committee appointed PwC for the relevant engagements and specified audit focus areas.
It also approved the scope of non-audit services to be provided by PwC and subsequently
received regular reports on the relevant matters.
The quarterly financial reports were discussed with the Board of Management prior to their
publication. Representatives of the external auditors were present when the Half-Year Financial
Report was discussed at the end of July 2019.
During the year under report, the Audit Committee again dealt intensively with the topic
of compliance within the BMW Group. In his regular report, the Chairman of the Com-
pliance Committee provided a summary of ongoing compliance-related proceedings and
presented the improvements being made to the compliance system, which is now known as
“Compliance 4.0”.
In February 2019, the Board of Management informed the Audit Committee of the result of the
proceedings conducted by the Public Prosecutor’s Office Munich regarding a faulty software
update. Based on its classification as a misdemeanour, a fine of € 8.5 million was imposed,
which the Company accepted. The investigations undertaken by the Public Prosecutor did
not identify any evidence of test-stand-related defeat devices, fraud or any other deliberate
legal violations.
To Our Shareholders 13
The Audit Committee continued to deal intensively with the EU Commission’s investigation
into the antitrust allegations in connection with the former working groups of several German
automobile manufacturers. Subsequent to receiving the EU Commission’s Statement of Objec-
tions in April 2019, which resulted in the BMW Group recognising a sig nificant provision for
a possible fine, the Audit Committee held a separate meeting on this topic. At that meeting,
the Audit Committee was provided with detailed information concerning allegations made
by the EU Commission and was fully briefed on the Company’s viewpoint, which denies the
allegations and intends to contest them – with all the legal means at its disposal if necessary.
The Company’s Chief Legal Counsel and a representative of the law firm engaged by the
Company explained the Company’s legal position to the Committee.
At the following meeting of the Supervisory Board, the Chairman of the Audit Committee
reported on these matters in great detail. At the recommendation of the Audit Committee, the
Supervisory Board decided to obtain a second opinion from an independent antitrust law expert
in addition to the advice received from the law firm engaged by the Company. At a subsequent
meeting of the Audit Committee, the expert confirmed the Company’s legal opinion and its
defence strategy.
The Board of Management also reported in detail to the Audit Committee on the mutually
agreeable completion of proceedings initiated by the German Federal Cartel Office in 2016
regarding the purchase of long steel by the BMW Group. The proceedings were terminated
in November 2019 with the imposition of a fine of € 28 million, which the Company did not
contest. The Board of Management stressed that the exchange of information in question had
no effect on the selling prices of BMW Group vehicles.
Furthermore, the main results of the audits conducted by Group Internal Audit, along with
details of further audit planning, were reported to the Audit Committee. The Audit Committee
also discussed risk management and the BMW Group’s current risk profile as well as the internal
control system and the report on major legal disputes. The EMIR audit report (“European Market
Infrastructure Regulation”) pursuant to § 32 of the German Securities Trading Act (WpHG)
was also presented to the Audit Committee by an auditor, and the effectiveness of the system
in place at BMW AG to ensure compliance with regulatory requirements was confirmed.
The Audit Committee concurred with the decision of the Board of Management to raise the
Company’s share capital in accordance with Article 4 (5) of the Articles of Incorporation
(Authorised Capital 2019) by € 740,400 and to issue a corresponding number of new non-voting
bearer shares of preferred stock in conjunction with an Employee Share Programme.
A key aspect of the Personnel Committee’s work during its five meetings held during 2019
involved preparing decisions in connection with the composition of the Board of Management.
The Personnel Committee held discussions on Board of Management compensation, not least
against the background of the implementation of ARUG II and revision of the German Corporate
Governance Code. In individual cases it also granted approval for Board of Management members
to assume mandates outside the Group.
The Nomination Committee held one meeting during the financial year 2019, at which it addressed
the subject of succession planning for shareholder representatives on the Supervisory Board going
forward, taking into account the composition targets decided upon by the Supervisory Board.
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year 2019.
14
Report of the
Supervisory Board
Composition of the Board of Management
The Supervisory Board made several decisions regarding the composition of the Board of
Management during the 2019 financial year:
The mandate of the Chairman of the Board of Management, Harald Krüger, was terminated by
mutual agreement on 15 August 2019, after Mr Krüger had previously informed the Chairman
of the Supervisory Board that he was not available for a further term of office. We wish to
thank Mr Krüger for his outstanding work and the key momentum he provided with great
enthusiasm during his long tenure at the BMW Group as Chairman and Member of the Board
of Management as well as in his previous functions.
The Supervisory Board appointed Oliver Zipse as Chairman of the Board of Management with
effect from 16 August 2019. Mr Zipse initially became a Board of Management member with
responsibility for Production in 2015 and has worked for the BMW Group since 1991. Apart
from his expertise in the field of production, he has also gained a wealth of experience in
various strategic management functions.
On 16 August 2019, Dr Andreas Wendt was temporarily given Board responsibility for
Production in addition to his role as Board member responsible for the Purchasing and
Supplier Network.
With effect from 1 October 2019, Dr Milan Nedeljković was appointed member of the Board of
Management and assumed responsibility for Production. Dr Nedeljković joined the BMW Group
in 1993 and, after serving as Managing Director of the Leipzig and Munich production plants,
most recently worked as Senior Vice President for Corporate Quality.
The mandate of Milagros Caiña Carreiro-Andree was terminated by mutual agreement with
effect from 31 October 2019. We would like to thank Ms Caiña Carreiro-Andree for her
positive contribution to the further development of human resource policies throughout
the BMW Group.
With effect from 1 November 2019, Ilka Horstmeier was appointed member of the Board of
Management with responsibility for Human Resources and as Labour Relations Director.
Ms Horstmeier has worked for the BMW Group since 1995, most recently as Managing Director
of the Dingolfing plant.
In 2019, we resolved to extend the mandate of one Board of Management member.
Peter Schwarzenbauer left the Board of Management on 31 October 2019 after reaching the
stipulated retirement age. We wish to thank him for his dedication, his excellent work and
the dynamic contribution he made to the field of digitalisation in particular. As part of the
realignment of Board member portfolios, Mr Pieter Nota has been given combined responsibility
for all BMW Group brands as head of “Customer, Brands, Sales” and the size of the Board
has been reduced overall.
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board’s committees
Messrs Franz Haniel, Ralf Hattler and Jürgen Wechsler resigned from the Supervisory Board
with effect from the end of the Annual General Meeting 2019. We would like to thank all three of
them for their faithful, constructive cooperation during their respective periods of office on the
Supervisory Board. Mr Haniel was a member of the Supervisory Board for a period of 15 years.
To Our Shareholders 15
We therefore wish to express our gratitude to him in particular for his many years of loyal service
to the BMW Group. Within the framework of elections pursuant to the German Co-Determi-
nation Act, the employees elected Verena zu Dohna-Jaeger and Dr Thomas Wittig as members
of the Supervisory Board, the former as representative of IG Metall and the latter as executive
staff representative. The remaining employee representatives were re-elected. The Annual
General Meeting elected Dr Vishal Sikka, founder and CEO of Vianai Systems, Inc., as a new
member of the Supervisory Board. Susanne Klatten and Stefan Quandt, both entrepreneurs,
were re-elected as shareholder representatives.
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year 2019. The Supervisory Board plans to make a mutually
agreed change to the position of chair of the Audit Committee directly following the 2020
Annual General Meeting. As in the past, the future chairperson also needs to meet the required
criteria as an independent financial expert. The composition of the Supervisory Board and its
committees is contained in the Corporate Governance Report and the Statement on Corporate
Governance, which is available on our website. You can also find the curricula vitae of the
Supervisory Board members on our website.
Disclosure of attendance at meetings by individual members
The attendance rate at the meetings of the Supervisory Board and its committees was 99.6 %
overall. The following table shows attendance by individual member:
Supervisory Board Member
Meetings
Attendance
Attendance in %
Dr.-Ing. Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
Dr. Karl-Ludwig Kley
Christiane Benner
Dr. Kurt Bock
Verena zu Dohna-Jaeger 1
Franz Haniel 2
Ralf Hattler 2
Dr.-Ing. Heinrich Hiesinger
Prof. Dr. Reinhard Hüttl
Susanne Klatten
Prof. Dr. Renate Köcher
Horst Lischka
Willibald Löw
Simone Menne
Dr. Dominique Mohabeer
Brigitte Rödig
Dr. Vishal Sikka 1
Jürgen Wechsler 2
Dr. Thomas Wittig 1
Werner Zierer
1 Supervisory Board Member since 16 May 2019
2 Supervisory Board Member until 16 May 2019
22
21
22
21
22
5
5
4
1
1
5
5
6
5
5
5
5
5
5
4
1
4
5
22
21
22
21
21
5
5
4
1
1
5
4
6
5
5
5
5
5
5
4
1
4
5
100
100
100
100
95
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
16
Report of the
Supervisory Board
Examination of financial statements, including the separate non-financial report and
the proposal for the appropriation of profits
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (“PwC”) was appointed as
auditor for the first time for the financial year 2019. PwC conducted a review of the condensed
Interim Group Financial Statements and Interim Group Management Report for the six-month
period ended 30 June 2019 and presented the findings of its review to the Audit Committee.
No issues were identified that might indicate that the condensed Interim Group Financial
Statements and Interim Group Management Report had not been prepared in accordance
with the applicable provisions in all material respects.
PwC audited the Company and Group Financial Statements of BMW AG for the financial year
2019 as well as the Combined Company and Group Management Report – as authorised for
issue by the Board of Management on 10 March 2020 – and issued an unqualified audit opinion,
signed by the auditor Petra Justenhoven as independent auditor (Wirtschaftsprüferin) and
by Andreas Fell as independent auditor (Wirtschaftsprüfer) and auditor responsible for the
performance of the engagement.
At its meeting held on 27 February 2020, the Audit Committee initially considered in detail
the preliminary version of the Company and Group Financial Statements for the finan-
cial year 2019, the Combined Management Report (including the Statement of Corporate
Governance), the auditor’s long-form reports and the Board of Management’s proposal for
the appropriation of profits.
Immediately after authorising their issue, the Board of Management submitted the Company
and Group Financial Statements for the 2019 financial year, the Combined Management Report
(including the Statement of Corporate Governance) and the proposal for the appropriation of
profits to the Supervisory Board. The long-form audit reports of the auditor were also made
available to the Supervisory Board without delay.
At its meeting on 12 March 2020, the Audit Committee carefully examined and deliberated
on these documents before they were considered in detail at the plenary session of the
Supervisory Board.
At the respective meetings, the Board of Management provided the Audit Committee and the
Supervisory Board with detailed explanations of the financial reports presented. Representatives
of the external auditor were also present at both meetings. They reported on the main findings of
their audit, explained the key audit matters and answered additional questions put by members
of the Audit Committee and the Supervisory Board. The Audit Committee and the Supervisory
Board reviewed the key audit issues and the related audit procedures in great detail.
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 any 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 of the German Stock Corporation Act (AktG) issued by the
Board of Management and the Supervisory Board.
Based on a thorough examination conducted 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 Supervisory Board, no objections
were raised. The Group and Company Financial Statements of Bayerische Motoren Werke
Aktiengesellschaft for the financial year 2019 drawn up by the Board of Management were
subsequently approved at our meeting held on 12 March 2020.
To Our Shareholders 17
We also examined the proposal of the Board of Management to use the unappropriated profit
to pay a dividend of € 2.50 per share of common stock and € 2.52 per share of non-voting
preferred stock, in each case on shares entitled to receive a dividend. We consider the proposal
appropriate and have therefore given it our approval.
Due to the rapidly deteriorating situation caused by the proliferation of coronavirus, the Board
of Management resolved on 16 March 2020 to revise the forecast for the financial year 2020 and
to draw up the Company and Group Financial Statements anew, together with the Combined
Management Report. In a telephone conference of the Audit Committee held on the same day,
the Board of Management reported in detail on the adjustments made. Representatives of
the auditor reported on the supplementary audit performed and the findings identified and
confirmed that no objections had arisen in the course of this work. After thorough examination
and deliberation, the Audit Committee recommended that the Supervisory Board approve
the revised versions of the Company and Group Financial Statements for the financial year
2019. After concluding its own examination, the Supervisory Board determined that it had no
objections and accordingly approved the revised versions of the Company and Group Financial
Statements for the financial year 2019 on 17 March 2020. The Company Financial Statements
have therefore been adopted.
Furthermore, in conjunction with the presentation of the Sustainable Value Report, the Audit
Committee and the Supervisory Board considered the separate non-financial report of BMW AG
(Company and Group) at 31 December 2019 drawn up by the Board of Management. The
Board of Management provided a detailed explanation of the reports at the meetings. Repre-
sentatives of the auditor presented the main findings of their audit and answered additional
questions put by the members of the Supervisory Board. PwC performed a “limited assurance”
review of these reports and issued an unqualified statement thereon. 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 of the BMW Group worldwide for their commitment and joint achievements
in the financial year 2019.
The readiness of our employees to deliver outstanding performance alongside their passion and
enthusiasm for the enterprise and its products make us confident in the ability of the BMW Group
to successfully shape individual mobility as a technological pioneer moving forward.
Munich, 17 March 2020
On behalf of the Supervisory Board
Norbert Reithofer
Chairman of the Supervisory Board
18
Statement of the
Chairman
of the Board of
Management
Oliver Zipse
Chairman of the Board of Management
To Our Shareholders Dear Shareholders,
19
At the BMW Group, the customer always takes centre stage. That is what makes your Company
strong. But we also know that success doesn’t happen by itself – and certainly not in times of
technological transformation. We seek to offer our customers the best products and services
so they can be mobile in a way that suits their personal needs. Together, we are leading “sheer
driving pleasure” into a sustainable future – as intended by the Paris Climate Agreement. To
achieve this, we are systematically directing our focus towards new technologies and connectivity.
Because we want your Company to emerge as a winner of this transformation.
Our customers are the key to our success.
In 2019 we reached a new record level of vehicles delivered to customers for the ninth con-
secutive year. Personally, and on behalf of my Board of Management team, I would like to
thank our more than two-and-a-half million BMW, MINI and Rolls-Royce customers – and
over 175,000 BMW Motorrad customers.
I would also like to thank our high-performing retail organisation, as well as the suppliers we
work with as partners. The dedication and ideas of our more than 133,000 associates worldwide
drive the Company forwards.
Our team is proud to work for the BMW Group.
This was confirmed by our most recent employee survey – even at a time when the role of the
automotive industry is the subject of intense debate. The BMW Group is considered one of the
world’s most attractive employers and is the number one automobile manufacturer in various
renowned rankings. Our associates value that you, our shareholders, support the Company’s
long-term course. This gives us the backing and internal stability we need to continue to chart
our own course and differentiate ourselves from the competition.
The BMW Group strategy is dynamic.
Our business environment is shaped by uncertain developments, which we need to respond
to quickly and appropriately, but it is also shaped by stable trends. That is why enhancing
our strategy is an ongoing task.
Our corporate spirit is rooted in the values of responsibility, appreciation, transparency, trust
and openness. In the Board of Management, we have geared the BMW Group’s strategy towards
the relevant areas of future activity and adjusted core elements: what does the BMW Group
stand for? What drives us? What are we working towards? And how can we achieve our goals?
It is imperative that we focus on business, environmental and social challenges equally.
Everything today is interconnected. There are no simple solutions to long-term success.
People still want to be mobile.
This forms the basis of our business model and our confidence. Demand for premium mobility
worldwide is expected to grow until 2030. Our goal is to gain or regain market share – but not
at any price. Rising sales must also generate the necessary earnings.
20
Statement of the
Chairman
of the Board of
Management
We aim to improve our profitability.
The financial year 2019 was impacted by a variety of headwinds. As previously announced, our
Group earnings before tax were significantly lower than the previous year.
The EBIT margin in the Automotive Segment was within our adjusted target range of 4.5 to 6.5 per-
cent. The Board of Management and the Supervisory Board will propose a dividend of € 2.50 per
share of common stock and € 2.52 per share of preferred stock to the Annual General Meeting.
We are working intensively to bring the EBIT margin in the Automotive Segment back within
our target range of 8 to 10 percent. This is the standard we hold ourselves to – and what you
expect as shareholders. We will realise over 12 billion euros in efficiency potential through our
Performance > NEXT programme by the end of 2022 – for example, through current measures
aimed at digitalising our processes. We will continue to make significant investments in our
future. In 2019 alone, we invested 6.4 billion euros in research and development.
The biggest model offensive in our history continues.
Nearly all model series have been updated over the past two years. They will be joined this
year by new models like the BMW 2 Series Gran Coupé, highly profitable BMW M models,
new plug-in hybrids and electric models. Our portfolio is younger, more attractive and more
technologically diverse than ever before. This allows us to meet every customer’s needs and
desires – no matter where they are in the world. As a result we are challenging the competition
in every segment.
We offer our customers the Power of Choice.
Customers choose the vehicle segment that best suits their living environment – we provide
the right drivetrain to go with it. The popular BMW X3 is a good example of this. Starting this
year, four different drivetrain variants will be offered: efficient diesel and petrol, plug-in hybrid
and pure electric. Mobility needs will continue to vary around the world and from region to
region – in some cases, significantly. Our plants have the flexibility to produce all types of
drivetrains. In this way, we are able to inspire our customers and win them over to sustainable
drivetrains. Our online Annual Report features customers from the Netherlands, South Africa
and Japan and shows how they use different drivetrains in their everyday lives.
More than one million electrified vehicles by the end of 2021.
Our experience with e-mobility is delivering results. By the end of 2019, the BMW Group had
more than 500,000 electrified vehicles on roads across the world. This, in itself, is already a
significant contribution to climate protection. In Germany, BMW clearly leads the market for
electrified vehicles, with a share of 21 percent. In 2019, the average share of battery-electric
vehicles and plug-in hybrids in the European Union was three percent.
The BMW Group figure was nearly double that. We will continue in this direction: the goal is
for a quarter of our European new vehicle fleet to be electrified in 2021; a third in 2025 and
half in 2030. The next fully-electric models are already in the starting blocks: the MINI SE and
BMW iX3 this year, followed by the BMW i4 and iNEXT from 2021.
We provide maximum vertical integration for e-mobility.
The iX3, i4 and iNEXT use our entirely newly developed fifth-generation electric drivetrain. The
electric motor is designed in such a way that no rare earths are needed. Long-term contracts
will secure our supply of battery cells.
To Our Shareholders 21
We plan to meet the EU’s new CO2 standards.
We geared up for sustainable mobility early. This year alone, we plan to lower the CO2 emissions
of our European new vehicle fleet by another 20 percent. This would allow us to meet the
European Union’s new CO2 targets for 2020 and 2021. To achieve this, we are forging ahead
with our electric offensive and, at the same time, continuing to make our conventional engines
more efficient. Too little attention is paid to these efforts and their effects – even though they
have a rapid and noticeable impact.
Offering effective solutions. Creating a real impact. Ensuring sustainability.
That’s what we stand for.
Climate protection achieves the biggest impact through implementation, not announcements.
Our understanding of responsibility has always encompassed the entire value chain. Last year
alone, we reduced CO2 emissions from production by 25 percent from the previous year. The
“footprint” of every new plug-in hybrid is certified: from raw material procurement, through the
supply chain, production and use phase, all the way to recycling. E-mobility requires cobalt and
lithium. Starting this year, we will be sourcing both raw materials ourselves and making them
available to our suppliers. This creates transparency. You will find more details on this in our
Sustainable Value Report 2019. We will no longer be printing our Annual Report, which will
now be exclusively available on our website as part of our expanded digital offering.
Reliability even in difficult times.
The latest developments regarding the coronavirus pose major challenges for us all – including
the BMW Group. In close cooperation with our business partners, we are working on targeted
measures to avoid supply bottlenecks where possible. As a Company, we have initiated measures
worldwide to protect the health and safety of our employees, in consultation with our works
council representatives. At the same time I have been witnessing a remarkable solidarity:
employees are supporting each other. That is what sets your Company apart – taking on
responsibility as a key member of society.
Optimism secures success – and success secures the future.
Dear Shareholders,
We firmly believe that the far-reaching technological transformation will strengthen our business
model.
We are systematically further developing our highly complex and digitally connected vehicles
in the interests of our customers and society. We have the capability, the ambition and the
determination to be a pioneer in the age of new mobility – and, at the same time, to remain
an attractive and safe investment for you, our shareholders.
I invite you to accompany the BMW Group on our continued path towards the future.
Oliver Zipse
Chairman of the Board of Management
22
BMW AG Stock and
Capital Markets
in 2019
BMW AG STOCK
AND CAPITAL
MARKETS
IN 2019
Top ratings unchanged
Dividend payout ratio increases
www.bmwgroup.com / ir
Ratings remain at top level
The BMW Group continues to be the best-rated auto-
mobile manufacturer in Europe.
Moody’s has given BMW AG a long-term rating of A1
(stable outlook) since January 2017. The short-term
rating is P-1. The overall positive assessment reflects
the launch of attractive products in conjunction with
the current model offensive, the excellent positioning
of the BMW Group with respect to the challenges
faced by the automobile industry and its consistently
strong operating performance and robust financial and
capital structure. The rating agency Standard & Poor’s
has given BMW AG a long-term rating of A+ (negative
outlook) and a short-term rating of A-1.
These rating assessments are underpinned by the
BMW Group’s dependable financial profile and excel-
lent creditworthiness. Consequently, the Company not
only has good access to international capital markets,
but also benefits from attractive refinancing conditions.
Company rating
Non-current financial liabilities
Current financial liabilities
Outlook
Moody’s
Standard &
Poor’s
A1
P -1
A+
A -1
stable
negative
To Our Shareholders Dividend and payout ratio
In view of the Group’s good earnings performance,
the Board of Management and the Supervisory Board
will propose to the Annual General Meeting that
BMW AG’s unappropriated profit of € 1,646 million
(2018: € 2,303 million) be used to pay a dividend of
€ 2.50 per share of common stock (2018: € 3.50) and
a dividend of € 2.52 for each share of preferred stock
(2018: € 3.52). The payout ratio for 2019 therefore
stands at 32.8 % (2018: 32.0 %).
23
BMW AG stock
• 09
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
2019
2018
2017
2016
2015
601,995
601,995
601,995
601,995
601,995
73.14
77.75
58.70
70.70
96.26
69.86
86.83
90.83
77.71
88.75
92.25
65.10
97.63
122.60
75.68
56,867
56,127
55,605
55,114
54,809
55.05
67.85
47.54
2.50 2
2.52 2
7.47
7.49
3.90
90.92
62.10
82.50
60.70
3.50
3.52
10.60 5
10.62 5
4.12
87.87 5
74.64
78.89
67.29
4.00
4.02
13.07
13.09
6.78
82.30
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
65.11
1 Xetra closing prices.
2 Proposed by management.
3 Weighted average number of shares for the year.
4 Stock weighted according to dividend entitlements.
5 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
24
Financial Calendar
Contacts
FINANCIAL CALENDAR
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 89 382-2 53 87
+ 49 89 382-1 46 61
Fax
ir@bmwgroup.com
E-mail
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
www.bmwgroup.com / ir.
www.bmwgroup.com.
www.bmw.com,
www.rolls-roycemotorcars.com and
www.mini.com,
www.bmw-motorrad.com.
2020
18 March 2020
Annual Accounts Press Conference
19 March 2020
Analyst and Investor Conference
6 May 2020
Quarterly Statement to 31 March 2020
14 May 2020
Annual General Meeting
5 August 2020
Quarterly Report to 30 June 2020
4 November 2020
Quarterly Statement to 30 September 2020
2021
17 March 2021
Annual Report 2020
17 March 2021
Annual Accounts Press Conference
18 March 2021
Analyst and Investor Conference
7 May 2021
Quarterly Statement to 31 March 2021
12 May 2021
Annual General Meeting
3 August 2021
Quarterly Report to 30 June 2021
3 November 2021
Quarterly Statement to 30 September 2021
To Our Shareholders
2
Combined
Management
Report
General Information
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
COMBINED MANAGEMENT
REPORT
Page 26 General Information and Group Profile
Page 26 Organisation and Business Model
Page 28 Research and Development
Page 31 Production Network
Page 38 Purchasing and Supplier Network
Page 39 Workforce
Page 41 Sustainability
Page 43 Cooperation Agreements and Partnerships
Page 44 Management System
Page 48 Report on Economic Position
Page 48 General and Sector-specific Environment
Page 52 Overall Assessment by Management
Page 53 Comparison of Forecasts for 2019 with Actual Results in 2019
Page 64 Review of Operations
Page 64 Automotive Segment
Page 71 Motorcycles Segment
Page 73 Financial Services Segment
Page 76 Comments on Financial Statements of BMW AG
Page 82 Report on Outlook, Risks and Opportunities
Page 82 Outlook
Page 88 Risks and Opportunities
Page 101 Internal Control System Relevant for Accounting
and Financial Reporting Processes
Page 102 Disclosures Relevant for Takeovers and Explanatory Comments
26
General Information
and Group Profile
Organisation and
Business Model
GENERAL
INFORMATION
AND GROUP
PROFILE
Substantial upfront expenditure for
future-oriented projects
Production running at full swing
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.
On 10 March 2020, the Financial Statements of
BMW AG were drawn up by the Board of Manage-
ment and the Board of Management granted approval
for publication of the Group Financial Statements.
Based on current developments regarding the spread
of the coronavirus, the Board of Management on
16 March 2020 adjusted the original outlook for the
BMW Group, the assumptions regarding the devel-
opment of the global economy and the economic
risks and opportunities for the financial year 2020
in the Combined Management Report, as well as
the statement regarding the Events after the end of
the reporting period. On the same day, the Board of
Management again drew up the Financial Statements
of BMW AG and once again gave approval for the
publication of the Group Financial Statements.
General information on the BMW Group is provided
below. There have been no significant changes to the
Group’s structure compared to the previous year.
Based in Munich, Germany, Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) is the parent Company
of the BMW Group, which is the most successful maker
of automobiles and motorcycles in the premium seg-
ment worldwide. With BMW, MINI and Rolls-Royce,
the BMW Group owns three of the best-known pre-
mium brands in the automotive industry. In addition
to a strong market position in the premium segment
of the global motorcycles sector, the BMW Group is
also well-positioned in the financial services business.
The BMW Group comprises BMW AG itself and all
subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible
for managing the Group, which is sub- divided into
the Automotive, Motorcycles and Financial Services
operating segments. The Other Entities segment
primarily comprises holding companies and Group
financing companies.
The BMW Group sets itself clear targets in terms of sus-
tainable, individual mobility, resource-efficient value
creation, the continued development of its workforce
potential and its own social commitment. Sustain-
ability is therefore an integral part of the Group’s
business model and plays a vital role in ensuring its
viability going forward.
Combined Management Report 27
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 and Adventure segments as well as scooter
models for the Urban Mobility segment. BMW Motor-
rad also offers a broad range of equipment options to
enhance rider safety and comfort. The Motorcycles
business sales network is organised similarly to that
of the automobiles business. Currently, BMW motor-
cycles are sold by more than 1,200 dealerships and
importers in over 90 countries.
Financial Services segment
The BMW Group is a leading provider of financial
services in the automobile sector. These services are
offered in almost 60 countries worldwide via com-
panies and cooperation arrangements in place with
local financial service providers and importers. The
segment’s main business comprises credit financ-
ing 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 and working together with Alphabet coop-
eration partners, the BMW Group’s international
multi-brand fleet business provides financing and
comprehensive management services for corporate
car fleets in 20 countries. The segment also supports
the BMW Group’s dealership organisation by financ-
ing dealership vehicle inventories.
The BMW Group operates on a global scale and
employed a workforce of 133,778 people worldwide
at the end of the year. In 2019, the BMW Group
strengthened its position as one of the world’s most
attractive employers. Its leading role in terms of
sustainability contributes to employee loyalty within
the BMW Group and is one of the reasons for the low
staff attrition rate.
The BMW Group’s underlying principle in all aspects
of corporate strategy is its customer-oriented approach.
In its ongoing efforts to develop its products, brands
and services, the BMW Group is currently focusing
on new technologies such as alternative drivetrains,
digitalisation, connectivity and autonomous driving.
Presentation of segments
In order to provide a better insight into the Group as a
whole, this report also contains separate presentations
of the operating segments Automotive, Motorcycles
and Financial Services.
Automotive segment
The BMW brand caters to a wide variety of customer
requirements. Its portfolio encompasses a broad range
of models, starting with the premium compact class
and extending – via the premium mid-class – through
to the ultra-luxury class. Alongside all-electric mod-
els such as the BMW i3, it also offers its customers
state-of- the-art plug-in hybrids and a whole array
of vehicles driven by highly efficient combustion
engines. To gether with its extremely popular X-model
family and high-performance BMW M range, the
BMW Group meets the varying needs and wishes of
its customers worldwide.
The MINI brand promises outstanding driving plea sure
in the premium small car segment and, apart from its
highly efficient combustion-engine-driven models,
also offers plug-in hybrid and all-electric drivetrains.
Rolls-Royce is the ultimate marque in the ultra-luxury
segment, boasting a tradition that stretches back over
more than 100 years. Rolls-Royce Motor Cars spe-
cialises in bespoke customer specifications and offers
the very highest level of both quality and service.
The global sales network of the BMW Group’s automo-
bile business currently comprises around 3,500 BMW,
1,600 MINI and 150 Rolls-Royce dealerships. Within
Germany, sales are conducted through branches of
the BMW Group and independent authorised dealer-
ships. Sales outside Germany are handled primarily
by subsidiary companies and by independent import
companies in some markets.
28
General Information
and Group Profile
Organisation and
Business Model
Research and
Development
Research and Development
www.bmwgroup.com / innovation
A major factor in the enduring success of the
BMW Group is its consistent focus on the future. Inno-
vation is 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. Research and development (R&D) are
therefore of major importance for the BMW Group
in ensuring its long-term commercial success as a
premium manufacturer.
In its development of new technologies, the BMW Group
focuses on the topics of emissions- reducing drivetrain
systems, digitalisation and autonomous driving with
the aim of creating completely new experiences and
future ways of travelling. A key prerequisite for success
both now and in the future is the ability to anticipate
customer needs and wishes in all fields of technol-
ogy and implement developments in a way that adds
value for the customer. However, as a premium manu-
facturer, the BMW Group is driven by the aspiration
to exceed customer expectations in every respect.
With this approach, the BMW Group strives to find
outstanding solutions for the overall (mobility) needs
of its customers.
The BMW Group addresses the key trends shaping
tomorrow’s individual mobility via the central topics
of Design, Autonomous, Connectivity, Electrified and
Services.
1. Design
The BMW Group sees design as the characteristic
combination of aesthetics and technology. Out-
standing design involves focusing keenly on peo-
ple and their needs. Ground-breaking design
underlines the inimitable character of each new
vehicle, thereby strengthening all of the Group’s
brands.
2. Autonomous
Since 2018, the BMW Group has been pooling its
expertise with the aim of developing state-of-
the-art driver assistance systems in its own devel-
opment centre. The goal is to create an open
platform for highly and fully automated driving
that will serve as an industry standard going
forward. Today, the latest generation of driver as-
sistance systems already supports customers in
a variety of driving situations. However, “safety
first” always has the foremost priority in all
development work performed.
In July 2019, the BMW Group and Daimler AG
signed an agreement on long-term strategic coop-
eration in the field of automated driving. The
two companies intend to jointly develop the next
generation of technology for driver assistance
systems and automated driving on motorways as
well as automated parking features. The coope r-
ation is open for further OEM and technology
partners and the results of this collaboration
will also be offered to other OEMs for licensing.
3. Connectivity
The demands and needs of customers for mod-
ern, digital mobility are the top priority for the
BMW Group. One of the most important effects
of digitalisation in the automotive industry is
that the vehicle itself has become focal point of
the digital customer experience. The BMW Group
prepared itself at an early stage in this area.
With BMW Connected and the growing digital
offerings, the Company is prepared for the ex-
pectations and wishes of its customers. In this
regard, the focus is not just on the develop-
ment and integration of new technologies and
services for the vehicle, but on customers and
their contemporary demands. Digital services,
which customers are used to, should be avail-
able seamlessly and without restrictions even out-
side of the vehicle.
The ability to use services from the BMW Group
nearly everywhere at all times is the prerequi-
site for a digital services offering that is solely fo-
cused on the customers and their individual
needs. This includes, for example, personalised
and context-based information in the vehicle.
For customers of the BMW Group it is very easy
to keep the vehicle digitally up-to-date and to
tailor the vehicle to customers’ individual wishes
over the entire life cycle. With the Remote Soft-
ware Update, the vehicle can always be updated
with the latest software, functions are continu-
ously expanded and digital services can be booked
at any time. In this way, the security and quality
of the vehicle is contin ually improved. BMW dri vers
can therefore keep their vehicles up to date as they
are accustomed to from the smartphone world.
Combined Management Report
29
Due to its role as a technology carrier and its en-
dur ing sales success, the BMW i3 is also being
developed to the next level. Launched at the end of
2019, the MINI Cooper SE* is a further all- electric
vehicle that complements the BMW Group’s range
of electrified models. Over 90,000 registered
prospective customers (as of 2019) reflect the avid
interest of consumers in this first all-electric
MINI model. Rolls-Royce Motor Cars is also work-
ing hard on developing an electric vehicle. In line
with the expectations of its customers, the brand
will immediately focus on manufacturing all-
electric models.
The BMW Group’s range of models includes highly
efficient combustion engines as well as state-of-
the-art plug-in hybrids and all-electric drivetrains.
This broad array of options enables the Group to
meet the varying requirements and wishes of its
customers in different regions of the world while
at the same time making an effective contribution
to cutting CO2 emissions. Regardless of the type
of drivetrain the customer chooses, all current and
future models, each with their own specific
characteristics, will feature the driving pleasure
typical of the brand.
5. Services
The BMW Group aims to be one of the leading
providers of premium mobility services going
forward. In order to do so, it is essential to have a
clear understanding of the needs of customers
worldwide. This knowledge is the basis for offer-
ing customers an attractive, comprehensive range
of services in this field, too. These include easy-
to-use, digitally supported mobility services
that also feature bring-and-collect services or help
customers find open parking spaces in urban
environments. In order to reinforce this strategic
field, the BMW Group founded the joint venture
YOUR NOW together with Daimler AG during the
period under report. Further information is pro-
vided in the section Cooperation Agreements
and Partnerships.
With digital services such as on-street parking or
digital charging services, which are available to
book over the BMW ConnectedDrive Store, it has
been possible since 2014 to constantly customise
the vehicle toward individual preferences. The next
step for more flexibility involves offering addi-
tional vehicle functions after purchase, such as a
high-beam assistant or driver assistant system,
Active Cruise Control (ACC). The expanded, cus-
tomer-oriented and digital offerings of the
BMW Group make it possible to update the vehi-
cle for many years with the newest functions.
Therefore, customers do not need to decide about
specific optional equipment at purchase, but
they can regularly customise their vehicle based
on individual needs.
Together with automated driving, the systematic
expansion of connectivity on the path towards a
digital and emissions-free future is one of the cen-
tral areas of action, with which the BMW Group
is shaping the transformation of the mobility in-
dustry in line with its corporate strategy.
4. Electrified
During the 2019 reporting period, the BMW Group
reached a further milestone with the delivery
of its 500,000th electrified automobile. With 11
elec tri fied models in its range (as of 2019), the
BMW Group is among the world’s leading providers
of electric mobility. Since 2016, the Company
has been the market leader for electrified vehicles
in Germany and also occupies a top position
not only in Europe, but worldwide.
Its many years of experience have given the
BMW Group a broad and sound base of knowl-
edge in the field of electric mobility. On this
basis, the Company develops the drivetrain tech-
nology such as the motor, the power electronics
and also the battery, including the battery cell it-
self, guarantee ing the typical driving charac-
teristics for its electrified vehicles that customers
associate with the brand.
In 2020, the BMW X3 will be the first BMW Group
model to be available in four different drive-
train versions: with an efficient diesel or petrol
engine, as a plug-in hybrid, and with an all- elec tric
powertrain system in the form of the BMW iX3*.
The BMW iX3 is the first model to benefit from a
new generation of highly efficient BMW electric
drivetrains, which enables a new balance between
range and battery size.
* Fuel
consumption
and CO2 emis-
sions informa-
tion are available
on page 70.
30
General Information
and Group Profile
Organisation and
Business Model
Research and
Development
Production Network
Battery cell competence centre opened
The BMW Group has combined its wealth of experi-
ence in the field of e-mobility with its wide-ranging
knowledge of battery cells to form a new competence
centre in Munich. It is tasked with continuing to
develop battery cell technology and master the
processes required for cell production. Based on
current technology, the aim is to significantly increase
the energy density of battery cells and thus also the
range for customers.
The further development of battery cell technology
is a key success factor in the BMW Group’s electric
offensive strategy, enabling it to have a direct impact
on both the performance and the cost of the battery.
This holistic approach ensures that the BMW Group
is always at the cutting edge of technology while
simultaneously covering the entire value chain,
including research and development, assembly and
design of battery cells. Swift decision-making and
comprehensive collaboration are making it possible
to develop battery cells in a complete, transparent
and sustainable manner. Moreover, it is crucial to
take recycling into account from the very beginning.
Sustainability is also a key factor for the expansion of
electric mobility. For the BMW Group, responsible raw
material extraction and processing starts at the very
beginning of the value chain. Supply chains for the
upcoming fifth generation of high-voltage electrical
storage systems have also been restructured, including
the plan to purchase cobalt and lithium for battery
cells directly with effect from 2020. The strategy will
provide complete transparency regarding the origin
of these two essential raw materials for manufactur-
ing batteries. Further information is available in the
Sustainable Value Report at
www.bmwgroup.com / svr.
With the opening of the competence centre, the
BMW Group is not only setting the future strategic
course in technological terms, it is also securing jobs
and key qualifications in the long term.
BMW i Hydrogen NEXT presented
The BMW Group assumes that various alternative
drivetrain systems will coexist in future years, as the
mobility requirements of customers worldwide cannot
be met by one solution alone. Hydrogen-powered vehi-
cles could become an important alternative to, as well
as a supplement for, battery-electric powered vehicles.
This diversity in the field of electrified drivetrain tech-
nologies, which also includes plug-in hybrids alongside
highly efficient combustion engines, underlines the
BMW Group’s commitment to offering its customers
tailor-made solutions that satisfy their own individual
mobility needs. In 2019, the BMW Group presented a
further milestone in this strategy at the IAA with its fuel
cell-powered development vehicle BMW i Hydrogen
NEXT. This innovative vehicle provides an initial
preview of a small series of hydrogen fuel cell electric
drivetrains based on the current BMW X5.
The BMW Group has already demonstrated the
practical viability of the technology. Since 2013, the
BMW Group and the Toyota Motor Corporation have
been collaborating on the joint development of a
powertrain system based on hydrogen fuel cell tech-
nology. Since summer 2015, BMW Group researchers
have been testing a small fleet of BMW 5 Series GT
hydrogen fuel cell prototypes with a jointly developed
powertrain system.
Global research and innovation network expanded
At 31 December 2019, more than 15,700 people in
12 countries were working in the BMW Group’s global
research and innovation network. The following tables
summarise the key financial figures for research and
development:
BMW Group performance indicators relating
to research and development expenses
• 10
in € million
2019
2018
Research and development expenses
Amortisation
New expenditure for capitalised
development costs
Research and development expenditure
5,952
– 1,667
2,134
6,419
5,320
– 1,414
2,984
6,890
2019
20181
Change in
%pts1
Research and development
expenditure ratio 2
Capitalisation rate 3
6.2
33.2
7.1
43.3
– 0.9
– 10.1
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for
the prior year have been adjusted due to changes in presentation of selected items, which
are not material overall.
2 Research and development expenditure as a percentage of Group revenues.
3 Capitalised development costs as a percentage of research and development expenditure.
see
note 8
Further information on research and development
expenditure is provided in
note 8 to the Group
Financial Statements.
Combined Management Report Production Network
The BMW Group’s production system is characterised
by its high flexibility and efficiency, enabling it to
respond rapidly to changing market situations and fluc-
tuating regional demand. The BMW Group’s production
expertise also makes a contribution to its profitability.
Its production network leverages innovative technolo-
gies from the fields of digitalisation and Industry 4.0,
including applications from the worlds of virtual reality,
artificial intelligence and 3D printing. Standardised
processes and structures ensure consistent premium
quality throughout the production system. At the
same time, the BMW Group offers its customers a high
degree of individualisation.
Sustainability in production and along the value chain
has played a fundamental role for the BMW Group
Vehicle production of the BMW Group by plant
• 11
in units
Spartanburg
Dingolfing
Regensburg
Leipzig
Oxford
Munich
Rosslyn
Rayong
Chennai
Araquari
Goodwood
San Luis Potosí
Tiexi (BBA) 2
Dadong (BBA) 2
Born (VDL Nedcar) 3
Graz (Magna Steyr) 3
Partner plants
Group
31
for many years. The Company has been continually
reducing the use of resources such as energy and water
and produces less waste and CO2 emissions. In 2019
the production of a vehicle required on average
only half the resources and CO2 as in 2006. From
2020 onwards all plants operated directly by the
BMW Group globally as well as those of the joint
venture BMW Brilliance Automotive in China will
obtain energy exclusively from renewable sources.
High capacity utilisation throughout the entire
production network
The Group set a new production volume record in the
year under report, totalling 2,564,025 1 BMW, MINI
and Rolls-Royce brand vehicles (2018: 2,541,534 1
units; + 0.9 %). The figure comprised 2,205,841 1 BMW
(2018: 2,168,496 1 units; + 1.7 %), 352,729 MINI (2018:
368,685 units; – 4.3 %) and 5,455 Rolls-Royce (2018:
4,353 units; + 25.3 %) brand vehicles.
2019
2018
Change in %
Proportion of
production in %
411,620
284,907
255,804
230,284
222,340
221,077
69,463
23,700
8,976
8,208
5,455
25,538
250,241
286,268
174,097
52,231
33,816
356,749
328,862
319,592
244,248
234,501
157,799
50,224
15,612
10,956
7,752
4,353
308
299,939
191,888
211,660
64,431
42,660
2,564,025
2,541,534
15.4
– 13.4
– 20.0
– 5.7
– 5.2
40.1
38.3
51.8
– 18.1
5.9
25.3
–
– 16.6
49.2
– 17.7
– 18.9
– 20.7
0.9
16.1
11.1
10.0
9.0
8.7
8.6
2.7
0.9
0.3
0.3
0.2
1.0
9.8
11.2
6.8
2.0
1.3
100.0
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 536,509 units, 2018: 491,872 units).
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
3 Contract production.
Expansion of the international production network
In its efforts to remain successful going forward,
the BMW Group continues to invest in expanding
existing and establishing new production capacities,
thereby increasing its manufacturing capability and
enhancing the flexibility of its production network.
The BMW Group endeavours to achieve an even dis-
tribution of production and deliveries in the various
regions of the world.
In 2019, the BMW Group opened a new plant in
San Luis Potosí (Mexico). The new facility, which
has the capacity to manufacture up to 175,000 units
per year, produces the BMW 3 Series Sedan, thus sig-
nificantly boosting production flexibility within the
network. The BMW 3 Series Sedan is also produced
in Germany and China.
The BMW Brilliance Automotive Ltd, Shenyang (BBA)
joint venture in China is currently building a new facil-
ity on the premises of the Tiexi plant and carrying out
major extensions to its automobile plant in Dadong.
32
General Information
and Group Profile
Organisation and
Business Model
Production Network
Production of electrified automobiles in the
existing production system
The BMW Group is integrating the production of
fully and partially electrified vehicles in its existing
production system, enabling it to ensure the long-
term capacity utilisation of the production network,
while at the same time being able to respond swiftly
and flexibly to customer requirements. In 2019, the
Group produced electrified models at 11 different
locations worldwide.
The BMW Group plants in Germany play a leading
role in integrating e-mobility throughout the Group’s
production network. The technologies used to produce
electric powertrain components and high-voltage
batteries are developed at the Group’s prototype con-
struction centre in Munich. As a competence centre
for electric powertrain systems, the Dingolfing site
acts as lead production plant, and the e-motors for
the BMW Group’s electrified vehicles are manufac-
tured there. The corresponding battery modules and
high-voltage batteries are produced at the Group’s
three battery factories in Dingolfing ( Germany),
Spartanburg (USA) and Shenyang (China). In Thailand,
the BMW Group works closely with a partner that
manufactures batteries for electrified vehicles pro-
duced locally.
Its ability to produce electric powertrain systems,
batteries and prototypes for battery cells in-house
gives the BMW Group a competitive edge that enables
it to secure valuable knowledge of new technologies,
gain important system expertise and leverage cost
advantages.
The BMW Group combines its wealth of experience
and broad knowledge of battery cell technologies in
its own new competence centre, which was opened
in Munich in 2019.
Combined Management Report International production network
The production network comprises 31 locations in
15 countries, 20 of which are BMW Group plants.
Three of these locations belong to the BMW Brilliance
Automotive joint venture in Shenyang, China.
A further eight production sites are operated either
by partners or contract manufacturers. The same
standards of quality, safety and sustainability apply
at all locations within the BMW Group’s production
network worldwide.
33
Locations
BmW Group plAnts
Araquari
Berlin
Chennai
Dingolfing
Eisenach
Hams Hall
Landshut
Leipzig
Manaus
Munich
Oxford
Rayong
Regensburg
Rosslyn
San Luis Potosí
Spartanburg
Steyr
Swindon
Wackersdorf
Country
Brazil
Germany
India
Germany
Products
BMW 3 Series, BMW X1, BMW X3, BMW X4, BMW X5
BMW motorcycles, Maxi-Scooters, car brake discs
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X7, MINI Countryman
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW 8 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
Mexico
USA
Austria
United Kingdom
Germany
Lightweight construction components, electric drivetrain systems and special engines
Petrol engines for BMW, BMW i, MINI
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, MINI Clubman
BMW 3 Series, BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X5, BMW X6
Motorcycles
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series
BMW X1, BMW X2, BMW M
BMW X3
BMW 3 Series
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, 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 Manufacturing Plant Goodwood
United Kingdom
Rolls-Royce Phantom , Ghost, Wraith, Dawn, Cullinan*
* Fuel consumption and CO2 emissions information are available on page 70.
34
General Information
and Group Profile
Organisation and
Business Model
Production Network
The plants in Shenyang (China) are operated by the
BMW Brilliance Automotive (BBA) joint venture. The
Shenyang production location comprises the Dadong
and Tiexi automobile plants. Tiexi also has an engine
plant with an adjacent foundry and battery factory.
Locations
Joint venture BmW BrilliAnce
AUTOMOTIVE HOlDINGS lTD.
Dadong (Shenyang)
Tiexi (Shenyang)
Tiexi (Shenyang)
Country
China
China
China
The BMW Group’s four automobile partner plants in
Jakarta (Indonesia), Cairo (Egypt), Kaliningrad (Russia)
and Kulim (Malaysia) primarily serve their respective
regional markets.
Locations
PARTNER PlANTS
Jakarta
Cairo
Kaliningrad
Kulim
Country
Indonesia
Egypt
Russia
Malaysia
Products
BMW 5 Series
BMW X3
BMW 1 Series, BMW 2 Series, BMW 3 Series
BMW X1, BMW X2
Petrol engines, production of core engine parts
Products
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
MINI Countryman
BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, BMW X7
BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, BMW X7
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5
MINI Countryman
Combined Management Report The BMW Group also awards contracts to external
partners for the production of specific types of
vehicle as well as motorcycles. During the period
under report, Magna Steyr Fahrzeugtechnik pro-
duced the BMW 5 Series Sedan and the BMW Z4 in
Graz ( Austria).
Moreover, various MINI models and the BMW X1 were
assembled at VDL Nedcar in Born (the Netherlands).
BMW motorcycles were also manufactured by the
TVS Motor Company in Hosur (India) and the Loncin
Motor Company in Chongqing (China).
Locations
Country
Products
35
MINI Convertible, MINI Countryman
BMW X1
Motorcycles
BMW 5 Series
BMW Z4
Motorcycles
contrAct production
Born
Chongqing
Graz
Hosur
The Netherlands
China
Austria
India
Motorcycle production up sharply
In 2019, a total of 187,116 motorcycles rolled off produc-
tion lines at five different locations worldwide (2018:
162,687 units; + 15.0 %). The significant increase was
primarily due to the fact that the production of BMW
scooters at the Chinese partner Loncin Motor Co., Ltd
in Chongqing now covers the full product range. In
September 2019, BMW Motorrad celebrated 50 years
of motorcycle production at the Berlin plant together
with over 10,000 visitors.
36
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
12
Countries with
research and development
locations
Headquarters
Canada
usA
Mexico
United Arab
Emirates
Brazil
Argentina 1
South Africa
New Zealand
Russia
India
China
South Korea
Japan
Hong Kong
Thailand
Malaysia
Singapore 1
Indonesia 1
Australia
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 San Luis Potosí,
Mexico
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture – 3 plants)
1 Sales locations only.
Partner plants
outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kulim, Malaysia
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
BMW Technology, Chicago, USA
BMW Group IT Technology Office,
Greenville, USA
BMW Group IT DevOps Hub,
Rosslyn, South Africa
BMW do Brasil, Araquari,
Brazil
BMW Group Technology Office Tel Aviv,
Tel Aviv, Israel
BMW Group R&D Center Seoul,
Seoul, South Korea
Combined Management Report
BMW Group locations in Europe
• 13
37
Norway
Germany
The Netherlands
uk
Ireland
Belgium
France
Switzerland
Spain
Portugal
Italy
Slovenia 1
Malta
Sweden
Finland 1
Denmark
Czech
Republic
Poland
Austria
Slovakia 1
Hungary 1
Romania 1
Bulgaria 1
Greece
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
Partner plants
in Europe
Partner plant, Born,
the Netherlands
Partner plant, Graz,
Austria
Partner plant,
Kaliningrad, Russia
Research and development
network in Europe
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Group Lightweight
Construction and Technology Center,
Landshut, Germany
BMW Group Diesel Competence
Centre, Steyr, Austria
BMW France, S. A. S.,
Montigny, France
Critical TechWorks S.A.,
Porto, Portugal
Rolls-Royce Motor Cars Ltd.,
Goodwood, UK
Sales subsidiaries
and Financial Services
locations
38
General Information
and Group Profile
Organisation and
Business Model
Purchasing and
Supplier Network
Workforce
Purchasing and Supplier Network
Further information is available in the Sustainable
Value Report 2019 online at
www.bmwgroup.com / svr.
Connecting procurement markets
The BMW Group remains committed to its strategy
of maintaining a regional balance with regard to
sales volume, production and purchasing volumes,
thereby making an important contribution to natural
hedging against currency fluctuations. In particular,
the proportion of purchase volumes attributable to the
Americas region grew in 2019, mainly due to the sig-
nificant increase in vehicle production in Spartanburg,
USA, and the start-up of the vehicle plant in San Luis
Potosí, Mexico. Growth in the region will continue in
future with the ramping up of production in Mexico.
Regional mix of BMW Group
purchase volumes 2019
• 14
in %, basis: production material
Asia / Australia 6.5
Rest of Western
Europe 16.8
19.0
North America
2.3 Other
33.4
Germany
22.0 Eastern Europe
Ensuring access to resources in a volatile
environment
The international orientation of the Purchasing and
Supplier Network provides the BMW Group with good
access to global procurement markets. It is responsible
for the worldwide procurement and quality assurance
of production materials, raw materials, capital goods
and services as well as the manufacturing of vehicle
components produced in-house. External suppliers
are selected systematically on the basis of competitive-
ness according to the criteria of operating excellence,
quality, innovation, flexibility, cost and sustainability.
Sustainability and resource efficiency
along the value chain
The BMW Group attaches great importance to compli-
ance with environmental and social standards as well
as to the efficient use of resources along the entire
value chain.
For these reasons, sustainability criteria based on
the BMW Group Sustainability Standard are firmly
embedded in its purchasing processes. These criteria
also play an essential role in the selection and assess-
ment of suppliers and apply across the entire supply
chain. Sustainability management therefore creates
greater transparency for both the BMW Group and
its suppliers.
The BMW Group is also involved in initiatives aimed at
standardising sustainability requirements and estab-
lishing verification mechanisms for supply chains in
connection with critical raw materials.
Example: cobalt
Since cobalt is a key component for producing
electrified vehicles, the BMW Group is working to
achieve the greatest possible level of transparency in
the supply chain. The Group is in continuous contact
with battery cell manufacturers and demands disclo-
sure of the origin of this critical raw material. The
BMW Group has also made its information on the
subject of cobalt, such as the smelters and countries
of origin, publicly available and updates it regularly.
The next step will be to restructure the supply chains
used to acquire cobalt. From 2020 onwards, the Group
plans to purchase cobalt for fifth-generation battery
cells directly from mines in Morocco and Australia
and make it available to its supply chain partners. The
strategy increases transparency regarding the origin
of the raw material.
Combined Management Report Workforce
www.bmwgroup.com / en / responsibility / employees
BMW Group apprentices at 31 December
• 16
39
5,000
4,700
4,613
4,750
4,964
4,801
2,500
0
2015
2016
2017
2018
2019
High level of investment in employee qualification
Spending on employee training and development
totalled € 370 million and therefore remained at a
similar level to the previous year (2018: € 373 mil-
lion; – 0.8 %). The BMW Group consistently promotes
the principle of lifelong learning. The availability of
innovative, requirements-based learning opportuni-
ties enables employees to play an active role in shaping
the future of the BMW Group. During 2019, the range
of training courses on offer for key strategic areas such
as electric mobility, robotics and data analytics was
therefore expanded, new learning formats introduced
in conjunction with the digitalisation initiative, and
a greater emphasis placed on improving manager
skill sets, in particular those relevant for leadership
in the digital age.
Workforce at previous year’s level
At 31 December 2019, the BMW Group employed a
workforce of 133,778 people worldwide. The number
of employees was thus at a similar level to the end of
the previous year (2018: 134,682 employees; – 0.7 %).
During 2019, natural fluctuation was used to lever-
age competencies to focus even more keenly on the
major topics of the future. Specialists and IT experts
were hired in future-oriented fields such as artificial
intelligence and autonomous driving, electric mobility,
smart production and logistics as well as data analysis,
software architecture, agile software development and
innovative drivetrain systems. The global production
network was also further expanded.
BMW Group employees
• 15
Automotive
Motorcycles
Financial Services
Other
Group
31. 12. 2019
31. 12. 2018
Change in %
121,208
121,994
3,658
8,798
114
3,709
8,860
119
133,778
134,682
– 0.6
– 1.4
– 0.7
– 4.2
– 0.7
Realignment of vocational training
Started in 2018, the realignment of vocational training
continued to make good progress with the implemen-
tation of various strategic action packages, aimed in
particular at bringing about the digital transformation
of vocational training based on three pillars: modern
and mobile equipment, new digital collaboration and
learning platforms, and a broadly based system of
talent development specifically tailored to apprentices.
In addition to the basic range of skills still needed,
emphasis is also being placed on promoting the acqui-
sition of new technical and interdisciplinary expertise
across 30 vocations and 17 dual courses of study. The
latter were expanded to include the bachelor-degree
programmes Industry 4.0 Computer Science, Artificial
Intelligence and Production and Automation. The
total number of apprentices and participants in the
BMW Group’s development programmes for young
talent remained at a high level during the year under
report at 4,801 (2018: 4,964; – 3.3 %).
40
General Information
and Group Profile
Organisation and
Business Model
Workforce
Sustainability
BMW Group remains a highly attractive employer
Again in 2019, the BMW Group was ranked among
the world’s most attractive employers. In the latest
“World’s Most Attractive Employers” ranking pub-
lished by the agency Universum, the BMW Group
was once again named the most attractive automotive
company in the world.
In 2019, BMW Group China was also selected by busi-
ness students participating in the locally conducted
Universum student survey as the most attractive
employer in the automotive industry. The renowned
Zhaopin “Most Attractive Employer Award” named
the BMW Group the most attractive employer overall.
The BMW Group also came out on top again in
Trendence’s “Young Professional Barometer Germany”.
It also received the “Most Attractive Employer of the
Last 20 Years” award for the most number one rank-
ings over this period. Moreover, the Group matched its
previous year’s performance in the Universum study
“Young Professionals Germany”, finishing first, second
and third in the categories Business, Engineering and
IT respectively. Based on the overall results of studies
across all sectors, the BMW Group continued to be
one of the world’s highest-ranked companies in 2019.
Employee attrition rate at BMW AG*
• 17
as a percentage of workforce
7.0
3.5
0
2.70
2.64
2.78
2.08
3.39
2015
2016
2017
2018
2019
* Number of employees on unlimited employment contracts leaving the Company.
Diversity as a competitive factor
Diversity is a key factor in ensuring the BMW Group’s
continued competitiveness. 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. In this context, emphasis is placed
on the three aspects of gender, cultural background
and age / experience. In 2019, the BMW Group again
implemented a broad array of measures in its efforts
to promote diversity. Further information on this topic
is also provided in the Sustainable Value Report 2019.
www.bmwgroup.com / svr
The percentage of women in the BMW Group work-
force as a whole was 19.8 % (BMW AG: 16.3 %), surpass-
ing the internal target range of between 15 and 17 %.
The number of women in management functions rose
to 17.5 % across the BMW Group (BMW AG: 15.8 %).
During the year under report, female representation
in the BMW Group’s trainee and student development
programmes stood at approximately 39 % and 28 %
respectively.
At the same time, the workforce is becoming increas-
ingly international. Employees from over 120 countries
work together successfully for BMW AG. Moreover, a
balanced age structure in the workforce encourages
an exchange of ideas and knowledge between gen-
erations and plays a key role in reducing the loss of
know-how when valuable employees retire.
Proportion of female employees in manage-
ment functions at BMW AG / BMW Group*
• 18
BMW Group 14.3
BMW AG 12.5
15.3
13.3
16.0
14.0
17.2
15.1
17.5
15.8
in %
18
9
0
2015
2016
2017
2018
2019
*Since 2017 including maternity leave.
Combined Management Report 41
Sustainability
www.bmwgroup.com / responsibility
The BMW Group sees itself as a pioneer of sustain-
ability, not only within the automotive industry, but
across other sectors, too. Long-term thinking and
responsible action have long been the cornerstones of
the BMW Group’s distinct identity and its economic
success. As early as 1973, the BMW Group was the
first company in the automotive sector to appoint an
environment officer. Since 2001, the BMW Group has
been committed to the United Nations Environment
Programme, the UN Global Compact and the Cleaner
Production Declaration. Through its sustainability
policy, the BMW Group is supporting the implemen-
tation of the UN’s Sustainable Development Goals
(SDG), which were adopted in September 2015, and
is committed to complying with the Paris Climate
Convention.
The principles and importance of managing the
business on a sustainable basis are emphasised in
the BMW Group’s corporate strategy, which includes
a clear commitment 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.
Apart from the reduction of CO2 emissions, key
components of the Group’s sustainability strategy
include industrial environmental protection, circular
economy, sustainability in the supply chain, employee
orientation and social commitment.
In order to safeguard its viability going forward, the
BMW Group’s business model is rigorously based
on the principle of sustainability. The Group works
continually on technical innovations that contribute
to solving global challenges such as climate change
and urbanisation. In this endeavour, the BMW Group
concentrates on three main topics:
— The development of products and services for
sustainable individual mobility
— The efficient use of resources along the entire
value chain
— Responsibility towards employees and society
in general
Further information on sustainability within the
BMW Group is provided in the Sustainable Value Report
www.bmwgroup.com / svr.
2019, which is published online at
The Sustainable Value Report is published together
with the Annual Report and drawn up in accordance
with the “Comprehensive” option of the standards
of the Global Reporting Initiative (GRI). This is the
highest level of transparency set out in the GRI stan-
dards, in which all relevant information and indicators
of the aspects identified as material are reported on.
The Sustainable Value Report is drawn up subject to
a limited assurance engagement in accordance with
ISAE 3000 (International Standard on Assurance
Engagements 3000 (Revised): “Assurance Engagements
other than Audits or Reviews of Historical Financial
Information”).
Based on the requirements of the German CSR Direc-
tive Implementation Act, since the financial year 2017
BMW AG has been required to publish a non-financial
declaration at both Company and Group level. The
declaration is published jointly for BMW AG and the
BMW Group as a separate combined non-financial
report within the Sustainable Value Report.
The separate combined non-financial report is avail-
able online within the Sustainable Value Report 2019
at
www.bmwgroup.com / svr.
CO2 fleet emissions
The development of sustainable products and services
is an integral part of the BMW Group’s business model.
The early use of Efficient Dynamics technologies (since
2007) across the entire fleet and the electrification of
vehicles, which continued to make good progress in
2019, have enabled CO2 emissions to be continuously
reduced. Together, these two cornerstones are essen-
tial for future compliance with statutory CO2 and fuel
consumption limits going forward.
* EU-28
The BMW Group has reduced the CO2 emissions of its
newly sold vehicles in Europe by approximately 40 %
between 1995 and 2019. In Europe*, average CO2 emis-
sions were 127 g CO2 / km (2018: 128 g CO2 / km; – 0.8 %)
in the year under report. Based on this figure, the
BMW Group’s new vehicle fleet* in Europe in 2019
had an average fuel consumption of 5.0 litres of diesel
per 100 km or 6.0 litres of petrol per 100 km.
With effect from September 2018, all vehicles in the
EU were required to be approved in accordance with
the new WLTP testing cycle. However, the calculation
of CO2 fleet emissions by the EU Commission will
not be converted to WLTP until 2021. Therefore, for
reporting purposes up to and including 2020, WLTP
fleet emissions must be translated back to the previ-
ously applicable values calculated in accordance with
the outgoing New European Driving Cycle (NEDC).
Due to the changed test conditions used for WLTP
purposes, emission values are higher when translated
back to an NEDC basis (NEDC-correlated).
42
General Information
and Group Profile
Organisation and
Business Model
Sustainability
Cooperation
Agreements and
Partnerships
Production
In its efforts to reduce CO2 emissions generated by
production and thus contribute to climate protection,
the BMW Group uses energy-efficient equipment pow-
ered by renewable energy. In 2019, 87 % (2018: 79 %) of
the BMW Group’s electricity worldwide was generated
from renewable sources or were compensated through
appropriate certificates of origin. As from 2020, all the
Group’s locations worldwide are scheduled to obtain
their electricity exclusively from renewable sources.
In 2019, at 2.04 MWh per vehicle* produced, the
BMW Group further reduced the amount of energy
consumed in the production process compared with
the previous year (2018: 2.12 MWh; – 3.8 %).
Through the use of measures to boost energy efficiency
and the purchase and in-house generation of electricity
from renewable sources at BMW Group manufactur-
ing sites, production-related CO2 emissions fell by
25.0 % to 0.30 tonnes per vehicle* produced in the
year under report compared with the previous year
(2018: 0.40 tonnes).
Social engagement
Social engagement is also an integral part of the
BMW Group’s corporate identity. For many years now,
the BMW Group has firmly supported intercultural
exchange. In partnership with the UN Alliance of Civi-
lizations, the BMW Group presents the Intercultural
Innovation Award for projects the Company views as
exemplary in this field. Since 2011, each year it has
presented the “BMW Group Award for Social Com-
mitment” to employees who have made an exceptional
contribution through their outstanding volunteer work.
The Group addresses current social challenges,
primarily in areas where its expertise enables it to
make the greatest impact. The main focus here is on
problem-solving approaches that are internationally
applicable and have a tangible long-term impact by
helping people to help themselves. With this aim in
mind, the BMW Group works together with the BMW
Foundation Herbert Quandt.
BMW Foundation Herbert Quandt
The BMW Foundation Herbert Quandt is an inde-
pendent corporate foundation whose activities
contribute to the BMW Group’s social responsibility
and mission goals. The foundation endeavours to
inspire leaders worldwide to assume and continually
develop their social responsibility and political com-
mitment. Leaders are also encouraged to work for a
peaceful, just and sustainable future. With its Respon-
sible Leadership programmes, a global network and
* Efficiency indicator calculated from Scope 1 and Scope 2 CO2 emissions (market-based
method in accordance with GHG Protocol Scope 2 Guidance) of vehicle production, exclud-
ing motorcycles (adjusted for CHP losses), divided by the total amount of produced vehi-
cles, including from the joint venture BMW Brilliance Automotive Ltd., Shenyang (China),
but excluding vehicles from contract production at Magna Steyr and Nedcar.
impact-oriented investments, the BMW Foundation
Herbert Quandt supports the sustainability targets of
www.bmw-foundation.org .
the United Nations’ Agenda 2030
In 1959, Herbert Quandt secured the independence of
BMW AG, thus laying the foundation for the successful
development of the BMW Group. In recognition of his
entrepreneurial achievements, in 1970 BMW AG estab-
lished the “BMW Stiftung Herbert Quandt”, which
has meanwhile been renamed the “BMW Foundation
Herbert Quandt” with expanded endowment capital.
Further information on the topics of sustainability
and human resources within the BMW Group is avail-
able in the Sustainable Value Report 2019, which is
published online at
www.bmwgroup.com / svr.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
The BMW Group is in continual dialogue with its
numerous stakeholders, both in Germany and abroad.
Stakeholder feedback provides the BMW Group with
a clear picture of how current trends are changing
the business environment and provides key input for
the strategic decision-making process. In 2019, a total
of four dialogue events (BMW Group Dialogues) on
corporate responsibility and sustainability were held
in Tel Aviv, San Luis Potosí, Seoul and Munich. The
events addressed various topics, including product
and production responsibility, responsibility for
resources, and responsibility for future mobility.
In the course of regular materiality analysis, social
challenges are continually monitored and analysed
in order to gauge their significance from the point
of view of both external and internal stakeholders.
Top rankings in sustainability ratings
The BMW Group again achieved outstanding results
in prestigious sustainability ratings in 2019, thereby
confirming the Company’s view of its leading posi-
tion as a sustainable enterprise. In the Dow Jones
Sustainability Indices (DJSI) rating, the BMW Group
is the only German automobile manufacturer to have
been included once again in the two indices “Europe”
and “World” 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
category Leadership with a rating of A- in the year
under report. Furthermore, the Group was again
listed in the British FTSE4Good Index in 2019. The
BMW Group is also listed in the MSCI, Sustainalytics
and ISS-oekom rankings, holding a leading position
in each within the industry.
Combined Management Report 43
Spotlight
The BMW Group has signed an agreement with the
Chinese manufacturer Great Wall Motor Company
Limited to produce MINI electric vehicles via a 50:50
joint venture based in China. In addition to MINI elec-
tric vehicles, the Spotlight Automotive Limited joint
venture (Spotlight) will also produce electric vehicles
for Great Wall Motor. Apart from production, the
joint venture model includes the joint development
of battery-electric vehicles. Spotlight was founded on
27 December 2019 following approval by the Chinese
authorities.
Alongside the planned increase in the stake in BBA,
the BMW Group is expanding its presence in China
on a significant scale, thereby underlining its com-
mitment to the region.
HERE
Since the acquisition of the HERE mapping service
by BMW AG, Daimler AG and AUDI AG in 2015, the
partners have been working on high-precision digi-
tal maps that can be linked to real-time vehicle data.
These digital maps are key for the next generation
of mobility and location-based services, including
providing the basis for new assistance systems. As
an independent platform, HERE has ensured at all
stages that it remains accessible to other partners in
the automotive sector and beyond. In December 2019,
HERE announced the intention of Mitsubishi Corpo-
ration (MC) and Nippon Telegraph and Telephone
Corporation of Japan (NTT) to jointly acquire a 30 %
ownership stake in the business. Subject to regulatory
approvals, the transaction is expected to be closed
during the first half of 2020.
Cooperation Agreements and
Partnerships
In order to ensure the success of the business in the
long term, the BMW Group enters into specific coop-
eration agreements and partnerships with companies
in the automotive industry as well as technology lead-
ers in other sectors. Against a background of rapid
technological change, the aim of collaborating with
external partners is to combine expertise in order to
bring innovations to market within the shortest time
possible.
BMW Brilliance Automotive
The BMW Group intends to increase its stake in
BMW Brilliance Automotive (BBA) from 50 to 75 %.
An agreement to this effect was signed in 2018 with
the BMW Group’s venture partner, Brilliance China
Automotive Holdings Ltd. (CBA). The contractual term
of the joint venture, which was due to expire in 2028,
is to be extended up to 2040. Following approval by the
Annual General Meeting of CBA on 18 January 2019,
the closing of the agreement continues to be subject
to regulatory approvals.
YOUR NOW
On 28 March 2018, the BMW Group signed an agree-
ment with Daimler AG regarding the merger of certain
business units that provide mobility services. Follow-
ing approval by the relevant antitrust authorities, the
transaction was closed on 31 January 2019. The two
companies are now pressing ahead as planned to
re alise their joint vision of fully electric and autono-
mous on-demand mobility. The new range of mobility
services will be easy to access, intuitive to use, and cater
to customers’ needs. The cooperation comprises the
joint ventures REACH NOW (on- demand mobility and
multimodal services), CHARGE NOW (battery charg-
ing), FREE NOW (ride-hailing), PARK NOW (parking)
and SHARE NOW (car-sharing). The YOUR NOW
companies were contributed into a holding company
with effect from 31 December 2019. Based on this, the
BMW Group and the Daimler Group each have an
equal share in the holding company.
Under the YOUR NOW umbrella, BMW and Daimler
offer innovative solutions for cities and municipalities
seeking to make mobility more efficient and sustain-
able. Further information is provided in
note 2 to
the Group Financial Statements.
see
note 2
44
General Information
and Group Profile
Management System
MANAGEMENT SYSTEM
The business management system applied by the
BMW Group follows a value-based approach that
focuses on profitability, consistent growth, value
enhancement for capital providers and job security.
Capital is considered to be employed profitably when
the amount of profit generated sustainably exceeds
the cost of equity and debt capital. In this way, the
desired degree of corporate autonomy is also secured
in the long term.
BMW Group – value drivers
• 19
The BMW Group’s internal management system is
based on a multilayered structure. Operating manage-
ment occurs primarily at segment level. In order to
manage long-term corporate performance and assess
strategic issues, additional performance indicators are
taken into account within the management system at
Group level. In this context, the value added serves
as one of several indicators 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 a simplified form below.
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 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-re-
lated decisions, the system follows a project-oriented
management logic that is based on value added and
profitability performance indicators, thereby provid-
ing 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 capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or return
on equity. Specifically, return on capital employed
(RoCE) is used for the Automotive and Motorcycles
Return on capital employed
• 20
45
segments and return on equity (RoE) for the Financial
Services segment. These indicators combine a wide
range of relevant economic information, such as
profitability (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
4,499
6,182
15,513
12,420
2019
2018
2019
2018
2019
29.0
2018
49.8
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that generally do not incur interest (e. g. trade payables
and other provisions).
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis
of additional performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are the number of
vehicle deliveries and the operating return on sales
(EBIT margin: segment-related profit / loss before
financial result as a percentage of segment revenues)
as the key performance indicator for segment prof-
itability. 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.
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.
46
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
• 21
Motorcycles
Profit before financial result in € million
Average
capital employed in € million
Return on capital employed in %
2019
194
2018
175
2019
660
2018
616
2019
29.4
2018
28.4
The principal value drivers are the number of motor-
cycle deliveries and the operating return on sales
(EBIT margin: segment-related profit / loss before
financial result as a percentage of segment revenues)
as the performance indicator for segment profitability.
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. The target
is a long-term return on capital of at least 14 %.
Financial Services segment
As is common practice in the banking sector, the
Financial Services segment is managed on the basis
RoE Financial
Services
=
Profit before tax
Average equity capital
Return on equity
• 22
Profit before tax in € million
Average equity capital in € million
Return on equity in %
2019
2018*
2019
2018*
2019
Financial Services
2,272
2,143
15,146
14,522
15.0
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2018
14.8
Strategic management at Group level
Strategic management and quantification of finan-
cial implications for 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.
Combined Management Report
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 gener-
ating more value than the cost of capital.
47
Value added
Group
= earnings amount –
cost of capital
= earnings amount –
(cost of capital rate ×
capital employed)
Value added Group*
• 23
in € million
BMW Group
Earnings amount
Cost of capital (equity + debt capital)
Value added Group
2019
2018
2019
2018
2019
2018
7,369
9,898
7,812
7,279
– 443
2,619
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
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 earn-
ings amount corresponds to Group profit before tax,
ad justed for interest expense incurred in conjunction
with the pension provision and on the financial lia-
bilities 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 capi-
tal for the BMW Group in 2019 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 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 most important
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 project
decisions on periodic earnings and rates of return for
each year during the term of the project. The overall
result is a cohesive management model.
48
Report on
Economic Position
General and Sector-
specific Environment
REPORT
ON ECONOMIC
POSITION
Automobile markets down
on previous year
BMW Group automobile deliveries
nonetheless at new high level
Financial Services segment posts
record results
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
General economic environment
The global economy was impacted by a variety of
adverse factors during 2019, and the resulting 2.9 %
growth rate was the slowest recorded for years. The
economic slowdown was broadly based. Amongst
the G7 countries, Japan was the only one to record
an increase in economic output. The BRIC countries
were also unable to escape the consequences of the
slowdown, resulting in lower growth rates across
the board.
The 1.2 % growth rate recorded in the eurozone was
also down on the previous year. Although major
economies in the region continued to expand, the
pace of growth in Germany (+ 0.6 %), France (+ 1.3 %),
Italy (+ 0.2 %) and Spain (+ 2.0 %) was significantly low-
er year-on-year, whereby exports, private consumption
and a slight increase in public-sector spending con-
tributed to the positive growth rates. Despite lower
industrial production output, the unemployment rate
continued to fall and is now at its lowest level since
2008. Against a backdrop of weaker economic per-
formance and easing inflationary pressures, towards
the end of the year the European Central Bank (ECB)
decided to resume its securities purchase programme
and reduce its deposit rate further.
Economic performance in the United Kingdom (UK)
was dominated by ongoing uncertainty regarding the
terms of Brexit and hence the UK’s future relationship
with the European Union (EU). Despite a further slight
drop in the unemployment rate, private consumer
sentiment failed to improve noticeably. Public-sector
spending was increased substantially with a view to
counteracting the slowing pace of the UK economy.
Nevertheless, economic growth dropped for the fifth
consecutive year to stand at 1.4 %.
Combined Management Report 49
Although the drop in consumer demand due to the
value added tax hike was slightly greater than expect-
ed, this effect was more than offset by the even more
pronounced growth in consumer demand that had
occurred prior to the hike. Government spending was
increased on a significantly greater scale than one
year earlier, thereby boosting the domestic economy.
By contrast, exports fell year-on-year in 2019 as a
consequence of the trade disputes between the USA
and China.
Currency markets
The US dollar / euro exchange rate fluctuated between
1.09 and 1.15 US dollars to the euro during 2019, fin-
ishing at an average rate of 1.12 US dollars to the euro
for the year.
The development of the British pound’s exchange
rate over the year reflected the uncertainty of capital
markets regarding their expectations of an orderly
Brexit. As a consequence, the value of the British
currency dropped to 0.93 pounds to the euro at one
stage, compared to a high of 0.83, ultimately resulting
in an average rate of 0.88 pounds to the euro in 2019,
nearly unchanged from the previous year.
The Chinese renminbi stabilised year-on-year with an
average exchange rate of 7.73 renminbi to the euro
over the year. The Japanese yen also appreciated in
value with an average exchange rate of 122 yen to the
euro during the year under report.
Gross domestic product (GDP) in the USA was up by
2.3 % in 2019, marking the country’s tenth successive
year of economic growth. Once again, domestic demand
provided the momentum for growth. In addition to
higher spending by private households, public-sector
spending also rose significantly. Consumer sentiment
within private households was underpinned by a his-
torically low unemployment rate and rising wages. By
contrast, the level of investment by companies and
private households fell noticeably. Moreover, exports
stagnated and industrial production contracted on a
massive scale. Weak economic growth combined with
a moderate inflation rate of 1.8 % were the decisive
factors behind the US Reserve’s decision to cut interest
rates sharply during the period under report.
Growth in China came in at 6.1 % in 2019, slightly
down on the previous year. Private consumer spending
decreased year-on-year. The trade conflict with the USA
caused import prices to increase, thereby triggering a
rise in the inflation rate, the effect of which was felt
most noticeably by private households. Similarly, there
was no improvement in the willingness of companies
to invest, with volumes even lower than one year
earlier. During 2019, however, numerous protective
tariffs imposed by the USA on Chinese products
exacerbated the factors slowing down the Chinese
economy, causing the government to undertake fiscal
and monetary measures to prevent the economy from
cooling too quickly.
In Japan, GDP grew by 0.7 %, mainly attributable to a
moderate year-on-year increase in private consumption.
Exchange rates compared to the euro
• 24
Index: December 2014 = 100
British Pound
Chinese Renminbi
Russian Rouble
US Dollar
Japanese Yen
150
100
50
2015
2016
2017
2018
2019
2020
150
100
50
Source: Reuters.
50
Report on
Economic Position
General and Sector-
specific Environment
Oil price trend
• 25
Price per barrel of Brent Crude
100
50
0
Price in US dollars
Price in euros
2015
2016
2017
2018
2019
2020
Source: Reuters.
Metals price trend
• 26
Index: December 2014 = 100
300
200
100
0
Source: Reuters.
Palladium
Lithium carbonate
Gold
Cobalt
Platinum
2015
2016
2017
2018
2019
2020
100
50
0
300
200
100
0
Combined Management Report Energy and raw materials prices
Increasing uncertainty regarding the global economy
also put pressure on commodity markets in 2019.
After substantial rises for steel in the previous year,
prices consolidated at a lower level in 2019.
Against this backdrop, prices for precious and non-fer-
rous metals rose only slightly. Palladium and rhodium,
which are mainly used in catalytic converters, were
the exception to the general trend and became signifi-
cantly more expensive during the reporting period.
Prices for lithium and cobalt, which are used as raw
materials in batteries, were well down in 2019 com-
pared with the high levels of the recent past. Increased
supply capacity and significantly lower-than- expected
demand for these materials meant that prices remained
at a lower level than in previous years.
Despite some risks, oil markets were relatively calm
in 2019. The drone attack on oil production facilities
in Saudi Arabia caused prices to rise significantly in
the short term, but had little impact on price levels
in the medium term. Whereas prices in the region of
53 US dollars per barrel were still seen on the market
at the beginning of the year, the price of Brent crude
oil rose to a peak of 75 US dollars due to prevailing
concerns. Overall, the average price per barrel fell
sharply from 72 US dollars to 64 US dollars year-on-
year. WTI, the benchmark for crude oil in the USA,
followed a similar trend, with an average price of
around 57 US dollars per barrel for the year as a whole.
Steel price trend
• 27
Index: January 2015 = 100
150
100
50
2015
2016
2017
2018
2019
2020
Source: Working Group for the Iron and Metal Processing Industry.
51
International automobile markets
A downward trend was observable on most automo-
bile markets in 2019. Accordingly, registration figures
for passenger cars and light commercial vehicles fell
worldwide by 2.0 % to a total of 83.5 million vehicles.
International automobile markets
• 28
Europe
thereof Germany
thereof France
thereof Italy
thereof Spain
thereof UK
USA
China
Japan
Total
Change in %
+ 1.1
+ 4.9
+ 1.6
+ 0.1
– 4.6
+ 4.0
– 1.2
– 3.9
– 0.8
– 2.0
International motorcycle markets
Motorcycle markets in the 250 cc plus class generally
performed well during 2019. The number of new reg-
istrations worldwide increased by 3.1 % year-on-year.
International motorcycle markets
• 29
Europe
thereof Germany
thereof France
thereof Italy
thereof Spain
America
thereof USA
thereof Brazil
Total
Change in %
8.2
7.5
12.0
5.5
14.5
– 3.3
– 4.8
13.2
3.1
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
Despite challenging conditions and volatility on inter-
national markets, the BMW Group can look back on
an overall satisfactory business performance in 2019.
Despite some downward trends in figures in the past
financial year, the BMW Group’s results of operations,
financial position and net assets are all indicative
of its solid financial condition. Overall, in view of
the various economic challenges arising during the
year, business developed in line with management’s
revised expectations, taking into account the provision
recognised in connection with the EU Commission’s
antitrust proceedings. This assessment also takes
into account events after the end of the reporting
period. The impact expected from the spread of the
coronavirus has been taken into account in the out-
look for 2020.
52
Report on
Economic Position
General and Sector-
specific Environment
Overall Assessment
by Management
Comparison of
Forecasts for 2019
with Actual Results
in 2019
International interest rate environment
The trade dispute between the USA and China,
increasing trade barriers and growing uncertainty as a
result of geopolitical risks all had a negative impact on
the global economy in 2019. The major central banks
responded to these developments with expansionary
monetary policies.
In September, the European Central Bank decided to
cut the deposit rate by 0.10 % to – 0.50 % and resume
its bond purchase programme. Since November 2019,
it has been buying securities at a monthly rate of
€ 20 billion; an end to the purchase programme has
not been set.
With the outcome of the UK’s EU exit negotiations
being uncertain, the Bank of England (BoE) followed
a “wait-and-see” approach and left the key interest
rate unchanged at 0.75 % in 2019.
During the period under report, the US Federal
Reserve (Fed) cut interest rates for the first time since
the financial crisis. After three reductions of 0.25 %
in each case, at 31 December 2019 the benchmark
interest rate was within a range of 1.50 to 1.75 %. After
its meeting in October, the Fed signalled that it would
not reduce interest rates further in the near future.
In August, the Bank of China (PBOC) announced a
reform of its lending rate mechanism, replacing the
traditional benchmark interest rate with the market-
o riented Loan Prime Rate (LPR). On introduction of
the new system, the LPR stood at 4.25 %, 0.10 % lower
than the former traditional benchmark rate. During
the remainder of the year, the PBOC reduced the LPR
to 4.15 % in two steps.
Moderate economic growth, the increase of the value
added tax and an inflation rate that continues to
be significantly under the 2 % target prompted the
Japanese central bank to maintain its highly expansive
monetary policies.
Combined Management Report COMPARISON OF
FORECASTS FOR 2019
WITH ACTUAL RESULTS
IN 2019
53
The following table shows the development of key per-
formance indicators for the BMW Group as a whole as
well as for the Automotive, Motorcycles and Financial
Services segments in the financial year 2019 compared
to the forecasts made in the Annual Report 2018.
Key figures presented in the report have been rounded
in accordance with standard commercial practice. In
certain cases, this may mean that values do not add up
exactly to the stated total and that percentages cannot
be derived exactly from the values shown.
BMW Group comparison of 2019 forecasts with actual outcomes 2019
• 30
Forecast for 2019
in 2018 Annual Report
Forecast revision
during the year
Actual outcome
in 2019
Group
Profit before tax
significant decrease
€ million
Workforce at year-end
in line with last year’s level
7,118 (– 26.1 %)
significant decrease
133,778 (– 0.7 %)
in line with last
year’s level
Automotive seGment
Deliveries to customers 1
Fleet emissions 2
slight increase
slight decrease
EBIT margin
between 6 and 8
Q1: between 4.5 and 6.5
Return on capital employed
significant decrease
motorcycles seGment
Deliveries to customers
EBIT margin
Return on capital employed
solid increase
between 8 and 10
solid increase
FinAnciAl services seGment
Return on equity
in line with last year’s level
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units).
2 EU-28.
units
2,538,367 (+ 2.2 %)
slight increase
g CO2 / km
%
%
units
%
%
%
127 (– 0.8 %)
in line with last
year’s level
4.9 (– 2.3 %pts)
29.0 (– 20.8 %pts)
significant decrease
175,162 (+ 5.8 %)
solid increase
8.2 (+ 0.1 %pts)
29.4 (+ 1.0 %pts)
slight increase
15.0 (+ 0.2 %pts)
in line with last
year’s level
In an ad hoc announcement dated 5 April 2019,
the BMW Group reported that the EU Commission
had informed it of a “Statement of Objections” in
conjunction with ongoing antitrust proceedings. The
EU Commission is investigating whether German
automobile manufacturers cooperated in techni-
cal working groups to restrict competition in the
development and rollout of emissions-reduction
technologies. The Statement of Objections leads the
BMW Group to conclude that it is probable (“more
likely than not”) that the EU Commission will issue
a significant fine. If necessary, the BMW Group will
contest the EU Commission’s allegations with all the
legal means at its disposal.
54
Report on
Economic Position
Comparison of
Forecasts for 2019
with Actual Results
in 2019
Irrespective thereof, the fact that a fine is “more
likely than not” triggers a requirement to recognise
a provision in accordance with International Financial
Reporting Standards. Based on information currently
available and in accordance with International Finan-
cial Reporting Standards, a provision of approximately
€ 1.4 billion was recognised in the first quarter of 2019
to take account of financial impacts that cannot yet
be definitively assessed. Group and Automotive seg-
ment earnings for the first quarter as well as for the
full financial year were impacted accordingly. The
BMW Group has examined the objections and gained
access to the documents in the EU Commission’s
investigation file. In December 2019, the BMW Group
submitted a detailed response to the EU Commission,
which the latter will now examine before determining
the next steps in the proceedings. Consequently, it
is not yet possible to assess the ultimate financial
impact definitively.
Detailed information on the key performance indica-
tors for the Group is presented as part of the following
review of the BMW Group’s results of operations,
financial position and net assets. The development
of the key performance indicators for the Automo-
tive, Motorcycles and Financial Services segments is
described in the relevant sections on each segment.
In December 2019, BMW Group was informed by
the U. S. Securities and Exchange Commission
(the SEC) that the SEC had commenced an inquiry
into BMW Group’s vehicle sales* practices and
reporting. On January 22, 2020, the SEC formally
opened an investigation into potential violations of
U. S. securities laws by BMW Group relating to dis-
closures regarding BMW Group’s unit sales of new
vehicles. BMW Group is reviewing the matter and
cooperating with the SEC’s investigation. Information
on contingent liabilities is provided in
note 38 to
the Group Financial Statements.
* see Glossary
for the definition
of deliveries
see
note 38
The preparation of BMW Group’s retail vehicle deliv-
ery data involves estimates and judgments and is
subject to other uncertainties, including:
— The vast majority of deliveries of vehicles are
carried out by independent dealerships or other
third parties, and BMW Group is reliant on
such third parties to correctly report relevant
data to BMW Group.
— In addition, the definition of deliveries includes
any vehicles delivered in the United States or
Canada if:
— the relevant dealers designate such vehicles as
service loaner vehicles or demonstrator vehi-
cles (BMW Group provides financial incentives
in this regard to such dealers); or
— such vehicles are company vehicles pur chased
by dealers or other third parties at auctions
or by dealers directly from BMW Group,
each of which may not correlate to a sale to a
consumer or other end user in the relevant
reporting period.
See Glossary – Explanation of Key Figures – Deliveries
for the definition of deliveries.
Retail vehicle deliveries during a given reporting
period do not correlate directly to the revenue that
BMW Group recognises in respect of such report-
ing period.
In connection with reviewing its sales practices
and related reporting practices, BMW Group also
reviewed prior period retail vehicle delivery data and
separately determined that certain vehicle deliveries
were not reported in the correct periods. BMW Group
has revised the data on those vehicle deliveries that
had not been reported in the correct periods as
further described below, and is making, and will
continue to make in the future, certain adjustments
to its policies and procedures in order to improve the
reliability and validity of its retail vehicle delivery
data, in particular with respect to the timing of the
recognition of deliveries.
Specifically, the retail vehicle delivery data presented
in this annual report (years 2015 through 2019) have
been revised by adjusting the data for BMW Group’s
six most significant markets to reflect the above. In
the years 2015 through 2019, these six markets (China,
USA, Germany, UK, Italy and Japan) represented on
average 68.3 % of BMW Group’s total vehicle deliv-
eries. For each of the years 2015 through 2019, these
revisions amounted to less than 1 % of BMW Group’s
total retail vehicle deliveries. The retail vehicle deliv-
ery data for BMW Group’s other markets have not
been adjusted, as BMW Group believes the impact
to be immaterial.
While BMW Group believes the retail vehicle delivery
data presented in this annual report to be materially
correct in accordance with BMW Group’s definition
of deliveries, challenges and further revisions of such
data cannot be ruled out.
Combined Management Report Results of operations of the BMW Group
The BMW Group recorded a solid year-on-year
increase in revenues for the financial year 2019.
Alongside product mix effects, higher revenues from
leasing and the sale of products previously leased to
customers also had a positive influence in the year
under report. Moreover, revenues were positively
impacted by currency factors, mainly relating to the
BMW Group condensed income statement
• 31
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
Profit from continuing operations
Profit / loss from discontinued operations
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 profit margin
Effective tax rate
55
exchange rates of the US dollar, Chinese renminbi,
Japanese yen and Thai baht. In the previous year,
revenues were also negatively impacted by the high
level of competition due to the reaction of competitors
to the early implementation of WLTP regulations as
well as by the unfavourable effect of trade conflicts
on selling prices.
2019
2018*
Change in %
104,210
– 86,147
18,063
96,855
– 78,477
18,378
7.6
– 9.8
– 1.7
2.1
–
– 17.0
–
– 26.1
15.4
– 29.9
–
– 28.9
– 29.5
– 29.5
– 9,568
123
8,933
694
9,627
– 2,530
7,097
– 33
7,064
10.60
10.62
2018*
Change in %pts
9.9
7.3
19.0
26.3
– 3.1
– 2.5
– 1.7
3.8
– 9,367
– 1,285
7,411
– 293
7,118
– 2,140
4,978
44
5,022
7.47
7.49
2019
6.8
4.8
17.3
30.1
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
56
Group revenues by region were as follows:
Report on
Economic Position
BMW Group revenues by region
• 32
in %
Europe
Asia
Americas
Other regions
Group
BMW Group cost of sales
• 33
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
2019
44.4
30.6
22.7
2.3
2018*
46.2
30.9
20.2
2.7
100.0
100.0
2019
2018*
Change in %
48,690
23,623
2,288
5,952
1,667
1,641
2,566
3,675
44,558
22,042
2,035
5,320
1,414
1,844
1,717
2,996
86,147
78,477
9.3
7.2
12.4
11.9
17.9
– 11.0
49.4
22.7
9.8
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
Group cost of sales increased compared to the pre-
vious year. Higher manufacturing costs due to stricter
regulatory requirements (especially in connection
with the reduction of fleet emissions), negative
currency effects, higher raw material prices (espe-
cially for palladium and rhodium) as well as higher
warranty expenses all had a negative impact on
cost of sales.
in € million
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
2019
2018
5,952
– 1,667
2,134
6,419
5,320
– 1,414
2,984
6,890
In addition to the higher level of cost of sales incurred
for the Financial Services business, there was a year-
on-year increase in the area of research and develop-
ment, where expenses rose to € 5,952 million (2018:
€ 5,320 million), mainly in relation to the electrification
of vehicles (including the iNEXT), ongoing develop-
ment work on autonomous driving and digitalisation.
In the previous year, capitalised development costs
related mainly to investments in new model series such
as the X5, the BMW 3 Series and the BMW 8 Series,
while in 2019 they related mainly to amounts invested
in autonomous driving, the BMW 1 Series and a new
generation of electrified vehicles. Furthermore, the
higher level of costs capitalised in the previous years
referred to above also resulted in increased amortisa-
tion on capitalised development costs in 2019.
Combined Management Report 57
BMW Group performance indicators relating to research and development expenses
• 34
in %
Research and development expenditure ratio
Capitalisation rate
2019
6.2
33.2
2018*
Change in %pts
7.1
43.3
– 0.9
– 10.1
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled € 6,017 million (2018: € 5,113 million).
Selling and administrative expenses amounted to
€ 9,367 million and were therefore slightly down on
the previous year (2018: € 9,568 million), helped by a
decrease in personnel costs that was partially attrib-
utable to amendments to pension plans in the USA.
The net amount of other operating income and ex-
penses decreased significantly from a positive amount
of € 123 million to negative € 1,285 million, mainly due
to the recognition of a provision of approximately
€ 1.4 billion in connection with the EU Commission
antitrust proceedings. Further information is provided
note 10 to the Group Financial Statements.
in
As a result, profit before financial result (EBIT) de-
creased by € 1,522 million to € 7,411 million (2018:
€ 8,933 million).
see
note 10
The financial result deteriorated significantly year-on-
year by € 987 million to a net expense of € 293 million.
The main negative factor here was a € 496 million drop
in the result from equity accounted investments,
whereby a € 179 million increase in the Group’s share
of earnings of BMW Brilliance Automotive Ltd. was
more than offset by the negative at-equity result of
€ 662 million attributable to the YOUR NOW compa-
nies. In addition to operating losses, the YOUR NOW
at-equity result also included write-downs recorded
at separate entity level amounting to € 277 million
arising in conjunction with the reorientation of the
YOUR NOW Group. Further information is provided
in
note 2 to the Group Financial Statements.
see
note 2
In addition, the higher interest expense arising in
connection with the recognition of lease liabilities in
accordance with IFRS 16 as well as the higher amount
of interest unwound on non-current provisions for
statutory and non-statutory warranty obligations had
a negative impact on the net interest result.
At a net negative amount of € 109 million, other finan-
cial result was significantly down on the previous year
(2018: net positive amount of € 51 million). The one-
off revaluation gain of € 329 million arising from the
pooling of mobility services with the Daimler Group
was partially offset by impairment losses totalling
€ 240 million. In the previous year, other financial
result also included a revaluation gain of € 209 million
arising on the takeover of DriveNow. Other financial
result was also adversely affected by revaluation losses
recognised on interest rate hedges in connection with
the refinancing of the Financial Services business.
As forecast most recently in the Quarterly Statement
to 30 September 2019, Group profit before tax for
the full financial year was significantly down on the
previous year and, at € 7,118 million (2018: € 9,627 mil-
lion), was therefore in line with revised expectations.
The income tax expense for the year amounted to
€ 2,140 million (2018: € 2,530 million). The effective
tax rate increased to 30.1 % (2018: 26.3 %), mainly due
to the non-deductibility of the expense recorded for
the provision relating to EU Commission anti-trust
proceedings as well as the non-deductibility of impair-
ment losses relating to the YOUR NOW Group, recog-
nised in other financial result. Tax income received for
prior years – mainly due to the successful conclusion
of intergovernmental tax treaties covering the topic
of transfer pricing – had an offsetting effect.
The net interest result deteriorated by € 331 million,
mainly due to the reversal of provisions recorded in
2018 following the conclusion of mutual agreement
procedures relating to taxes and customs.
In the year under report, the workforce size, based
on a total of 133,778 employees, remained at a simi-
lar level year-on-year and was therefore in line with
expectations (2018: 134,682 employees; – 0.7 % ).
58
Report on
Economic Position
Financial position of the BMW Group
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for the
financial years 2019 and 2018, classified according to
operating, investing and financing activities. Cash and
cash equivalents in the cash flow statements corre-
spond to the amounts disclosed in the balance sheet.
BMW Group cash flows
• 35
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.
in € million
2019
2018
Change
Cash inflow (+) / outflow (–) from operating activities
Cash inflow (+) / outflow (–) from investing activities
Cash inflow (+) / outflow (–) from financing activities
Effects of exchange rate and changes in composition of Group
Change in cash and cash equivalents
3,662
– 7,284
4,790
– 111
1,057
5,051
– 7,363
4,296
– 44
1,940
– 1,389
79
494
– 67
– 883
The decrease in cash inflow from the Group’s operat-
ing activities was attributable in particular to higher
tax payments, mainly relating to the tax reform in the
USA. The decrease was exacerbated by the increase
in working capital over the twelve-month period,
primarily reflecting the slight increase in inventories
held by the Automotive, Motorcycles and Financial
Services segments.
Total cash outflow from the Group’s investing activ-
ities was slightly down on the previous year. Lower
cash outflows for investments in property, plant
and equipment and intangible assets (€ 875 million
decrease) contrasted with higher net cash outflows for
investments in financial assets (€ 761 million increase),
the latter relating primarily to the acquisition of the
YOUR NOW companies (cash outflow of € 890 million).
The higher dividend received from BMW Brilliance
Automotive Ltd., Shenyang (€ 259 million increase),
also had a positive impact.
The amount of cash inflow from the Group’s financing
activities resulted mainly from the higher volume of
asset-backed securities financing, while the repay-
ment of loans had an offsetting effect.
Combined Management Report 59
Refinancing
A broad range of instruments on international money
and capital markets is used to refinance Group oper-
ations worldwide. The funds raised are used almost
exclusively to finance the BMW Group’s Financial
Services business.
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times, focusing
on three areas:
1. The ability to act through permanent access
to strategically important capital markets
2. Autonomy through the diversification of refi-
nancing instruments and investors
3. Focus on value through the optimisation of
financing costs
Financing measures undertaken at corporate level
ensure access to liquidity for the Group’s operating
subsidiaries at standard market conditions and con-
sistent credit terms. Funds are acquired in line with
a target liability structure, comprising a balanced
mix of financing instruments. The use of longer-term
instruments to fund the Group’s Financial Services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid the liquidity risk in
the portfolio. This conservative financial approach
also helps the Group’s rating. Further information
is provided in the section Liquidity risks within the
“Report on Outlook, Risks and Opportunities”.
On account of its good ratings and the high level
of acceptance it enjoys on capital markets, the
BMW Group was again able to refinance operations at
favourable conditions on debt capital markets during
the financial year 2019. In addition to bonds, loan
notes and private placements, the Group also issued
commercial paper. As in previous years, all issues were
in high demand, not only from private investors but
also from institutional investors in particular. In addi-
tion, retail customer and dealership financing receiv-
ables as well as rights and obligations from leasing
contracts are securitised in the form of asset-backed
securities (ABS) financing arrangements. Specific
banking instruments, such as customer deposits held
by the Group’s own banks in Germany and the USA,
are also deployed for financing purposes. In addition,
loans are also taken from international banks.
In 2019, the BMW Group issued three euro bench-
mark bonds on the European capital market with a
total issue volume of € 6.8 billion, as well as bonds
on the US capital market with a total issue volume
of USD 5.0 billion. Bonds were also issued in British
pounds, Canadian dollars, Swiss francs and Norwe-
gian krone for a total amount of € 2.0 billion. Private
placements totalling € 4.4 billion were also issued,
including, for the first time, so-called “Panda bonds”
for an amount of 9.5 billion Chinese renminbi.
A total of 13 public ABS transactions were executed in
2019, including five in China, two each in Japan, the
USA and Germany, and one each in Canada and South
Africa with a total volume equivalent to € 7.7 billion.
Further funds were also raised via new and prolonged
ABS conduit transactions in Japan, UK, Germany and
Australia with a total volume equivalent to € 5.6 bil-
lion. Other transactions remain in place in Germany,
Switzerland and South Africa, amongst others.
The following table provides an overview of amounts
utilised at 31 December 2019 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
13.4
40.4
–
2.6
* Measured at exchange rates at the relevant transaction dates.
At 31 December 2019, liquidity remained at a solid
level of € 17.4 billion.
The BMW Group also has access to a syndicated credit
line, which was newly agreed upon in July 2017. The
syndicated credit line of € 8 billion has a term up to
July 2024 and is being made available by a consortium
of 44 international banks. The credit line was not
being utilised at 31 December 2019.
Further information with respect to financial liabilities
is provided in
notes 31, 35 and 39 to the Group
Financial Statements.
see
notes 31, 35
and 39
60
Net assets of the BMW Group
Report on
Economic Position
BMW Group condensed balance sheet at 31 December
• 36
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
Assets held for sale
Total assets
equity A nd liABilities
Equity
Pension provisions
Other provisions
Deferred and current tax
Financial liabilities
Trade payables
Other liabilities
Liabilities in conjunction with assets held for sale
Group
2019
20181
Change in %
Currency-adjusted
change2 in %
Proportion of
balance sheet
total in %
2019
11,729
23,245
42,609
3,199
703
92,437
7,325
3,403
12,939
15,891
2,518
12,036
–
10,971
19,801
38,259
2,624
739
87,013
7,685
3,016
10,596
14,248
2,546
10,979
461
228,034
208,938
59,907
3,335
13,209
1,595
116,740
10,182
23,066
–
57,829
2,330
11,401
2,931
103,597
9,669
21,119
62
6.9
17.4
11.4
21.9
– 4.9
6.2
– 4.7
12.8
22.1
11.5
– 1.1
9.6
–
9.1
3.6
43.1
15.9
– 45.6
12.7
5.3
9.2
–
9.1
6.8
16.5
9.9
22.0
– 7.0
4.0
– 5.0
9.8
20.7
10.2
– 1.8
9.1
0.0
7.6
1.4
42.4
15.0
– 47.5
11.5
4.5
7.5
0.0
7.6
5.1
10.2
18.7
1.4
0.3
40.5
3.2
1.5
5.7
7.0
1.1
5.3
0.0
100.0
26.3
1.5
5.7
0.7
51.2
4.5
10.1
0.0
100.0
Total equity and liabilities
228,034
208,938
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
The balance sheet total of the BMW Group was signifi-
cantly higher than at the end of the previous financial
year. Currency impacts from the British pound, the
US dollar, the Canadian dollar and the Thai baht
contributed to this increase.
The sharp rise in property, plant and equipment com-
pared to one year earlier was mainly attributable to
the recognition of right-of-use assets in accordance
with IFRS 16, as a result of which property, plant
and equipment increased by € 2.8 billion. In addition,
substantial amounts were invested to develop the
product portfolio.
Leased products went up significantly year-on-year
on the back of leasing portfolio growth in various
countries, including Germany and the USA.
Inventories also increased significantly compared to
the previous year due to the build-up of inventories
of higher-value vehicles such as the BMW X5 and
X7 models. Higher inventories of raw materials and
supplies also contributed to the rise, partly reflecting
the higher purchase price of some precious metals,
especially palladium.
Combined Management Report Receivables from sales financing increased solidly
over the twelve-month period, mainly due to larger
credit financing volumes in the UK and China. A
total of 1,320,656 new credit financing contracts with
retail customers were signed during the financial
year 2019. Compared to the end of the previous
financial year, the contract portfolio with dealers
and retail customers under management grew by
4.5 % to 4,064,561 contracts.
Group equity rose slightly by € 2,078 million to
€ 59,907 million, increased primarily by the profit
of € 4,915 million attributable to shareholders of
BMW AG and decreased by the dividend payment
of € 2,303 million. The reduction in the equity ratio
reflected the fact that – due to the effects described
above – the balance sheet total rose at a faster rate
than equity. The adoption of IFRS 16 therefore only
had a limited impact on the equity ratio.
61
BMW Group equity ratio
• 37
in %
Group
Automotive segment
Financial Services segment
31. 12. 2019
31. 12. 2018*
Change in %pts
26.3
35.5
9.9
27.7
41.0
10.1
– 1.4
– 5.5
– 0.2
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
Pension provisions increased significantly compared
to the end of the financial year 2018, with lower
discount rates in Germany and the UK in particular
contributing to the rise.
Other provisions increased markedly year-on-year
due to the provision recognised in conjunction with
ongoing EU Commission antitrust proceedings. Fur-
ther information is provided in
note 10 to the Group
Financial Statements.
see
note 10
Financial liabilities were significantly higher than at
the end of the previous financial year, mainly as a
result of new bonds issued. This also includes the 144A
bond in the USA and the first Panda bond placed on
the Chinese capital market.
Overall, the results of operations, financial position
and net assets position of the BMW Group remained
stable during the year under report.
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 value
added calculation. The allocation statement applies
value added to each of the participants involved in
the value added process. The bulk of the net value
added benefits employees. The remaining proportion
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 2019.
62
Report on
Economic Position
BMW Group value added statement
• 38
Work perFormed
Revenues
Financial income
Other income
Total output
Cost of materials 2
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
2019
in € million
2019
in %
2018
1
in € million
2018
1
in %
Change
in %
104,210
– 22
1,031
99.0
0.0
1.0
96,855
988
774
98.2
1.0
0.8
105,219
100.0
98,617
100.0
57,358
14,923
72,281
32,938
10,749
22,189
12,451
2,466
2,250
1,646
3,269
107
54.5
14.2
68.7
31.3
10.2
21.1
56.1
11.1
10.1
7.4
14.7
0.5
53,132
12,342
65,474
33,143
8,601
24,542
12,479
2,266
2,733
2,303
4,671
90
53.9
12.5
66.4
33.6
8.7
24.9
50.8
9.2
11.2
9.4
19.0
0.4
22,189
100.0
24,542
100.0
7.6
–
33.2
6.7
8.0
20.9
10.4
– 0.6
25.0
– 9.6
– 0.2
8.8
– 17.7
– 28.5
– 30.0
18.9
– 9.6
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
BMW Group value added 2019
• 39
in %
Depreciation and amortisation 10.2
14.2 Other expenses
Cost of materials 54.5
21.1 Net value added
56.1 % Employees
11.1 % Providers of finance
10.1 % Government / public sector
7.4 % Shareholders
14.7 % Group
0.5 % Minority interest
Combined Management Report Results of operations by segment
BMW Group revenues by segment
• 40
in € million
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
BMW Group profit / loss before tax by segment
• 41
in € million
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
BMW Group margins by segment
• 42
in %
Automotive
Gross profit margin
EBIT margin
Motorcycles
Gross profit margin
EBIT margin
63
2019
20181
Change in %
Currency adjusted
change 2 in %
91,682
2,368
29,598
5
– 19,443
104,210
85,846
2,173
27,705
6
– 18,875
96,855
6.8
9.0
6.8
– 16.7
– 3.0
7.6
5.2
8.1
4.6
– 18.0
0.1
6.1
2019
20181
Change in %
4,467
187
2,272
– 96
288
7,118
6,977
169
2,143
– 45
383
9,627
– 36.0
10.7
6.0
–
– 24.8
– 26.1
2019
20181
Change in %pts
14.9
4.9
19.3
8.2
16.2
7.2
20.0
8.1
– 1.3
– 2.3
– 0.7
0.1
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
64
Report on
Economic Position
Review of Operations
Automotive Segment
REVIEW OF OPERATIONS
Automotive Segment
Automobile deliveries at record level
The BMW Group delivered a total of 2,538,367 1 BMW,
MINI and Rolls-Royce brand automobiles in 2019,
thereby setting a new record for the total number of
deliveries to customers (2018: 2,483,292 1, 2 units; + 2.2 %).
Volumes also developed well for each of the Group’s
brands. The BMW brand achieved a new high to date,
with 2,185,793 1 units (2018: 2,114,963 1, 2 units; + 3.3 %)
delivered to customers. MINI remained slightly below
the previous year’s figure, with 347,474 units delivered
worldwide (2018: 364,135 2 units; – 4.6 %). Rolls-Royce
Motor Cars exceeded the 5,000-unit threshold for
the first time, with 5,100 vehicles handed over to
customers (2018: 4,194 2 units; + 21.6 %). This signifi-
cant increase also represents a new record for the
ultra-luxury marque.
As foreseen in the outlook for the financial year 2019,
Automotive segment deliveries increased slightly and
were therefore in line with expectations.
The ongoing electrification of the product range is
also having a significant impact. As targeted, the
BMW Group finished the year with half a million
electrified vehicles on roads across the globe. The
broad range of electrified vehicles on offer is ideally
suited to meeting customer needs and constitutes an
important aspect of the BMW Group’s contribution
to effective climate protection.
Fleet carbon dioxide (CO2) emissions 3
at previous year’s level
CO2 emissions from fleet vehicles delivered in
Europe in 2019 amounted to 127 g CO2 / km (2018:
128 g CO2 / km; – 0.8 %) and were therefore at the
previous year’s level. The original forecast predicted
a slight decrease. The lower proportion of diesel-
powered vehicles delivered in 2019 meant that no
further reduction in fleet CO2 emissions was achieved
compared to the previous year.
1 Including the
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
(2019:
538,612 units,
2018:
455,581 units).
Deliveries up in Asia and in the Americas,
slightly down in Europe
Deliveries of BMW Group automobiles in Asia rose
by a solid 6.8 % in 2019. In total, 930,085 1 BMW, MINI
and Rolls-Royce brand vehicles (2018: 871,181 1, 2 units)
were delivered to customers in this region. Figures for
China developed very positively, rising to 724,733 1
units (2018: 635,813 1, 2 units; + 14.0 %).
The BMW Group’s performance in Europe was held
down by a number of factors, in particular due to the
prevalence of political uncertainty in a number of
countries. At 1,083,669 units, deliveries of the Group’s
three brands decreased marginally year-on- year (2018:
1,097,117 2 units; – 1.2 %). Contrary to this broader
trend, business in Germany developed positively,
with a total of 330,507 units delivered, 6.4 % up on
the previous year (2018: 310,576 2 units). In the UK,
volumes fell slightly year-on-year to 233,780 units (2018:
236,752 2 units; – 1.3 %), not least due to uncertainty
regarding Brexit.
On the American continent, business conditions
were characterised by growing competition within a
declining market. With 472,904 units delivered, the
BMW Group nevertheless exceeded the previous year’s
figure (2018: 457,095 2 units; + 3.5 %). Sales figures
for the Group’s three brands in the USA were solidly
up year-on-year, with 375,751 units delivered (2018:
355,373 2 units; + 5.7 %). The BMW Group also ended
2019 as the leading premium automobile manufacturer
in the USA.
BMW Group – key automobile markets 2019
• 43
as a percentage of deliveries
3 EU-28
Other 29.2
28.6 China
Japan 2.4
Italy 2.9
UK 9.2
14.7 USA
13.0 Germany
2 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjust-
ments is a review of sales data in prior periods for the BMW Group’s most important markets
(China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en ables better com-
parability. Additional information can be found in the section “Comparison of Forecasts for
2019 with Actual Results in 2019”.
Combined Management Report BMW Group deliveries of vehicles by region and market 1
• 44
65
in 1,000 units
Europe
thereof Germany
thereof UK
Americas
thereof USA
Asia 2
thereof China 2
Other markets
Total 2
2019
2018
2017
2016
2015
1,083.7
1,097.1
1,103.2
1,091.9
1,003.1
330.5
233.8
472.9
375.8
930.1
724.7
51.7
310.6
236.8
457.1
355.4
871.2
635.8
57.9
296.5
242.4
456.1
358.8
847.5
595.0
61.9
298.5
252.4
453.4
359.5
739.4
508.8
67.8
287.4
232.3
503.9
413.8
685.5
465.8
65.3
2,538.4
2,483.3
2,468.7
2,352.4
2,257.9
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group’s most important markets (China, USA, Germany,
UK, Italy and Japan). The retrospective adjustment en ables better comparability. Additional information can be found in the section “Comparison of Forecasts for 2019 with Actual Results in 2019”.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units, 2018: 455,581 units, 2017: 385,705 units, 2016: 311,473 units, 2015: 281,357 units).
The BMW X family again benefited from strong
demand in 2019. Worldwide deliveries of X family
vehicles rose to 963,994 units, a significant 22.3 %
year-on-year increase (2018: 788,063 1 units). A signif-
icant contribution to this growth was made by the
highly successful BMW X3 model, deliveries of which
rose by more than one-half to 316,883 units (2018:
200,151 1 units; + 58.3 %) due to the full availability
of the model produced in China. Deliveries of the
BMW X2 (91,812 units; 2018: 66,792 1 units; +37.5 %)
and the X4 (61,598 units; 2018: 46,894 1 units; + 31.4 %)
increased by around one-third. At 165,537 units, deliv-
eries of the BMW X5 once again exceeded the previous
year’s very high level (2018: 155,134 1 units; + 6.7 %).
The positive resonance identified around the market
launch of the new X7, which has been available since
March 2019, was also reflected in its subsequent sales
performance (2019: 39,924 units; 2018: 15 units).
BMW 2 brand achieves new volume record
BMW brand deliveries rose by 3.3 % to 2,185,793 units
in 2019, reaching a new record level for the ninth year
in succession (2018: 2,114,963 1 units). The models of
the BMW X family, the BMW i3, the new BMW Z4 and
the new BMW 8 Series all made positive contributions
to the overall growth. Moreover, the X1 and X5 (both
from the BMW X family) as well as the BMW Z4 were
all global market leaders in their own segments. The
BMW i3 continues to perform well as a highly success-
ful model for mobility in metropolitan areas.
At 359,211 units, sales of the BMW 3 Series were slightly
down on the previous year (2018: 364,347 1 units; – 1.4 %),
partially influenced by model changes to the Sedan
in March and the Touring in September. Moreover,
the new extended-wheelbase version has only been
available in China since June 2019. The launch of
the new models helped boost deliveries, particularly
during the final quarter, resulting in double-digit
volume growth. Between October and Decem-
ber 2019, the BMW Group delivered 106,155 units
of the BMW 3 Series worldwide, 20.6 % more than
in the previous year (2018: 87,987 1 units). Worldwide
deliveries of the BMW 5 Series fell to 353,268 units
(2018: 381,749 1 units; – 7.5 %). The new BMW Z4,
which has been available since March 2019, enjoyed
strong demand during the period under report (2019:
15,827 units). Sales figures for the new BMW 8 Series
also developed very encouragingly and had totalled
12,219 units (2018: 923 units) by the end of the report-
ing period.
66
Combined
Management
Report
Report on
Economic Position
Review of Operations
Automotive Segment
Deliveries of BMW vehicles by model variant 1, 2
• 45
in units
BMW 1 Series
BMW 2 Series
BMW 3 Series
BMW 4 Series
BMW 5 Series
BMW 6 Series
BMW 7 Series
BMW 8 Series
BMW Z4
BMW X1
BMW X2
BMW X3
BMW X4
BMW X5
BMW X6
BMW X7
BMW i
BMW total
2019
2018
Change in %
Proportion of
BMW sales volume
2019 in %
173,870
115,184
359,211
74,238
353,268
25,181
50,552
12,219
15,827
266,124
91,812
316,883
61,598
165,537
22,116
39,924
42,249
198,548
153,073
364,347
108,376
381,749
26,244
56,208
923
85
283,709
66,792
200,151
46,894
155,134
35,368
15
37,347
2,185,793
2,114,963
– 12.4
– 24.8
– 1.4
– 31.5
– 7.5
– 4.1
– 10.1
–
–
– 6.2
37.5
58.3
31.4
6.7
– 37.5
–
13.1
3.3
8.0
5.3
16.4
3.4
16.2
1.2
2.3
0.6
0.7
12.2
4.2
14.5
2.8
7.6
1.0
1.8
1.9
100.0
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units, 2018: 455,581 units).
2 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group’s most important markets (China, USA, Germany,
UK, Italy and Japan). The retrospective adjustment en ables better comparability. Additional information can be found in the section “Comparison of Forecasts for 2019 with Actual Results in 2019”.
BMW model range significantly expanded
A total of 12 new BMW models, including four
M models, were launched during 2019. Two model
revisions were also brought to market during the same
period. March saw the launch of the seventh-gener-
ation BMW 3 Series Sedan, the new BMW 8 Series
Convertible, the BMW Z4 Roadster and the BMW X7.
In the same month, the BMW 7 Series became
available across the dealer organisation following an
extensive model revision. In summer, the ex tended-
wheelbase version of the 3 Series Sedan went on sale
in China. In autumn, BMW launched successor models
for the 3 Series Touring and the 1 Series. The new
BMW 8 Series Gran Coupé also became available in
autumn 2019.
3 Fuel
consumption
and CO2 emis-
sions informa-
tion are available
on page 70.
BMW M achieves record result 3
With 136,173 units delivered during the twelve-month
period, BMW M GmbH achieved the best result to date in
its almost 50-year history (2018: 103,580 2 units; + 31.5 %),
ensuring it a leading market position among the pro-
viders in its competitive field.
The addition of the new X3 M and X4 M as well as the
first two M8 models significantly extends the range
of vehicles offered by the BMW Group subsidiary. All
new models are now immediately available at market
launch as competition models with more powerful
engines. In addition to the X models (X3 M, X4 M,
X5 M and X6 M), the BMW M2 CS and – within the
luxury class – the M8 Coupé, M8 Convertible and
M8 Gran Coupé all made their débuts during the year
under report. 2019 thus saw the launch of the largest
number of BMW M models to date.
MINI down on previous year
In 2019, due to external factors, the MINI brand was
not quite able to match the high level of deliveries
achieved one year earlier. In particular, Brexit-driven
uncertainty and intense competition in the small and
compact car segment played a significant role. Never-
theless, thanks to its underlying strength in numerous
markets, the MINI brand managed to grow its overall
share in the highly competitive premium segment.
At 347,474 units, MINI brand deliveries worldwide were
slightly down year-on-year (2018: 364,135 1 units; – 4.6 %).
The MINI Countryman nearly reached the 100,000 unit
Deliveries of MINI vehicles by model variant 1
• 46
in units
MINI Hatch (3- and 5-door)
MINI Convertible
MINI Clubman
MINI Countryman
MINI total
Rolls-Royce looks back on successful year
In 2019, Rolls-Royce Motor Cars surpassed the 5,000
threshold for the first time in over 100 years of cor-
porate history, also setting a new record with 5,100
deliveries worldwide (2018: 4,194 1 units; + 21.6 %).
The new Rolls-Royce Cullinan 2, which has been
available to customers since the end of 2018, made a
major contribution to this performance (2,508 units;
2018: 544 1 units).
One of the key factors for the success of Rolls-Royce
Motor Cars is its bespoke range. At Rolls-Royce, the
term bespoke refers to equipment configurations
with which the vehicles are highly individualised
in accordance with customer requirements. The
result is the creation of unique vehicles that secure
Rolls-Royce Motor Cars an outstanding position in
the luxury segment.
67
mark again (98,845 units; 2018: 99,594 1 units; – 0.8 %).
However, partly due to the decisive contribution made
by the popular plug-in hybrid model, it nevertheless
remained a cornerstone for the MINI brand. The
MINI Hatch (3- and 5-door) achieved a volume of
177,560 units (2018: 184,008 1 units; – 3.5 %).
The revised model of the MINI Clubman was also
launched during the year under report. The MINI
Convertible remains the world’s best-selling vehicle of
its kind. The John Cooper Works brand also continues
to enjoy strong demand.
2019
2018
Change in %
Proportion of
MINI sales volume
2019 in %
177,560
184,008
30,384
40,685
98,845
32,738
47,795
99,594
347,474
364,135
– 3.5
– 7.2
– 14.9
– 0.8
– 4.6
51.2
8.7
11.7
28.4
100.0
The product range also includes Black Badge variants
of the Dawn, Ghost, Wraith and Cullinan models.
In addition to bespoke equipment options, the
Black Badge vehicles also offer more powerful engine
performance.
Deliveries of Rolls-Royce vehicles
by model variant 1
• 47
in units
2019
2018
Change in %
Phantom 2
Ghost
Wraith / Dawn
Cullinan 2
Rolls-Royce total
604
662
1,326
2,508
5,100
831
1,003
1,816
544
4,194
– 27.3
– 34.0
– 27.0
–
21.6
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group’s most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section “Comparison
of Forecasts for 2019 with Actual Results in 2019”.
2 Fuel consumption and CO2 emissions information are available on page 70.
68
Report on
Economic Position
Review of Operations
Automotive Segment
Deliveries of electrified automobiles up on
previous year
At the end of the year under report, the BMW Group’s
vehicle portfolio included 11 all-electric or electri-
fied models in various segments. These models are
sold on more than 70 markets around the world,
underlining the BMW Group’s leading position world-
wide in terms of combined deliveries of all-electric
and plug-in hybrid vehicles as well as being market
leader in Germany.
Worldwide deliveries of electrified BMW and MINI
brand vehicles in 2019 totalled 146,160 units (2018:
142,385 1 units; + 2.7 %). The number of BMW plug-in
hybrid vehicles delivered was influenced by the
3 Series and X5 model changes as well as by the
launch of the X3 in autumn 2019. The total of 86,947
BMW hybrid drive vehicles delivered to customers
during the period under report was down on the
very high figure achieved one year earlier (2018:
91,759 1 units; – 5.2 %). The new models helped gener-
ate a positive trend in the fourth quarter of 2019, as
sales of hybrid-drive BMW vehicles during the final
three months of the year increased significantly by
16.1 % to 33,250 units (2018: 28,649 1 units). Over the
twelve-month period, the BMW i3 recorded a 14.1 %
increase in worldwide deliveries to 39,501 units (2018:
34,623 1 units). The electrified MINI Countryman 2 also
benefited from strong demand, with 16,964 units
delivered to customers during the period under report
(2018: 13,279 1 units; + 27.8 %).
Deliveries of electrified models 1
• 48
in units
BMW i
BMW e
MINI Electric
Total
2019
2018
Change in %
42,249
86,947
16,964
37,347
91,759
13,279
146,160
142,385
13.1
– 5.2
27.8
2.7
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group’s most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section “Comparison
of Forecasts for 2019 with Actual Results in 2019”.
2 Fuel consumption and CO2 emissions information are available on page 70.
Greater choice of electrified vehicles 2
During the current financial year, BMW will launch three
further models featuring hybrid technology, namely
the BMW X1, the X2 and the BMW 3 Series Touring.
Two additional all-electric models will be added with the
MINI Cooper SE and the BMW iX3. The BMW Group is
consciously focusing on battery electric vehicles (BEV)
and plug-in hybrid technologies (PHEV). Flexible
platforms are being used to cover varying regional
customer requirements, enabling buyers to select
the drivetrain system best suited to their mobility
requirements.
The BMW Vision iNEXT was showcased in 2019 with
the aim of providing a preview of tomorrow’s mobil-
ity. The vehicle embodies the fusion of electric and
autonomous driving as well as next-level connectivity.
Segment revenues at record level, earnings
negatively impacted by provision
The Automotive segment recorded a solid year-on-
year increase in revenues. Alongside positive currency
effects, the main influencing factor was the product
mix effect generated by increased deliveries of the
X7 and the BMW 8 Series, which were launched in
2019, the X4, the X5, and the Rolls-Royce Cullinan,
all of which were available for the full twelve-month
period in 2019. Growth in after-sales business due to
the increased size of the global vehicle fleet also had a
positive impact on revenues. In the previous year, rev-
enues were also negatively impacted by the high level
of competition caused by the reaction of competitors
to the early implementation of WLTP regulations as
well as the tougher market situation triggered by trade
conflicts. The rejuvenation of the product portfolio
has also helped the segment to achieve higher prices.
Segment cost of sales increased moderately compared
to the previous year. This was mainly due to higher
manufacturing costs driven by stricter regulatory
requirements (especially in relation to the reduction of
fleet emissions), negative currency effects and higher
raw material prices (particularly for palladium and
rhodium). The increase in research and development
expenses described above also had a negative impact.
Warranty expenses increased mainly as a result of
allocations to provisions in light of local changes to
legislation as well as additional allocations to provi-
sions in individual markets.
Combined Management Report The net amount of other operating income and ex penses
deteriorated from a positive amount of € 134 million
to negative € 1,359 million year-on-year, mainly due
to the provision recognised for the EU Commission’s
antitrust proceedings referred to above. Further infor-
mation is provided in
note 10 to the Group Financial
Statements.
see
note 10
The EBIT margin came in at 4.9 % (2018: 7.2 %; – 2.3 per-
centage points). As forecast in the Quarterly Statement
to 30 September 2019 the EBIT margin was within the
target range of 4.5 to 6.5 % and therefore in line with
revised expectations. In the Annual Report 2018, the
segment EBIT margin was forecast to be within the
target range of 6 to 8 %.
The Automotive segment’s financial result finished
at a net negative amount of € 32 million, significantly
down on the previous year (2018: net positive amount
€ 795 million). The deterioration mainly reflected the
negative impact of the result from equity-accounted
investments on the one hand and other financial result
Free cash flow Automotive segment
• 49
69
on the other (the latter excluding the revaluation
losses recognised on interest rate hedges), in both
cases described above in the analysis of the Group’s
results of operations. Profit before tax for the year was
significantly lower than one year earlier.
The Automotive segment’s RoCE in 2019 fell signifi-
cantly to 29.0 % (2018: 49.8 %; – 20.8 percentage points),
mainly due to the lower EBIT. Other factors with a
negative impact on RoCE were the increase in capital
employed due to the first-time recognition of right-of-
use assets in accordance with IFRS 16 and the higher
level of capital expenditure, particularly in conjunction
with the development of the product portfolio.
The long-term target RoCE of at least 26 % for the Auto-
motive segment was slightly exceeded. As forecast in
the outlook for the financial year 2019, RoCE decreased
significantly and was therefore in line with expectations.
Free cash flow for the Automotive segment was as
follows:
in € million
2019
2018
Change
Cash inflow (+) / outflow (–) from operating activities
Cash inflow (+) / outflow (–) from investing activities
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
9,690
– 7,165
42
2,567
9,352
– 6,769
130
2,713
338
– 396
– 88
– 146
The change in working capital included in the cash
inflow from operating activities resulted mainly from
the higher level of inventories and was offset by a
decrease in trade payables. Following the adoption
of IFRS 16, lease payments are included in cash flows
from financing activities, giving rise to a positive
effect of € 470 million. The increase in cash outflow
from investing activities mainly reflected the changes
described in the Group Cash Flow Statement with
respect to investments in property, plant and equip-
ment and intangible assets, financial assets and divi-
dends received. The liquidation of a Group company
in the previous financial year also had a negative effect.
70
Report on
Economic Position
Review of Operations
Automotive Segment
Motorcycles
Segment
In the Automotive segment, net financial assets com-
prised the following:
Net financial assets Automotive segment
• 50
in € million
2019
2018
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.
9,077
4,470
7,784
8,631
4,321
7,694
21,331
20,646
446
149
90
685
– 3,754
17,577
– 1,158
19,488
– 2,596
– 1,911
The increase in external financial liabilities was main-
ly attributable to the recognition of lease liabilities
according to IFRS 16 amounting to € 2.8 billion. Fur-
note 6 to the Group
ther information is provided in
Financial Statements.
see
note 6
BMW Group fuel consumption and CO2 emissions information
• 51
Model
BmW Group electriFied models
BMW iX3
BMW X1 xDrive25e
BMW X2 xDrive25e
BMW 330e Touring
BMW 330e xDrive Touring
MINI Cooper SE Countryman ALL4
MINI Cooper SE
BmW
BMW X3 M
BMW X4 M
BMW X5 M
BMW X6 M Competition
BMW M8 Competition Coupé
BMW M8 Competition Convertible
BMW M8 Competition Gran Coupé
BMW M2 CS
rolls-royce
Cullinan
1 Provisionary data based on WLTP.
2 Provisionary data.
Fuel consumption
in l / 100 km
(combined)
CO2 emissions
in g / km
(combined)
Electric power
consumption
in kWh / 100 km
( combined)
0
1.9
2.1 – 1.9
2.1 – 1.7
2.5 – 2.0
2.1 – 1.9
0
0
43
47 – 43
48 – 39
56 – 46
47 – 43
< 20 1
13.8
14.2 – 13.7 2
19.4 – 15.7 2
22.3 – 17.8 2
13.9 – 13.5
0
16.8 – 14.8
10.5
239
10.6 – 10.5
240 – 239
13
12.7
10.6
10.8
10.7
296
289
242
246
244
10.4 – 9.6
238 – 219
14.5
330 – 328
Combined Management Report Motorcycles Segment
Solid increase in motorcycle deliveries
With the delivery of 175,162 units in 2019, the Motor-
cycles segment exceeded the previous year’s figure by
5.8 %, marking a new record for the ninth consecutive
year (2018: 165,566 units).
As anticipated in the outlook for the financial year
2019, the Motorcycles segment achieved a solid
increase in deliveries and was therefore in line with
expectations.
Deliveries up in nearly all markets
The number of motorcycles sold in Europe rose by
7.0 % to 104,994 units (2018: 98,144 units). Deliveries
in Germany increased by 10.4 % to 26,292 units (2018:
23,824 units). Growth rates in Italy (15,580 units,
2018: 14,110 units; + 10.4 %) and Spain (12,607 units,
2018: 11,124 units; + 13.3 %) were also up on a dou-
ble- digit scale year-on-year. In France, motor cycle
deliveries grew slightly by 4.1 % to 17,300 units
(2018: 16,615 units). The only year-on-year decline
occurred in the USA, where – within a declining
market – BMW Motorrad saw deliveries fall slightly to
13,379 units (2018: 13,842 units; – 3.3 %). A particularly
sharp rise of 36.7 % was recorded for Brazil, where,
for the first time, more than 10,000 BMW motor-
cycles were sold in a single year (10,064 units; 2018:
7,361 units).
Model range further rejuvenated
BMW Motorrad introduced four new and two revised
models during the period under report. In Febru-
ary 2019, it launched three new models – the F 850 GS
Adventure (Adventure segment) and the C 400 X and
the C 400 GT (Urban Mobility segment). These were
followed by the revised R 1250 R (Roadster segment) in
April and the new S 1000 RR (Sport segment) in July.
The revised version of the R 1250 RS (Sport segment)
has been available to customers since September.
71
Numerous other new models and concept studies
were also presented during the year under report.
The Concept R18 was unveiled at the Concorso
d’Eleganza Villa d’Este – a new interpretation of
BMW Motorrad classics. The special limited edition
of the R nine T / 5 model was presented during the
BMW Motorrad Days event. At the International
Motorcycle Fair in Milan (EICMA), customers had
the opportunity to familiarise themselves with the
new models F 900 R (Roadster segment), F 900 XR
and S 1000 XR (Adventure segment) and the Concept
Study R18 / 2, a modern interpretation of a dynamic,
high-performance cruiser.
BMW Group deliveries of motorcycles
• 52
in 1,000 units
164.2
165.6
175.2
137.0
145.0
180
90
0
2015
2016
2017
2018
2019
BMW Group – key motorcycle markets 2019
• 53
as a percentage of sales volume
Other 45.7
Brazil 5.7
15.0 Germany
9.9 France
8.9 Italy
7.6 USA
7.2 Spain
72
Report on
Economic Position
Review of Operations
Motorcycles
Segment
Financial Services
Segment
Strong segment performance
The Motorcycles segment also recorded solid year- on-
year revenue growth. In addition to the higher number
of units delivered, product mix and currency effects
also had a positive impact on the performance in 2019.
The segment EBIT margin edged up to 8.2 % (2018:
8.1 %; + 0.1 percentage points) and therefore within the
range of 8 to 10 % forecast in the Annual Report 2018.
Profit before tax for the twelve-month period was
significantly higher than one year earlier.
The return on capital employed (RoCE) for the Motor-
cycles segment in 2019 increased slightly to 29.4 %
(2018: 28.4 %; + 1.0 percentage points), mainly due to
the higher level of EBIT. In the most recent outlook
provided in the Quarterly Statement to 30 Septem-
ber 2019, a solid increase was still being forecast.
The deviation in this case was due to the higher
amount of capital employed. The long-term target
RoCE of 26 % for the Motorcycles segment continued
to be surpassed.
Combined Management Report Financial Services Segment
Successful financial year for the
Financial Services segment
The Financial Services segment performed strongly
in 2019 within a challenging, volatile environment.
Segment profit before tax rose by 6.0 % to a record
level of € 2,272 million (2018 1: € 2,143 million).
In balance sheet terms, business volume grew by 7.3 %
to stand at € 142,834 million (2018 1: € 133,147 mil-
lion). The contract portfolio under management at
31 December 2019 comprised 5,973,682 contracts,
therefore growing slightly by 4.7 % year-on-year (2018:
5,708,032 contracts).
More than two million new contracts concluded
Thanks to its strong performance, the Financial Ser-
vices segment surpassed the threshold of two million
new customer contracts in a single year for the first
time. In total, 2,003,782 credit financing and leasing
contracts were concluded with retail customers dur-
ing the period under report, a solid 5.0 % year-on-
year increase (2018: 1,908,640 contracts). The biggest
growth markets were China and the USA. While the
number of new contracts grew slightly by 3.4 % in
the credit financing line of business, the correspond-
ing increase for leasing business was 8.2 %. Overall,
leasing accounted for 34.1 % and credit financing for
65.9 % of new business.
In the pre-owned financing and leasing business for
BMW and MINI brand vehicles, 398,144 new contracts
were signed during the twelve-month period (2018:
396,610 contracts; + 0.4 %).
The total volume of new credit financing and leasing
contracts concluded with retail customers amounted
to € 61,353 million, representing a solid year-on-year
increase (2018: € 55,817 million; + 9.9 %). Adjusted for
currency factors, the increase was 7.9 %.
73
The proportion of new BMW Group vehicles either
leased or financed by the Financial Services segment
in the financial year 2019 amounted to 52.2 % 2, 2.1 per-
centage points up on the previous year (2018: 50.1 %),
mainly due to growth in China and the USA.
The total portfolio of financing and leasing contracts
with retail customers again developed positively in
2019, growing 4.8 % year-on-year. In total, 5,486,319
contracts were in place with retail customers at
31 December 2019 (2018: 5,235,207 contracts). The
China region continued to record the fastest growth
rate of all regions, significantly enlarging its contract
portfolio by 19.8 % compared to one year earlier. The
Europe / Middle East / Africa region (+ 5.6 %) and the
EU Bank 3 (+ 4.0 %) grew year-on-year, while the total
contract portfolio in the Americas region (+ 0.7 %) hov-
ered around the previous year’s level. The Asia / Pacific
region saw a slight decrease in the volume of its con-
tract portfolio (– 2.5 %).
Contract portfolio of
Financial Services segment
• 54
in 1,000 units
6,000
3,000
0
5,115
5,381
4,719
5,708
5,974
2015
2016
2017
2018
2019
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the
2 The calculation only includes automobile markets in which the Financial Services segment
adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of
selected items, which are not material overall.
is represented by a consolidated entity.
3 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises
BMW Bank GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe / Middle East / Africa
region in conjunction with strategic realignments.
74
BMW Group new vehicles financed or
leased by Financial Services segment 1, 2
• 55
Report on
Economic Position
Review of Operations
Financial Services
Segment
in %
46.1
49.9
46.7
50.1
52.2
Leasing 22.0
22.4
20.7
21.2
22.3
Financing 24.1
27.5
26.0
28.9
29.9
60
30
0
2015
2016
2017
2018
2019
1 Until 2015 excluding Rolls-Royce.
2 Delivery figures have been adjusted retrospectively going back to 2015, as described in
the section “Comparison of forecasts for 2019 with actual outcomes in 2019”.
Contract portfolio retail customer financing
of Financial Services segment 2019
• 56
in % per region
Asia / Pacific 8.1
China 12.2
EU Bank 3 18.5
35.5 Europe /
Middle East /
Africa
25.7 America
3 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises
BMW Bank GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe / Middle East / Africa
region in conjunction with strategic realignments.
Slight growth in fleet business
The BMW Group is one of Europe’s foremost leasing
and full-service providers. Under the brand name
Alphabet, the Financial Services segment’s fleet
management business offers leasing and financing
arrangements as well as specific services to commer-
cial customers. The number of fleet contracts rose by
2.5 % during the financial year 2019. Included in the
total contract portfolio with retail customers referred
to above, the segment was thus managing a portfolio
of 717,353 fleet contracts at the end of the reporting
period (2018: 700,080 contracts).
Dealership financing slightly up on previous year
The total volume of dealership financing continued
growing during the financial year 2019 to stand at
€ 21,227 million at the end of the reporting period
(2018: € 20,438 million; + 3.9 %).
Financial Services segment posts record earnings
The Financial Services segment achieved a solid
increase in revenues during the period under report
on the back of portfolio growth, higher revenues from
the sale of returned leasing vehicles, and favourable
currency factors.
Cost of sales relating to Financial Services business
increased by € 1,849 million (2018: € 24,089 million).
Consistent with the development of revenues, the
main factors for the increase were expenses associated
with the sale of returned leasing vehicles as well as
risk provisioning expenses driven by portfolio growth.
Profit before tax in the Financial Services segment rose
by 6.0 %, representing a solid year-on-year increase.
As predicted in the Annual Report 2018, the 15.0 %
return on equity generated by the Financial Services
segment in 2019 was at a similar level to the previ-
ous year (2018: 14.8 %; + 0.2 percentage points) and
exceeded the RoE target of at least 14 %.
Combined Management Report 75
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
Net cash flows for the Financial Services segment
• 57
in € million
2019
2018
Change
Cash inflow (+) / outflow (–) from operating activities
Cash inflow (+) / outflow (–) from investing activities
Cash inflow (+) / outflow (–) from financing activities
Net
– 5,345
– 6,790
129
5,300
84
130
6,793
133
1,445
– 1
– 1,493
– 49
The decrease in cash outflow from the Financial Ser-
vices segment’s operating activities was mainly due
to the higher profit before tax and the lower increase
in receivables from sales financing compared to the
previous year. Cash inflow from financing activities
was mainly driven by the increase in asset-backed
securities financing and the repayment of loans.
Risk profile
Despite ongoing political and economic uncertainties,
such as Brexit and trade disputes, the risk profile
across the Financial Services segment’s total portfolio
remained stable at a low level.
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
0.26 % at 31 December 2019 and was therefore nearly
unchanged compared to one year earlier (2018: 0.25 %).
This figure comprises a credit loss ratio for leasing
business of 0.15 % (2018: 0.14 %) and a credit loss ratio
for financing business with retail customers of 0.41 %
(2018: 0.38 %).
Further information on the risk situation is provided
in the section Risks and Opportunities.
Development of credit loss ratio
• 58
in %
0.5
0.25
0
0.37
0.32
0.34
0.25
0.26
2015
2016
2017
2018
2019
Other Entities Segment / Eliminations
Profit before tax recorded for the Other Entities
segment and eliminations fell by € 146 million. The
significant drop was due in particular to revaluation
losses (included in other financial result) arising
on interest rate and currency hedges in connection
with the refinancing of the Financial Services busi-
ness. In addition, a sharp rise in the number of new
operating lease contracts had a negative impact due
to the elimination of margins relating to the leased
products concerned.
76
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 contained in the German
Stock Corporation Act (AktG).
On 10 March 2020, the Financial Statements of BMW AG
were drawn up by the Board of Management. Based on
current developments regarding the spread of corona-
virus, the Board of Management on 16 March 2020
adjusted the original outlook for the BMW Group, the
assumptions regarding the development of the global
economy and the economic risks and opportunities for
the financial year 2020 in the Combined Management
Report, as well as the statement regarding the Events
after the end of the reporting period. On the same day,
the Financial Statements of BMW AG were drawn up
anew by the Board of Management.
The key financial performance indicator for BMW AG
is the dividend payout ratio (unappropriated profit of
BMW AG in accordance with HGB in relation to the net
profit for the year of BMW Group in accor dance with
IFRS). The key non-financial performance indicators
are essentially identical and concurrent with those of
the BMW Group. These are described in detail in the
Report on Economic Position section of the Combined
Management Report.
Differences in accounting treatments based on HGB
(used for the Company Financial Statements) and
IFRS (used for the Group Financial Statements) 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 as well as the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
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 sec-
tion of the Combined Management Report.
BMW AG develops, manufactures and sells auto-
mobiles 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 primarily through branches, sub sidiaries,
independent dealerships and importers. In the
financial year 2019, BMW AG increased automobile
deliveries by 35,898 units to 2,555,795 units. This
figure includes 534,638 units relating to series sets
supplied to the joint venture BMW Brilliance Auto-
motive Ltd., Shenyang, an increase of 44,056 units
over the previous year.
At 31 December 2019, BMW AG employed a workforce
of 88,303 people (31 December 2018: 89,842 people).
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 *
Other operating 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
77
2019
2018
84,691
– 70,178
14,513
– 3,979
– 2,776
– 5,528
1,295
– 2,526
1,858
39
– 767
2,129
– 22
2,107
– 461
1,646
78,355
– 63,841
14,514
– 4,078
– 2,803
– 5,859
2,184
– 1,158
2,344
– 1,452
– 872
2,820
– 19
2,801
– 498
2,303
* Separate presentation of other operating income and expenses from the financial year 2019. Prior year’s figures will be presented analogously.
Revenues increased by € 6,336 million year-on-year,
primarily reflecting growth in the volume of deliveries
to customers. In geographical terms, the increase re-
lated mainly to China and the USA. Revenues totalled
€ 84,691 million (2018: € 78,355 million), of which
Group internal revenues accounted for € 57,412 million
(2018: € 58,707 million) or 67.8 % (2018: 74.9 %).
Cost of sales increased by 9.9 % to € 70,178 million,
mostly due to the higher number of deliveries and
the rise in cost of materials. Gross profit decreased
by € 1 million to € 14,513 million.
Selling and administrative expenses were slightly
lower than in the previous year.
The expense for income taxes relates primarily to
current tax for the financial year 2019.
After deducting the expense for taxes, the Company
reports a net profit of € 2,107 million, compared to
€ 2,801 million in the previous year.
Subject to the shareholders’ approval of the appro-
priation of results at the Annual General Meeting,
the unappropriated profit available for distribution
amounts to € 1,646 million (2018: € 2,303 million).
As a percentage of Group net profit, the dividend
corresponds to a payout ratio of 32.8 % (2018: 32.0 %).
78
Report on
Economic Position
Comments on
Financial Statements
of BMW AG
Research and development expenses related mainly to
new vehicle models (including the new 1 Series, the
2 Series Gran Coupé and the X6), expenditure on the
development of reference architectures, powertrain
systems and automated driving, as well as higher
expenditure on vehicle electrification. Compared to
the previous year, research and development expenses
decreased by 5.6 %.
Other operating income fell to € 1,295 million (2018:
€ 2,184 million), whereby the change was mainly
attributable to a positive prior-year effect resulting
from the change in method for measuring provisions
for statutory and non-statutory warranties and prod-
uct guarantees.
Other operating expenses totalling € 2,526 million
(2018: € 1,158 million) were impacted mainly by the
recognition of the provision recognised in connection
with ongoing EU Commission antitrust proceedings.
Income from profit transfer agreements with Group
companies, reported in the line item Result on invest-
ments, decreased year-on-year. By contrast, financial
result improved by € 1,491 million, mainly due to
higher income from designated plan assets offset
against pension obligations. The lower impairment
loss of € 30 million (2018: € 119 million) recognised on
the investment in SGL Carbon SE, Wiesbaden, also
had the effect of keeping down the deterioration in
earnings for the year.
Combined Management Report 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
Prepaid expenses
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
79
2019
2018
405
12,473
3,762
16,640
5,994
964
16,698
3,513
4,109
6,757
252
11,976
3,559
15,787
4,811
947
8,570
3,595
4,080
6,542
38,035
28,545
58
1,086
535
668
55,819
45,535
659
2,210
10,564
1,646
15,079
658
2,177
10,103
2,303
15,241
28
28
205
8,784
8,989
511
5,751
21,777
187
28,226
3,497
55,819
214
7,824
8,038
545
5,560
12,670
285
19,060
3,168
45,535
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled € 3,233 million (2018: € 2,975 million), up by
8.7 % compared to the previous year. Depreciation
and amortisation amounted to € 2,573 million (2018:
€ 2,470 million).
The carrying amount of investments rose to € 3,762 mil-
lion (2018: € 3,559 million), mainly due to additions to
investments in subsidiaries amounting to € 257 million.
The impairment loss recognised on the investment in
SGL Carbon SE, Wiesbaden, amounting to € 30 million
(2018: € 119 million) had an offsetting effect.
80
Report on
Economic Position
Comments on
Financial Statements
of BMW AG
Inventories increased to € 5,994 million (2018:
€ 4,811 million), mainly due to the build-up of raw
materials, supplies and goods for resale and the
first-time inclusion in inventories of prepayments
on orders.
Receivables from subsidiaries, most of which relate
to intragroup financing receivables, increased to
€ 16,698 million (2018: € 8,570 million), primarily due
to the change in the exercise of the option to offset
receivables from and payables to subsidiaries with
effect from the financial year 2019.
The decrease in other receivables and other assets
to € 3,513 million (2018: € 3,595 million) was mainly
attributable to lower receivables from companies with
which an investment relationship exists. The increase
in tax receivables had an offsetting effect.
As a result of the lower unappropriated profit com-
pared with the dividend paid for the previous financial
year, equity decreased by € 162 million to € 15,079 mil-
lion. The equity ratio fell from 33.5 % to 27.0 %, mainly
due to the higher balance sheet total.
In order to secure pension obligations, cash funds to-
talling € 497 million were transferred to BMW Trust e. V.,
Munich, in conjunction with a Contractual Trust
Arrangement (CTA), to be invested in plan assets.
Plan assets are offset against the related guaranteed
obligations. The resulting surplus of assets over liabil-
ities is reported in the BMW AG balance sheet on the
line item Surplus of pension and similar plan assets
over liabilities.
Provisions for pensions went down from € 214 million
to € 205 million, after offsetting pension plan assets
against pension obligations.
Other provisions increased year-on-year, mainly due
to the provision recognised in connection with
EU Commission antitrust proceedings.
Liabilities to banks decreased by € 34 million, mainly
as a result of the repayment of project-related loans.
Liabilities to subsidiaries amounting to € 21,777 mil-
lion (2018: € 12,670 million) comprised mainly
financial liabilities. In addition to higher intragroup
financing liabilities, the increase was primarily due
to the change in the exercise of the option to offset
receivables from and payables to subsidiaries with
effect from the financial year 2019.
Deferred income increased by € 329 million to
€ 3,497 million and included mainly amounts for
services still to be performed relating to service and
maintenance contracts.
Liquidity within the BMW Group is ensured by means
of a liquidity concept applied uniformly across the
Group. This involves concentrating a significant part
of the Group’s liquidity at the level of 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.
Cash and cash equivalents increased by € 215 million
to € 6,757 million, mainly as a result of net positive
cash inflows from operating activities. Investments
in long-lived assets and the payment of the dividend
for the previous financial year had an offsetting effect.
Combined Management Report 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. At the same time, the result
in investments has a significant impact on the earn-
ings of BMW AG.
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
For the financial year 2020, BMW AG forecasts a divi-
dend payout ratio (unappropriated profit of BMW AG
in accordance with HGB in relation to the BMW Group
net profit for the year in accordance with IFRS) within
a range of between 30 and 40 % (2019: 32.8 %).
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG
with respect to its non-financial performance indica-
tors correspond largely to the BMW Group’s outlook.
This is described in detail in the Report on Outlook,
Risks and Opportunities section of the Combined
Management Report.
81
Events after the end of the reporting period
On 30 January 2020, the World Health Organisation
(WHO) declared an international health emergency
due to the outbreak of coronavirus. Since 11 March
the WHO has characterised the spread of the corona-
virus as a pandemic.
The continuing spread of the coronavirus and the
impact on the business development of BMW AG is
being continually monitored. Based on current devel-
opments, BMW AG expects that the increasing spread
of the coronavirus and the necessary containment
measures will have a negative impact on BMW AG
vehicle deliveries in all key sales markets. Risks
also exist for upstream and downstream processes,
for example, through possible bottlenecks due to
supply shortages.
Current assessments and assumptions for the financial
year 2020, to the extent already known to BMW AG,
have been taken into account and described in the
outlook report. Apart from these assessments, no
further significant negative effects are known or can
be estimated at the present time. However, further
negative effects could arise in the course of the year.
No other events have occurred since the end of the
financial year that could have a major impact on the
results of operations, financial position and net assets
of BMW AG.
PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, Frankfurt am Main, Munich branch, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet
and the income statement are presented here. The
BMW AG financial statements for the financial year
2019 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 on the homepage
of the BMW Group under
www.bmwgroup.com / ir.
82
Report on Outlook,
Risks and
Opportunities
Outlook
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
Economic development significantly
slowed by spread of coronavirus
Automobile markets in decline
as consequence worldwide
BMW Group outlook for 2020 signifi-
cantly impacted by coronavirus
OUTLOOK
The report on outlook, risks and opportunities describes
the expected development of the BMW Group in 2020,
including the significant risks and opportunities, from
a Group management perspective. In line with the
Group’s internal management system, the outlook
covers 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 that are based on
the BMW Group’s expectations and assessments and
which can be influenced by unforeseeable events. As
a result, actual outcomes can deviate either positively
or negatively from the expectations described below –
for example on account of political and economic
developments. Further information is provided in
the section Risks and Opportunities.
Its 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 matters discussed
therein are relevant for all of the BMW Group’s key
performance indicators and could result in variances
between the outlook and actual outcomes.
Combined Management Report 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
any which could have an effect on the overall perfor-
mance of the Group. The expectations contained in
the outlook are based on the BMW Group’s forecasts
for 2020 and reflect its most recent status. The basis
for the preparation of and the principal assumptions
used in the forecasts – which consider the consensual
opinions of leading organisations, such as economic
research institutes and banks – are set out below. The
BMW Group’s outlook is drawn up on the basis of
these assumptions.
The high degree of uncertainty surrounding the global
spread and resulting consequences of coronavirus
makes it difficult to provide an accurate forecast of
the BMW Group’s business performance for the finan-
cial year 2020. Based on the latest developments, the
BMW Group expects the spread of coronavirus and
the required containment measures to have a negative
impact on delivery volumes in all major markets over
the year 2020 as a whole. This assessment is based on
the assumption that deliveries across all markets will
return to normal after a few weeks. Any potential
longer-term effects on deliveries due to the spread of
coronavirus and the associated volatility on financial
markets cannot be assessed at present and are there-
fore not included in the outlook.
In the UK, in addition to the consequences of corona-
virus, uncertainties relating to EU exit negotiations on
a trade agreement are having the effect of impairing
the reliability of forecasts drawn up by businesses.
Irrespective of these matters, the BMW Group is
working on the basis that an agreement between the
EU and UK will be finalised by 31 December 2020.
Furthermore, the BMW Group anticipates that trade
tensions between the USA and China will continue
to be a source of uncertainty, but that the current
tariffs will not see a further increase. The Group also
assumes that trade between the EU and the USA will
not be subject to additional tariffs.
From the beginning of the financial year 2020, the key
performance indicator for the workforce size will be
based solely on the number of core and temporary
employees. This change is in line with the reorgan-
isation of internal management, which focuses on
these employee groups. Employee groups such as
apprentices, students gaining work experience and
doctoral candidates primarily serve to secure the next
generation of employees and promote the training of
young people, and are therefore excluded from an
internal management perspective. For this reason,
they will no longer be included in the key performance
indicator for the workforce size.
83
Economic outlook
The global economy will be significantly impacted by
the knock-on consequences of coronavirus. Despite
the fact that wide-ranging monetary and fiscal policy
measures have already been initiated in many coun-
tries, global growth is likely to be significantly lower
than in the previous year. Although the provisional
agreement in the trade dispute between the USA and
China as well as the reduced level of concern regarding
a potentially disorderly withdrawal of the UK from the
EU gave rise to some optimism at the beginning of the
year, the positive impact in these two areas is likely to
be far outweighed by the knock-on consequences of
coronavirus. At present, it is not possible to provide an
exact assessment of the situation. Further information
on political and global economic risks is also provided
in the section Risks and Opportunities.
GDP in the eurozone is likely to grow significantly
more sluggishly in 2020 than the predicted rate of 1.0 %.
The growth rate in Germany is likely to be even slower.
Similarly, prospects for the economies of other member
states in the eurozone are also on the gloomy side.
France and Spain will grow only marginally at most,
while Italy, the first country in Europe to be affected
by coronavirus, is likely to go in recession.
In the UK, apart from the impact of coronavirus, eco-
nomic performance in 2020 will also depend on the
progress of negotiations with the EU regarding a free
trade agreement. Overall, GDP growth in 2020 is likely
to be significantly below the most recently predicted
level of 1.0 %.
In the USA, growth is expected to continue slowing
down in 2020. The spread of coronavirus and the
resulting containment measures are likely to reduce
eco nomic momentum to a level considerably lower than
the most recently predicted 1.7 %, despite developments
on the labour and property markets remaining positive.
The US Federal Reserve has already responded to the
spread of coronavirus with interest rate cuts and will
likely adopt further mea sures to support the economy.
Even without the impact of coronavirus, the ongoing
normalisation of the Chinese economy would have
caused the country’s growth rate to continue falling in
2020. However, the extent of the slowdown will now be
much greater and certainly be below the most recently
predicted rate of 5.6 %.
Rather than growing slightly, the Japanese economy
is likely to contract due to coronavirus, particularly
in view of the fact that the value added tax hike in
October 2019 is bound to exert downward pressure
on private consumption for some time to come. As an
export-oriented country, Japan is likely to be hit harder
by a decline in world trade than China, for example.
84
Report on Outlook,
Risks and
Opportunities
Outlook
Currency markets
Currencies of particular importance for the interna-
tional operations of the BMW Group are the Chinese
renminbi, the British pound, the Japanese yen and
the US dollar. All of these major currencies are again
expected to be subject to a high degree of fluctuation
in 2020.
The US dollar could benefit from its function as a
“safe haven” in 2020 due to the spread of coronavirus.
Overall, therefore, the US dollar is more likely to move
sideways against the euro.
In the case of the Chinese renminbi, the close eco-
nomic links between the USA and China suggest that
the currencies of these two countries will develop
relatively synchronously. The renminbi is likely to
depreciate marginally against the euro in 2020.
The value of the British pound is currently being
largely determined by the progress of the Brexit
negotiations. Accordingly, the most likely scenario
is a volatile sideways movement of the pound against
the euro.
The Japanese central bank’s highly expansionary
monetary policy is unlikely to change in 2020. The
euro / yen exchange rate is therefore likely to follow a
sideways trend.
The currencies of numerous emerging economies
could come under further downward pressure against
the US dollar and the euro, particularly in countries
such as Russia, Brazil and India.
International automobile markets
According to the original forecasts, new registrations
worldwide were expected to decrease slightly in 2020
(83.1 million units; – 0.5 %). However, due to the
worldwide spread of coronavirus, new registrations
are now expected to drop significantly.
International motorcycle markets
Prior to the outbreak of coronavirus, the BMW Group
had predicted that the global motorcycle markets in
the 250 cc plus class would grow slightly in 2020. For
instance, the upward trend seen on major European
markets such as France and Spain was expected to con-
tinue. In Germany and Italy, the markets were forecast
to remain stable. By contrast, the USA was predicted to
see a further slight decline in motorcycle registrations
in 2020, whereas Brazil was expected to see a slight
increase. However, due to the spread of coronavirus,
global motorcycle markets in the 250 cc plus class are
now expected to decline slightly year-on-year.
International interest rate environment
Protectionism and the ongoing trade dispute between
the USA and China are casting a shadow over global
growth prospects for 2020. The new coronavirus,
which is spreading worldwide, poses an additional
risk for the global economy. Various central banks
and governments have already taken action to coun-
teract the economic impact of the virus with a raft of
monetary policy measures.
In view of the developments regarding coronavirus,
the US Federal Reserve lowered its benchmark interest
rates by 0.5 percentage points on 3 March 2020 and by
1 percentage point on 15 March 2020. In connection
with the latest developments, further reductions
appear to be likely over the course of the year.
Further central banks are expected to take measures
to mitigate the negative impact on the global economy
and to ensure liquidity on the markets.
Apart from the consequences of the spread of corona-
virus and other global developments, the progress of
negotiations on a trade agreement between the EU
and the UK are likely to have a considerable impact on
the UK economy. The Bank of England is also expected
to adopt measures to counter the negative economic
impact of coronavirus and to stabilise the economy.
Combined Management Report The economic consequences of the coronavirus and
the trade war with the USA are likely to continue
having an adverse impact on the Chinese economy in
2020. A mixture of reforms as well as monetary and
fiscal policy measures is intended to counteract any
sharp slowdown in economic growth.
Despite the government’s economic mea sures against
the negative effects of the tax increase, the economy
in Japan is likely to be impacted negatively by the
coronavirus. It is expected that the Japanese central
bank will continue its extremely low interest rate poli-
cies, in order to reach the target of 2 % price stability.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
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 capitalise on any opportu-
nities that present themselves, even at short notice.
Coordination between the Group’s sales and produc-
tion 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.
In view of the increasingly unpredictable conse quences
of economic and political conditions around the
world, actual economic growth in some regions may
deviate from expected trends and outcomes. Areas
affected in this context include trade and customs
policies, security and potential additional international
trade conflicts.
85
Direct effects of coronavirus on the BMW Group
Prior to the outbreak of coronavirus, the BMW Group’s
original forecast for the Automotive segment envis-
aged a slight increase in deliveries to customers and
an EBIT margin of between 6 and 8 %. Group profit
before tax was expected to increase significantly.
The spread of coronavirus has slowed down the
growth of the BMW Group’s deliveries in China. In
light of the sharp increase in corona infections in other
regions of the world, currently particularly in Europe
and North America, the BMW Group now expects
worldwide deliveries to customers to be significantly
down on the previous year.
Due to the lower volume of deliveries in China com-
pared to the original forecast, the necessary contain-
ment measures and a similar trend already emerging
in other regions of the world, including Europe and
North America, earnings of the Automotive segment
are likely to be negatively impacted, particularly in
the first half of the year. The negative effect on the
EBIT margin of the Automotive segment over the full
twelve-month period is currently expected to be in
the region of four percentage points. Based on the
latest forecast, the EBIT margin for the Automotive
segment is therefore expected to be within the range
of 2 and 4 %.
In the Financial Services segment, the number of new
contracts is expected to decrease and the risk provi-
sioning expense to increase. As a result, the return on
equity is forecast to drop slightly year-on-year.
Taking into account the effects described above, Group
profit before tax is expected to be significantly lower
than in 2019.
Furthermore, risks also exist for upstream processes,
including possible bottlenecks due to supply shortages.
The BMW Group continues to observe developments
closely and is ready to take all necessary measures.
86
Report on Outlook,
Risks and
Opportunities
Outlook
Outlook for the BMW Group
Overall assessment by Group management
Within a volatile environment, now overshadowed
by the global spread of coronavirus, business is ex-
pected to develop negatively during the financial year
2020. While numerous new automobile and motor-
cycle models as well as individual mobility-related
services will generate additional momentum, the
various factors described above are likely to have a
major offsetting impact. Research and development
expenses will remain at a high level in connection
with future- oriented projects. In light of the impact
of the global spread of coronavirus, profit before tax
during the period covered by the outlook is likely to
decrease significantly.
For the same reason, Automotive segment deliv-
eries to customers are likely to be well down on
the previous year. At the same time, fleet carbon
dioxide emissions are forecast to drop considerably.
Influenced by the negative factors described above,
the Automotive segment’s EBIT margin in 2020 is
expected to lie within a target range of 2 and 4 %. The
latest prediction is that the RoCE in this segment is
likely to be significantly lower than one year earlier.
The RoE in the Financial Services segment is expected
to decrease slightly, mainly due to the higher risk
provisioning expense.
The Motorcycles segment is now expected to record a
slight decrease of deliveries to customers, down on the
previous forecast of a solid increase. The EBIT margin
is expected to lie within a target range of 6 and 8 %,
while the RoCE is likely to be slightly under the pre-
vious year’s level.
The targets are to be achieved with a workforce size
which – based on the new method of calculation
described above – will be at a similar level to the
previous year (workforce size at the end of 2019
based on the new definition: 126,016 employees;
workforce size based on the previous definition:
133,778 employees).
The prevailing high level of uncertainty – particularly
in connection with the further spread of corona-
virus, economic and political developments such as
the negotiations between the EU and the UK on a
trade agreement by 31 December 2020, as well as
international trade and customs policies – may cause
economic developments in many regions to deviate
markedly from expected trends and outcomes. Any
such deviations could have a significant impact on
the business performance of the BMW Group.
Furthermore, the actual business performance of the
BMW Group may also differ from current expectations
as a result of the risks and opportunities described
below in the Report on Risks and Opportunities.
Combined Management Report BMW Group key performance indicators
• 61
Group
Profit before tax
Workforce at year-end
Automotive seGment
Deliveries to customers 2
Fleet emissions 3
EBIT margin
Return on capital employed
motorcycles seGment
Deliveries to customers
EBIT margin
Return on capital employed
87
2019
reported
2019
adjusted
2020
Outlook1
€ million
7,118
–
significant decrease
133,778
126,016
in line with last
year’s level
units
2,538,367
g CO2 / km
%
%
units
%
%
127
4.9
29.0
175,162
8.2
29.4
–
–
–
–
–
–
–
–
significant decrease
significant decrease
between 2 and 4
significant decrease
slight decrease
between 6 and 8
slight decrease
slight decrease
FinAnciAl services seGment
Return on equity
%
15.0
1 Based on adjusted figures.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units).
3 EU-28.
88
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 Group’s corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risks.
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 materi alise
are taken into account in the Outlook Report. The
following sections focus on potential future devel-
opments or events, which could result in a positive
(opportunity) or a negative (risk) deviation from the
BMW Group’s outlook. 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 suc-
cess of the business are monitored and managed. Any
risks capable of posing a threat to the going-concern
status of the BMW Group are strictly avoided. Where
no specific reference is made, opportunities and risks
relate to the Automotive segment. The scope of entities
consolidated in the Report on Risks and Opportuni-
ties corresponds to the scope of consolidated entities
included in the BMW Group Financial Statements.
Risk management system
The objective of the risk management system, and the
main function of risk reporting, is to identify, mea-
sure and, where possible, actively manage internal or
external risks that could threaten the attainment of the
Group’s corporate targets. According to Group-wide
rules, every employee and manager has a duty to report
risks through the relevant reporting channels. The key
elements of a good risk culture are rooted in the core
values of the BMW Group, its risk management manual
and in the principles of its risk management strategy.
The risk management system 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 Representatives.
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 This formal structure reinforces the network’s visibility
and underlines the importance of risk management
within the BMW Group. Responsibilities and tasks
of the centralised risk management function and the
Network Representatives are clearly documented and
accepted. In view of the dynamic growth of business
and the increasingly volatile environment in which it
operates, the BMW Group’s Corporate Audit reviews
its risk management system for effectiveness and
appropriateness on an annual basis.
Other functions such as compliance (see the section
Corporate Governance) and the internal control sys-
tem (see the section Internal Control System) form
key interfaces with the risk management system.
As an independent part of the organisation, Group
Internal Audit also ensures the appropriateness and
effectiveness of these functions.
During 2019, the risk management system was fur-
ther enhanced by focusing on the concept of simula-
tion-based risk aggregation and by looking at risks not
only from the perspective of areas of responsibility, but
also from a process-oriented perspective, with a view to
improving the informative value of risk-bearing capac-
ity and in order to gain a better insight into the chains
of effects between individual risks. For this purpose,
individual risks from different areas of responsibil-
ity were allocated to the relevant process steps and
dependencies between individual risks mapped out.
Risk management process
The risk management process covers the entire Group
and comprises the 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. All risks
are assessed using a loss distribution approach,
thereby enabling better comparability of risks for
both internal and external reporting purposes. Risks
are classified according to the extent of their average
earnings impact, taking into account the probability of
occurrence (risk amount) or the risk-bearing capacity
(potential worst-case earnings impact).
Risk assessment for the BMW Group is performed in
conjunction with the calculation of risk-bearing capac-
ity. For this purpose, risks measured on a worst-case
basis are aggregated using a value-at-risk model
(99 % confidence level) with correlation effects taken
into account, and compared with the asset cushion.
89
The risk-bearing capacity is regularly monitored by
means of an integrated limit system for individual
risk categories.
The risk management system is regularly examined
by Group Internal Audit. The incorporation of
new insights and requirements ensures continual
improvement to the system. Training 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.
Alongside comprehensive risk management, sustain-
able business practice also constitutes a core strategic
principle for the BMW Group. Sustainability-related
risks are therefore also integrated in the Group-wide
risk network. In accordance with the CSR Directive
Implementation Act, risks that can have an impact on
the non-financial aspects referred to in the law were
reviewed as part of the reporting process. Significant
risks in this context are defined as risks from business
activities, business relationships and products / ser-
vices of the BMW Group that are highly likely to
have a serious adverse impact. No significant risks
were identified during the review. The Group’s Non-
Financial Declaration is provided in the Sustainable
Value Report 2019, which is available on the Internet
at
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.
Risk management within the Financial Services busi-
ness is built on the prevailing risk culture, the defined
risk strategy, the internal capital adequacy assessment
process framework and a set of rules comprising prin-
ciples and guidelines. The risk management process
is ensured in organisational terms by means of a clear
division between front- and back-office activities and
a comprehensive internal control system. The main
tool used to manage risks within the Financial Services
segment is ensuring the segment’s risk-bearing capac-
ity. Risks – in the sense of unexpected losses – must
be covered at all times. This is achieved by means of
risk-covering assets (asset cushions) in the form of
equity capital derived from the entity’s risk appetite.
Unexpected losses are measured according to various
value-at-risk models, which are validated at regular
intervals. Risks are also aggregated after taking
account of correlation effects. In addition to assessing
the Group’s ability to bear risk, stress scenarios are
also examined. The segment’s risk-bearing capacity
is also regularly monitored by means of an integrated
limit system for the various risk categories.
90
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
Risk measurement
Based on their significance with respect to the results
of operations, financial position and net assets of the
BMW Group, risks are classified as high, medium or
low. The impact of risks is measured and reported net
of risk mitigation measures that are already taking
effect (net basis).
In the following sections, “earnings impact” is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
The potential earnings impact arising on the occur-
rence of a risk, measured on the basis of a worst-case
scenario over the two-year assessment period, is
classified as follows:
Class
Low
Medium
High
Potential earnings impact
in a worst case scenario
> € 0 – 500 million
> € 500 – 2,000 million
> € 2,000 million
The risk amount, which indicates the significance of
risks for the BMW Group, corresponds to the average
earnings impact, taking into account probability of
occurrence and risk mitigation measures that are
already taking effect.
The following criteria apply for the purposes of clas-
sifying the risk amount:
Class
Low
Medium
High
Risk amount
> € 0 – 50 million
> € 50 – 400 million
> € 400 million
Opportunities 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
Group’s product and service portfolio is continu ally
reviewed on the basis of these analyses. This results,
for example, in new product projects being pre sented
to the Board of Management for consideration. Prob-
able measures aimed at increasing profitability are
already incorporated in the outlook.
Continuous monitoring of major business processes
and strict cost controls are essential for ensuring
strong profitability and return on capital employed.
In order to be able to compete successfully in the long
term and at the same time help advance the move
towards climate neutrality that is being demanded by
politicians and society alike, it is the BMW Group’s
policy to design flexible platforms for rear- and front-
wheel drive vehicles, enabling it to produce different
drivetrain systems on the back of a single architecture
and therefore optimise plant structures.
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. 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.
91
Risks
Opportunities
Classification of
risk amount
Change compared
to prior year
Classification
Change compared
to prior year
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 network
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
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial posi-
tion and net assets of the BMW Group. Unforeseen
disruptions in global economic relations can have
highly unpredictable effects. Economic risks can
result in lower purchasing power in the countries
and regions affected and cause reduced demand for
the products and services offered by the BMW Group,
while at the same time having a negative impact on
production. 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.
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. A reorientation
of US economic policy, changes within the EU and
High
High
High
Low
High
Medium
Medium
Low
High
Medium
High
Medium
Medium
Medium
Stable
Insignificant
Stable
Stable
Stable
Insignificant
Insignificant
High
Increased
Insignificant
Medium
Decreased
Insignificant
Stable
Stable
Insignificant
Insignificant
Decreased
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Significant
Significant
–
Significant
Insignificant
Decreased
Significant
Significant
–
–
Stable
Stable
–
–
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
–
Stable
possible economic agendas by parties within the EU
that are critical of globalisation and could therefore
jeopardise stability could lead to more restrictive trade
practices in the coming years.
A possible introduction of further trade barriers,
including anti-dumping customs duties and duties
aimed at protecting national security by the
US administration, could have a significantly adverse
impact on the BMW Group’s operations through
less favourable conditions for importing vehicles.
Moreover, countermeasures by the USA’s trading
partners could slow down global economic growth
and have a sustained adverse impact on the export
of vehicles produced in the USA. The BMW Group’s
“production follows the market” strategy involves
local production both in the USA and with other
important trade partners. Local production reduces
the existing risk of trade barriers. Nevertheless, any
increase in trade barriers would have an adverse
impact on the BMW Group.
92
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
The withdrawal of the UK from the EU 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 Euro-
pean 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
result in production losses due to delays in customs
clearance. In addition, it cannot be ruled out that
Brexit could lead to reduced customer spending in the
wake of weaker economic performance, particularly
in the UK, but also in parts of the EU. In the short and
medium term, uncertainty regarding the outcome of
the negotiations with the EU on a trade agreement by
31 December 2020 is likely to exacerbate these factors
and cause further unfavourable currency effects. A
possible further economic downturn in countries of
the EU could also potentially reduce growth prospects
for the BMW Group. European integration with a
unified economic and currency area is an important
pillar of economic stability in Europe.
The transition in China from an investment-driven to
a consumer-driven economy is associated with slower
growth rates and, potentially, greater instability in
the short to medium term 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.
A drop in raw material prices could result for the
BMW Group in lower demand from these countries,
while at the same time bringing down raw material
procurement costs for the BMW Group. Turmoil on
the Chinese property, stock and banking markets
as well as the pursuit of overly restrictive monetary
policies by the US Federal Reserve could pose consid-
erable risks for global financial market stability, such
as increased currency fluctuations and unfavourable
consequences for emerging markets in particular.
Furthermore, increasing political unrest, military con-
flicts, terrorist activities, natural disasters or pandemics
could have a lasting negative impact on the global
economy and international capital markets.
The enormous uncertainty currently regarding the
global spread and impact of the coronavirus makes
it difficult to make an accurate forecast of vehicle
deliveries. If the sales situation across all markets
does not normalise after a few weeks, further effects
on the BMW Group’s vehicle deliveries to customers
as well as on upstream and downstream processes
may materialise that cannot be assessed in terms of
either their duration or negative impact. The Group
is observing the situation closely and is taking appro-
priate measures.
Should the global economy develop significantly
better than presented in the outlook, opportunities
could arise for the BMW Group’s revenues and earn-
ings. Significantly stronger GDP growth in China,
demand- oriented reforms within the eurozone, the
intensification of trade relations between the EU and
the UK, de-escalation of the trade dispute between
the USA and its trading partners or more robust
consumer spending in emerging markets due to ris-
ing raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pric-
ing. The planned expansion of production capacities
will enable emerging opportunities to be exploited.
Macroeconomic opportunities that could generate
a sustainable impact on earnings are currently clas-
sified by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legis-
lation and regulations, particularly with regard to
emissions, safety and consumer protection as well
as regional vehicle-related purchase and usage taxes,
represents a significant risk for the automobile indus-
try. Country- and sector-specific trade barriers may
also change at short notice. A sudden tightening
of regulations in any of these areas may necessi-
tate significantly higher investments and ongoing
expenses or influence customer behaviour. If the risk
of market disruptions as a result of unforeseeable
short-term changes in legislation and regulations
were to materialise, this could have a high negative
impact on earnings over the two-year assessment
period and beyond. The risk amount attached to
these risks is classified as high.
At present, the BMW Group can observe a continu-
ous trend towards more stringent vehicle emissions
regulations, particularly in relation to conventional
drivetrain systems. The BMW Group is addressing this
risk on the one hand through its ongoing systematic
development of highly efficient combustion engines,
with the aim of further reducing fuel consumption and
emissions. At the same time, it is pressing ahead with
its plan for electrified vehicles across all brands and
model series. A main focus area of the BMW Group is
the systematic electrification of all brands and model
series. By the end of 2021, the BMW Group aims to
have more than one million electrified vehicles on
the roads.
Combined Management Report 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.
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as automated driving, and for
scaling up the range of electric mobility offerings.
In the case of BMW Group electrified vehicles, a
faster expansion of charging infrastructure could
increase acceptance and help boost sales of planned
or recently introduced product innovations com-
pared 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 Group’s earnings could also be positively
affected in the short to medium term by changes in
trade policies. A possible reduction in tariff barri-
ers, import restrictions or direct excise duties could
lower the cost of materials or 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 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 pref e rences
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.
A potential further intensification in competition
could put pressure on sales volumes, selling prices and
margins. For instance, the planned introduction of the
RDE II standard could result in market distortions –
similar to those which arose on the conversion to the
new WLTP test procedure in 2018 – even though the
BMW Group is compliant with the new requirements.
Changes in customer behaviour can also be brought
about by changes in attitudes, values, environmental
factors and fuel or energy prices. The BMW Group’s
flexible sales and production processes enable risks to
be reduced and newly arising opportunities in market
and product segments to be taken.
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
93
have been, or are being, introduced, includ ing entry
restrictions, congestion charges or, in some situations,
highly restrictive registration rules. These may impact
local demand for the BMW Group vehicles affected
and hence have a negative impact on sales, margins
and, possibly, the residual values of these vehicles.
The BMW Group is addressing this risk, for example,
by broadening its range of electrified vehicles.
New opportunities are being sought to create added
value for customers, and thereby to realise significant
opportunities with respect to sales growth and pri c-
ing. Further development of the product and mobil-
ity portfolio 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 services and bring them to market. If the
negative impact of the current competitive situation
is reduced more quickly than expected, additional
opportunities will arise for the BMW Group. Com-
pared to the assumptions made in the outlook, the
BMW Group expects these opportunities to have no
significant earnings impact over the two-year assess-
ment period.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
Risks relating to production processes and technology
fields can lead to unplanned interruptions in produc-
tion or additional costs due to vehicle recall actions.
If risks arising from production processes and tech-
nologies were to materialise, they could have a high
earnings impact over the two-year assessment period.
The corresponding risk amounts are classified as high.
During the process of expanding the division-based
perspective by a process-oriented perspective, the
individual risks were combined to create an overall
view of the development and production process. As
a result, the risk assessment was increased compared
to the previous year.
Potential causes of production downtimes include fire,
machine and tooling breakdowns, IT malfunctions,
temporary disruption in utility supply or transporta-
tion and logistical disruptions. All production units
have a variety of measures in place to deal with
potential production interruptions and downtimes,
some of which are integrated into the planning
process and can be implemented operationally with
a high degree of flexibility. These measures are highly
relevant in terms of both the amount of damage and
the probability of occurrence of risks. Examples
include the interchangeability of production facilities,
preventive maintenance of production facilities, the
maintenance of adequate safety stock levels and the
management of spare parts across the plant network.
94
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
Risk is also reduced through flexible working hour
models and working time accounts as well as the
ability to build individual vehicle models or engine
types with a high degree of flexibility – either addi-
tionally or alternatively – at other sites, depending on
requirements. The focus is on ensuring that customers
can take delivery of their vehicle, both on time and
in the premium quality expected.
Technical fire protection systems, rapid response by
on-site fire brigades and appropriate employee train-
ing represent the three key strategies for preventing
or reducing potential damage from fires. Furthermore,
policies are in place with insurance companies of high
credit standing for fire-related events that lead to
significant production interruptions at the Group’s
or at suppliers’ premises. Measures undertaken in
conjunction with the latest challenges posed by Brexit
include appropriate increases in levels of safety stocks,
enhancing flexibility along the supply chain and estab-
lishing specific IT solutions to handle related financial
and logistics processing issues. In addition, in order
to counter the risk of limited availability of products,
particularly at the start of production for new vehicle
projects, appropriate quality management processes
are in place to monitor and secure their success.
Targeted cyberattacks could cause damage to pro-
duction facilities, resulting in long downtimes and,
consequently, substantial losses. This threat is being
countered by the rollout of new detection, analysis
and response measures.
Vehicles may be damaged or destroyed due to natural
hazards or other risks during transport from produc-
tion plants to the sales regions. As a consequence
of the growing number of major claims, deductible
amounts included in transport insurance policies have
already risen significantly. In fact, as more and more
insurance companies withdraw from this market seg-
ment, there is a risk that it could become economically
unviable to take out insurance, as a result of which the
BMW Group would be required to bear the losses itself.
The BMW Group recognises appropriate provisions
for statutory and non-statutory warranty obligations.
It cannot be ruled out, however, that additional costs
could arise in connection with vehicle recall actions
that are either not covered or not fully covered by pro-
visions. Despite thorough quality assurance processes,
such risks can always arise if materials and / or
processing procedures used prove insufficient, in
some cases years after the launch of a product. Further
information on risks relating to provisions for statutory
and non-statutory warranty obligations is provided in
note 33 of the Group Financial Statements.
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new
and complex technologies. Digitalisation within the
production area is being driven by technological and
IT innovations. Lean processes will remain the basis
for efficient production systems in the future. Digital
solutions invariably offer added value if they add to
the efficiency of serial processes. A good example of
this in the field of production logistics is the use of
smart transport robots, which help optimise processes
relating to parts handling and order picking.
Given the long lead times in developing new prod-
ucts and processes, additional opportunities are not
expected to have a significant impact on earnings
during the outlook period.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused
by the failure of a supplier as well as to threats to
BMW Group-relevant know-how within the supplier
network. Production problems at the level of suppliers
could lead to consequences from increased expendi-
ture for the BMW Group to production interruptions
and a corresponding reduction in sales volume.
The increasing complexity of the supplier network,
especially at the level of lower tier suppliers, whose
operations can only be influenced indirectly by the
BMW Group, is a further potential cause of down-
times at supplier locations. Moreover, the increased
threat of cyberattacks along the value chain affects
supply security maintenance and the protection of
BMW Group-relevant know-how. In order to ensure
a uniform level of information security for all parties
concerned along the value chain, the BMW Group
impresses on suppliers the importance of obtaining
appropriate IT security certification. The BMW Group
employs a comprehensive set of monitoring and
proactive control measures to ensure that supply
industry participants are able to rise to the current
challenges facing them.
If purchasing risks were to materialise, they could have
a high earnings impact over the two-year assessment
period. The level of risk attached to purchasing risks
is classified as medium. Through an intensified imple-
mentation of measures regarding fire protection and
protection from cyberattacks at the level of suppliers,
the risk has decreased compared to the previous year.
Close cooperation between carmakers and suppliers in
the development and production of vehicles and the
provision of services generates economic benefits, but
also raises levels of dependency. Potential reasons for
the failure of individual suppliers include in particular
IT-related risks, non-compliance with sustainability or
see
note 33
Combined Management Report quality standards, insufficient financial strength of a
supplier, the occurrence of natural hazards, fires and
insufficient supply of raw materials.
As part of supplier preselection, the BMW Group
checks for compliance with the sustainability standards
for the supplier network. This includes consideration of
and compliance with internationally recognised human
rights and applicable labour and social standards.
In addition, the technical and financial capabilities
of suppliers are monitored, especially where mod-
ular-based production is concerned. Supplier sites
are assessed for exposure to natural hazards, such as
floods or earthquakes, in order to identify supply risks
regarding parts and materials at an early stage and
implement appropriate precautions. Fire risks at series
suppliers are evaluated by means of questionnaires,
compliance with a defined set of criteria and selective
site inspections. The risks associated with the supply
of raw materials are countered by reducing the use
of raw materials or substituting them with alternative
raw materials.
By monitoring and developing global supplier markets,
the BMW Group continuously strives to optimise its
competitiveness by working together with the world’s
best product and service providers.
Within the Purchasing and Supplier Network, oppor-
tunities arise above all in the area of global sourcing
and associated efficiency improvements. Making
good use of suppliers’ innovations is an important
prerequisite for developing future-oriented mobility
products and services. Similarly, favourable loca-
tion-specific cost factors, in particular those arising
in connection with local supplier structures in close
proximity to new and existing BMW Group produc-
tion plants as well as the introduction of innovative
production technologies, could lead to lower cost
of materials for the BMW Group. One goal of the
BMW Group is to have battery cells manufactured
in Europe. A key prerequisite for this is the further
development of battery cell technology and exper-
tise of the processes for cell production. Contracts
have been concluded with various suppliers as part
of the electrification strategy. Integration of previ-
ously unidentified innovations from the supplier
market in the Group’s 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.
Compared to the assumptions made in the outlook,
the BMW Group does not expect such additional
opportunities to have a significant earnings impact
over the two-year assessment period.
95
Risks and opportunities relating to the sales network
In order to sell its products and services, the BMW Group
employs a global sales network, comprising primarily
independent dealerships, branches, subsidiaries and
importers. In addition, a pilot project for direct sales
will be launched in South Africa in 2020. Any threat
to the continued activities of parts of the sales network
would entail risks for the BMW Group. The occur-
rence 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 commu-
nication and connectivity in particular offer new
opportunities for the BMW Group’s brands. Based
on data from the vehicle, customers can elect to use a
specified service, at which stage they will be required to
consent to the transfer of the relevant telematics data.
Service providers that are requested to perform the
work receive the necessary data via the BMW Group’s
secure back-end. This information provides the basis
for customised, data-based and innovative service
options. Additional opportunities could arise if new
sales channels contribute to greater brand reach to
customer groups than currently envisaged in the
outlook. Compared to the assumptions made in the
outlook, the BMW Group expects these opportunities
to have no significant earnings impact over the two-
year assessment period.
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 and constant efforts to
ensure compliance with applicable data protection
legislation, the risks in this area are classified as high.
In addition to cyberattacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of informa-
tion, data and systems. Direct consequences include
expenditure required to limit the immediate damage
and to restore systems promptly. Negative impacts on
revenue due to the non-availability of products and
services or disruptions in the production of compo-
nents or vehicles are also possible. A further indirect
result could be reputational damage.
96
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
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 as a result of unauthorised access or mis-
use. Data security is an integral component of all busi-
ness 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 appropri-
ate 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 to 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 mea-
sures create a high level of security and risk awareness.
With regard to cooperation agreements and business
partnerships, the BMW Group protects its intellec-
tual property as well as customer and employee data
through clear instructions on information security
and data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly 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
management team.
With the advance of digitalisation, the BMW Group
is improving the customer experience in its existing
lines of business. At the same time, new business
segments are emerging, which have only become
feasible as a result of innovation in the area of
information technology. The development and pro-
vision of digital services for customers, increased
vehicle connectivity and automated driving solu-
tions are opening up new opportunities. Via BMW
ConnectedDrive and BMW CarData, the range of
services and apps on offer to customers is constantly
being expanded and updated. Since March 2019,
the BMW Intelligent Personal Assistant enables
customers to access functions and information by
voice interaction with an intelligent, digital charac-
ter. The BMW Group expects these opportunities
to have no significant earnings impact over the
assessment period as compared to the assumptions
made in the outlook.
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). Regularly up-
dated cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
If currency risks were to materialise, they could be
associated with a medium earnings impact over
the two-year assessment period. The risk amount
attached to currency risks is classified as 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 medium term and for
operational purposes by means of hedging on financial
markets. The principal objective 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 material prices
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 materials prices were to materialise,
they could have a medium earnings impact over
the two-year assessment period. The risk amount is
classified as medium. Significant opportunities could
arise if raw materials 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 and supply contracts with fixed
pricing arrangements.
Combined Management Report 97
liquidity risks
The major part of the Financial Services segment’s
credit financing and leasing business is refinanced on
capital markets. Liquidity risks can arise in the form
of rising refinancing costs or from restricted access to
funds as a consequence of the general market situation.
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 Group’s
rating being downgraded, is classified as low.
Based on the experience of the financial crisis, a
liquidity concept has been drawn up, which is rigor-
ously adhered to and continuously developed. Use
of the “matched funding principle” to finance the
Financial Services segment’s operations generally
eliminates liquidity risks. 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 mon-
itoring ensure that cash inflows and outflows for the
various maturities and currencies offset each other.
This approach is incorporated in the BMW Group’s
liquidity concept. The liquidity position is monitored
continuously and managed through Group-wide
planning of financial requirements and funding. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group’s solid financial and earnings position
results in high credit ratings from internationally
recognised rating agencies.
Further information on risks in conjunction with
financial instruments is provided in
note 39 to the
Group Financial Statements.
see
note 39
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. Despite the high level of external funding,
the risk amounts relating to pension obligations are
classified as high. Within a favourable capital mar-
ket environment, the return generated by growth-
oriented pension assets may exceed expectations 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.
Regulatory requirements can influence the amount
of pension obligations. The BMW Group’s pension
obligations are mainly held in external pension funds
or trust arrangements and 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 Group’s pension obligations
are mainly settled out of pension fund assets. The
pension assets of the BMW Group comprise inter-
est-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).
see
note 32
Further information on risks in conjunction with
note 32 of the
pension provisions is provided in
Group Financial Statements.
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 segment’s total risk exposure was covered at all
times during the 2019 financial year by the avail-
able risk-covering assets. As a result, the Financial
Services segment’s risk-bearing capacity was assured
at all times.
Automotive segments. The risk amount is classified
as high 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 vehicle’s 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.
Developments on pre-owned car markets represents
an important factor for the BMW Group. In 2019, the
electrification of vehicles also played a major role in
the public debate. Prices in pre-owned vehicle markets
in the premium segment remained within the normal
range. As part of the management of residual value
risks, the net present value of risk costs is calcu lated
at contract inception. Market developments are
observed throughout the contractual period and the
risk assessment 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 recog-
nised in the balance sheet. If 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 medium. Favourable interest
rate developments compared to the outlook represent
opportunities which the BMW Group classifies as
significant. Interest rate risks in the Financial Services
business are managed by matching maturities for
refinancing and by employing interest-rate deriva-
tives. If the relevant recognition criteria are fulfilled,
derivatives used by the BMW Group are accounted for
as hedging instruments. Further information on risks
in conjunction with financial instruments is provided
note 39 to the Group Financial Statements.
in
see
note 39
98
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
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 clas-
sified as medium. The BMW Group classifies potential
opportunities in this area as insignificant.
Initial and continuous creditworthiness testing is
an important aspect of the BMW Group’s credit risk
management. For this reason, every borrower’s credit-
worthiness is tested for all credit financing and leasing
contracts entered into by the BMW Group. Opportu-
nities may arise if the managed portfolio performs
better over time than estimated when the credits were
granted. Intensive management of purchasing pro-
cesses and collateral assessment as well as favourable
macroeconomic developments could boost these
opportunities. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the purchasing 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. Changes in the creditworthiness of
customers arising during the credit term are covered
by risk provisioning procedures. The credit risk of the
individual customers is quantified on a monthly basis
and, depending on the outcome, taken into account
within the risk provisioning system. Macroeconomic
developments are currently subject to a higher degree
of volatility. If developments are more favourable than
assumed in the outlook, credit losses may be reduced,
leading to a positive earnings impact.
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 Group’s perspective over the two-year
assessment period. A high earnings impact would
then arise for the affected Financial Services and
Combined Management Report 99
typical for the sector or may result as 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 consequences
and cause damage to the Group’s public image.
More rigorous application or interpretation of exist-
ing regulations could result in a greater number of
recalls. The high quality of the Group’s products,
which is ensured by regular quality audits and ongo-
ing improvement measures, helps reduce this risk.
Compared with the risk situation presented in the
Group Management Report 2018, the assessment
of legal risks in conjunction with antitrust allega-
tions made against five German car manufacturers
has become more concrete following receipt of the
Statement of Objections from the EU Commission.
The EU Commission alleges that the manufacturers
colluded with the aim of restricting innovation and
competition with regard to certain exhaust treatment
systems for diesel- and petrol-driven passenger vehi-
cles. The current investigations are solely concerned
with possible infringements of competition law. The
EU Commission is not alleging that the BMW Group
conducted a deliberate and unlawful manipulation
of the emissions control system. The Statement of
Objections leads the BMW Group to believe that it
is probable (“more likely than not”) that the Com-
mission will issue a significant fine. The BMW Group
will contest the Commission’s allegations with all
legal means at its disposal if necessary. A provision
of approximately € 1.4 billion was recognised in
accordance with International Financial Reporting
Standards for negative financial impacts that cannot
yet be definitively assessed.
The BMW Group has reviewed the objections and
the case information from the EU Commission.
In December 2019 the BMW Group submitted a
detailed reply to the objections of the Commission.
The EU Commission will examine the response and,
on the basis of that, determine the next procedural
steps. Therefore, the financial impacts cannot yet be
definitively assessed.
Operational risks relating to 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
( process risks), people (personnel-related risks), sys-
tems (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 medium.
Legal risks
The BMW Group is exposed to various legal risks, not
least as a result of its global operations. Legal risks may
result from non-compliance with laws or other legal
requirements or from legal disputes with business
partners or other market participants. 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 Group’s
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 across the globe consistently act in a lawful
manner. In 2019 the system was further enhanced,
particularly with a focus on the characteristics of
the roles and responsibilities in the Group-wide
Compliance Management as well as the monitoring
of compliance trainings and additional preventative
activities. Further information on the BMW Group’s
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, alleged
claims (particularly relating to warranties and product
liability or rights infringements) and proceedings
initiated by government agencies. Any of these could,
amongst other consequences, have an adverse impact
on the Group’s reputation. Such proceedings are
100
Report on Outlook,
Risks and
Opportunities
Risks and
Opportunities
Internal Control
System Relevant for
Accounting and
Financial Reporting
Processes
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense. Any
additional risks from legal proceedings are reported
as other contingent 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 Contingent Assets), the required infor-
mation is not provided if the BMW Group concludes
that disclosure of the information could seriously
prejudice the outcome of the relevant legal proceed-
ings. Further information on contingent liabilities
is provided in
note 38 to the Group Financial
Statements.
see
note 38
Overall assessment of the risk and opportunities
situation
The assessment of overall risk situation is based on a
consolidated view of all significant individual risks.
The overall risk situation for the BMW Group remains
unchanged compared to the previous year. Simi larly,
there has also been no significant change in the
opportunities situation.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group’s
results of operations, financial position and net assets
as well as on its reputation. A comprehensive risk
management system is in place to ensure that the
BMW Group successfully manages these risks.
Management of the BMW Group does not see any
threat to the BMW Group’s status as a going concern.
As in the previous year, identified risks are considered
to be manageable. Were they to materialise, however,
they could – like the opportunities – have an impact
on the underlying key performance indicators, which
could therefore result in deviations from the outlook.
The BMW Group’s financial position is stable, with
liquidity requirements currently covered by available
liquidity and credit lines.
Combined Management Report INTERNAL CONTROL
SYSTEM* RELEVANT FOR
ACCOUNTING AND
FINANCIAL REPORTING
PROCESSES
* Disclosures
pursuant to § 289
and § 315 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 accurate 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 the 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.
101
Controls are integrated into accounting and financial
reporting processes at both individual entity and
Group level, taking account of the principle of the
separation of duties. Important accounting-related
IT systems incorporate controls which, among others,
prevent business transactions from being recorded
incorrectly and ensure that business transactions are
recorded completely and in good time and measured
properly in accordance with applicable requirements.
Controls are also in place to test the appropriateness
of consolidation procedures.
As part of the ongoing development of IT systems for
accounting and financial reporting processes, whether
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 identify and subsequently eliminate
any control weaknesses.
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group accounting and financial reporting
processes are clearly defined and allocated to the rele-
vant 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 internal
and external audits as well as of ongoing data analysis.
In this context, the Group’s units confirm the effec-
tiveness of the internal control system for accounting
and financial reporting. The results of the assessment
are gathered and documented with the aid of appro-
priate 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 appropriate, the
Supervisory Board are informed immediately in the
event of any significant changes in the effectiveness
of the internal control system.
102
Disclosures Relevant
for Takeovers
and Explanatory
Comments
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
* Disclosures
pursuant to
§ 289a and
§ 315a HGB.
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to € 658,862,500 at 31 December 2019
(2018: € 658,122,100) and, in accordance with Article 4
no. 1 of the Articles of Incorporation is sub-divided
into 601,995,196 shares of common stock (91.37 %)
(2018: 601,995,196; 91.47 %) and 56,867,304 shares of
non-voting preferred stock (8.63 %) (2018: 56,126,904;
8.53 %), 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 shares of preferred stock 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 affecting voting rights or the transfer
of shares
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information 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 41 to the Group Financial
Statements).
see
note 41
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
103
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON 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 2018.
2 Controlled entities, of which 3 % or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
3 Controlled entities, of which 3 % or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3 % or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
5 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
9.0
16.6
0.2
20.7
25.6 2
16.6 3
16.6 4
20.75
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 f. 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 votes 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).
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 Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised,
with the approval of the Supervisory Board, to increase
for cash contributions BMW AG’s share capital during
the period until 15 May 2024 by up to € 4,259,600 for
the purposes of an Employee Share Programme by
issuing new non-voting shares of preferred stock,
which carry the same rights as existing non-voting
preferred stock (Authorised Capital 2019). Subscrip-
tion rights of existing shareholders are excluded. No
conditional capital is in place at the reporting date.
104
Disclosures Relevant
for Takeovers
and Explanatory
Comments
Significant agreements of the Company taking
effect in the event of a 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, including
interest, would fall due immediately if one or more
parties jointly acquire direct or indirect control
of BMW AG. The term control is defined as the
acquisition of more than 50 % of the share capital
of BMW AG, the right to receive more than 50 % of
the dividend or the right to direct the affairs of
the Company or appoint the majority of mem-
bers of the Supervisory Board.
— A cooperation agreement concluded with
Peugeot SA relating to 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 acquiring
control over the other contractual party and if
any concerns of the other contractual party re-
gard ing 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. This
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that – either directly or indirectly – more than 25 %
of the shares of the other party are acquired by a
third party or the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
— Framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agree-
ments) with respect to trading activities with
derivative financial instruments. These agree-
ments include an extraordinary right of termina-
tion which triggers actions in the event that the
creditworthiness of the party involved is signifi-
cantly weaker following a direct or indirect acqui-
sition of beneficially owned equity capital that
confers the power to elect a majority of the Super-
visory Board of a contractual 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 loans 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 has taken place or 30 days after it has
made a request to discuss the situation – that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financ-
ing 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 divi-
dends payable or (iv) any other comparable con-
trolling influence over BMW AG.
— BMW AG and Daimler AG have entered into a
Joint Venture Agreement relating to mobility
services in the areas of car sharing, ride hailing,
parking, charging and multimodality, which
entitles both Daimler AG and BMW AG (here-
after principals) to initiate a bidding procedure
in the event that (i) the other principal receives
notice in accordance with § 33 of the German
Securities Trading Act (WpHG) that – including
shares attributed pursuant to § 34 WpHG – a
shareholding of more than 50 % has been attained
or, in accordance with § 20 AktG of the German
Stock Corporation Act (AktG) that a sharehold-
ing of more than 50 % has been attained or (ii)
a shareholder or a third party – including shares
attributed pursuant to § 30 WpHG – holds more
than 50 % of the voting rights or shares in the
other principal, or (iii) the other principal has
concluded a control agreement as dependent
com pa ny. The outcome of such a bidding pro-
cedure is that the joint venture will go to the
principal making the highest bid.
Combined Management Report 105
— The collaboration agreement between BMW AG
and Mercedes-Benz AG relating to the develop-
ment of technologies for second-generation auto-
mated driving (from 2024) may be terminated by
either party if a third party – directly or indirectly –
acquires at least 30 % of the voting rights in one
of the contractual parties (§ 29 (2) and § 30 of the
German Securities Acquisition and Takeover
Act (WpÜG)).
— BMW AG has agreed with Great Wall Motor
Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The agree-
ment grants an extraordinary right of termina-
tion to either joint venture partner in the event
that – either directly or indirectly – more than
25 % of the shares of the other party are acquired
by a third party or the other party is merged
with another legal entity. The termination of the
joint venture agreement may result in the sale
of the shares to the other joint venture partner
or in the liquidation of the joint venture entity.
— Several supply and development contracts between
BMW AG and various industrial customers, all
relating to the sale of components for drivetrain
systems, grant an extraordinary right of ter-
mination to the relevant industrial customer 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 or entity
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 vot-
ing rights exercisable at Annual General Meet-
ings 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 com-
petitors of the HERE Group or certain potential
competitors of the HERE Group from the tech-
nology sector acquire at least 25 % of BMW AG.
If none of the other shareholders acquire these
shares, the other shareholders 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 con-
tractual parties if a competitor of one of the
parties acquires and subsequently holds at least
30 % of the voting shares of one of the contrac-
tual parties.
— The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S. p. A.,
relating to the development of technologies used
in automated vehicles, may be terminated by
any of the contractual parties if certain competi-
tors in the technology sector acquire and sub-
sequently hold at least 30 % of the voting shares
of the other contractual party.
106
Disclosures Relevant
for Takeovers
and Explanatory
Comments
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
BMW AG has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
Combined Management Report 3
Group Financial
Statements
Income Statement
Statement of
Comprehensive
Income
Balance Sheet
Cash Flow
Statement
Notes
GROUP FINANCIAL
STATEMENTS
Page 108 Income Statement
Page 108 Statement of Comprehensive Income
Page 110 Balance Sheet
Page 112 Cash Flow Statement
Page 114 Statement of Changes in Equity
Page 116 Notes to the Group Financial Statements
Page 116 Accounting Principles and Policies
Page 133 Notes to the Income Statement
Page 141 Notes to the Statement of Comprehensive Income
Page 142 Notes to the Balance Sheet
Page 164 Other Disclosures
Page 184 Segment Information
Page 190 List of Investments at 31 December 2019
108
BMW Group
Income Statement
Statement of Com-
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Income Statement 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
Profit / loss from continuing operations
Profit / loss from discontinued operations
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
2019
20181
2019
2018
2019
2018
2019
20181
2019
2018
2019
20181
7
8
9
10
10
24
11
11
12
13
31
14
14
14
14
104,210
– 86,147
18,063
– 9,367
1,031
– 2,316
7,411
136
179
– 499
– 109
– 293
7,118
– 2,140
4,978
44
5,022
107
4,915
7.47
7.49
–
7.47
7.49
96,855
91,682
85,846
– 78,477
– 78,062
– 71,918
13,620
– 7,762
976
– 2,335
4,499
136
420
– 737
149
– 32
4,467
– 1,354
3,113
44
3,157
30
3,127
13,928
– 7,880
810
– 676
6,182
632
567
– 533
129
795
6,977
– 1,853
5,124
– 33
5,091
30
5,061
18,378
– 9,568
774
– 651
8,933
632
397
– 386
51
694
9,627
– 2,530
7,097
– 33
7,064
90
6,974
10.60
10.62
–
10.60
10.62
2,368
– 1,911
457
– 264
2,173
– 1,738
435
– 263
2
– 1
194
–
1
– 8
–
– 7
187
– 56
131
–
131
–
131
4
– 1
175
–
–
– 6
–
– 6
169
– 45
124
–
124
–
124
29,598
27,705
– 25,938
– 24,089
– 19,443
– 18,875
19,764
19,268
3,660
– 1,341
73
– 80
2,312
–
4
– 7
– 37
– 40
2,272
– 672
1,600
–
1,600
77
1,523
3,616
– 1,362
42
– 124
2,172
–
12
– 14
– 27
– 29
2,143
– 502
1,641
1,641
–
60
1,581
5
–
5
– 24
173
– 125
29
–
1,515
– 1,419
– 221
– 125
– 96
29
– 67
– 67
–
–
– 67
1,178
– 1,145
6
–
6
– 79
126
– 80
– 27
–
– 51
– 18
– 45
– 36
– 81
– 81
–
–
– 81
321
24
– 193
225
377
– 1,761
1,672
–
–
– 89
288
– 87
201
201
–
–
201
393
16
– 208
230
431
– 1,360
1,312
–
–
– 48
383
– 94
289
289
–
–
289
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
Profit / loss from continuing operations
Profit / loss from discontinued operations
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 €
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
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
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
Costs of hedging
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
Items that can 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 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
Note
2019
20182
5,022
– 1,254
32
387
– 867
42
– 706
125
– 3
171
544
173
– 694
4,328
107
4,221
19
31
7,064
935
– 217
718
– 30
– 1,381
– 620
– 157
674
192
– 1,322
– 604
6,460
90
6,370
Group Financial Statements
109
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
Profit / loss from continuing operations
Profit / loss from discontinued operations
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
(unaudited supplementary
(unaudited supplementary
Automotive
information)
Motorcycles
information)
Financial Services
(unaudited supplementary
information)
Other Entities
(unaudited supplementary
information)
Eliminations
(unaudited supplementary
information)
Note
2019
20181
2019
2018
2019
2018
2019
20181
2019
2018
2019
20181
– 19,443
– 18,875
19,764
19,268
29,598
27,705
– 25,938
– 24,089
3,660
– 1,341
73
– 80
2,312
–
4
– 7
– 37
– 40
2,272
– 672
1,600
–
1,600
77
1,523
3,616
– 1,362
42
– 124
2,172
–
12
– 14
– 27
– 29
2,143
– 502
1,641
–
1,641
60
1,581
5
–
5
– 24
173
– 125
29
–
1,515
– 1,419
– 221
– 125
– 96
29
– 67
–
– 67
–
– 67
6
–
6
– 79
126
– 80
– 27
–
321
24
– 193
225
377
–
1,178
– 1,145
– 1,761
1,672
– 51
– 18
– 45
– 36
– 81
–
– 81
–
– 81
–
– 89
288
– 87
201
–
201
–
201
393
16
– 208
230
431
–
– 1,360
1,312
–
– 48
383
– 94
289
–
289
–
289
96,855
91,682
85,846
– 78,477
– 78,062
– 71,918
2,368
– 1,911
457
– 264
2,173
– 1,738
435
– 263
Income Statement 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
Profit / loss from continuing operations
Profit / loss from discontinued operations
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 €
7
8
9
10
10
24
11
11
12
13
31
14
14
14
14
104,210
– 86,147
18,063
– 9,367
1,031
– 2,316
7,411
136
179
– 499
– 109
– 293
7,118
– 2,140
4,978
44
5,022
107
4,915
7.47
7.49
–
7.47
7.49
18,378
– 9,568
774
– 651
8,933
632
397
– 386
51
694
9,627
– 2,530
7,097
– 33
7,064
90
6,974
10.60
10.62
–
10.60
10.62
13,620
– 7,762
976
– 2,335
4,499
136
420
– 737
149
– 32
4,467
– 1,354
3,113
3,157
44
30
3,127
13,928
– 7,880
810
– 676
6,182
632
567
– 533
129
795
6,977
– 1,853
5,124
– 33
5,091
30
5,061
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
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
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
Costs of hedging
Deferred taxes
Currency translation foreign operations
Other comprehensive income from equity accounted investments
Items that can 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 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
2
– 1
194
–
1
–
– 8
– 7
187
– 56
131
131
–
–
131
387
– 867
42
– 706
125
– 3
171
544
173
– 694
4,328
107
4,221
4
– 1
175
–
–
–
– 6
– 6
169
– 45
124
124
–
–
124
7,064
935
– 217
718
– 30
– 1,381
– 620
– 157
674
192
– 1,322
– 604
6,460
90
6,370
Note
2019
20182
5,022
– 1,254
32
19
31
110
BMW Group
Balance Sheet
at 31 December 2019
BMW GROUP
BALANCE SHEET AT 31 DECEMBER 2019
in € million
Note
2019
1. 1. 2019 1
31. 12. 20182
2019
2018
2019
2018
2019
20182
2019
2018
2019
20182
Group
Automotive
(unaudited supplementary
information)
Motorcycles
(unaudited supplementary
information)
Financial Services
Other Entities
(unaudited supplementary
(unaudited supplementary
(unaudited supplementary
information)
information)
Eliminations
information)
11,729
23,245
42,609
3,199
703
51,030
1,370
2,194
1,325
10,971
22,163
38,259
2,624
739
48,313
1,010
1,640
847
10,971
19,801
38,259
2,624
739
48,313
1,010
1,638
847
11,212
22,749
–
3,199
5,144
–
131
3,451
2,203
10,472
19,372
–
2,624
4,843
–
216
3,043
4,633
137,404
126,566
124,202
48,089
45,203
15,891
2,518
41,407
5,955
1,209
11,614
12,036
–
14,248
2,546
38,700
6,675
1,378
9,749
10,979
463
14,248
2,546
38,700
6,675
1,378
9,749
10,979
461
14,404
2,228
–
4,772
1,000
33,492
9,077
–
13,071
2,287
–
4,988
618
21,859
8,631
461
90,630
84,738
84,736
64,973
51,915
127
407
–
–
–
–
–
–
36
570
679
186
–
–
–
1
11
–
877
95
399
–
–
–
–
–
–
33
527
568
167
–
–
–
2
12
–
749
50,348
46,114
– 7,739
– 7,855
51,079
48,333
389
89
–
1
139
512
3,351
105,908
808
103
41,407
1,009
84
5,106
2,075
–
403
30
–
1
138
485
2,835
98,339
609
91
38,700
1,325
91
5,081
1,985
–
1
–
–
–
–
–
1
–
187
125
873
–
1
–
–
–
–
–
1
–
460
669
351
–
6,847
6,660
– 11,289
– 10,765
1,168
84
38,919
47,019
695
28
33,956
41,340
– 49
– 68
– 20
– 39
– 1,853
– 1,918
– 43,184
– 40,610
– 64,182
– 61,207
– 13
– 98
64,692
48,775
– 91,677
– 65,968
50,592
47,882
65,878
50,256
– 91,690
– 66,066
228,034
211,304
208,938
113,062
97,118
1,447
1,276
156,500
146,221
112,897
91,596
– 155,872
– 127,273
659
2,161
57,667
– 1,163
59,324
658
2,118
55,830
– 1,338
57,268
658
2,118
55,862
– 1,338
57,300
583
529
529
59,907
57,797
57,829
40,174
39,778
3,335
5,788
632
70,647
5,100
85,502
7,421
963
46,093
10,182
17,966
–
2,330
5,530
1,762
66,744
5,293
81,659
5,871
1,158
39,260
9,669
15,826
64
2,330
5,530
1,773
64,772
5,293
79,698
5,871
1,158
38,825
9,669
15,826
62
2,820
5,605
543
2,680
7,929
2,089
5,354
1,016
1,017
7,558
19,577
17,034
6,962
704
1,929
8,814
34,902
–
5,433
933
879
8,360
24,639
62
–
96
81
–
–
569
746
105
–
–
413
183
–
701
–
64
70
–
–
506
640
101
–
–
348
187
–
636
15,545
14,806
21,972
20,683
– 17,784
– 17,438
– 3,749
– 3,841
– 68
– 39
– 43,139
– 40,272
47
102
3,804
18,170
39,639
61,762
299
184
26,938
943
50,829
–
49
106
4,576
19,170
36,333
60,234
328
208
25,705
950
43,990
–
372
–
34
49,865
102
128
–
22
44,624
1,168
55
75
12
–
9
17
11
–
17,239
12,339
– 13
– 98
23,171
12,595
– 91,119
– 65,585
79,193
71,181
40,552
24,971
– 91,132
– 65,683
Current provisions and liabilities
Liabilities in conjunction with assets held for sale
50,373
45,942
– 46,956
– 44,152
Non-current provisions and liabilities
Current provisions and liabilities
82,625
71,848
71,411
53,311
40,306
Total equity and liabilities
228,034
211,304
208,938
113,062
97,118
1,447
1,276
156,500
146,221
112,897
91,596
– 155,872
– 127,273
Total equity and liabilities
1 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6 to the Group Financial Statements.
2 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
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
Assets held for sale
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
Liabilities in conjunction with assets held for sale
21
22
23
24
25
26
13
28
29
30
25
26
27
28
31
31
31
31
31
32
33
13
35
36
33
34
35
37
36
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
Assets held for sale
Current assets
Total assets
equIty A nd lIAbIlItI eS
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Minority interest
Equity
Pension provisions
Other provisions
Deferred tax
Financial liabilities
Other liabilities
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Equity attributable to shareholders of BMW AG
Group Financial Statements in € million
Note
2019
1. 1. 2019 1
31. 12. 20182
2019
2018
2019
2018
2019
20182
2019
2018
2019
20182
Group
(unaudited supplementary
(unaudited supplementary
Automotive
information)
Motorcycles
information)
Financial Services
(unaudited supplementary
information)
Other Entities
(unaudited supplementary
information)
Eliminations
(unaudited supplementary
information)
389
89
403
30
50,348
46,114
–
1
–
1
51,079
48,333
139
512
3,351
105,908
808
103
41,407
1,009
84
5,106
2,075
–
138
485
2,835
98,339
609
91
38,700
1,325
91
5,081
1,985
–
1
–
–
–
6,847
–
1,168
84
38,919
47,019
–
1
–
187
125
1
–
–
–
–
–
–
–
– 7,739
– 7,855
–
–
6,660
– 11,289
– 10,765
–
695
28
– 49
– 68
– 20
– 39
– 1,853
– 1,918
33,956
41,340
– 43,184
– 40,610
– 64,182
– 61,207
–
1
–
460
669
–
–
–
– 13
–
–
–
–
– 98
–
64,692
48,775
– 91,677
– 65,968
873
–
351
–
–
–
–
–
Total assets
228,034
211,304
208,938
113,062
97,118
1,447
1,276
156,500
146,221
112,897
91,596
– 155,872
– 127,273
90,630
84,738
84,736
64,973
51,915
877
749
50,592
47,882
65,878
50,256
– 91,690
– 66,066
583
529
529
59,907
57,797
57,829
40,174
39,778
15,545
14,806
21,972
20,683
– 17,784
– 17,438
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
Assets held for sale
Current 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
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Liabilities in conjunction with assets held for sale
137,404
126,566
124,202
48,089
45,203
21
22
23
24
25
26
13
28
29
30
25
26
27
28
31
31
31
31
31
32
33
13
35
36
33
34
35
37
36
11,729
23,245
42,609
3,199
703
51,030
1,370
2,194
1,325
15,891
2,518
41,407
5,955
1,209
11,614
12,036
–
659
2,161
57,667
– 1,163
59,324
3,335
5,788
632
70,647
5,100
85,502
7,421
963
46,093
10,182
17,966
–
10,971
22,163
38,259
2,624
739
48,313
1,010
1,640
847
14,248
2,546
38,700
6,675
1,378
9,749
10,979
463
658
2,118
55,830
– 1,338
57,268
2,330
5,530
1,762
66,744
5,293
81,659
5,871
1,158
39,260
9,669
15,826
64
10,971
19,801
38,259
2,624
739
48,313
1,010
1,638
847
14,248
2,546
38,700
6,675
1,378
9,749
10,979
461
658
2,118
55,862
– 1,338
57,300
2,330
5,530
1,773
64,772
5,293
79,698
5,871
1,158
38,825
9,669
15,826
62
11,212
22,749
3,199
5,144
–
–
131
3,451
2,203
14,404
2,228
4,772
1,000
33,492
9,077
–
–
2,820
5,605
543
2,680
7,929
6,962
704
1,929
8,814
34,902
–
10,472
19,372
2,624
4,843
–
–
216
3,043
4,633
13,071
2,287
–
4,988
618
21,859
8,631
461
2,089
5,354
1,016
1,017
7,558
5,433
933
879
8,360
24,639
62
Non-current provisions and liabilities
19,577
17,034
1 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6 to the Group Financial Statements.
2 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
127
407
–
–
–
–
–
–
36
570
679
186
–
–
–
1
–
11
–
96
81
–
–
569
746
105
–
–
–
413
183
701
95
399
–
–
–
–
–
–
33
527
568
167
–
–
–
2
–
12
–
64
70
–
–
506
640
101
–
–
–
348
187
636
47
102
3,804
18,170
39,639
61,762
299
184
26,938
943
50,829
–
49
106
4,576
19,170
36,333
60,234
328
208
25,705
950
43,990
–
372
–
34
49,865
102
128
–
22
44,624
1,168
–
–
–
–
– 3,749
– 3,841
– 68
– 39
– 43,139
– 40,272
Current provisions and liabilities
82,625
71,848
71,411
53,311
40,306
79,193
71,181
40,552
24,971
– 91,132
– 65,683
Current provisions and liabilities
Total equity and liabilities
228,034
211,304
208,938
113,062
97,118
1,447
1,276
156,500
146,221
112,897
91,596
– 155,872
– 127,273
Total equity and liabilities
50,373
45,942
– 46,956
– 44,152
Non-current provisions and liabilities
55
75
9
17
17,239
12,339
12
11
–
–
– 13
–
–
–
– 98
–
23,171
12,595
– 91,119
– 65,585
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
–
–
–
–
Liabilities in conjunction with assets held for sale
111
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
Assets held for sale
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
112
BMW Group
Cash Flow Statement
BMW GROUP
CASH FLOW STATEMENT
in € million
Net profit
Profit / loss from discontinued operations
Current tax expense
Income taxes paid
Interest received 2
Other interest and similar income / expenses 2
Depreciation and amortisation of tangible, intangible and investment assets
Other non-cash income and expense items
Result from equity accounted investments
Gain / loss on disposal of tangible and intangible assets and marketable securities
Change in deferred taxes
Change in leased products
Change in receivables from sales financing
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
Change in other operating assets and liabilities
Cash inflow / outflow from operating activities
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units 3
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 2
Proceeds from non-current financial liabilities 4
Repayment of non-current financial liabilities 4
Change in other financial liabilities
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 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 With the exception of interest from lease liabilities, interest relating to financial services business is classified as revenues / cost of sales.
3 Includes dividends received from investment assets amounting to € 643 million (2018: € 384 million).
4 Gross cash flows presented, which were presented as net amounts in the prior year.
Group
2019
20181
(unaudited supplementary
(unaudited supplementary
Automotive
information)
Financial Services
information)
2019
20181
2019
20181
5,022
– 44
3,316
– 3,389
91
51
6,017
– 200
– 136
4
– 1,176
– 3,825
– 3,560
– 1,117
– 1,560
14
429
1,512
1,096
3,662
7,064
33
2,218
– 1,972
170
– 199
5,113
111
– 632
– 34
312
– 1,642
– 5,724
– 619
– 403
112
– 328
– 88
940
5,051
– 6,902
– 7,777
– 6,734
– 7,618
– 19
– 13
Total investment in intangible assets and property, plant and equipment
50
32
– 1,598
–
1,087
– 775
822
– 7,284
21
107
– 164
– 209
623
– 3,725
3,761
– 7,363
33
25
– 2,366
– 2,630
–
– 199
150,517
–
– 136
30,762
– 143,500
– 22,564
305
4,790
– 28
– 83
– 1,161
4,296
– 19
– 25
1,057
1,940
10,979
12,036
9,039
10,979
9,352
– 5,345
5,091
33
1,886
– 1,751
170
– 165
4,982
83
– 632
– 35
– 71
–
–
– 758
– 390
59
– 427
332
187
18
105
– 145
– 209
1,210
– 3,692
3,562
– 6,769
– 2
– 31
– 25
1,474
7,157
8,631
1,600
–
1,602
– 345
–
3
54
23
–
–
– 930
– 3,600
– 3,589
– 222
– 193
– 11
– 18
– 59
118
2
1
–
–
–
–
57
– 268
356
129
491
5,300
6
–
90
1,985
2,075
1,641
308
– 299
–
–
1
–
1
34
33
24
– 1,732
– 5,726
130
– 39
60
109
– 7
– 1,198
– 6,790
3
2
–
–
2
–
–
–
– 63
199
130
827
6,793
– 4
–
129
1,856
1,985
33
25
– 2,366
– 2,630
– 2,085
– 1,053
2,099
– 136
5,491
– 1
5,097
1
132,408
12,940
– 410
– 133,089
– 12,071
3,157
– 44
1,638
– 1,984
91
61
5,853
– 262
– 136
– 284
3
–
–
– 831
– 1,255
43
381
1,745
683
9,690
50
31
–
– 1,557
1,087
– 507
465
– 7,165
877
– 197
173
– 605
–
– 22
28
446
8,631
9,077
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income / expenses 2
Gain / loss on disposal of tangible and intangible assets and marketable securities
Profit / loss from discontinued operations
Net profit
Current tax expense
Income taxes paid
Interest received 2
Other non-cash income and expense items
Result from equity accounted investments
Change in deferred taxes
Change in leased products
Change in receivables from sales financing
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
Change in other operating assets and liabilities
Cash inflow / outflow from operating activities
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units 3
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 2
Proceeds from non-current financial liabilities4
Repayment of non-current financial liabilities4
Change in other financial liabilities
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
Group Financial Statements Other interest and similar income / expenses 2
Depreciation and amortisation of tangible, intangible and investment assets
Gain / loss on disposal of tangible and intangible assets and marketable securities
Profit / loss from discontinued operations
in € million
Net profit
Current tax expense
Income taxes paid
Interest received 2
Other non-cash income and expense items
Result from equity accounted investments
Change in deferred taxes
Change in leased products
Change in receivables from sales financing
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
Change in other operating assets and liabilities
Cash inflow / outflow from operating activities
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units 3
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 2
Proceeds from non-current financial liabilities 4
Repayment of non-current financial liabilities 4
Change in other financial liabilities
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
5,022
– 44
3,316
– 3,389
91
51
6,017
– 200
– 136
4
– 1,176
– 3,825
– 3,560
– 1,117
– 1,560
14
429
1,512
1,096
3,662
50
32
–
– 1,598
1,087
– 775
822
– 7,284
33
–
– 199
150,517
305
4,790
– 28
– 83
7,064
33
2,218
– 1,972
170
– 199
5,113
111
– 632
– 34
312
– 1,642
– 5,724
– 619
– 403
112
– 328
– 88
940
5,051
21
107
– 164
– 209
623
– 3,725
3,761
– 7,363
25
–
– 136
30,762
– 1,161
4,296
– 19
– 25
– 2,366
– 2,630
– 143,500
– 22,564
1,057
1,940
10,979
12,036
9,039
10,979
113
Group
2019
20181
Automotive
(unaudited supplementary
information)
Financial Services
(unaudited supplementary
information)
2019
20181
2019
20181
3,157
– 44
1,638
– 1,984
91
61
5,853
– 262
– 136
3
– 284
–
–
– 831
– 1,255
43
381
1,745
683
9,690
5,091
33
1,886
– 1,751
170
– 165
4,982
83
– 632
– 35
– 71
–
–
– 758
– 390
59
– 427
332
187
1,600
–
1,602
– 345
–
3
54
23
–
–
– 930
– 3,600
– 3,589
– 222
– 193
– 11
– 18
– 59
118
9,352
– 5,345
1,641
–
308
– 299
–
1
34
33
–
1
24
– 1,732
– 5,726
130
– 39
60
109
– 7
– 1,198
– 6,790
Profit / loss from discontinued operations
Net profit
Current tax expense
Income taxes paid
Interest received 2
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income / expenses 2
Other non-cash income and expense items
Result from equity accounted investments
Gain / loss on disposal of tangible and intangible assets and marketable securities
Change in deferred taxes
Change in leased products
Change in receivables from sales financing
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
Change in other operating assets and liabilities
Cash inflow / outflow from operating activities
– 6,902
– 7,777
– 6,734
– 7,618
– 19
– 13
Total investment in intangible assets and property, plant and equipment
50
31
– 1,557
–
1,087
– 507
465
– 7,165
18
105
– 145
– 209
1,210
– 3,692
3,562
– 6,769
33
25
– 2,366
– 2,630
877
– 197
173
– 605
–
2,099
– 136
– 2
– 2,085
– 1,053
– 22
28
446
8,631
9,077
– 31
– 25
1,474
7,157
8,631
2
1
–
–
57
– 268
356
129
–
–
5,491
– 1
3
2
–
–
2
– 63
199
130
–
–
5,097
–
491
5,300
6
–
90
1,985
2,075
827
6,793
– 4
–
129
1,856
1,985
1
132,408
12,940
– 410
– 133,089
– 12,071
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units 3
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 2
Proceeds from non-current financial liabilities4
Repayment of non-current financial liabilities4
Change in other financial liabilities
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 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 With the exception of interest from lease liabilities, interest relating to financial services business is classified as revenues / cost of sales.
3 Includes dividends received from investment assets amounting to € 643 million (2018: € 384 million).
4 Gross cash flows presented, which were presented as net amounts in the prior year.
The reconciliation of liabilities from financing activities is presented in note 35.
114
BMW Group
Statement of
Changes in Equity
BMW GROUP
STATEMENT OF CHANGES IN EQUITY
in € million
31 December 2018 (as originally reported)
Effects of accounting policy change*
31 December 2018 (as adjusted
due to accounting policy change)
Effects from the first-time application of IFRS 16
1 January 2019 (adjusted according to IFRS 16)
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2019
in € million
1 January 2018 (as originally reported)
Effects of accounting policy change*
1 January 2018 (as adjusted
due to accounting policy change)
Net profit*
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018*
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2018 *
Note
31
Subscribed
capital
Capital
reserves
Revenue
reserves
658
–
658
–
658
–
–
–
–
1
–
–
2,118
56,121
–
– 259
2,118
55,862
–
– 32
2,118
55,830
–
–
–
–
–
43
–
4,915
– 867
4,048
– 2,303
–
–
92
31
659
2,161
57,667
– 760
29
15
59,324
59,907
Note
31
Subscribed
capital
Capital
reserves
Revenue
reserves
658
–
2,084
50,993
–
– 116
Accumulated other equity
Derivative
financial
Securities
instruments
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
1,515
Translation
differences
– 1,494
–
658
2,084
50,877
– 1,494
1,515
53,656
436
54,092
–
–
–
–
–
–
–
–
–
–
–
–
34
–
6,974
718
7,692
– 2,630
–
–
– 77
31
658
2,118
55,862
– 1,326
– 1
529
57,829
Accumulated other equity
Derivative
financial
Securities
instruments
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
Minority
interest
Total
Translation
differences
– 1,326
– 1,326
558
– 569
57,300
529
57,829
558
– 569
57,559
529
58,088
31 December 2018 (as originally reported)
– 259
Effects of accounting policy change*
31 December 2018 (as adjusted
due to accounting policy change)
– 32
Effects from the first-time application of IFRS 16
– 1,326
558
– 569
57,268
529
57,797
1 January 2019 (adjusted according to IFRS 16)
– 551
– 551
–
128
128
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Net profit
– 2,303
– 63
– 2,366
Dividend payments
–
–
–
–
–
–
–
566
566
–
168
168
–
–
–
–
– 1
–
– 1
–
– 1
–
30
30
–
–
–
–
11
–
11
–
– 12
– 12
–
–
–
–
–
–
–
–
–
–
8
–
–
–
–
–
– 6
– 447
–
–
–
–
–
5
–
5
–
–
–
–
– 259
– 32
4,915
– 694
4,221
1
43
94
53,772
– 116
6,974
– 604
6,370
– 2,630
–
34
– 906
– 906
– 572
– 572
– 51
558
– 2
– 569
– 130
57,300
–
–
107
–
107
–
–
10
583
90
–
90
–
–
–
3
Minority
interest
436
–
5,022
– 694
4,328
1
43
104
Total
54,208
– 116
7,064
– 604
6,460
– 2,630
–
34
– 127
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2019
1 January 2018 (as originally reported)
Effects of accounting policy change*
1 January 2018 (as adjusted
due to accounting policy change)
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018 *
Net profit*
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2018 *
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
Group Financial Statements
Accumulated other equity
Translation
differences
Securities
Derivative
financial
instruments
– 1,326
–
– 1,326
–
– 1,326
–
566
566
–
–
–
–
– 1
–
– 1
–
– 1
–
30
30
–
–
–
–
558
–
558
–
558
–
– 551
– 551
–
–
–
8
31
659
2,161
57,667
– 760
29
15
115
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
– 569
57,559
–
– 259
– 569
57,300
–
– 32
Minority
interest
529
–
529
–
Total
58,088
– 259
57,829
31 December 2018 (as originally reported)
Effects of accounting policy change*
31 December 2018 (as adjusted
due to accounting policy change)
– 32
Effects from the first-time application of IFRS 16
– 569
57,268
529
57,797
1 January 2019 (adjusted according to IFRS 16)
–
128
128
–
–
–
– 6
– 447
4,915
– 694
4,221
107
–
107
5,022
– 694
4,328
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Net profit
– 2,303
– 63
– 2,366
Dividend payments
1
43
94
59,324
–
–
10
583
1
43
104
59,907
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2019
1 January 2019 (adjusted according to IFRS 16)
658
2,118
55,830
in € million
31 December 2018 (as originally reported)
Effects of accounting policy change*
31 December 2018 (as adjusted
due to accounting policy change)
Effects from the first-time application of IFRS 16
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2019
in € million
1 January 2018 (as originally reported)
Effects of accounting policy change*
1 January 2018 (as adjusted
due to accounting policy change)
Net profit*
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018*
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2018 *
Note
31
Subscribed
capital
Capital
reserves
Revenue
reserves
658
2,118
56,121
658
2,118
55,862
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
43
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34
–
– 259
– 32
4,915
– 867
4,048
– 2,303
–
–
92
6,974
718
7,692
– 2,630
–
–
– 77
Note
31
Subscribed
capital
Capital
reserves
Revenue
reserves
658
–
2,084
50,993
– 116
658
2,084
50,877
– 1,494
–
– 1,494
–
168
168
–
–
–
–
11
–
11
–
– 12
– 12
–
–
–
–
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
31
658
2,118
55,862
– 1,326
– 1
1,515
–
1,515
–
– 906
– 906
–
–
–
– 51
558
Accumulated other equity
Translation
differences
Securities
Derivative
financial
instruments
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
Minority
interest
436
–
Total
54,208
– 116
1 January 2018 (as originally reported)
Effects of accounting policy change*
53,656
436
54,092
1 January 2018 (as adjusted
due to accounting policy change)
90
–
90
–
–
–
3
7,064
– 604
6,460
– 2,630
–
34
– 127
529
57,829
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018 *
Net profit*
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2018 *
5
–
5
–
– 572
– 572
–
–
–
53,772
– 116
6,974
– 604
6,370
– 2,630
–
34
– 2
– 569
– 130
57,300
116
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 Statements)
at 31 December 2019 were drawn up in accordance
with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of § 315 e (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements and Combined Management Report
will be submitted to the operator of the electronic
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.
Key figures presented in the report have been rounded
in accordance with standard commercial practise. In
certain cases, this may mean that values do not add
up exactly to the stated total and that percentages
cannot be derived from the values shown.
The income statement for the BMW Group and seg-
ments is 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 requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include an income statement and a
balance sheet for the Automotive, Motorcycles, Finan-
cial Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by a statement
of cash flows for the Automotive and Financial Services
segments. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds for
Group companies and the related interest. A description
of the nature of the business and the major operating
activities of the BMW Group’s segments is provided in
note 45 (“Explanatory notes to segment information”).
On 10 March 2020, the Board of Management granted
approval for publication of the Group Financial State-
ments. Based on current developments regarding the
see
note 45
Group Financial Statements
117
spread of the coronavirus, the Board of Management
on 16 March 2020 adjusted the original outlook for
the BMW Group, the assumptions regarding the
development of the global economy and the economic
risks and opportunities for the financial year 2020
in the Combined Management Report, as well as the
statement regarding the Events after the end of the
reporting period and once again gave approval for
the publication of the Group Financial Statements.
The presentation of selected items (such as the reclas-
sification of vehicles held for sale in the financial
services business) has been changed in the financial
year 2019. The items affected are not significant
overall. The changes in presentation are explained
in the notes relating to the relevant balance sheet and
income statement line items. Prior year figures have
been adjusted accordingly.
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 56 structured entities, consisting of asset-
backed securities entities and special-purpose funds.
In relation to fully consolidated companies, the follow-
ing changes took place in the Group reporting entity
in the financial year 2019:
Included at
31 December 2018
Included for the
first time in 2019
No longer included
in 2019
Included at
31 December 2019
Germany
Foreign
Total
23
–
2
21
194
217
16
24
16
26
186
207
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).
The following three major arrangements are accounted
for as joint operations:
— The BMW Group is party to a cooperation
with Toyota Motor Corporation, Toyota City,
which developed a sports car.
— The BMW Group and Daimler AG are working
together on a long-term strategic cooperation in
the field of highly automated driving systems.
— The BMW Group has also signed an agreement
with the Chinese automobile manufacturer
Great Wall Motor Company Limited (Great Wall)
for the joint development and production of
electric vehicles in China. Vehicle development
and production will be carried out by the
jointly controlled company Spotlight Automotive
Limited (Spotlight). Spotlight was founded on
27 December 2019 following approval by the
Chinese authorities. The BMW Group and
Great Wall each hold 50 % of the joint operation’s
equity. In addition to electric MINI vehicles,
Spotlight will also develop and produce electric
vehicles for Great Wall. At 31 December 2019,
the joint development and production arrange-
ments with Spotlight are included in the Group
Financial Statements on a proportionate basis.
118
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
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 accounted
for using the equity method, with measurement on
initial recognition based on acquisition cost.
On 28 March 2018, the BMW Group signed an agree-
ment with the Daimler Group regarding the merger of
certain business units that provide mobility services.
Following approval by the relevant antitrust author-
ities, the transaction was closed on 31 January 2019.
Existing on-demand mobility offerings in the areas of
car sharing, ride-hailing, parking, charging and multi-
modality have been combined with future strate gic
expansion in mind. As a result of the business com-
bination, following the final signing of contracts,
the BMW Group and the Daimler Group each held
equal shares in Car2Go Deutschland GmbH, Berlin
(ShareNow), Blitz 18-353 GmbH, Munich (FreeNow),
Parkmobile Group Holding B. V., Amsterdam
(ParkNow), Digital Charging Solutions GmbH, Berlin
(ChargeNow) and Moovel Group GmbH, Berlin
(ReachNow). The joint ventures are combined under
the name YOUR NOW.
As a result of the merger, the investments in the com-
panies previously held by the BMW Group were remea-
sured to their fair value. DriveNow GmbH & Co. KG,
Munich, including its subsidiaries and DriveNow
Verwaltungs GmbH, Munich (DriveNow), are part
of the agreement. These entities were contributed
in kind to Car2Go Deutschland GmbH, Berlin, on a
fully re alised profit basis, in return for shares in that
company. Up to 31 January 2019, DriveNow was
accounted for as a discontinued operation. Profit
after tax amounted to € 44 million and resulted pri-
marily from the contribution of DriveNow to Car2Go
Deutschland GmbH. This amount is reported in the
income statement as part of the result from discon-
tinued operations. The remaining BMW companies
included in the agreement were not previously fully
consolidated on the grounds of immateriality. The
transaction gave rise to a preliminary positive impact
of € 329 million which is included in the result on
investments. This amount comprises sale proceeds
of € 232 million and revaluation gains of € 97 million
arising on the remaining shares. The transaction
resulted in a total cash outflow of € 890 million, com-
prising an inflow of € 295 million and an outflow of
€ 1,185 million. The items described above relating
to YOUR NOW also have an impact on the Group’s
and Automotive segment’s cash flows from investing
activities.
Since 1 February 2019, the joint ventures are accounted
for in the BMW Group Financial Statements using the
equity method. The BMW Group’s share of the loss
recorded for the YOUR NOW companies during the
financial year 2019 amounted to € 662 million. This
figure includes impairment losses totalling € 277 million.
Revised business expectations gave rise to an indication
of impairment, thereby triggering an impairment test.
As part of this process, impairment losses totalling
€ 240 million were recognised in the BMW Group Finan-
cial Statements on the carrying amount of individual
YOUR NOW companies. These impairment losses are
included in the line item “Result on investments”.
The amounts recognised as impairment losses partly
reflect decisions taken at the level of ShareNow and
ReachNow not to serve certain markets in the future.
In this context, the result from equity accounted
investment also includes expenses arising from the
recognition of provisions and impairment losses.
The work on opening balance sheets at the merger
date and the calculation of the final purchase prices
have not yet been finalised. For this reason, the final
purchase prices cannot yet be determined definitively.
Similarly, purchase price allocations have not yet
been finalised.
The YOUR NOW companies were contributed into a
holding company with effect from 31 December 2019.
As a result of the contribution, the BMW Group and
the Daimler Group each held equal shares in Blitz
18-353 GmbH (renamed YOUR NOW Holding GmbH
in January 2020), Munich. The contribution was
accounted for as an exchange transaction without
economic substance and executed on the basis of
carrying amounts.
The other changes to the Group reporting entity do
not have a material impact on the results of operations,
financial position and net assets of the Group.
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“.
Group Financial Statements
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables
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.
Non-monetary balance sheet items denominated in
foreign currencies are rolled forward on the basis of
historical exchange rates.
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
119
1 Euro =
British Pound
Chinese Renminbi
Japanese Yen
Korean Won
Russian Rubel
Thai Baht
US-Dollar
Argentina has fulfilled the definition of a hyperinfla-
tionary economy since 1 July 2018. For this reason,
IAS 29 (Financial Reporting in Hyperinflationary
Economies) is being applied for the BMW subsidiary
in Argentina. The price indices published by the
Federación Argentina de Consejos Profesionales de
Ciencias Económicas (FACPCE) are used to adjust
non-monetary assets and liabilities and items in
the income statement. The resulting effects are not
material for the BMW Group.
04
Accounting policies, assumptions, judgements
and estimations
Revenues from contracts with customers include in
particular revenues from the sale of products (primar-
ily new and pre-owned vehicles and related products)
as well as revenues from services. Revenue is recog-
nised when control is transferred to the dealership
or retail customer. In the case of sales of products,
this is usually at the point in time when the risks and
rewards of ownership are transferred. Revenues are
stated net of settlement discount, bonuses and rebates
as well as interest and residual value subsidies. The
consideration arising from these sales usually falls
due for payment immediately or within 30 days. In
exceptional cases, a longer payment period may also
be agreed. In the case of services, control is trans-
ferred over time. Consideration for the rendering of
services to customers usually falls due for payment at
Closing rate
Average rate
31. 12. 2019
31. 12. 2018
0.85
7.82
121.81
1,297.79
69.60
33.40
1.12
0.89
7.87
125.77
1,271.07
79.72
37.01
1.14
2019
0.88
7.73
122.06
1,304.68
72.43
34.76
1.12
2018
0.88
7.81
130.36
1,298.78
74.07
38.15
1.18
the beginning of a contract and is therefore deferred
as a contract liability. The deferred amount is released
over the service period and recognised as revenues in
the income statement. As a rule, amounts are released
on the basis of the expected expense trend, as this
best reflects the performance of the service. If the
sale of products includes a determinable amount for
services (multiple-component contracts), the related
revenues are deferred and recognised as income in the
same way. Variable consideration components, such
as bonuses, are measured at the expected value, and,
in the case of multiple-component contracts allocated
to all performance obligations unless directly attrib-
utable to the sale of a vehicle.
Revenues from the sale of products, for which
repurchase arrangements or rights of return are in
place, are not recognised immediately in full. Instead,
revenues are either recognised proportionately, or
the difference between the sales and repurchase
price is recognised in instalments over the term of the
contract depending on the nature of the agreement.
In the case of vehicles sold to a dealership that are
expected to be repurchased in a subsequent period
as part of leasing operations, revenues are not recog-
nised at Group level at the time of the sale of the
vehicle. Instead, assets and liabilities relating to the
right of return vehicles are recognised.
120
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Revenues from leases of own-manufactured vehicles
are recognised at Group level in accordance with
the requirements for manufacturer or dealer lessors.
In the case of operating leases, revenues from lease
payments are recognised on a straight-line basis
over the lease term. In the case of finance leases,
revenues are recognised at the lease commencement
date at the amount of the fair value of the leased
asset and reduced by any unguaranteed residual
value of vehicles that are expected to be returned to
the Group at the end of the lease term. Similarly, cost
of sales is reduced for unguaranteed residual values.
In addition, initial direct costs are recognised as cost
of sales at the lease commencement date.
Revenues also include interest income from financial
services. Interest income arising on finance leases as
well as on retail customer and dealership financing
is recognised using the effective interest method
and reported as interest income on credit financing
within revenues.
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 periods in which the costs occur that
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 for the year
after minority interests and attributable to each cate-
gory of stock, by the average number of outstanding
shares. Net profit for the year is accordingly allocated
to the different categories of stock. The portion of the
net profit that 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 sepa-
rately disclosed in accordance with IAS 33.
Intangible assets are measured at acquisition or manu-
facturing cost. Intangible assets with finite useful lives
are amortised on a straight-line basis over their useful
lives of between three and 20 years. Impairment losses
are recognised where necessary. Intangible assets with
indefinite useful lives are tested annually for impair-
ment. Internally generated intangible assets mainly
comprise development costs for vehicle, module and
architecture projects.
Development costs are capitalised if all of the criteria
specified by IAS 38 are met. They are measured on the
basis of direct costs and directly attributable overhead
costs. Project-related capitalised development costs
are amortised on a straight-line basis following the
start of production over the estimated product life
cycle (usually eight to twelve years).
Goodwill arises on first-time consolidation of an ac-
qui red business when the cost of acquisition exceeds
the Group’s share of the net fair value of the assets,
liabilities and contingent liabilities identified during
the acquisition.
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
reco gnised, reducing the carrying amount to the
higher of the asset’s value in use or fair value less
costs to sell.
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
higher than the amortised acquisition or manu-
facturing cost. Impairment losses on goodwill are
not reversed.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions – 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
expectations.
Group Financial Statements The BMW Group determines the value in use on the
basis of a present value computation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These long-term
forecasts are based on detailed forecasts drawn up
at an operational level, covering a planning period
of six years. 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.
Amounts are discounted on the basis of a market-
re la ted cost of capital rate. Impairment tests are
performed for accounting and financial reporting pur-
poses for the Automotive and Motorcycles cash-gener-
ating units using a risk-adjusted pre-tax cost of capital
(WACC) that is updated annually. 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 %
2019
2018
Automotive
Motorcycles
Financial Services
10.9
10.9
11.5
12.0
12.0
13.4
The risk-adjusted discount rate, calculated using a
CAPM model, also 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 assumptions used to determine the recoverable
amount would result in the requirement to recognise
an impairment loss.
121
In order to determine a target internal rate of return,
risk-adjusted cost of capital rates are averaged for the
recent past. For the purposes of long-term product and
investment decisions, the following target internal
rates of return are used:
in %
2019
2018
Automotive
Motorcycles
Financial Services
12.0
12.0
13.4
12.0
12.0
13.4
All 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.
122
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
In the case of leased items of property, plant and equip-
ment, a right-of-use asset and a liability for the out-
standing lease payments are recognised with effect
from the date on which the leased asset becomes
available for use by the BMW Group. The acquisition
cost for the right-of-use asset is calculated as the sum
of the present value of the future lease payments, any
lease payments made at or before the commencement
date, any initial direct costs incurred by the lessee
and the estimated costs of dismantling, removing or
restoring the leased asset. Lease incentives granted
by the lessor are deducted. Right-of-use assets are
depreciated on a straight-line basis over the shorter
of the useful life of the leased asset and the expected
lease term. If ownership of the leased asset is auto-
matically transferred at the end of the lease term or
the exercise of a purchase option is reflected in the
lease payments, the right-of-use asset is amortised
on a straight-line basis over the expected useful life
of the leased asset. Right-of-use assets are reported
in the balance sheet within the relevant line items
for property, plant and equipment. The amortisation
expense on right-of-use assets is reported in the
income statement in cost of sales as well as in selling
and administrative expenses.
The lease liability is measured on initial recognition at
the present value of the future lease payments. Sub-
sequent to initial recognition, the carrying amount of
the lease liability is increased to reflect interest on the
lease liability and reduced, without income statement
impact, by the lease payments made. Lease liabilities
are reported within financial liabilities, while interest
expense is reported as part of net interest result. In
the cash flow statement, both the repayment portion
and the interest portion of lease payments are shown
as cash outflows from financing activities.
The lease payments to be taken into account to
measure the right-of-use asset and the lease liability
comprise fixed payments, variable lease payments
that depend on an index or an interest rate as well
as amounts expected to be payable under residual
value guarantees. If it is reasonably certain that a
purchase or lease extension option will be exercised,
the relevant payments are also included. Payments
for periods for which the lessee has an option to
terminate a lease unilaterally are only included in
the lease payments if it is reasonably certain that
the termination option will not be exercised. For the
purposes of assessing options, the BMW Group takes
account of all facts and circumstances that create
an economic incentive to exercise or not to exercise
the option.
IFRS 16 requires that lease payments are discounted
as a general rule using the interest rate implicit in
the lease. However, since the interest rate in leases
entered into by the BMW Group cannot readily be
determined, amounts are discounted on the basis
of the incremental borrowing rate, comprising the
risk-free interest rate in the relevant currency for
matching maturities plus a premium for the credit
risk. Specific risks attached to an asset are generally
not taken into account, given that collateral received
in the context of alternative financing arrangements
is not relevant within the BMW Group.
Determining which items are to be counted as lease
payments – including the issue of the lease term
underlying those payments – and which discount rate
to apply involves using estimates and assumptions
that may differ from actual outcomes.
As lessee, the BMW Group makes use of the applica-
tion exemptions available for short-term leases and
leases of low-value assets.
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
period 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 car-
rying 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 recog-
nised in prior years no longer exists or has decreased.
In such cases, the carrying amount of the asset is
increased to the recoverable amount, at a maximum
up to the amount of the asset’s amortised cost.
Assumptions and estimations are required regard-
ing future residual values, since these represent
a significant 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
historical data 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 Investments accounted for using the equity method are
measured – provided no impairment has been recog-
nised – at cost of investment adjusted for the Group’s
share of earnings and changes in equity capital. If
there is any indication that an investment is impaired,
an impairment test is performed on the basis of a
discounted cash flow method. An indication exists, for
example, in the event of a serious shortfall compared
to budget, the loss of an active market or if funds are
required to avoid insolvency.
The Group’s financial assets include in particular other
investments, receivables from sales financing, mar-
ketable securities and investment funds, derivative
financial assets, trade receivables and cash and cash
equivalents. As a general rule, non-derivative finan-
cial assets are accounted for on the settlement date.
Depending on the business model and the structure of
contractual cash flows, financial assets are classified
as measured at amortised cost, at fair value through
other comprehensive income or at fair value through
profit or loss. The category “at fair value through other
comprehensive income” at the BMW Group comprises
mainly marketable securities and investment funds
used for liquidity management purposes. Selected
mar ketable securities and investment funds, money
market funds within cash and cash equivalents as
well as convertible bonds are recognised at fair value
through profit or loss, as their contractual cash flows
do not solely represent payments of principal and
interest. The BMW Group does not make use of the
option to measure equity instruments at fair value
through other comprehensive income or debt instru-
ments at fair value through profit or loss.
The market values of financial instruments measured
at fair value are determined on the basis of market
information available at the balance sheet date, such as
quoted prices or using appropriate measurement meth-
ods, in particular the discounted cash flow method.
Items reported under other investments within the scope
of IFRS 9 are measured at fair value through profit or
loss. Investments in subsidiaries, joint arrangements
and associated companies that are not material to the
BMW Group and which do not fall within the scope of
IFRS 9 are also included in other investments.
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables from vehicle finance leases
which are measured at an amount equal to the net
investment in the lease.
123
With the exception of receivables from operating
leases and trade receivables, the BMW Group applies
the general approach described in IFRS 9 to deter-
mine impairment of financial assets. Under the general
approach, loss allowances are measured on initial
recognition on the basis of the expected 12-month
credit loss (stage 1). If the credit loss risk at the end
of the reporting period has increased significantly
since initial recognition, the impairment allowance
is measured on the basis of lifetime expected credit
losses (stage 2 – general approach). The BMW Group
applies the simplified approach described in IFRS 9
to operating lease and trade receivables, whereby the
amount of the loss allowance is measured subsequent
to the initial recognition of the receivable on the basis
of lifetime expected credit losses (stage 2 – simplified
approach). For the purposes of allocating an item to
stage 2, it is irrelevant whether the credit risk of the
assets concerned has increased significantly since
initial recognition. In the case of credit-impaired assets
which had not been credit- impaired at the time they
were acquired or originated, an impairment allowance
is recognised at an amount equal to lifetime expected
credit losses (stage 3). This is the case regardless of
whether the general or simplified approach is applied.
As a general rule, the BMW Group assumes that a
receivable is in default if it is more than 90 days
overdue or if there are objective indications of insol-
vency. Credit-impaired assets are identified as such
on the basis of this definition of default. In the case
of stage 3 assets, interest income is calculated on the
asset’s carrying amount less any impairment loss.
Loss allowances on receivables from sales financing
are determined primarily on the basis of past expe-
rience with credit losses, current data on overdue
receivables, rating classes and scoring information.
Forward-looking information (for instance forecasts of
key performance indicators) is also taken into account
if, based on past experience, such indicators show a
substantive correlation to actual credit losses.
The measurement of the change in default risk is based
on a comparison of the default risk at the date of initial
recognition and at the end of the reporting period.
The default risk at the end of each reporting period is
determined on the basis of credit checks, current key
performance indicators and any overdue payments.
Loss allowances on trade receivables are determined
primarily on the basis of information relating to over-
due amounts. In the case of marketable securities and
investment funds, the BMW Group usually applies
the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets
with an investment grade rating are always allocated to
stage 1. The loss allowance on these assets is calculated
using the input factors available on the market, such
as ratings and default probabilities.
124
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
The BMW Group writes off financial assets when it has
no reasonable expectation of recovering the amounts
concerned. This may be the case, for instance, if the
debtor is deemed not to have sufficient assets or other
sources of income to service the debt.
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. Derivative financial instruments are recognised
as of the trade date, measured at their fair value. Fair
values are determined on the basis of valuation mo dels.
Observable market price, tenor and currency basis
spreads are taken into account in the measurement
of derivative financial instruments. Furthermore, 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 to recognise the
credit risks arising from the fair values of a group of
derivative financial assets and liabilities on the basis
of their total net amount. Portfolio-based valuation
adjustments (credit valuation adjustments and debit
valuation adjustments) to the individual derivative
financial assets and financial liabilities are allocated
using the relative fair value approach (net method).
Where hedge accounting is applied, changes in fair
value of derivate financial instruments are presented
as part of other financial result in the income state-
ment or within other comprehensive income as a
component of accumulated other equity, depending
on whether the hedging relationship is classified as
a fair value hedge or a cash flow hedge. Fair value
hedges are mainly used to hedge interest rate risks
relating to bonds, other financial liabilities and receiv-
ables from sales financing. For selected fixed-interest
assets, part of the interest rate risk is hedged on a
portfolio basis in accordance with IAS 39. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio. The currency basis is not
designated as part of the hedging relationship in the
case of interest rate hedges accounted for as fair value
hedges. Accordingly, changes in the market value of
such instruments are recorded as costs of hedging
within accumulated other equity. Amounts accumu-
lated in equity are reclassified to other financial result
within income statement over the term of the hedging
relationship. Ineffectiveness of hedging relationships
is also recognised in other financial result.
The time values of option transactions and the interest
component – including the currency basis – of forward
currency contracts are not designated as part of the
hedging relationship in the case of currency hedges
accounted for as cash flow hedges. Changes in the
market value of such components are recorded as
costs of hedging on a separate line within accumulated
other equity. Amounts recorded in accumulated other
equity from currency hedges are reclassified to cost
of sales when the related hedged item is reco g nis ed
in profit or loss. Ineffectiveness is recognised directly
in cost of sales.
In the case of raw materials hedges that are accounted
for as cash flow hedges, the hedging instruments are
designated in full as part of the hedging relationship.
As an exception to this general rule, the interest
component of raw materials derivative instruments
redesignated in conjunction with the first-time
application IFRS 9 was not designated as part of
the hedging relationship. Changes in the fair value
of this component are recorded as costs of hedging
on a separate line within accumulated other equity.
Amounts recorded in accumulated other equity are
included in the carrying amount of inventories on
initial recognition.
Deferred income taxes are recognised for all temporary
differences between the tax and accounting bases of
assets and liabilities, including differences arising on
consolidation procedures, as well as on unused tax
losses and unused tax credits. Deferred tax assets
and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is
realised or the liability settled, based on tax rates
and tax laws that have been enacted or substantively
enacted by the balance sheet date.
The recoverability of deferred tax assets is assessed at
each balance sheet date on the basis of planned tax-
able income in future financial years. If with a pro ba-
bility of more than 50 percent future tax benefits 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 cer-
tainty and to some extent cannot be influenced by the
BMW Group, the measurement of deferred tax assets
is subject to uncertainty.
Group Financial Statements 125
Deferred tax liabilities on taxable temporary dif fer ences
arising from investments in subsidiaries, branches and
associated companies and interests in joint arrange-
ments are not recognised if the Group is able to control
the timing of the reversal and it is probable that the
temporary difference will not reverse in the foreseeable
future. This is particularly the case if it is intended that
profits will not be distributed, but rather will be used
to maintain the substance and expand the volume of
business of the entities concerned.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation app lica ble
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.
As a general rule, each income tax treatment is consid-
ered independently when accounting for uncertainties
in income taxes. If it is not considered probable that an
income tax treatment will be accepted by the local
tax authorities, the BMW Group uses the most likely
amount of the tax treatment when determining tax-
able profit and the tax base.
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, as well as vehi-
cles held for sale in the financial services business,
are stated at the lower of manufacturing cost and net
realisable value. Manufacturing cost comprises all
costs which are directly attributable to the manufac-
turing 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. Financing costs are not included in the
acquisition or manufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months. With the exception of money market
funds, cash and cash equivalents are measured at
amortised cost.
Financial liabilities, with the exception of lease liabil-
ities, are measured on first-time recognition at their
fair value. For these purposes, transaction costs are
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
reco gnition, liabilities are – with the exception of
derivative financial instruments – measured at amor-
tised cost using the effective interest method.
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 ex pected increases in pensions and
salaries. The calculation is based on independent
actuarial valuations which take into account the
relevant biometric factors.
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 ex-
pectancy of employees. Discount rates are determined
by reference to market yields at the end of the report-
ing 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.
126
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Past service cost arises where a BMW Group com-
pany 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).
Other provisions are recognised when the BMW Group
has a present legal or constructive 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 period of more than one year are measured
at their net present value.
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contrac-
tual and voluntary) involves estimations. In addition
to manufacturer warranties prescribed by law, the
BMW Group offers various further standard (assur-
ance-type) warranties depending on the product
and sales market. No provisions are recognised for
additionally offered service packages that are treated
as separate performance obligations.
Provisions for statutory and non-statutory warranties
are recognised at the point in time when control over
the goods is transferred to the dealership or retail
customer or when it is decided to introduce new
warranty measures. With respect to the level of the
provision, 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.
Provisions for warranties for all companies of the
BMW Group are adjusted regularly to take account
of new information, with the impact of any changes
recognised in the income statement. Further infor-
mation is provided in
note 33. Similar estimates
are also made in conjunction with the measurement
of expected reimbursement claims.
The recognition and measurements 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 appro-
priateness of assumptions is regularly reviewed, based
on assessments undertaken both by management
and external experts, such as lawyers. If new devel-
opments arise in the future that result in a different
assessment, provisions are adjusted accordingly.
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.
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 40 and in the list of investments
disclosed in
note 46.
Share-based remuneration programmes which are ex-
pected 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 41.
see
notes 40 and 46
see
note 33
see
note 41
Group Financial Statements 127
05
Financial reporting rules
Standards and Revised Standards significant for the
BMW Group applied for the first time in the finan-
cial year 2019:
Standard / Interpretation
IFRS 16
Leases
IFRS 9, IAS 39,
IFRS 7
Interest Rate Benchmark Reform
(Amendments to IFRS 9, IAS 39, IFRS 7)
IFRIC 23
Uncertainty Over Income Tax Treatments
Changes due to the new accounting standard IFRS 16
are described in
note 6.
see
note 6
The amendments to IFRS 9, IAS 39 and IFRS 7 pro-
vide relief with regard to the expected impact of the
interest rate benchmark reform on hedge accounting
and are being applied early by the BMW Group. The
amendments provide temporary relief from applying
specific hedge accounting requirements in the case of
hedging relationships directly affected by the interest
rate benchmark reform. Accordingly, hedge account-
ing requirements must be applied as if the benchmark
interest rate, on which the hedged cash flows and cash
flows from the hedging instrument are based, were
not changed by the benchmark interest rate reform.
Consequently, the amendments to IFRS 9 and IAS 39
ensure that hedge accounting is not required to be
discontinued specifically as a result of the bench-
mark interest rate reform. The relief is applied to all
BMW Group hedging relationships affected by the
uncertainties arising from the benchmark interest
rate reform.
Date of
issue by
IASB
13. 1. 2016
26. 9. 2019
Date of
mandatory
application
IASB
1. 1. 2019
1. 1. 2020
Date of
mandatory
application
EU
1. 1. 2019
1. 1. 2020
7. 6. 2017
1. 1. 2019
1. 1. 2019
IFRIC 23 clarifies the accounting for uncertainties
regarding income tax issues and transactions. Due
to accounting practises previously followed, based on
the consistent application of IAS 12, the BMW Group
is not affected by IFRIC 23.
Other accounting rules required to be applied for
the first time in the financial year 2019 did not have
any significant impact on the BMW Group Financial
Statements.
Other financial reporting standards issued by the
IASB and not yet applied are not expected to have
any significant impact on the BMW Group Financial
Statements. With the exception of the benchmark
interest rate reform, the BMW Group has not applied
any other new accounting rules before their manda-
tory date.
128
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
06
Changes in accounting policy for leases
(a) First-time application of IFRS 16 – Accounting
for leases as lessee
Up to 31 December 2018, the accounting treatment of
a lease was determined in accordance with IAS 17 on
the basis of the extent to which the risks and rewards
attached to the leased item were transferred to the
lessee. Leased items of property, plant and equip-
ment whose economic ownership was attributed to
the BMW Group (finance leases) were measured on
initial recognition at their fair value or, if lower, at the
net present value of minimum lease payments. The
assets were depreciated using the straight-line method
over their estimated useful lives or, if shorter, over the
contractual lease period. Obligations for future lease
payments were recognised at their net present value
in other financial liabilities. In the case of leases that
did not transfer substantially all the risks and rewards
incidental to ownership from the Group to the lessee
(operating leases), lease payments were previously
recognised in the income statement on a straight-line
basis over the lease term.
The new Standard IFRS 16 (Leases) requires a new
approach to accounting for leases by lessees. In prin-
ciple, every lease is now required to be accounted for
at the level of the lessee as a financing transaction,
reflecting the fact that the distinction between ope-
r ating and finance leases has been eliminated.
The new Standard has been applied with effect from
1 January 2019 using the modified retrospective
method. On transition to the new Standard, the
BMW Group applied the following practical expe-
dients permitted for lessees by IFRS 16:
— no reassessment was made at the date of initial
application as to whether or not existing con-
tracts constituted a lease based on IFRS 16.
Instead, the previous assessment made under
IAS 17 and IFRIC 4 was retained.
— An impairment review of individual right-of-
use assets was not performed. Instead, the
as sessment of the existence of onerous leases in
accordance with IAS 37 (Provisions, Contin-
gent Liabilities and Contingent Assets) is used
as a practical expedient. No provisions for
onerous leases were recognised at 31 Decem-
ber 2018.
— Leases expiring no later than 31 December 2019
are accounted for as short-term leases regardless
of the original lease term.
— Initial direct costs were not taken into account
when measuring right-of-use assets at the time
of initial application.
— Current information is taken into account when
determining the lease term if the contract con-
tains options to extend or terminate the lease.
At the date of initial application, the balance sheet
total increased by € 2,407 million as a result of leases
previously classified as operating leases. The reclas-
sification resulted in a slight decline in the equity
ratio. For a small number of real estate contracts,
the carrying amount of right-of-use assets has been
determined as if IFRS 16 had been applied from the
commencement of the lease. After offsetting deferred
tax effects amounting to € 13 million, this resulted in
a reduction of approximately € 32 million in Group
revenue reserves at 1 January 2019. The BMW Group’s
profit before financial result for the financial year
2019 benefited from a positive effect of € 27 million.
Furthermore, cash flows from operating activities
increased and cash flows from financing activities
decreased by € 494 million.
Group Financial Statements
Starting with financial obligations for operating leases
at 31 December 2018, lease liabilities can be reconciled
to the opening balance at 1 January 2019 as follows:
Reconciliation of opening balance
• 65
in € million
Financial obligations for operating leases at 31 December 2018
Application of practical expedients for leases of low-value assets and short-term leases
Change in assessment of leases
Other
Gross lease liabilities for former operating leases at 1 January 2019
Discounting impact
Lease liabilities for former operating leases at 1 January 2019
Present value of finance lease liabilities at 31 December 2018
Total lease liabilities at 1 January 2019
Lease liabilities were discounted using a weighted
average incremental interest rate of 1.94 % at 1 Jan-
uary 2019.
(b) Changes in methods used to account
for leases as lessor
In conjunction with the adoption of IFRS 16, the meth-
ods used to account for leases as a lessor have also
been reviewed, resulting in a change of accounting
policy as described below with effect from the finan-
cial year 2019. The change in accounting policy has
been applied retrospectively in accordance with IAS 8,
with comparative figures adjusted. In this context, the
opening balance sheet at 1 January 2018 and figures
for the financial year 2018 have been adjusted.
As a result of the revised definition of initial direct
costs contained in IFRS 16, the BMW Group has
changed the timing of income statement recognition
for volume-dependent bonuses relating to Financial
Services segment sales promotions. Rather than being
spread over the term of the underlying lease, these
costs are now recognised as an expense in full in the
period in which the entitlement to the bonus arises.
This resulted in a retrospective decrease in Group
revenue reserves at 1 January 2018 of € 101 million,
after offset of deferred tax amounting to € 44 million
(31 December 2018: reduction of revenue reserves of
€ 113 million, after offset of deferred tax amounting
to € 49 million).
129
2,694
– 102
69
4
2,665
– 258
2,407
105
2,512
The BMW Group is also required to account for
finance leases concluded with retail customers via the
Financial Services segment in accordance with the
requirements applicable to manufacturers or dealers.
For this reason, revenues and cost of sales arising on
the sale of vehicles which will subsequently be leased
to customers under finance lease arrangements are
now recognised at a later date. Revenues and cost of
sales relating to vehicle sales are no longer recognised
at the time of sale, but rather at the commencement
of the lease. Revenues are recognised on the basis of
the leased asset’s fair value, reduced by any ungua r -
anteed residual value of vehicles that are expected
to be returned to the Group. Similarly, cost of sales
is reduced for unguaranteed residual values. In addi-
tion, initial direct costs incurred by the Financial
Services segment are recognised at Group level as
cost of sales. Overall, this resulted in a retrospective
decrease in Group revenue reserves at 1 January 2018
of € 15 million, after offset of deferred tax amounting
to € 4 million (31 December 2018: decrease of revenue
reserves of € 146 million, after offset of deferred tax
amounting to € 44 million). The adoption of these
requirements did not have any significant impact
on the accounting in the Automotive and Financial
Services segments.
130
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
The tables below show the impact of accounting pol-
i cy changes on the balance sheets at 1 January 2018
and 31 December 2018, as well as on the income
statement, statement of comprehensive income and
cash flow statement for the financial year 2018.
bMW Group change in presentation of balance sheet at 1 January 2018
• 66
in € million
ASSetS
Total non-current assets
thereof receivables from sales financing
thereof deferred tax
thereof other assets
Total current assets
thereof current tax
thereof other assets
Total assets
equIty A nd lIAbIlItI eS
Total equity
thereof equity attributable to shareholders of BMW AG
thereof revenue reserves
Total non-current provisions and liabilities
thereof other provisions
thereof deferred tax
thereof other liabilities
Total current provisions and liabilities
thereof other provisions
thereof other liabilities
Total equity and liabilities
As originally
reported
Impact of
accounting
policy changes
As amended
122,090
– 105
121,985
48,475
1,965
1,630
73,496
1,566
7,485
– 18
6
– 93
– 34
11
– 45
48,457
1,971
1,537
73,462
1,577
7,440
195,586
– 139
195,447
54,208
53,772
50,993
69,616
5,632
2,166
5,045
71,762
6,367
13,443
– 116
– 116
– 116
– 31
–
– 31
–
8
–
8
54,092
53,656
50,877
69,585
5,632
2,135
5,045
71,770
6,367
13,451
195,586
– 139
195,447
Group Financial Statements
bMW Group change in presentation of balance sheet at 31 december 2018
• 67
131
in € million
ASSetS
Total non-current assets
thereof receivables from sales financing
thereof deferred tax
thereof other assets
Total current assets
thereof current tax
thereof other assets
Total assets
equIty A nd lIAbIlItI eS
Total equity
thereof equity attributable to shareholders of BMW AG
thereof revenue reserves
Total non-current provisions and liabilities
thereof other provisions
thereof deferred tax
thereof other liabilities
Total current provisions and liabilities
thereof other provisions
thereof other liabilities
Total equity and liabilities
bMW Group change in presentation of income statement
for the period from 1 January to 31 december 2018
• 68
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Profit / loss before financial result
Profit / loss before tax
Income taxes
Net profit / loss
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
As originally
reported
Impact of
accounting
policy changes
As amended
125,442
48,109
1,590
2,026
83,538
1,366
9,790
– 80
– 20
48
– 108
479
12
467
125,362
48,089
1,638
1,918
84,017
1,378
10,257
208,980
399
209,379
58,088
57,559
56,121
79,983
5,776
1,806
5,299
70,909
6,078
15,117
– 259
– 259
– 259
– 48
– 9
– 33
– 6
706
– 3
709
57,829
57,300
55,862
79,935
5,767
1,773
5,293
71,615
6,075
15,826
208,980
399
209,379
As originally
reported
Impact of
accounting
policy changes
As amended
97,480
– 78,924
18,556
– 9,558
9,121
9,815
– 2,575
7,207
7,117
10.82
10.84
10.82
10.84
– 165
– 13
– 178
– 10
– 188
– 188
45
– 143
– 143
– 0.22
– 0.22
– 0.22
– 0.22
97,315
– 78,937
18,378
– 9,568
8,933
9,627
– 2,530
7,064
6,974
10.60
10.62
10.60
10.62
132
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Notes to the
Income Statement
bMW Group change in presentation of statement of comprehensive income
for the period from 1 January to 31 december 2018
• 69
in € million
Net profit
Total comprehensive income
Total comprehensive income attributable to shareholders of BMW AG
BMW Group change in presentation of cash flow statement
for the period from 1 January to 31 december 2018
• 70
in € million
Cash inflow / outflow from operating activities
thereof net profit
thereof change in deferred taxes
thereof change in receivables from sales financing
thereof change in provisions
thereof change in other operating assets and liabilities
As originally
reported
Impact of
accounting
policy changes
As amended
7,207
6,603
6,513
– 143
– 143
– 143
7,064
6,460
6,370
As originally
reported
Impact of
accounting
policy changes
As amended
5,051
7,207
355
– 5,670
– 82
697
–
– 143
– 45
20
– 12
180
5,051
7,064
310
– 5,650
– 94
877
Group Financial Statements 133
NOTES TO THE INCOME
STATEMENT
07
Revenues
Revenues by activity comprise the following:
in € million
2019
2018*
Sales of products and related goods
73,433
68,029
Sales of products previously
leased to customers
Income from lease instalments
Interest income on loan financing
and finance leases
Revenues from service contracts,
telematics and roadside assistance
Other income
Revenues
* Prior year’s figures adjusted.
11,020
10,746
10,163
9,995
3,996
3,728
2,820
2,195
2,784
2,156
104,210
96,855
Revenues recognised from contracts with customers
in accordance with IFRS 15 totalled € 89,610 million
(2018: € 81,871 million).
An analysis of revenues by segment is shown in the
explanatory comments on segment information
provided in
note 45. Revenues from the sale of
products and related goods are generated primarily in
the Automotive segment and, to a lesser extent, in the
Motorcycles segment. Revenues from sales of products
previously leased to customers, income from lease
instalments and interest income on loan financing and
finance leases are allocated to the Financial Services
segment. Other income relates mainly to the Auto-
motive segment and the Financial Services segment.
The major part of revenues expected to arise from the
Group’s order book at the end of the reporting period
relates to the sale of vehicles. Revenues resulting from
those sales will be recognised in the short term. The
services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent
only an insignificant portion of expected revenues.
Accordingly, use has been made of the practical
expedient contained in IFRS 15, permitting an entity
not to disclose information on a quantitative basis
due to the short-term nature of items and the lack of
informational value of such disclosures.
Interest income on loan financing and finance leases
includes interest calculated on the basis of the effec-
tive interest method totalling € 3,687 million (2018:
€ 3,423 million). This interest income is not reported
separately in the income statement as it is not signif-
icant compared to total Group revenues.
see
note 6
Comparative figures for the previous financial year
have been adjusted to reflect the change in accounting
policy for manufacturer lessors (see
note 6) and
the change in the presentation of amortisation of
initial direct costs for finance leases and receivables
originated. These were previously recorded as cost
of sales and are now reported as reductions of rev-
enues (amount adjusted for the financial year 2018:
€ 460 million).
08
Cost of sales
Cost of sales comprises:
in € million
2019
2018*
Manufacturing costs
48,690
44,558
Cost of sales relating to financial services
business
23,623
22,042
thereof: interest expense relating
to financial services business
Research and development expenses
Expenses for service contracts, telematics
and roadside assistance
see
note 45
Warranty expenditure
Other cost of sales
Cost of sales
* Prior year’s figures adjusted.
2,288
5,952
1,641
2,566
3,675
2,035
5,320
1,844
1,717
2,996
86,147
78,477
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to € 105 million
(2018: € 88 million).
Expenses for impairment losses on receivables from
sales financing recognised in the income statement
for the financial year 2019 amounted to € 219 million
(2018: € 142 million). Because the impairments are of
minor importance compared to total Group cost of
sales, a separate disclosure has not been provided in
the income statement.
134
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Notes to the
Income Statement
Comparative figures for the previous financial year
have been adjusted to reflect the change in accounting
policy for volume-dependent bonuses and for manu-
note 6) as well as the change in
facturer lessors (see
the presentation of amortisation of initial direct costs
for finance leases and receivables originated. These
were previously recorded as cost of sales and are now
reported as reductions of revenues (amount adjusted
for the financial year 2018: € 460 million).
see
note 6
Research and development expenditure was as follows:
in € million
2019
2018
Research and development expenses
Amortisation
New expenditure for capitalised
development costs
Total research and development
expenditure
5,952
– 1,667
5,320
– 1,414
2,134
2,984
6,419
6,890
09
Selling and administrative expenses
Selling and administrative expenses relate mainly to
expenses for marketing, personnel and IT.
in € million
2019
2018*
Selling expenses
Administrative expenses
Total selling and administrative
expenses
* Prior year’s figures adjusted.
5,656
3,711
5,848
3,720
9,367
9,568
The previous year’s figure has been adjusted due to
the change in accounting policy for volume-dependent
bonuses (see
note 6).
see
note 6
10
Other operating income and expenses
Other operating income and expenses comprise the
following items:
in € million
2019
2018
Exchange gains
Income from the reversal of provisions
Income from the reversal of impairment
losses and write-downs
Gains on the disposal of assets
Sundry operating income
Other operating income
Exchange losses
Expense for additions to provisions
Expense for impairment losses and
write-downs
Sundry operating expenses
Other operating expenses
148
433
8
41
401
1,031
– 181
– 1,732
– 173
– 230
– 2,316
185
216
15
96
262
774
– 135
– 193
– 48
– 275
– 651
Other operating income and expenses
– 1,285
123
Income from the reversal of and expenses for the
recog nition of impairment allowances and write-
downs relate mainly to impairment allowances on
receivables.
Impairment losses recognised on receivables from
contracts with customers amounted to € 48 million
(2018: € 47 million).
The expense for additions to provisions includes
litigation and other legal risks. Income from the
reversal of provisions includes income arising on
the reassessment of risks from legal disputes.
In an ad hoc announcement dated 5 April 2019,
the BMW Group reported that the EU Commission
had informed it of a “Statement of Objections” in
conjunction with ongoing antitrust proceedings.
The EU Commission alleges that the manufacturers
col lu ded with the aim of restricting innovation and
competition with regard to certain exhaust treat-
ment systems for diesel- and petrol-driven passenger
vehicles. The allegation concerns selective catalytic
reduction (SCR) systems and the use of petrol par-
ticulate filters (OPF). The Commission’s preliminary
view is that the conduct objected to may be in breach
of EU competition rules. The Statement of Objections
leads the BMW Group to conclude that it is probable
(“more likely than not”) that the EU Commission will
issue a significant fine. The resulting requirement
to recognise a provision increased other operating
expenses by approximately € 1.4 billion in 2019.
Group Financial Statements
The BMW Group has examined the objections and
gained access to the documents in the EU Commission’s
investigation file. In December 2019, the BMW Group
submitted a detailed response to the EU Commission,
which the latter will now examine before determining
the next steps in the proceedings. Consequently, it
is not yet possible to assess the ultimate financial
impact definitively.
11
Net interest result
in € million
2019
2018
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
Net interest result
179
9
179
– 226
– 41
– 232
– 4
– 499
– 320
397
8
397
– 91
– 62
– 233
– 2
– 386
11
135
12
Other financial result
in € million
2019
2018
Income from investments in subsidiaries
and participations
thereof from subsidiaries:
Expenses from investments in subsidiaries
and participations
Result on investments
Income (+) and expenses (–) from
financial instruments
Sundry other financial result
Other financial result
387
13
– 307
80
– 189
– 189
– 109
278
9
– 122
156
– 105
– 105
51
see
note 2
The result on investments includes revaluation effects
relating to YOUR NOW. Further information is pro-
vi ded in
note 2 to the Group Financial Statements.
The figure reported for the previous year included
a positive valuation effect relating to the DriveNow
companies amounting to € 209 million.
Sundry other financial result comprises mainly in-
come and expenses arising on the measurement of
stand-alone derivatives and fair value hedge rela-
tionships, as well as income and expenses from the
measurement and sale of marketable securities and
shares in investment funds.
13
Income taxes
Taxes on income of the BMW Group comprise the
following:
in € million
2019
2018*
Current tax expense
Deferred tax expense (+) /
deferred tax income (–)
thereof relating to temporary
differences
thereof relating to tax loss
carryforwards and tax credits
Income taxes
* Prior year’s figures adjusted.
3,316
2,218
– 1,176
– 1,439
263
2,140
312
596
– 284
2,530
The previous year’s figures have been adjusted due to
the change in accounting policy for volume-dependent
note 6).
bonuses and for manufacturer lessors (see
see
note 6
136
Notes to the Group
Financial Statements
Notes to the
Income Statement
The tax expense was reduced by € 30 million (2018:
€ 41 million) as a result of utilising tax loss carry-
forwards, for which deferred tax 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
valuation allowance on deferred tax assets relating
to tax losses available for carryforward and temporary
differences amounted to € 7 million (2018: € 24 million).
Deferred taxes are determined on the basis of tax
rates which 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 428.0 (2018: 428.0), the underlying income tax rate
for Germany was as follows:
in %
2019
2018
Corporate tax rate
Solidarity surcharge
Corporate tax rate including solidarity
surcharge
Municipal trade tax rate
German income tax rate
15.0
5.5
15.8
15.0
30.8
15.0
5.5
15.8
15.0
30.8
Deferred taxes for non-German entities are calculated
on the basis of the relevant country-specific tax rates.
These ranged in the financial year 2019 between 9.0 %
and 40.0 % (2018: between 9.0 % and 45.0 %).
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:
in € million
2019
2018*
Profit before tax
Tax rate applicable in Germany
Expected tax expense
7,118
30.8 %
2,192
9,627
30.8 %
2,965
Variances due to different tax rates
– 373
– 436
Tax increases (+) / tax reductions (–) due to:
Tax-exempt income
Non-deductible expenses
Equity accounted
Tax expense (+) / benefits (–)
for prior years
Effects from tax rate changes
Other variances
Actual tax expense
Effective tax rate
* Prior year’s figures adjusted.
– 314
909
5
– 162
– 17
– 100
2,140
30.1 %
– 173
314
– 158
– 16
90
– 56
2,530
26.3 %
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income increased
compared to one year earlier. The tax increases were
due to provisions and impairment losses on invest-
ments that are non-deductible for tax purposes as well
as to non-deductible withholding tax.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years, which were largely attributable
to the successful conclusion of intergovernmental tax
treaties covering the topic of transfer pricing.
Other variances include various reconciling items.
Group Financial Statements The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
137
in € million
Intangible assets
Property, plant and equipment
Leased products
Other investments
Sundry other assets
Tax loss carryforwards
Capital Losses
Provisions
Liabilities
Eliminations
Valuation allowances on tax loss carryforwards
Valuation allowances on capital losses
Netting
Deferred taxes
Net
* Prior year’s figures adjusted.
Deferred tax assets
Deferred tax liabilities
2019
2018*
2019
2018*
17
53
324
3
1,125
306
329
6,239
3,544
3,883
22
171
489
3
1,185
578
313
5,323
2,570
3,226
15,823
13,880
– 177
– 329
– 13,123
2,194
1,562
– 185
– 313
– 11,744
1,638
–
3,186
780
4,085
22
3,454
–
–
42
647
1,539
13,755
–
–
3,077
359
5,175
20
3,254
–
–
29
620
983
13,517
–
–
– 13,123
– 11,744
632
–
1,773
135
Tax loss carryforwards – all relating to foreign opera-
tions – amounted to € 954 million (2018: € 2,045 mil-
lion). This includes one tax loss carryforward
amounting to € 519 million (2018: € 542 million), on
which a valuation allowance of € 177 million (2018:
€ 185 million) was recognised on the related deferred
tax asset. The decrease in tax losses available for
carryforward was mainly attributable to tax reform
in the USA. For entities with tax losses available for
carryforward, a net surplus of deferred tax assets
over deferred tax liabilities is reported amounting
to € 292 million (2018: € 234 million). Deferred tax
assets are recognised on the basis of management’s
assessment that there is material evidence that the
entities will generate future taxable profits, against
which deductible temporary differences can be offset.
It is expected for instance that tax-allowable start-up
losses incurred for the plant opened in 2019 in San
Luis Potosí, Mexico, can be utilised against future
planned income.
Tax loss carryforwards amounting to € 553 million
(2018: € 1,551 million) can be used indefinitely, while
€ 401 million (2018: € 494 million) expire after more
than 3 years.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
increased to € 1,938 million (2018: € 1,841 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses – amounting to
€ 329 million (2018: € 313 million) – were fully written
down since they can only be utilised against future
capital gains.
The deferred tax amount reported in the position
eliminations relates mostly to the balance sheet line
item Leased products.
Deferred tax assets and deferred tax liabilities are
netted for each relevant tax entity if they relate to the
same tax authorities.
138
Deferred taxes recognised directly in equity amounted
to € 2,015 million (2018: € 1,457 million).
Notes to the Group
Financial Statements
Notes to the
Income Statement
in € million
Deferred taxes at 1 January (assets (–) / liabilities (+)) 2
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
thereof from currency translation
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (–) / liabilities (+))
1 Prior year’s figures adjusted.
2 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6.
2019
20181
122
– 1,176
– 558
– 170
– 376
– 12
50
– 1,562
164
312
– 457
– 677
222
– 2
116
135
Taxable temporary differences relating to invest-
ments in subsidiaries, associated companies and
joint ventures amount to € 21,215 million (2018:
€ 17,051 million). No deferred taxes are recognised
on these taxable temporary differences because the
BMW Group is able to determine the timing of the
reversal of the temporary differences and it is prob-
able that the temporary differences will not reverse
in the foreseeable future, in particular in view of
the fact that there is no intention to distribute the
profits, but rather to use them to maintain their
substance and reinvest in the companies concerned.
No computation was made of the potential impact
of income taxes on the grounds of proportionality.
Deferred tax liabilities on expected dividends amount
to € 64 million and relate primarily to dividends from
foreign subsidiaries and joint ventures.
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.
14
Earnings per share
Net profit attributable to the shareholders of BMW AG
€ million
4,914.5
6,974.4
2019
20181
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 / diluted earnings per share of common stock
Basic / diluted earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
1 Prior year’s figures adjusted.
2 Proposal by management.
€ million
€ million
4,494.4
420.1
6,383.6
590.8
number
601,995,196
601,995,196
number
56,122,857
55,605,380
€
€
€
€
7.47
7.49
2.50 2
2.52 2
10.60
10.62
3.50
3.52
Group Financial Statements
139
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. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
16
Leases
(a) As lessee
In terms of accounting for leases as a lessee, the fol-
lowing amounts are included in the income statement
for the financial year 2019:
Basic / diluted earnings per share from continuing
operations amounted to € 7.40 per share of common
stock and € 7.42 per share of preferred stock.
in € million
The previous year’s figures have been adjusted due to
the change in accounting policy for volume-dependent
note 6).
bonuses and for manufacturer lessors (see
see
note 6
Expenses for leases of low-value assets and
short-term leases
Expenses relating to variable lease payments
not included in the measurement of lease liabilities
Interest expenses arising on the measurement of
lease liabilities
2019
– 94
– 3
– 54
15
Personnel expenses
The income statement includes personnel expenses
as follows:
in € million
2019
2018
Wages and salaries
Pension and welfare expenses
Social insurance expenses
Personnel expenses
10,370
10,249
1,133
948
1,387
843
12,451
12,479
Personnel expenses include € 72 million (2018:
€ 45 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to € 148 million
(2018: € 122 million). Employer contributions paid to
state pension insurance schemes totalled € 667 mil-
lion (2018: € 645 million).
The average number of employees during the year was:
2019
2018
Employees
125,893
123,337
Apprentices and students gaining work
experience
7,389
8,228
Average number of employees
133,282
131,565
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
see
notes 4, 6, 20,
22 and 35
Most of the expenses for leases for low-value assets
and short-term leases relate to low-value assets.
The BMW Group is party to leases at the end of the
reporting period which have not yet commenced.
These leases could give rise to future cash outflows
amounting to € 42 million.
Total cash outflows for leases in 2019 amount to
€ 591 million.
Information on right-of-use assets and lease liabilities
and further explanatory comments are pro vided in
note 4 (Accounting policies, assumptions, judgments
and estimates), note 6 (Changes in accounting policy
for leases), note 20 (Analysis of changes in Group
tangible, intangible and investment assets in 2019),
note 22 (Property, plant and equipment (including
right-of-use assets arising from leases) and note 35
(Financial liabilities).
(b) As lessor
in € million
Income from variable lease payments for operating leases
Income from variable lease payments for finance leases
Financial income on the net investment in finance leases
Selling profit or loss on the sale of vehicles previously
leased to retail customers under finance leases
2019
171
19
885
1,389
Variable lease payments are based on distance driven.
The agreements have, in part, extension and pur chase
options.
140
Notes to the Group
Financial Statements
Notes to the
Income Statement
Notes to the
Statement of
Comprehensive
Income
17
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2019 for the Group auditor
and the PwC network of audit firms amounted to
€ 19 million (2018: € 24 million, KPMG International)
and consists of the following:
PwC International
(2018: KPMG International)
thereof: PwC GmbH
(2018: KPMG AG)
2019
2018
2019
2018
14
1
1
3
19
17
3
2
2
24
4
1
–
2
7
5
2
–
–
7
18
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to € 41 million (2018: € 29 million)
and € 199 million (2018: € 83 million) respectively, was
recognised in the income statement in 2019.
These amounts relate mainly to public sector grants
aimed at the promotion of regional structures as well
as to subsidies received for plant expansions.
in € million
Audit of financial statements
Other attestation services
Tax advisory services
Other services
Fee expense
Services provided during the financial year 2019 by
the Group auditor PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft, Frankfurt am Main,
Munich branch, 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 the
separate financial statements of BMW AG and its
subsidiaries, and, in accordance with current require-
ments, all work related thereto, including the review
of the Interim Group Financial Statements.
Other attestation services include mainly project-
related audits, comfort letters and statutorily
prescribed, contractually agreed or voluntarily com-
missioned attestation work.
Other services mainly include consulting services
relating to production processes.
Group Financial Statements
141
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
19
Disclosures relating to the statement of
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
2019
2018
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
Marketable securities (at fair value through other comprehensive income)
thereof gains / losses arising in the period under report
thereof reclassifications to the income statement
Derivative financial instruments
thereof gains / losses arising in the period under report
thereof reclassifications to the income statement
Costs of hedging
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 that can be reclassified to the income statement in the future
– 1,254
387
– 867
42
59
– 17
– 706
– 229
– 477
125
– 611
736
– 3
171
544
173
935
– 217
718
– 30
– 1
– 29
– 1,381
– 333
– 1,048
– 620
– 973
353
– 157
674
192
– 1,322
Other comprehensive income for the period after tax
– 694
– 604
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
2019
2018
Before
tax
Deferred
taxes
After
tax
Before
tax
Deferred
taxes
After
tax
Remeasurement of the net defined benefit liability for pension plans
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
Costs of hedging
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Other comprehensive income
– 1,254
42
– 706
125
– 3
544
– 1,252
387
– 12
211
– 34
6
–
558
– 867
30
– 495
91
3
544
– 694
935
– 30
– 1,381
– 620
– 157
192
– 1,061
– 217
18
436
187
33
–
457
718
– 12
– 945
– 433
– 124
192
– 604
Other comprehensive income relating to equity ac-
counted investments is reported in the Group
Statement of Changes in Equity within currency trans-
lation differences with a positive amount of € 22 mil-
lion (2018: negative amount of € 24 million), within
derivative financial instruments with a negative amount
of € 56 million (2018: positive amount of € 39 million)
and costs of hedging with a positive amount of € 37 mil-
lion (2018: negative amount of € 139 million).
NOTES TO THE BALANCE SHEET
142
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
20
Analysis of changes in Group tangible,
intangible and investment assets 2019
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
thereof right-of-use assets
from leases
Plant and machinery
thereof right-of-use assets
from leases
Other facilities, factory and office equipment
thereof right-of-use assets
from leases
Advance payments made and
construction in progress
Property, plant and equipment
Leased products
45,851
619
20,513
Investments accounted for using
the equity method
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including € 71 million recognised through the income statement.
2 Carrying amounts at 1.1.2019 (from the first-time application of IFRS 16).
3 Including assets under construction of € 1,555 million.
2,624
444
938
28
1,410
–
2
4
–
6
2,876
139
86
–
225
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2019
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12. 2019
1. 1. 2019
Current year
adjustments1
Disposals
31. 12. 2019
31. 12. 2019
31. 12. 2018
Translation
differences
Reclas si-
fications
Value
14,990
385
1,798
17,173
14,023
2,387
38,190
1
3,061
71
2,392
57,666
–
–
11
11
115
22
224
–
23
1
18
380
751
2,581
75
311
33
1,297
5,202
2,134
–
448
2,582
–
–
–
–
1,733
15,391
–
182
385
2,075
1,915
17,851
1,013
397
5,014
5
1,183
6,202
5,310
28,111
2,082
–
–
–
–
–
191
480
–
671
–
–
4
4
44
1
158
–
14
–
–
–
– 1
–
–
– 1
1,667
–
148
1,815
794
430
3,086
6
322
31
–
–
–
–
–
–
1,733
4,948
10,443
9,976
–
166
1,899
5
1,169
6,122
380
906
380
615
11,729
10,971
Development costs
Goodwill
Other intangible assets
Intangible assets
46
6,104
9,345
6,420
buildings on third party land
Land, titles to land, buildings, including
426
2,681
2,387 2
thereof right-of-use assets
from leases
275
2,147
1,025
908 Other facilities, factory and office equipment
6
31
–
76
73
1 2
71 2
1,991 3
2,395
thereof right-of-use assets
from leases
thereof right-of-use assets
from leases
Advance payments made and
construction in progress
5
–
–
–
– 6
2,172
29,177
10,884
10,078
Plant and machinery
–
–
–
–
–
–
–
–
–
–
–
–
–
240
–
240
3,199
2,624
– 322
11
–
– 219
– 11
–
– 311
– 230
88
501
–
589
204
499
–
703
253
458
28
739
Investments accounted for using
the equity method
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
–
–
–
–
2
–
–
4
–
–
–
–
–
–
–
–
–
99
45
15,449
3,107
2,187
40,061
–
286
2
3
82
3,172
104
1,991
2,575
60,673
35,503
216
4,202
2,493
37,428
23,245
19,801
Property, plant and equipment
17,041
49,942
7,592
95
4,732
5,086
7,333
42,609
38,259
Leased products
2,061
3,439
293
28
28
349
292
1,000
–
1,292
– 8
1,253
6
63
1
– 1,713
–
–
–
–
–
–
–
Group Financial Statements
143
Development costs
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2019
Additions
Disposals
31. 12. 2019
Translation
differences
Reclassi-
fications
1. 1. 2019
Translation
differences
Current year
Reclas si-
fications
Value
adjustments1
Disposals
31. 12. 2019
31. 12. 2019
31. 12. 2018
5,014
5
1,183
6,202
5,310
–
28,111
–
2,082
–
–
–
–
4
4
44
1
158
–
14
–
–
1,667
–
148
1,815
794
430
3,086
6
322
31
–
Leased products
45,851
619
20,513
17,041
49,942
7,592
95
4,732
2,575
60,673
35,503
216
4,202
–
191
480
–
671
–
–
– 1
–
– 1
–
–
–
–
–
–
–
–
–
2
–
– 6
–
4
–
–
–
–
–
–
–
–
–
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
thereof right-of-use assets
from leases
Plant and machinery
thereof right-of-use assets
from leases
thereof right-of-use assets
from leases
Advance payments made and
construction in progress
Property, plant and equipment
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 € 71 million recognised through the income statement.
2 Carrying amounts at 1.1.2019 (from the first-time application of IFRS 16).
3 Including assets under construction of € 1,555 million.
14,990
385
1,798
17,173
14,023
2,387
38,190
1
3,061
71
2,392
57,666
2,624
444
938
28
1,410
–
–
11
11
115
22
224
–
23
1
18
380
–
2
4
–
6
1,013
397
2,134
–
448
2,582
751
2,581
75
311
33
1,297
5,202
139
86
–
225
– 8
1,253
6
63
– 1,713
–
–
–
–
1
–
–
–
–
–
–
–
1,733
15,391
–
182
385
2,075
1,915
17,851
2,187
40,061
286
3,172
15,449
3,107
82
104
1,991
99
45
–
2
3
293
28
28
349
292
1,000
–
1,292
2,876
2,061
3,439
–
–
–
–
–
–
–
–
–
–
–
–
–
1,733
4,948
10,443
9,976
5
1,169
6,122
380
906
380
615
11,729
10,971
–
166
1,899
46
5
6,104
9,345
6,420
Land, titles to land, buildings, including
buildings on third party land
426
2,681
2,387 2
thereof right-of-use assets
from leases
2,172
29,177
10,884
10,078
Plant and machinery
–
275
–
–
6
76
1 2
thereof right-of-use assets
from leases
2,147
1,025
908 Other facilities, factory and office equipment
31
–
73
71 2
1,991 3
2,395
thereof right-of-use assets
from leases
Advance payments made and
construction in progress
2,493
37,428
23,245
19,801
Property, plant and equipment
5,086
7,333
42,609
38,259
Leased products
240
–
240
3,199
2,624
– 322
11
–
– 219
– 11
–
– 311
– 230
88
501
–
589
204
499
–
703
253
458
28
739
Investments accounted for using
the equity method
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
144
Analysis of changes in Group tangible, intangible
and investment assets 2018
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
in € million
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2018
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12. 2018
1. 1. 2018
Current year
adjustments1
Disposals
31. 12. 2018
31. 12. 2018
31. 12. 2017
Translation
differences
Reclas si-
fications
Value
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
12,965
385
1,750
15,100
11,088
36,833
2,799
2,525
53,245
–
–
12
12
75
201
20
18
314
2,984
–
161
3,145
277
2,888
294
1,409
4,868
Leased products 2
43,634
735
18,580
Investments accounted for using
the equity method
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
2,769
438
820
28
–
3
9
–
1,286
12
547
8
115
–
123
1 Including € 74 million recognised through the income statement.
2 Prior year’s figures adjusted due to the change in the presentation of vehicles coming out of leases, as well as initial direct costs.
3 Including assets under construction of € 2,017 million.
–
–
–
–
959
–
125
14,990
385
1,798
1,084
17,173
372
1,119
60
82
2,852
183
11,730
38,189
2,990
– 1,551
6
2,395
–
–
–
–
–
–
–
3,123
55,304
2,975
35,503
19,801
18,471
Property, plant and equipment
17,098
45,851
7,697
114
3,488
3,707
7,592
38,259
36,257
Leased products2
692
2,624
5
6
–
444
938
28
11
1,410
4,556
5
1,075
5,636
4,966
27,838
1,970
34,774
–
–
189
408
– 1
596
–
–
5
5
29
154
17
–
200
–
2
–
1
– 1
1,414
–
195
1,609
348
2,886
270
–
3,504
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73
–
1
74
956
–
92
1,048
33
2,767
175
–
–
–
–
–
–
5,014
9,976
8,409
Development costs
5
1,183
6,202
380
615
380
675
10,971
9,464
Goodwill
Other intangible assets
Intangible assets
5,310
6,420
28,111
10,078
6,122
8,995
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
2,082
908
829 Other facilities, factory and office equipment
–
2,395 3
2,525
Advance payments made and
construction in progress
–
2,624
2,769
Investments accounted for using
the equity method
191
480
–
671
253
458
28
739
249
412
29
690
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
Group Financial Statements Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
1. 1. 2018
Additions
Disposals
31. 12. 2018
Translation
differences
Reclassi-
fications
1. 1. 2018
Translation
differences
Current year
Reclas si-
fications
Value
adjustments1
Disposals
31. 12. 2018
31. 12. 2018
31. 12. 2017
145
4,556
5
1,075
5,636
4,966
27,838
1,970
–
34,774
–
–
5
5
29
154
17
–
200
1,414
–
195
1,609
348
2,886
270
–
3,504
Leased products 2
43,634
735
18,580
17,098
45,851
7,697
114
3,488
–
189
408
– 1
596
–
2
– 1
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73
1
74
956
–
92
1,048
33
2,767
175
5,014
9,976
8,409
Development costs
5
1,183
6,202
380
615
380
675
10,971
9,464
Goodwill
Other intangible assets
Intangible assets
5,310
6,420
28,111
10,078
6,122
8,995
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
2,082
908
829 Other facilities, factory and office equipment
–
–
2,395 3
2,525
Advance payments made and
construction in progress
2,975
35,503
19,801
18,471
Property, plant and equipment
3,707
7,592
38,259
36,257
Leased products2
–
–
–
–
–
–
2,624
2,769
Investments accounted for using
the equity method
191
480
–
671
253
458
28
739
249
412
29
690
Investments in non-consolidated
subsidiaries
Participations
Non-current marketable securities
Other investments
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
12,965
385
1,750
15,100
11,088
36,833
2,799
2,525
53,245
2,769
438
820
28
–
–
12
12
75
201
20
18
314
–
3
9
–
2,984
–
161
3,145
277
2,888
294
1,409
4,868
547
115
8
–
123
959
–
125
14,990
385
1,798
1,084
17,173
372
1,119
60
82
2,852
183
11,730
38,189
2,990
– 1,551
6
2,395
3,123
55,304
692
2,624
5
6
–
444
938
28
–
–
–
–
–
–
–
–
–
–
–
1,286
12
11
1,410
1 Including € 74 million recognised through the income statement.
2 Prior year’s figures adjusted due to the change in the presentation of vehicles coming out of leases, as well as initial direct costs.
3 Including assets under construction of € 2,017 million.
23
Leased products
Minimum lease payments of non-cancellable oper-
a t ing leases amounting to € 20,894 million (2018:
€ 18,880 million) fall due as follows:
in € million
31. 12. 2019
31. 12. 2018
within one year
between one and two years
between two and three years
between three and four years
between four and five years
between one and five years
later than five years
9,804
6,489
3,278
1,073
225
–
25
8,980
–
–
–
–
9,863
37
Minimum lease payments
20,894
18,880
Impairment losses amounting to € 198 million (2018:
€ 235 million) were recognised on leased products in
2019 as a consequence of changes in residual value
expectations. Income from the reversal of impairment
losses amounted to € 74 million (2018: € 92 million).
The carrying amount of leased products was adjusted
due to changes in presentation of initial direct costs
(previously reported as other assets) and vehicles com-
ing out of leases (now reported as part of inventories)
(adjustment effect at 31 December 2018: decrease of
€ 313 million).
146
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
21
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 € 43 million (2018: € 41 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 asset is subject to a
limited right of ownership. The € 2 million increase
in the carrying amount is entirely due to currency
factors. Intangible assets also include goodwill of
€ 33 million (2018: € 33 million) allocated to the Auto-
motive cash-generating unit (CGU) and goodwill of
€ 347 million (2018: € 347 million) allocated to the
Financial Services CGU.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2019.
As in the previous year, no financing costs were reco g-
nised as a cost component of intangible assets in 2019.
22
Property, plant and equipment
(including right-of-use assets arising from leases)
No impairment losses were recognised in 2019, as in
the previous year.
As in the previous year, no financing costs were
reco g nised as a cost component of property, plant
and equipment in 2019.
Right-of-use assets arising from leases of land and
buildings relate primarily to logistics and office
pre mises and, to a lesser extent, to selling and pro-
duction premises. In order to secure these premises
and, in the interests of flexibility, the property rental
agreements concerned often contain extension and
termination options.
Group Financial Statements
147
24
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 YOUR NOW companies,
the joint venture IONITY Holding GmbH & Co. KG
(IONITY) and the interest in the associated company
THERE Holding B. V. (THERE).
Together with Audi AG, Daimler AG and other com-
panies, the BMW Group holds shares in THERE.
HERE International B. V. (HERE) is an associated
company of THERE. 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 auto-
mated driving.
BMW Brilliance produces BMW brand models for the
Chinese market and also has engine manufacturing
facilities, which supply the joint venture’s two plants
with petrol engines.
Capital increases were made at the level of THERE
in January 2019, with BMW AG participating with an
amount of € 69 million. Since then, BMW AG’s stake
in THERE amounts to 29.7 %.
In December 2019, it was announced that Mitsubishi
Corporation (MC) and Nippon Telegraph and Tele-
phone Corporation (NTT) will jointly acquire a 30 %
stake in HERE. The transaction is subject to the
approval of the antitrust authorities and is expected
to be closed during the first half of 2020.
The BMW Group intends to increase its stake in
the BMW Brilliance joint venture from 50 % to 75 %.
On 11 October 2018, the BMW Group signed an
agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive
Holdings Ltd. (CBA), to acquire an additional 25 %
shareholding in BMW Brilliance. The two partners
agreed on a purchase price of an equivalent of € 3.6 bil-
lion. The contractual term of the joint venture, which
would currently expire in 2028, is to be ex tended to
2040 as part of the agreement. The prerequisite for
the extension is the acquisition of the additional
shares as agreed. The agreement was approved at
the CBA shareholders’ meeting on 18 January 2019
and remains subject to the approval of the relevant
authorities. The transaction is scheduled to be closed
in 2022. The closing will result in BMW Brilliance
being fully consolidated in the BMW Group Financial
Statements and is expected to result in the recognition
of a significant valuation gain in the financial year in
which the transaction closes.
With effect from 31 January 2019, the BMW Group
completed the merger of several mobility services
companies under the name YOUR NOW. Further
information is provided in
note 2 to the Group
Financial Statements.
see
note 2
Together with Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company and the Volkswagen Group,
the BMW Group operates the joint venture IONITY
Holding GmbH & Co. KG, whereby each of the par-
ties has an equal shareholding. IONITY’s business
model envisages the construction and operation of
high-performance charging stations for battery electric
vehicles in Europe.
148
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Financial information relating to equity accounted
investments is summarised in the following tables:
in € million
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
BMW Brilliance
THERE
YOUR NOW
DriveNow
IONITY
dISCloSuReS RelAtInG to
the bAlAnCe Sheet
Non-current assets
Current assets
thereof cash and cash equivalents
Equity
Non-current financial liabilities
Non-current provisions and liabilities
Current provisions and liabilities
thereof current financial liabilities
ReConCIlIAtIon oF
AGGReGAted FInAnCIAl
InFoRMAtIon
Assets
Provisions and liabilities
Net assets
Group’s interest in net assets
Eliminations
Carrying amount
7,248
7,381
2,937
5,293
87
1,271
7,978
887
6,714
6,570
2,937
5,926
71
1,193
6,094
81
1,131
1,763
467
1
2
2
1,643
1,116
818
1,597
1,764
2,106
–
–
1
–
–
–
1
–
112
184
469
39
14,629
13,284
1,598
1,765
2,759
9,337
5,292
2,646
– 960
1,686
7,358
5,926
2,963
– 898
2,065
1
1
653
1,597
1,764
2,106
475
–
475
522
–
522
987
–
987
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
175
70
50
205
–
5
30
–
245
40
205
51
–
51
48
110
102
149
–
3
6
–
158
9
149
37
–
37
in € million
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
BMW Brilliance
THERE
YOUR NOW
DriveNow
IONITY
dISCloSuReS RelAtInG to
the InCoMe S tAteMent
Revenues
Scheduled depreciation
Profit / loss before financial result
Interest income
Interest expense
Income taxes
Profit / loss after tax
thereof from continuing operations
Other comprehensive income
Total comprehensive income
Group dividend income *
21,910
17,766
651
2,374
84
5
654
1,947
1,947
– 14
1,933
1,284
636
1,922
62
–
535
1,561
1,561
– 250
1,311
384
–
–
– 1
–
–
–
–
–
424
150
– 1
– 1,349
–
–
–
–
23
28
– 383
– 383
1
– 337
– 337
– 7
– 1,805
– 1,805
–
– 382
– 344
– 1,805
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14
–
– 6
–
–
–
– 6
–
–
– 6
–
1
–
–
1
– 29
– 18
–
1
5
– 24
– 24
–
– 24
–
–
–
3
– 15
–
–
– 15
–
* Including dividends received in the amount of € 643 million (2018: € 384 million).
Group Financial Statements 149
25
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
see
note 6
in € million
31. 12. 2019
31. 12. 2018*
Credit financing for retail customers
and dealerships
Finance lease receivables
Receivables from
sales financing
* Prior year’s figures adjusted.
71,104
21,333
66,959
20,054
92,437
87,013
The figures for the previous financial year have been
restated for the change in accounting policy for
ma nu facturer lessors (see
note 6), as well as for
the change in the presentation of initial direct costs
previously reported within other assets (adjustment
effect at December 31, 2018: increase of € 700 mil-
lion) and of residual value risk provisions, previously
reported within other provisions (adjustment effect at
31 December 2018: decrease of € 441 million).
Impairment allowances on receivables from sales
financing in accordance with IFRS 9, which only arise
within the Financial Services segment, developed
as follows:
in € million
General
Simplified
Stage 1
Stage 2
Stage 3
Impairment allowances at 1 January 2019
Reclassification to Stage 1
Reclassification to Stage 2
Reclassification to Stage 3
Derecognition and origination of receivables
Write-off of receivables
Changes in risk parameters
Other changes
Impairment allowances at 31 December 2019
363
2
– 17
– 6
17
– 2
– 40
44
361
175
– 13
107
– 24
– 26
– 17
31
– 24
209
12
–
–
– 1
1
–
–
–
12
482
– 1
– 16
175
– 15
– 133
1
24
517
in € million
General
Simplified
Stage 1
Stage 2
Stage 3
Impairment allowances at 1 January 2018
Reclassification to Stage 1
Reclassification to Stage 2
Reclassification to Stage 3
Derecognition and origination of receivables
Write-off of receivables
Changes in risk parameters
Other changes
Impairment allowances at 31 December 2018
365
3
– 7
– 4
59
– 3
4
– 54
363
192
– 20
79
– 23
– 10
– 20
1
– 24
175
12
–
–
– 1
1
– 1
– 1
2
12
450
– 4
– 21
138
– 17
– 105
26
15
482
Total
1,032
– 12
74
144
– 23
– 152
– 8
44
1,099
Total
1,019
– 21
51
110
33
– 129
30
– 61
1,032
Impairment allowances include € 74 million (2018:
€ 113 million) on credit-impaired receivables relating
to finance leases.
The estimated fair value of vehicles held as collateral
for credit-impaired receivables at the end of the report-
ing period totalled € 541 million (2018: € 506 million).
The carrying amount of assets held as collateral and
reclaimed as a result of payment default amounted to
€ 39 million (2018: € 42 million).
150
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Finance leases are analysed as follows:
in € million
31. 12. 2019
31. 12. 2018
Gross investment in finance leases
due within one year
due between one and two years
due between two and three years
due between three and four years
due between four and five years
due between one and five years
due later than five years
Net investment in finance leases
due within one year
due between one and two years
due between two and three years
due between three and four years
due between four and five years
due between one and five years
due later than five years
6,991
6,811
5,462
3,775
529
–
32
6,811
–
–
–
–
15,480
24
23,600
22,315
6,256
6,225
4,968
3,421
433
–
30
6,123
see
note 6
–
–
–
–
13,908
23
21,333
20,054
Unrealised interest income
2,267
2,261
The carrying amount of the net investment in finance
leases remained largely unchanged over the reporting
period.
26
Financial assets
Financial assets comprise:
in € million
31. 12. 2019
31. 12. 2018
Marketable securities and
investment funds
Derivative instruments
Loans to third parties
Credit card receivables
Other
Financial assets
thereof non-current
thereof current
5,391
1,620
54
–
260
7,325
1,370
5,955
5,316
1,977
20
244
128
7,685
1,010
6,675
In June 2019, the Financial Services segment sold a
credit card portfolio based in the USA and amounting
to € 216 million for strategic reasons.
Allowances for impairment and credit risk
The carrying amounts of receivables relating to the
credit card business comprises the following:
in € million
31. 12. 2019
31. 12. 2018
Gross carrying amount
Allowance for impairment
Net carrying amount
–
–
–
262
– 18
244
27
Income tax assets
Income tax assets totalling € 1,209 million (2018:
€ 1,378 million, adjusted see
note 6) include claims
amounting to € 186 million (2018: € 222 million),
which are expected to be settled after more than one
year. Claims may be settled earlier than this depend-
ing on the timing of the underlying proceedings.
28
Other assets
Other assets comprise:
in € million
31. 12. 2019
31. 12. 2018*
Return right assets for future
leased products
Receivables from companies in which
an investment is held
Other taxes
Expected reimbursement claims
Collateral assets
Prepaid expenses
Receivables from subsidiaries
Sundry other assets
Other assets
thereof non-current
thereof current
* Prior year’s figures adjusted.
4,807
3,779
2,641
1,935
1,086
413
396
308
1,353
12,939
1,325
11,614
1,916
1,747
933
293
460
295
1,173
10,596
847
9,749
From the financial year 2019 onward, certain advance
payments to suppliers for raw materials, supplies and
finished goods amounting to € 536 million, which were
previously reported within other assets (line item
Prepaid expenses) have now been reclassified to inven-
tories. The previous year’s figures have been adjusted
accordingly (adjustment effect at 31 December 2018:
decrease of € 609 million). Furthermore, the compar-
ative figures for the previous financial year have been
Group Financial Statements
151
In addition, the previous year’s figures have been
adjusted due to the change in the presentation of
vehicles coming out of leases that were previously
reported within leased products (adjustment effect
at 31 December 2018: increase of € 592 million).
30
Trade receivables
Trade receivables comprise the following:
in € million
31. 12. 2019
31. 12. 2018
Gross carrying amount
2,590
2,600
Allowances for impairment of stage 2 –
simplified procedure
Allowances for impairment of stage 3
– 26
– 46
– 20
– 34
Net carrying amount
2,518
2,546
Impairment allowances on trade receivables in accor-
dance with IFRS 9 developed as follows:
in € million
2019
2018
Allocated (+)
Reversed (–)
Utilised
Exchange rate impact and other changes
Balance at 31 December
54
30
– 7
– 7
2
72
60
21
– 26
– 1
–
54
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank gua r-
antees so that the risk of bad debt loss is very limited.
Expenses for impairment losses and income from the
reversal of impairment losses is not significant and
is therefore not reported separately in the income
statement.
adjusted to reflect the change in accounting policy
for volume-dependent bonuses and for manufacturer
lessors (see
note 6) as well as the change in the pre-
sentation of deferred initial direct costs for operating
and finance leases and receivables originated. These
items are now reported within leased products and
receivables from sales financing (adjustment effect at
31 December 2018: decrease of € 939 million).
see
note 6
Collateral assets comprise mainly customary collat-
eral (banking deposits) in connection with the sale
of receivables.
29
Inventories
Inventories comprise the following:
in € million
31. 12. 2019
31. 12. 2018*
Finished goods and goods for resale
11,491
10,548
Work in progress, unbilled contracts
Raw materials and supplies
Vehicles held for sale in the
financial services business
Advance payments to suppliers
Inventories
* Prior year’s figures adjusted.
1,286
1,674
808
632
1,208
1,247
609
636
Out of the total amount of recognised for inventories
at 31 December 2019, inventories measured at net
realisable value amounted to € 973 million (2018:
€ 680 million). Write-downs to net realisable value
in the financial year 2019 amounted to € 126 million
(2018: € 54 million), while reversals of write-downs
amounted to € 22 million (2018: € 22 million).
The expense recorded in conjunction with inven-
tories during the financial year 2019 amounted to
€ 62,633 million (2018: € 58,079 million). At 31 Decem-
ber 2019, the carrying amounts of inventories expected
to be realised after more than twelve months amount
to € 445 million (2018: € 452 million).
From the financial year 2019 onward, certain advance
payments to suppliers for raw materials, supplies and
finished goods amounting to € 536 million, which were
previously reported within other assets, have been
reclassified to inventories. The previous year’s figures
have been adjusted accordingly (adjustment effect at
31 December 2018: increase of € 609 million).
15,891
14,248
Balance at 1 January
152
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
31
Equity
number of shares issued
Preferred stock
Common stock
2019
2018
2019
2018
Shares issued / in circulation at 1 January
56,126,904
55,605,404
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
744,447
4,047
521,524
24
–
–
–
–
56,867,304
56,126,904
601,995,196
601,995,196
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 2019, a total of 744,447 shares of preferred stock
was sold to employees at a reduced price of € 46.10 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 2020.
Issued share capital increased by € 0.7 million as a
result of the issue to employees of 740,400 new shares
of non-voting preferred stock. BMW AG is authorised
up to 15 May 2024 to issue 5 million shares of non-
voting preferred stock amounting to nominal € 5.0 mil-
lion. At the end of the reporting period, 4.3 million
of these amounting to nominal € 4.3 million remained
available for issue.
In addition, 4,047 previously issued shares of pre-
ferred stock were acquired and re-issued to employees
in conjunction with the Employee Share Programme.
Capital reserves
Capital reserves include premiums arising from the
issue of shares and totalled € 2,161 million (2018:
€ 2,118 million). The change amounting to € 43 million
related to the share capital increase in conjunction
with the issue of shares of preferred stock to employees.
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 obligation for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of
BMW AG for the financial year 2019 amounting to
€ 1,646 million be utilised as follows:
— Distribution of a dividend of € 2.52 per share of
preferred stock (€ 141 million)
— Distribution of a dividend of € 2.50 per share of
common stock (€ 1,505 million)
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Group Financial Statements
153
The capital structure at the end of the reporting period
was as follows:
in € million
31. 12. 2019
31. 12. 2018*
Equity attributable to shareholders
of BMW AG
Proportion of total capital
Non-current financial liabilities
Current financial liabilities
Total financial liabilities
Proportion of total capital
Total capital
* Prior year’s figures adjusted.
59,324
33.7 %
70,647
46,093
57,300
35.6 %
64,772
38,825
116,740
103,597
66.3 %
64.4 %
176,064
160,897
Equity attributable to shareholders of BMW AG in-
creased during the financial year by 3.5 % primarily
reflecting the increase in revenue reserves.
The previous year’s figures have been adjusted due to
the change in accounting policy for volume-dependent
note 6).
bonuses and for manufacturer lessors (see
see
note 6
Accumulated other equity
Accumulated other equity comprises amounts reco g-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial instru-
ments and marketable securities, costs of hedging
recognised directly in equity as well the related
deferred taxes.
Further information regarding the transition effects
recognised directly in equity on the initial application
of IFRS 16 is provided in
note 6.
see
note 6
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 manages 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 require-
ments. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments
available on the world’s capital markets to achieve
diversification.
154
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
32
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. In
Germany, pension entitlements are mostly covered
by assets transferred 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 of the 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. In Germany, the so-called “pension
entitlement trend” (Festbetragstrend) remained at
2.0 %. The following weighted average values have
been used for Germany, the UK and other countries:
in %
Discount rate
Pension level trend
Weighted duration of all pension obligations in years
Germany
United Kingdom
Other
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
1.00
1.38
21.3
1.91
1.62
20.2
1.92
2.15
19.2
2.69
2.25
19.0
2.42
–
16.0
3.66
–
17.2
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Germany
United Kingdom
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70 %)
S2PA tables and S2PA light tables with weightings
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. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
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
14,022
11,320
11,542
9,721
9,503
9,137
–
–
Carrying amounts at 31 December
2,702
1,821
thereof pension provision
thereof assets
2,702
–
1,823
– 2
8,277
8,167
–
110
125
– 15
1,127
883
1,428
1,049
24,652
21,340
21,247
18,937
2
246
262
– 16
3
382
382
–
2
3
3,314
2,313
3,335
– 21
2,330
– 17
–
366
371
– 5
Group Financial Statements
155
united Kingdom
Defined benefit plans exist in the United Kingdom
which are closed for all plan participants. Vested
benefits remain in place. New benefits are covered
by contributions made to a defined contribution plan.
The defined benefit pension plans are administered
by BMW Pension Trustees Limited, Farnborough,
and BMW (UK) Trustees Limited, Farnborough,
both trustee companies which act independently
of the BMW Group. BMW (UK) Trustees Limited,
Farnborough, is represented by ten trustees and
BMW Pension Trustees Limited, Farnborough, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies. Funding contributions to the funds
are determined in agreement with the BMW Group.
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 dependents’ benefits.
The increase to current pension payments for inflation
is carried out in accordance with § 16 of the Company
Pensions Act (Betriebsrentengesetz).
The defined benefit plans have been closed to new
entrants since 2014. Defined contribution plans with
a minimum rate of return, comprising employer- and
employee-funded components, continue to exist. The
fact that the plan involves a minimum rate of return
means that the defined contribution entitlements 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 invested
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 members 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,
employee representatives, senior executives and
members of the Board of Management of BMW AG.
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.
156
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
The change in the net defined benefit liability for pension
plans can be derived as follows:
in € million
1 January 2019
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 2019
thereof pension provision
thereof assets
in € million
1 January 2018
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 2018
thereof pension provision
thereof assets
Defined
benefit
obligation
Plan assets
Total
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
21,247
– 18,937
2,310
473
485
– 191
– 3
–
3,201
– 3
– 4
–
–
78
– 1,104
473
24,652
–
– 444
–
–
– 2,002
–
–
–
–
– 527
– 78
1,103
– 455
473
41
– 191
– 3
– 2,002
3,201
– 3
– 4
–
– 527
–
– 1
18
– 21,340
3,312
3
–
–
–
–
–
–
–
–
– 1
–
–
–
–
2
Defined
benefit
obligation
Plan assets
Total
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
22,710
– 19,477
3,233
508
475
59
–
–
– 1,274
– 416
– 264
–
–
73
– 632
8
–
– 413
–
– 10
999
–
–
–
–
– 658
– 73
689
6
508
62
59
– 10
999
– 1,274
– 416
– 264
–
– 658
–
57
14
21,247
– 18,937
2,310
3
–
–
–
–
–
–
–
–
–
–
–
–
–
3
2,313
473
41
– 191
– 3
– 2,002
3,201
– 3
– 4
– 1
– 527
–
– 1
18
3,314
3,335
– 21
Net defined
benefit liability
3,236
508
62
59
– 10
999
– 1,274
– 416
– 264
–
– 658
–
57
14
2,313
2,330
– 17
Group Financial Statements Since 1 July 2019, future entitlements relating to
former members of two defined benefit plans in the
USA are being accounted for via a defined contribu-
tion plan. Past service cost resulted mainly from the
complete closure of the defined benefit plans.
Depending on the cash flow profile and risk struc-
ture of the pension obligations involved, plan assets
relating to defined benefit plans are invested in a
diversified portfolio.
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
2019
2018
2019
2018
2019
2018
2019
2018
Germany
United Kingdom
Other
Total
157
CoMponentS oF plAn ASSetS
Equity instruments
Debt instruments
thereof investment grade
thereof mixed funds
(funds without a rating)
thereof non-investment grade
Real estate funds
Money market funds
Absolute return funds
Other
Total with quoted market price
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
2,031
6,513
4,275
–
2,238
–
–
–
109
8,653
911
316
595
–
394
20
632
710
1,565
5,604
3,402
–
2,202
–
–
–
–
584
6,648
5,891
–
757
–
74
–
–
407
5,774
5,224
–
550
–
221
–
–
91
592
585
–
7
19
29
–
15
172
552
518
–
34
93
47
–
15
2,705
13,754
10,752
–
3,002
19
103
–
124
2,144
11,930
9,144
–
2,786
93
268
–
15
7,169
7,306
6,402
746
879
16,705
14,450
1,009
307
702
–
325
12
669
537
256
–
256
–
716
–
640
219
270
–
216
54
678
–
605
212
1
–
–
1
–
1
31
104
137
883
1
–
–
1
36
1
65
67
170
1,168
316
851
1
1,110
21
1,303
1,033
4,635
1,280
307
918
55
1,039
13
1,339
816
4,487
1,049
21,340
18,937
Total without quoted market price
2,667
2,552
1,831
1,765
31 December
11,320
9,721
9,137
8,167
The expected change arising from benefit payments
out of plan assets – which does not have an income
statement impact – is predicted to exceed employer
contributions to plan assets in the coming year by
€ 65 million. Plan assets of the BMW Group include
own transferable financial instruments amounting to
€ 8 million (2018: € 5 million).
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 actuar-
ial 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 currency
derivatives. As part of the internal reporting proce-
dures and for internal management purposes, finan-
cial risks relating to the pension plans are reported
using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
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.
158
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
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. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
67.6
27.4
5.0
65.9
29.3
4.8
–
45.5
54.5
–
48.5
51.5
64.3
29.0
6.8
77.3
18.8
3.9
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 – inde-
pendently of each other – could influence the defined
benefit obligation at the end of the reporting period.
It is only possible to aggregate sensitivities to a limi-
ted 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 dis-
proportional change in the defined benefit obligation.
Discount rate
Pension level trend
Average life expectancy
Pension entitlement trend
Change in defined benefit obligation
31. 12. 2019
31. 12. 2018
in € million
in %
in € million
in %
increase of 0.75 %
– 3,352
– 13.6
– 2,652
– 12.5
decrease of 0.75 %
increase of 0.25 %
decrease of 0.25 %
increase of 1 year
4,290
905
– 810
1,155
decrease of 1 year
– 1,097
increase of 0.25 %
decrease of 0.25 %
200
– 192
17.4
3.7
– 3.3
4.7
– 4.4
0.8
– 0.8
3,334
597
– 567
770
– 779
156
– 147
15.7
2.8
– 2.7
3.6
– 3.7
0.7
– 0.7
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
Group Financial Statements 159
33
Other provisions
Other provisions changed during the year as follows:
in € million
1. 1. 2019*
Translation
differences
Additions
Reversal of
discounting
Utilised
Reversed
31. 12. 2019
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
* Prior year’s figures adjusted.
5,147
2,819
2,087
1,348
11,401
69
6
– 7
25
93
2,831
1,448
2,341
912
7,532
168
– 2,561
– 104
5,550
1,617
3
10
–
181
– 1,713
– 440
– 377
– 5,091
– 67
– 698
– 38
– 907
2,496
3,293
1,870
13,209
1,495
2,489
1,820
7,421
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 reim-
bursement claims at 31 December 2019 amounted to
€ 1,086 million (2018: € 933 million) and are disclosed
within other assets (see
note 28).
Provisions for obligations for personnel and social
expenses comprise mainly performance-related remu-
neration components, early retirement part-time work-
ing arrangements and employee long-service awards.
see
note 6
see
note 28
The figures for the previous financial year have been
restated for the change in accounting policy for
manufacturer lessors (see
note 6), as well as for the
chan ges in the presentation of residual value risk pro-
visions for finance leases and vehicle financing, which
were previously reported in other provisions and
have now been reclassified to receivables from sales
financing (adjustment effect at 31 December 2018:
decrease of € 441 million).
The provisions for other obligations cover numerous
identifiable specific risks and uncertain obligations, in
particular for litigation and liability risks, including the
provision recognised for the ongoing EU Commission’s
antitrust proceedings. Further information is provided
in
note 10.
see
note 10
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
34
Income tax liabilities
Current income tax liabilities totalling € 963 million
(2018: € 1,158 million) include € 89 million (2018:
€ 96 million) which are expected to be settled after
more than twelve months. Liabilities may be settled
earlier than this depending on the timing of the
underlying proceedings.
160
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
35
Financial liabilities
Financial liabilities of the BMW Group comprise the
following:
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Lease liabilities
Commercial paper
Derivative instruments
Other
Financial liabilities
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Lease liabilities
Commercial paper
Derivative instruments
Other
Financial liabilities
Planned future cash outflows from variable lease
payments, which are not taken into account in the
measurement of lease liabilities, are expected to
amount to € 56 million.
Similarly, potential future cash outflows amounting
to € 1,393 million (undiscounted) have not been taken
into account in the measurement of lease liabilities
as it is not reasonably certain that the leases will be
renewed (or not terminated). These cash outflows
relate to periods of up to 59 years.
31. 12. 2019
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
14,077
7,952
11,216
7,903
544
2,615
1,149
637
35,801
11,597
3,414
2,204
1,363
–
886
271
12,287
–
27
1,329
988
–
61
419
Total
62,165
19,549
14,657
11,436
2,895
2,615
2,096
1,327
46,093
55,536
15,111
116,740
31. 12. 2018
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
9,762
5,732
10,961
8,678
9
2,480
646
557
32,592
11,603
3,289
3,293
49
–
915
110
10,992
–
109
1,225
47
–
114
434
Total
53,346
17,335
14,359
13,196
105
2,480
1,675
1,101
38,825
51,851
12,921
103,597
Group Financial Statements
Liabilities related to financing activities can be recon-
ciled as follows:
161
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Lease liabilities
Commercial paper
Financial liabilities towards companies in which an
investment is held
Other (excluding interest payable)
Liabilities relating to financing activities
in € million
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Lease liabilities
Commercial paper
Financial liabilities towards companies in which an
investment is held
Other (excluding interest payable)
Liabilities relating to financing activities
1. 1. 2019
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. 2019
53,346
17,335
14,359
13,196
105
2,480
529
626
101,976
7,342
1,869
202
– 1,754
– 440
134
– 233
202
7,322
–
–
–
–
–
–
–
–
–
618
345
96
– 43
6
1
–
36
1,059
859
–
–
44
–
–
–
–
–
–
–
– 7
3,224
–
–
–
62,165
19,549
14,657
11,436
2,895
2,615
296
864
903
3,217
114,477
1. 1. 2018
Cash inflows /
outflows
Changes due to
the acquisition
or disposal of
companies
Changes due to
exchange rate
factors
44,880
16,855
13,572
12,658
114
4,461
739
604
93,883
7,784
288
557
679
– 9
– 2,021
– 210
– 31
7,037
–
–
–
–
–
–
–
–
–
Changes in
fair values
– 33
–
–
–
–
–
–
–
Other changes
31. 12. 2018
8
–
3
–
–
–
–
15
26
53,346
17,335
14,359
13,196
105
2,480
529
626
101,976
707
192
227
– 141
–
40
–
38
1,063
– 33
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
162
Bonds comprise:
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
Issuer
BMW Finance N. V.
Interest
variable
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
EUR 5,000 million
SEK 1,500 million
USD 700 million
NOK 500 million
EUR 25,900 million
JPY 19,100 million
CNY 11,500 million
HKD 2,166 million
USD 2,050 million
SEK 1,750 million
NOK 1,500 million
GBP 1,150 million
AUD 290 million
RON 240 million
BMW US Capital, LLC
variable
USD 3,658 million
BMW Canada Inc.
Other
fixed
fixed
fixed
variable
fixed
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
USD 13,655 million
EUR 2,500 million
AUD 30 million
CAD 200 million
CAD 2,400 million
GBP 940 million
SEK 500 million
KRW 120,000 million
CNY 6,000 million
INR 4,000 million
GBP 1,450 million
NOK 1,000 million
CHF 600 million
1.9
4.0
2.4
3.0
6.3
5.8
2.3
4.8
5.3
5.0
3.8
5.8
6.9
1.0
2.7
6.2
7.6
5.0
2.0
3.4
1.4
3.0
3.0
3.0
3.0
4.3
10.0
6.8
0.0
0.7
2.5
2.4
0.8
0.4
3.8
2.3
2.5
1.8
1.9
1.5
3.3
4.0
2.0
3.0
1.0
3.0
2.0
2.2
1.0
0.8
2.6
4.8
8.1
1.5
3.3
0.5
The following details apply to commercial paper:
Issuer
BMW US Capital, LLC
BMW Finance N.V.
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 %)
USD 2,587 million
EUR 300 million
INR 1,100 million
22
31
297
1.7
– 0.4
6.8
Group Financial Statements
36
Other liabilities
Other liabilities comprise the following items:
in Mio. €
31. 12. 2019
31. 12. 2018*
163
6,103
5,038
3,635
2,971
1,265
815
585
519
192
109
5,021
4,976
3,112
2,940
945
850
297
781
92
102
1,834
23,066
2,003
21,119
37
Trade payables
As in the previous year, trade payables are due within
one year.
Refund liabilities for future leased products
Contract liabilities
Deferred income
Bonuses and sales aides
Other taxes
Deposits received
Other advanced payments received for orders
Payables to other companies in which an investment is held
Payables to subsidiaries
Social security
Sundry
Other liabilities
* Prior year’s figures adjusted.
Contract liabilities relate to obligations for service and
repair work as well as telematics services and roadside
assistance agreed to be part of the sale of a vehicle
(in some cases multi-component arrangements).
An amount of € 2,255 million (2018: € 2,134 million)
was released from contract liabilities in the financial
year and recognised as revenues from contracts
with customers.
Deferred income includes down payments received
on leases with customers as well as deferred grants.
Grants comprise mainly public sector funds to
promote 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 it relates.
The previous year’s figures have been adjusted for the
change in accounting policy for manufacturer lessors
(see
note 6).
see
note 6
OTHER DISCLOSURES
164
Notes to the Group
Financial Statements
Other Disclosures
38
Contingent liabilities and other financial
commitments
Contingent liabilities
The following contingent liabilities existed at the
balance sheet date:
see
note 10
in € million
31. 12. 2019
31. 12. 2018
Investment subsidies
Litigation
Guarantees
Other
Contingent liabilities
284
139
46
618
1,087
275
125
14
351
765
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the date of preparation of the Group
Financial Statements. This assessment may change
over time and is adjusted regularly on the basis of new
information and circumstances. A part of the risks is
covered by insurance.
The European Commission is currently conducting
an investigation in connection with antitrust allega-
tions against five German car manufacturers. The
BMW Group has provided for the potential outcome
of the investigation in the form of a provision mea-
sured on the basis of the Statement of Objections, at
the best possible estimate (see also
note 10). In con-
nection with these allegations, numerous class action
lawsuits have been brought in the USA and Canada
as well as several private lawsuits in South Korea.
The class action lawsuits in the USA were initially
dismissed on the basis of the lack of conclusiveness.
The applicants resubmitted their claims in mid-2019
in an amended form. A decision on the five manufac-
turers’ renewed claims for the dismissal of the class
action lawsuits is still pending. Class action lawsuits
in Canada and private lawsuits in South Korea are
at an early stage. Further civil lawsuits based on the
allegations are possible. In addition, the Chinese State
Administration for Market Regulation (SAMR) opened
antitrust proceedings against BMW AG in March 2019.
These proceedings are still at an early stage. Possible
risks for the BMW Group can neither be foreseen in
detail nor quantified at present. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
Group Financial Statements
165
other financial obligations
In addition to liabilities, provisions and contingent
liabilities, the following commitments exist for the
BMW Group at the end of the reporting period:
in € million
31. 12. 2019
31. 12. 2018
Purchase commitments for
property, plant and equipment
Purchase commitments for
intangible assets
3,128
3,486
2,146
1,554
Regulatory authorities have ordered the BMW Group
to recall various vehicle models in conjunction 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.
In September 2019, the Japan Fair Trade Commission
conducted a search at BMW Japan Corp. in connection
with its market practises in relation to distributors.
These investigations are ongoing. Possible risks for
the BMW Group can neither be foreseen in detail nor
quantified at present. Further disclosures pursuant to
IAS 37.86 cannot be provided at present.
BMW Group has been notified that the U. S. Securities
and Exchange Commission (“SEC”) is conducting an
investigation related to vehicle sales practices and
reporting of delivery figures. The potential risks for
BMW Group related to the SEC’s investigation cannot
be quantified at the present time. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
166
Notes to the Group
Financial Statements
Other Disclosures
39
Financial instruments
The carrying amounts of financial instruments are
assigned to IFRS 9 categories in the following table.
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 assets
Remaining other assets
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
Lease liabilities
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which an investment is held
Remaining other liabilities
Total
31. 12. 2019
At amortised cost
At fair value
through other com-
prehensive income
At fair value
through profit
or loss
Not assigned to an
IFRS 9 category
–
70,625
–
–
–
444
40
–
260
11,574
2,518
308
2,641
413
1,519
–
–
–
–
–
3,889
–
–
–
–
–
–
–
–
–
461
–
–
–
50
1,058
14
–
–
462
–
–
–
–
–
242
21,812
326
1,244
–
–
–
–
–
–
–
–
–
–
8,058
90,342
3,889
2,045
31,682
62,165
11,436
14,657
2,615
19,549
–
–
–
–
1,327
10,182
192
519
4,749
127,391
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,020
–
–
–
–
–
–
–
–
–
–
–
805
271
–
2,895
–
–
–
–
17,606
1,020
21,577
Group Financial Statements
167
31. 12. 2018 *
At amortised cost
At fair value
through other com-
prehensive income
At fair value
through profit
or loss
–
87,013
–
–
–
675
17
244
128
10,094
2,546
295
1,916
293
1,444
–
–
–
–
–
3,671
–
–
–
–
–
–
–
–
–
429
–
840
654
483
970
3
–
–
885
–
–
–
–
–
104,665
3,671
4,264
53,346
13,196
14,359
2,480
17,335
–
–
–
105
1,101
9,669
92
781
5,665
118,129
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
697
556
422
–
–
–
–
–
–
1,675
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 assets
Remaining other assets
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
Lease liabilities
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which an investment is held
Remaining other liabilities
Total
* Prior year’s figures adjusted – see note 25. The carrying amounts of cash flow hedges and fair value hedges are categorised as at fair value through profit or loss for the sake of clarity.
Receivables from sales financing are shown including finance and operating leases.
168
Notes to the Group
Financial Statements
Other Disclosures
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carry-
ing amounts differ from their fair value. Due to their
predominantly short-term nature, the fair value of
other financial assets and liabilities measured at amor-
tised cost corresponds to the carrying amount. For
this reason, these items are not disclosed separately.
in € million
Fair value
Carrying amount
Fair value
Carrying amount*
31. 12. 2019
31. 12. 2018
Receivables from sales financing
Marketable securities and investment funds
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
* Prior year’s figures adjusted – see note 25.
73,699
446
62,757
19,659
14,739
12,071
70,625
444
62,165
19,549
14,657
11,436
90,445
680
53,831
17,443
14,374
13,277
87,013
675
53,346
17,335
14,359
13,196
With effect from the financial year 2019, the fair
value and carrying amounts of receivables from
sales financing do not include receivables relating to
finance and operating leases. The fair value of these
receivables amounts to € 22,741 million (carrying
amount: € 21,812 million) at the balance sheet date.
At 31 December 2019, financial assets and liabilities
measured at fair value in accordance with IFRS 9
are classified in the following table on the basis of
their measurement levels in accordance with IFRS 13.
Where the fair value was required for a financial
instrument for disclosure purposes, the discounted
cash flow method was used, taking account of the
BMW Group’s own default risk. The fair values of
these items are allocated to Level 2 in accordance
with IFRS 13.
in € million
Marketable securities, investment funds and collateral assets
Other investments
Cash equivalents
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw material market price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw material market price risks
31. 12. 2019
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
4,582
106
–
–
–
–
–
–
–
–
–
365
–
462
–
1,274
74
267
–
1,155
723
218
–
355
–
14
–
–
–
5
–
–
–
Group Financial Statements in € million
Marketable securities, investment funds and collateral assets
Other investments
Cash equivalents
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw material market price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw material market price risks
169
31. 12. 2018
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
4,641
164
–
–
–
–
–
–
–
–
–
–
–
885
–
1,069
713
191
–
923
409
343
–
265
–
3
–
–
–
4
–
–
–
Any transfers between fair value hierarchy levels are
made at the end of the relevant reporting period.
With effect from 30 June 2019, marketable securities
amounting to € 187 million were transferred from
Level 1 to Level 2 in view of the fact that their fair value
is determined on the basis of observable market data.
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:
in € million
31. 12. 2019
Fair value
Valuation method
Input Parameter
Unquoted equity instruments
355
Market-based approach
Convertible bonds
Options on unquoted equity instruments
Milestone analysis
(quantitative and qualitative factors)
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
14
5
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
Exercise price
170
Notes to the Group
Financial Statements
Other Disclosures
Financial instruments allocated to Level 3 relate
mainly to investments in a private equity fund. For
valuation purposes, the investment advisor provides
the external fund manager with relevant, invest-
ment-specific information on an ongoing basis (at
least quarterly). The latter subsequently assesses the
underlying individual companies in accordance with
the guidelines for international private equity and
venture capital valuations (IPEV).
As part of the process of analysing valuations, the
external fund manager reviews the investment- specific
milestones, including an analysis of key financial,
technical and liquidity-specific performance indica-
tors. Based on this analysis, it is considered whether
the price set at the most recent financing round is
acceptable as a reasonable market valuation, in par-
ticular for early-stage or growth-phase investments.
Key performance indicators used for the purpose
of milestone analysis are highly dependent on the
business model underlying the investment; typical
technical key performance indicators relate to licenses
in € million
1 January 2019
Additions
Disposals
Gains (+) / losses (–) recognised in accumulated other equity
Gains (+) / losses (–) recognised in the income statement
Currency translation differences
31 December 2019
Gains and losses recognised in the income state-
ment in the financial year 2019 included unrealised
gains and losses totalling a net positive amount of
€ 32 million.
in € million
1 January 2018
Additions
Disposals
Gains (+) / losses (–) recognised in accumulated other equity
Gains (+) / losses (–) recognised in the income statement
Currency translation differences
31 December 2018
and patents held, the stage of technology development
such as evidence of feasibility and prototypes, market
entries, customer and user growth and appointments
to key management positions. Key financial perfor-
mance indicators used are revenues, EBITDA and the
corresponding growth rate and / or development of
specific contribution margins. Key liquidity-specific
performance indicators are cash on hand, cash burn
rates and prospects for future financing rounds.
A detailed listing and quantification of potential sen-
sitivities is not considered meaningful in view of the
valuation methodology applied. A change of + / – 10 %
in the relevant input parameter (price of the last
financing round) would normally also give rise to a
similar change of + / – 10 % in the valuation. Similarly,
a significant reduction in growth rates or margins
could result in impairment and therefore to a lower
valuation of an investment.
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
Unquoted equity
instruments
Convertible bonds
Options on
unquoted equity
instruments
Financial Instru-
ments Level 3
265
90
– 38
–
33
5
355
3
14
– 3
–
–
–
14
4
–
–
–
1
–
5
272
104
– 41
–
34
5
374
Unquoted equity
instruments
Convertible bonds
Options on
unquoted equity
instruments
Financial Instru-
ments Level 3
111
103
– 4
–
45
10
265
2
3
– 2
–
–
–
3
2
–
–
–
2
–
4
115
106
– 6
–
47
10
272
Group Financial Statements
171
offsetting of financial instruments
Derivative financial instruments of the BMW Group
are subject to legally enforceable master netting agree-
ments or similar contracts. However, receivables and
payables relating to derivative financial instruments
are not netted due to non-fulfilment of the stipulated
criteria. Offsetting would have the following impact
on the carrying amounts of derivatives:
in € million
31. 12. 2019
31. 12. 2018
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
1,620
– 833
787
2,096
– 833
1,263
1,977
– 913
1,064
1,675
– 913
762
Gains and losses on financial instruments
The following table shows the net gains and losses
arising on financial instruments in accordance with
IFRS 9:
2019
2018
– 1,012
160
296
– 150
203
155
see
note 19
Net gains and losses arising on financial instruments
measured at fair value through other comprehensive
income relate to marketable securities and shares
in investment funds and are disclosed in
note 19.
Interest income arising on financial assets measured
at fair value through other comprehensive income
amounted to € 49 million (2018: € 58 million) and
interest expense to € 41 million (2018: € 47 million).
Non-derivative financial assets and liabilities are only
offset if a legally enforceable right currently exists and
it is actually intended to offset the relevant amounts.
No financial assets and liabilities have been netted
in the BMW Group due to the fact that the necessary
requirements for netting have not been met.
in € million
Financial instruments measured at fair value through profit or loss
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
Net gains and losses of financial instruments measured
at fair value through profit or loss mainly include gains
and losses arising on the fair value measurement of
stand-alone derivatives, on marketable securities and
shares in investment funds, and on other investments.
Net gains and losses arising on financial assets mea-
sured at amortised cost mainly include exchange
rate gains and losses as well as expenses and income
relating to impairment losses. Net gains and losses
arising on financial liabilities measured at amortised
cost mainly include exchange rate gains and losses.
Interest income arising on financial assets measured
at amortised cost mainly relates to the interest income
earned on credit financing and reported within
revenues. Interest expense for financial liabilities
measured at amortised cost amounted to € 1.9 billion
(2018: € 1.8 billion).
172
Notes to the Group
Financial Statements
Other Disclosures
credit risk
The BMW Group is exposed to counterparty credit
risks if contractual partners, for example a retail cus-
t omer or a dealership, are unable or only partially able
to meet their contractual obligations. Information on
the management of credit risk for receivables from
financial services is provided in the Combined Man-
agement Report (see section Report on Outlook, Risks
and Opportunities).
Notwithstanding the existence of collateral accepted,
the carrying amount of financial assets (with the
exception of derivative financial instruments) gener-
ally represents the maximum credit risk. In addition,
the credit risk is increased by additional unutilised
loan commitments in the dealership financing
line of business. Total credit risk at the end of the
reporting period amounted to € 31,943 million (2018:
€ 29,403 million).
In the case of all relationships underlying non-deriva-
tive financial instruments, in order to minimise the
credit 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.
In the case of trade receivables, customers are regu larly
assessed with regard to their credit risk. Depending
on contractual status, necessary measures, such as
dunning procedures, are initiated in good time.
The credit risk relating to cash deposits and derivative
financial instruments is minimised by the fact that the
Group only enters into such contracts with parties of
first-class credit standing.
Within the financial services business, items financed
for retail customers and dealerships (such as vehi-
cles, facilities and property) serve as first-ranking
collateral with a recoverable value. Security is also
put up by customers in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. Items previously held as collateral that
are subsequently acquired relate mainly to vehicles.
As a rule, these assets can be converted into cash
at short notice through the dealership organisation.
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.
The credit risk on trade receivables is assessed
mainly on the basis of information relating to over-
due amounts. The gross carrying amounts of these
receivables are allocated in accordance with IFRS 9
to overdue ranges used for management purposes
as follows:
in € million
31. 12. 2019
31. 12. 2018
Not overdue
1 – 30 days overdue
31 – 60 days overdue
61 – 90 days overdue
More than 90 days overdue
Total
1,947
369
89
40
145
2,066
375
34
29
96
2,590
2,600
Group Financial Statements 173
Receivables from sales financing are allocated to inter-
nally defined rating categories based on credit risk.
The classification into creditworthiness levels is based
on default probabilities. The related gross carrying
amounts in accordance with IFRS 9 are allocated as
follows:
in € million
General
Simplified
Total
Expected
credit loss
Stage 1
Stage 2
Stage 3
31. 12. 2019
Gross carrying amount of financial assets
with good credit ratings
Gross carrying amount of financial assets
with medium credit ratings
Gross carrying amount of financial assets
with poor credit ratings
Total
85,399
4,102
38
89,539
696
1,167
704
2,567
–
–
1,014
1,014
86,473
5,291
1,772
93,536
272
199
628
1,099
378
22
16
416
31. 12. 2018
in € million
General
Simplified
Total*
Expected
credit loss
Stage 1
Stage 2
Stage 3
Gross carrying amount of financial assets
with good credit ratings
Gross carrying amount of financial assets
with medium credit ratings
Gross carrying amount of financial assets
with poor credit ratings
Total
* Prior year’s figures adjusted.
79,805
4,393
187
84,385
753
1,062
607
2,422
421
52
37
510
–
–
990
990
80,979
5,507
1,821
88,307
269
189
592
1,050
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 25,
26 and 30.
see
notes 25,
26 and 30
174
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
non-deRIvAtIve FInAnCIAl lIAbIlItIeS
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
Trade payables
Commercial paper
Other financial liabilities
deRIvAtIve FInAnCIAl lIAbIlItIeS
With gross settlement
Cash outflows
Cash inflows
With net settlement
Cash outflows
31. 12. 2019
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
14,977
8,255
8,751
11,277
10,182
2,618
750
1,524
33,826
– 32,302
374
374
37,477
12,090
2,317
3,505
–
–
12,595
–
1,378
27
–
–
1,958
1,686
758
18,485
– 17,727
338
338
– 26
598
– 624
23
23
65,049
20,345
12,446
14,809
10,182
2,618
4,394
2,256
52,909
– 50,653
735
735
Total financial liabilities
58,708
58,443
15,683
132,834
in € million
non-deRIvAtIve FInAnCIAl lIAbIlItIeS
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
Trade payables
Commercial paper
Other financial liabilities
deRIvAtIve FInAnCIAl lIAbIlItIeS
With gross settlement
Cash outflows
Cash inflows
With net settlement
Cash outflows
31. 12. 2018
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
10,789
6,942
9,848
11,010
9,669
2,478
20
731
19,218
– 18,487
245
245
34,196
11,710
3,804
3,368
–
–
318
665
11,639
– 10,974
515
515
11,546
–
900
107
–
–
454
–
213
– 213
81
81
56,531
18,652
14,552
14,485
9,669
2,478
792
1,396
31,070
– 29,674
841
841
Total financial liabilities
51,732
54,576
13,088
119,396
The cash flows from non-derivative liabilities com-
prise principal repayments and the related interest.
The amounts disclosed for derivative instruments
comprise only cash flows relating to derivatives that
have a negative fair value at the balance sheet date.
In the case of derivatives with a negative fair value,
an overall positive cash flow can arise due to the
various yield curves used. At 31 December 2019 credit
commitments available at short notice to dealerships
which had not been called upon at the end of the
reporting period amounted to € 10,776 million (2018:
€ 9,010 million).
Group Financial Statements
175
The BMW Group measures currency risk using a cash-
flow-at-risk model. The analysis of currency risk is
based on forecast foreign currency transactions which
could result in exposures to surpluses of foreign cur-
rency cash inflows and cash outflows. At the end of
the reporting period, the overall currency exposure –
in each case for the following year and determined by
aggregating the individual currency exposures based
on their absolute amount – was as follows:
in € million
31. 12. 2019
31. 12. 2018
Currency exposure
33,950
28,407
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
e red risk position. The cash-flow-at-risk approach
involves showing the impact of potential exchange
rate fluctuations on operating cash flows on the basis
of probability distributions. Volatilities and correla-
tions serve as the main input factors to determine the
relevant probability distributions.
The potential negative impact on earnings is calcu-
lated at the reporting date for each currency for the
following financial year on the basis of current market
prices and exposures with a confidence level of 95 %.
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 for the following year resulting
from unfavourable changes in exchange rates, mea-
sured on the basis of the cash-flow-at-risk approach.
in € million
31. 12. 2019
31. 12. 2018
Cash flow at risk
487
431
Solvency is assured at all times by managing and
monitoring the liquidity situation on the basis of
a rolling cash flow forecast. The resulting funding
requirements are covered by a variety of instruments
placed on the world’s financial markets, with the aim
to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic
target debt structure.
As a further reduction of risk, a syndicated credit line
totalling € 8 billion (2018: € 8 billion) from a consortium
of international banks is available to the BMW Group.
Intragroup cash flow fluctuations are balanced out by
the use of daily cash pooling arrangements.
Further information is provided in the Combined
Management Report.
Market risks
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials market price risk.
Protection against such risks is provided in the first
instance though natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting.
Currency, interest rate and raw materials market 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
Combined Management Report.
currency risk
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. In order to
hedge currency risks, the BMW Group holds, as at
31 December 2019, derivative financial instruments
mostly in the form of forward currency contracts and
currency swaps.
As part of the implementation of the risk management
strategy, the extent to which risk exposures should be
hedged is decided at regular intervals. The economic
relationship between the hedged item and the hedging
instrument is based essentially on the fact that they
are denominated in the same currency and have the
same maturities.
176
Notes to the Group
Financial Statements
Other Disclosures
interest rate risk
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. At the BMW Group, all items subject to, or
bearing, interest are exposed to interest rate risk and
can therefore affect both the assets and liabilities side
of the balance sheet.
The fair value of the Group’s interest rate portfolios
was as follows at the end of the reporting period:
in € million
31. 12. 2019
31. 12. 2018
Fair values of interest rate portfolios
55,697
60,356
Interest rate risk is managed through the use of in-
te r est rate derivatives. As part of the implementation
of the risk management strategy, interest rate risks
are monitored and managed at regular intervals. The
interest rate contracts used for hedging purposes
comprise mainly swaps, which, if hedge accounting
is applied, are accounted for as fair value hedges. The
economic relationship between the hedged item and
the hedging instrument is based on the fact that the
main parameters of the hedged item and the related
hedging instrument, such as start date, term and
currency, are the same.
For selected fixed-interest assets, part of the interest
rate risk is hedged on a portfolio basis. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio.
As a result of the ongoing reform and replacement
of specific benchmark interest rates, uncertainty
arises regarding the timing and exact nature of those
changes. Overall, a considerable number of contracts
within the BMW Group are directly affected by the
reform of benchmark interest rates. Hedging rela-
tionships within the BMW Group are based primarily
on USD LIBOR and GBP LIBOR reference interest
rates, whereby those rates are designated as the
hedged risk in fair value hedges. In the case of these
hedging relationships, uncertainty arises with respect
to the identifiability of the designated benchmark
interest rates.
The transition to the newly created and / or revised
benchmark interest rates is being managed and moni-
tored within the framework of a multidisciplinary
project, the scope of which is likely to cover changes to
systems, processes, risk and valuation models, as well
as dealing with the related impact at an accounting
and financial reporting level. The uncertainty arising
from interest rate benchmark reform is expected to
persist most likely until the end of 2021.
The BMW Group applies a value-at-risk approach
throughout the Group for internal reporting purposes
and to manage interest rate risk. This approach is
based on a historical simulation in which the potential
future fair value losses of the interest rate portfo-
lios are compared across the Group with expected
amounts on the basis of a holding period of 250 days
and a confidence level of 99.98 %. The risk mitigating
effect of correlations between the various portfolios
is taken into account when the risks are aggregated.
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, mea-
sured on the basis of the value-at-risk approach:
in € million
Value at risk
31. 12. 2019
31. 12. 2018
1,094
1,123
Raw materials price risk
The BMW Group is exposed to market price risks on
raw materials. In order to hedge these risks, the Group
mainly used forward commodity contracts. As part of
the implementation of the risk management strategy,
the extent to which risk exposures should be hedged
is decided at regular intervals and the corresponding
hedging ratio defined.
The economic relationship between the hedged item
and the hedging instrument is based essentially on
the fact that they have the same basis and term. The
BMW Group designates only the commodity price
index-linked raw material surcharge as a hedged item.
Other price components contained in the contract are
not designated as being part of the hedge relationship
as no effective hedging instruments exist for these
components.
Group Financial Statements The starting point for analysing raw materials price
risk is to identify planned purchases of raw materials
or components containing raw materials, the so-called
“exposure”. At each reporting date, the exposure for
the following financial year amounted to:
in € million
31. 12. 2019
31. 12. 2018
Raw material price exposures
4,382
4,174
This exposure is 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 showing the impact of potential raw materials
market price fluctuations on operating cash flows
on the basis of probability distributions. Volatilities
and correlations serve as input factors to assess the
relevant probability distributions.
The potential negative impact on earnings is 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 %. The risk mitigating effect of correlations between
the various categories of raw materials is taken into
account when the risks are aggregated.
The following table shows the potential negative 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 each reporting date for the following financial
year was as follows:
in € million
31. 12. 2019
31. 12. 2018
Cash flow at risk
419
327
disclosures on hedging measures
The following disclosures on hedging measures
include derivatives of fully consolidated companies
that have been designated as a hedging instrument.
The amounts shown in the table are stated before
deferred taxes and take account of additional effects
arising from the application of the modified closing
rate method.
177
The nominal amounts of hedging instruments were
as follows:
in € million
Maturity within
one year
31. 12. 2019
Maturity
between one
and five years
Maturity later
than five years
Currency risks
Interest rate risks
Raw material price risks
Nominal amounts of
hedging intruments
14,823
6,672
1,651
9,020
29,691
1,920
–
12,938
–
23,146
40,631
12,938
in € million
Maturity within
one year
31. 12. 2018
Maturity
between one
and five years
Maturity later
than five years
Currency risks
Interest rate risks
Raw material price risks
Nominal amounts of
hedging intruments
17,159
4,619
1,526
9,097
24,295
2,109
–
12,027
32
23,304
35,501
12,059
The following table shows the average hedging rates of
hedging transactions used by the BMW Group.
Currency risks
31. 12. 2019
31. 12. 2018
Average
hedging rates
EUR / CNY
EUR / USD
EUR / GBP
EUR / KRW
EUR / JPY
8.26
1.16
0.87
8.26
1.17
0.79
1,328.59
1,288.91
124.92
125.29
Average
hedging rates
Raw material price risks
31. 12. 2019
31. 12. 2018
Aluminium (EUR / t)
Lead (EUR / t)
Copper (EUR / t)
Palladium (EUR / oz)
Platinum (EUR / oz)
1,833
1,815
5,173
1,022
916
1,797
1,784
5,279
745
945
Information on average interest hedge rates is not
provided, since interest rate derivatives designated
as hedging instruments are used exclusively to hedge
items in fair value hedges. The hedge rates therefore
correspond in each case to current market interest rate
level. Most of the hedges used in this context relate
to variable yield curves relating to the euro, US dollar
and British pound currency areas.
178
Notes to the Group
Financial Statements
Other Disclosures
The following tables provides information on the nomi-
nal amounts, carrying amounts and fair value changes
of contracts designated as hedging instruments:
31. 12. 2019
Carrying Amounts
in € million
Nominal amounts
Assets
Liabilities
Change in fair value
of designated
components
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
23,843
3,571
60
266
59,999
1,244
590
215
271
– 479
250
758
31. 12. 2018
Carrying Amounts
in € million
Nominal amounts
Assets
Liabilities
Change in fair value
of designated
components
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
26,256
3,667
52,580
651
189
654
363
334
556
121
– 453
27
The following tables show key information on hedged
items for each risk category as well as the balances
of designated components within accumulated other
equity:
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
31. 12. 2019
Carrying Amounts
Balances in accumulated other equity
Assets
Liabilities
Change in value
of hedged items
Continuing hedge
relationships
Terminated hedge
relationships
–
–
–
–
479
– 250
8,631
58,723
– 759
– 23
1
–
–
–
–
31. 12. 2018
Carrying Amounts
Balances in accumulated other equity
Assets
Liabilities
Change in value
of hedged items
Continuing hedge
relationships
Terminated hedge
relationships
–
–
–
–
– 119
453
941
– 262
8,930
49,846
– 33
–
– 1
–
–
Group Financial Statements The accumulated amount of hedge-related fair value
adjustments is € 8 million for assets (2018: € 15 million)
and € 1,012 million (2018: € 243 million) for liabilities.
Hedge relationships give rise to the following effects:
179
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
2019
Change of
designated com-
ponents in other
comprehensive
income
Change in costs of
hedging in other
comprehensive
income
Hedge
ineffectiveness
recognised in
income statement
– 961
264
–
117
– 7
9
2018
–
–
– 1
Change of
designated com-
ponents in other
comprehensive
income
Change in costs of
hedging in other
comprehensive
income
Hedge
ineffectiveness
recognised in
income statement
– 931
– 497
– 614
12
–
– 19
–
–
– 6
Designated components and costs of hedging within
accumulated other equity changed as follows:
in € million
Opening balance at 1 January 2019
Change in fair value during the reporting period
Reclassification to profit or loss
for continuing hedge relationships
for terminated hedge relationships
Reclassification to acquisition costs for inventories
Closing balance at 31 December 2019
in € million
Opening balance at 1 January 2018
Change in fair value during the reporting period
Reclassification to profit or loss
for continuing hedge relationships
for terminated hedge relationships
Reclassification to acquisition costs for inventories
Closing balance at 31 December 2018
Currency risks
Interest rate risk
Raw material price risk
Designated
component
Costs
of hedging
Costs
of hedging
Designated
component
Costs
of hedging
940
– 480
– 491
9
–
– 22
– 614
– 622
716
23
–
– 497
– 13
13
– 4
–
–
– 4
– 262
250
–
5
8
1
12
– 1
–
–
– 6
5
Currency risks
Interest rate risk
Raw material price risk
Designated
component
Costs
of hedging
Costs
of hedging
Designated
component
Costs
of hedging
1,875
120
– 987
– 68
–
940
–
– 966
319
33
–
– 614
6
– 20
1
–
–
– 13
235
– 453
–
7
– 51
– 262
–
14
–
–
– 2
12
180
Notes to the Group
Financial Statements
Other Disclosures
The nominal amount of hedging instruments directly
affected by the reform of benchmark interest rates is
€ 11,269 million (of which USD LIBOR € 8,949 million,
GBP LIBOR € 1,907 million).
40
Related party relationships
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business with 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
2019
2018
2019
2018
2019
2018
2019
2018
Supplies and services
performed
Supplies and services
received
Receivables
at 31 December
Payables
at 31 December
BMW Brilliance Automotive Ltd.
9,227
7,691
107
99
2,639
1,829
496
772
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2019,
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 2019, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
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 Supervisory Boards of DELTON Health AG, Bad
Homburg v. d. H., and DELTON Technology SE,
Bad Homburg v. d. H., as well as the sole shareholder
of DELTON Logistics S.à r. l., Grevenmacher, which
via its subsidiaries, performed logistic-related services
for the BMW Group during the financial year 2019.
In addition, the Delton companies held by Stefan
Quandt acquired vehicles from the BMW Group by
way of leasing.
Stefan Quandt, Germany, is also the indirect ma jor-
ity shareholder of SOLARWATT GmbH, Dresden.
Cooperation arrangements are in place between the
BMW Group and SOLARWATT GmbH, Dresden,
within the field of electric mobility. The focus of this
cooperation is on the provision of complete photo-
voltaic solutions for rooftop systems and carports
to BMW i customers. In 2019 SOLARWATT 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 2019,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
Group Financial Statements
181
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
in € thousand
2019
2018
2019
2018
2019
2018
2019
2018
Supplies and services
performed
Supplies and services
received
Receivables
at 31 December
Payables
at 31 December
DELTON Health AG (formerly DELTON AG)
DELTON Logistics S. à r. l.
DELTON Technology SE
SOLARWATT GmbH
ALTANA AG
UnternehmerTUM GmbH
EnviroChemie GmbH
Entrust Datacard Corp.
2,065
1,473
6
453
2,529
104
28
153
3,536
–
23,386
–
–
358
2,322
58
–
103
21,596
–
–
462
2,651
107
–
–
–
1
401
1,527
–
–
20
14
–
8
355
27
–
10
34
–
–
4
341
–
–
2
–
1,871
–
–
65
693
–
–
–
2,235
–
–
5
367
–
–
Apart from vehicle sales, service loaners, leasing and
financing contracts at customary conditions, compa-
nies of the BMW Group concluded no further trans-
actions 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 pensions
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 ex-
penses on an immaterial scale and performs services
for BMW Trust e. V., Munich.
For disclosures relating to the compensation of key
management personnel, please see
note 43 and the
Compensation Report.
see
note 43
41
Share-based remuneration
The BMW Group provides three share-based pro-
grammes: one for eligible employees, one for senior
heads of department and one for members of the
Board of Management.
employee Share programme
In connection with the Employee Share Programme,
non-voting shares of preferred stock in BMW AG were
granted in 2019 to qualifying employees at favourable
note 31 for the number and price
conditions (see
see
note 31
of issued shares). Participants in the programme
were entitled in 2019 to acquire packages of 10, 17 or
25 shares of preferred stock (2018: 7, 12 or 17) with
a discount in each case of € 13.00 (2018: € 20.00) per
share compared to the market price (average closing
price in Xetra trading in the period from 5 November
to 8 November 2019: € 59.10). The programme was
open to employees who have been in an employment
relationship with BMW AG or by a wholly-owned
BMW AG subsidiary in Germany, provided that the
management of the subsidiary concerned has decid-
ed to participate in the programme. At the date of
the announcement of the programme, there was a
requirement for the employment relationship to have
existed without interruption for at least one year and
for it to continue until the transfer of the shares of
preferred stock. Shares of preferred stock acquired
in conjunction with the Employee Share Programme
are subject to a vesting period of four years, starting
from 1 January of the year in which the shares were
acquired. In the financial year under report, 744,447
(2018: 521,524) shares of preferred stock were acquired
by employees. This figure includes 740,400 (2018:
521,500) shares out of Authorised Capital 2019, with
the remainder bought back via the stock exchange.
Every year the Board of Management of BMW AG
decides whether the programme is to be continued.
In the financial year 2019, the BMW Group recorded
a personnel expense of € 10 million (2018: € 10 million)
for the Employee Share Programme, corresponding
to the difference between the market price and the
reduced price of the shares of preferred stock pur-
cha sed by employees.
182
Notes to the Group
Financial Statements
Other Disclosures
programme for senior heads of department and
members of the board of Management
The share-based remuneration programme for qualify-
ing senior heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on a
sustainable basis. Under the terms of the programme,
participants give a commitment to invest an amount
equivalent to 20 % of their earnings-related bonus in
shares of BMW common stock and to hold the shares
so acquired for a minimum of four years. With effect
from 1 July 2019, the share-based compensation pro-
gramme was revised and the investment requirement
increased to 26 % of the earnings-related bonus. In
return for the investment requirement, BMW AG pays
100 % of the investment amount as a net subsidy. Once
the four-year holding period requirement has been
fulfilled, the participants receive – for each three
common stock shares held and at the Company’s
option – one additional share of common stock or the
cash equivalent, to be decided at BMW AG’s discretion.
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.
Members of the Board receive a cash compensation
(investment component) for the specific purpose of
investment – after tax and deductions – in shares
of common stock of BMW AG. For financial years
from 2018 onwards, the investment component cor-
responds to 45 % of the gross bonus. The investment
component is paid after the end of the Annual General
Meeting, at which the separate financial statements
of BMW AG for the relevant financial year are pre-
sented. The shares of common stock are purchased
immediately after the investment component has been
paid out. Shares of common stock purchased in this
way by Board members are required to be held for a
period of four years. At the end of the holding period,
Board members receive from BMW AG, for every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to be
decided at BMW AG’s discretion. In the event of death
or invalidity, special rules apply for early payment
of share-based remuneration components based on
the target amounts. Insofar 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
share-based remuneration are forfeited.
The members of the Board of Management in office at
the end of the reporting period hold 36,921 shares of
BMW common stock based on holding requirements
arising from share-based remuneration for the finan-
cial years 2015 to 2018 (2018: 65,960).
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 obligation 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 in Xetra trading at
31 December 2019).
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 2019
was € 5,851,703 million (2018: € 4,745,518 million).
The total expense recognised in 2019 for the share-
based remuneration component of current and
former Board of Management members and senior
heads of department was € 1,979,477 million (2018:
€ 609,890 million).
The fair value of the programmes for Board of Manage-
ment members and senior heads of department at the
date of grant of the share-based remuneration com-
ponents was € 1,374,798 (2018: € 1,919,680 million),
based on a total of 19,983 shares (2018: 22,245 shares)
of BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
Further details on the remuneration of the Manage-
ment Board are provided in the Compensation Report,
which is part of the Combined Management Report.
42
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 included in the Corporate Governance State-
ment, which is available on the BMW Group website
at
www.bmwgroup.com / ir.
Group Financial Statements
43
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 2019 in
accordance with IFRS comprised the following:
in € million
2019
2018
Compensation to members of the
Board of Management
Fixed remuneration
Variable remuneration
thereof Performance Cash Plan
Share-based remuneration component
Allocation to pension provisions
Benefits in conjunction with the
termination of board activity
Compensation to members of the
Supervisory Board
Fixed compensation and attendance fees
Variable compensation
Total expense
thereof due within one year
30.0
8.1
20.9
8.3
1.0
2.9
7.1
5.6
2.0
3.6
45.6
28.6
28.8
8.2
20.3
5.3
0.3
3.4
3.9
5.6
2.0
3.6
41.7
30.7
Since the financial year 2018, variable cash com-
pensation has been supplemented by a multi-year
and future-oriented Performance Cash Plan (PCP).
The PCP evaluation period comprises three years,
the grant year and the two subsequent years. The
PCP bonus is paid out after the end of the three-year
evaluation period.
The total remuneration of former members of the
Board of Management and their dependants amounted
to € 16.0 million (2018: € 9.2 million).
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to € 14.6 million (2018: € 19.7 million), determined
in accordance with IAS 19. Pension obligations to
former members of the Board of Management and
their surviving dependants, also determined in
accordance with IAS 19, amounted to € 113.1 million
(2018: € 91.0 million).
183
The compensation arrangements applicable for
members of the Supervisory Board for the financial
year 2019 do not include any stock options, value
appreciation rights comparable to stock options or
any other stock-based compensation components.
Apart from vehicle sales, service loaners, vehicle lease
and financing contracts at customary 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 about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensa-
tion Report, which is part of the Combined Manage-
ment Report.
44
Events after the end of the reporting period
On 30 January 2020, the World Health Organisation
(WHO) declared an international health emergency
due to the outbreak of coronavirus. Since 11 March
the WHO has characterised the spread of the corona-
virus as a pandemic.
The continuing spread of the coronavirus and
the impact on the business development of the
BMW Group is being continually monitored. Based
on current developments, the BMW Group expects
that the increasing spread of the coronavirus and the
necessary containment measures will have a nega-
tive impact on BMW Group vehicle deliveries in all
key sales markets. Risks also exist for upstream
and downstream processes, for example, through
possible bottlenecks due to supply shortages. For
the Financial Services segment, risk provisioning
expense is expected to increase.
Current assessments and assumptions for the finan-
cial year 2020, to the extent already known to the
BMW Group, have been taken into account and
described in the outlook report. Apart from these
assessments, no further significant negative effects
are known or can be estimated at the present time.
However, further negative effects could arise in the
course of the year.
No other events have occurred since the end of the
financial year that could have a major impact on
the results of operations, financial position and net
assets of BMW AG and the BMW Group.
SEGMENT INFORMATION
184
Notes to the Group
Financial Statements
Segment Information
45
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into
operating segments in accordance with IFRS 8. The
segmentation follows the internal management and
reporting system and takes account of the or gan-
isa tio nal structure of the BMW Group based on
the va rious 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 primarily by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA as well as in China, Korea, Italy, Russia and
Thailand 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
business, 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 re-
ported in the Other Entities segment. This segment
also includes the operating companies BMW (UK)
Investments Ltd. and Bavaria Lloyd Reisebüro GmbH,
which are not allocated to one of the other segments.
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
include the treatment of inter-segment warranties,
the earnings impact of which is allocated to the
Automotive and Financial Services segments on
the basis used internally to manage the business. In
addition, intragroup repurchase agreements between
the Automotive and Financial Services segments
pursuant to IFRS 15, impairment allowances on
intragroup receivables and changes in the value of
consolidated other investments pursuant to IFRS 9
are also excluded. Intragroup leasing arrangements
are not reflected in the internal management and
reporting system on a IFRS 16 basis and therefore,
in accordance with IFRS 8, do not give rise to any
changes in the presentation of segment information.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated upon
consolidation. Inter-segment revenues are based on
market prices. Centralised functions are included in
the segments concerned. Expenses for centralised
administrative functions allocated to the Financial
Services segment are not settled in cash.
Group Financial Statements
185
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 results
used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate
resources and comprises all current and non- current
operational assets after deduction of liabilities used
operationally which are generally not subject to
interest (e. g. trade payables).
The success of the Financial Services segment is mea-
sured 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.
186
Notes to the Group
Financial Statements
Segment Information
Segment information by operating segment is as
follows:
in € million
2019
2018*
2019
2018
2019
2018*
2019
2018
2019
2018*
2019
2018*
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
Depreciation and amortisation on non-current assets
in € million
Segment assets
Investments accounted for using the equity method
73,624
18,058
91,682
4,499
136
7,607
5,853
68,252
17,594
85,846
6,182
632
7,853
4,982
2,374
– 6
2,368
194
–
149
110
2,176
– 3
2,173
175
–
147
97
28,210
1,388
29,598
2,272
–
27,544
11,142
26,425
1,280
27,705
2,143
–
24,767
10,122
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018*
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018*
31. 12. 2019
31. 12. 2018*
16,193
3,199
13,836
2,624
712
–
618
–
15,545
14,806
–
–
106,038
84,512
89,546
95,166
228,034
208,938
Segment assets
–
–
3,199
2,624
Investments accounted for using the equity method
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
– 96
– 45
–
–
104,210
96,855
– 19,443
– 18,875
–
–
– 19,443
– 18,875
104,210
96,855
249
–
– 7,003
– 6,356
1,172
–
– 6,174
– 6,600
7,118
136
28,297
10,749
9,627
632
26,593
8,601
2
3
5
–
–
–
–
2
4
6
–
–
–
–
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year
have been adjusted due to changes in presentation of selected items, which are not material overall.
Group Financial Statements 187
in € million
2019
2018*
2019
2018
2019
2018*
2019
2018
2019
2018*
2019
2018*
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
73,624
18,058
91,682
4,499
136
7,607
5,853
68,252
17,594
85,846
6,182
632
7,853
4,982
2,374
– 6
2,368
194
–
149
110
2,176
– 3
2,173
175
–
147
97
28,210
1,388
29,598
2,272
–
27,544
11,142
26,425
1,280
27,705
2,143
–
24,767
10,122
2
3
5
2
4
6
–
–
104,210
96,855
– 19,443
– 18,875
–
–
– 19,443
– 18,875
104,210
96,855
SeGMent InFoRMAtIon
by opeRAtInG SeGMent
External revenues
Inter-segment revenues
Total revenues
– 96
– 45
–
–
–
–
–
–
249
–
– 7,003
– 6,356
1,172
–
– 6,174
– 6,600
7,118
136
28,297
10,749
9,627
632
26,593
8,601
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Automotive
Motorcycles
Financial Services
Other Entities
Reconciliation to Group figures
Group
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018*
31. 12. 2019
31. 12. 2018
31. 12. 2019
31. 12. 2018*
31. 12. 2019
31. 12. 2018*
Investments accounted for using the equity method
16,193
3,199
13,836
2,624
712
–
618
–
15,545
14,806
–
–
106,038
84,512
89,546
95,166
228,034
208,938
Segment assets
–
–
–
–
3,199
2,624
Investments accounted for using the equity method
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year
have been adjusted due to changes in presentation of selected items, which are not material overall.
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
in € million
Segment assets
188
Notes to the Group
Financial Statements
Segment Information
Write-downs on inventories to their net realisable
value amounting to € 126 million (2018: € 54 million)
were recognised by the Automotive segment in the
financial year 2019. The reversal of impairment losses
increased the segment result of the Automotive seg-
ment by € 22 million (2018: € 22 million).
The result of the Financial Services segment was
negatively impacted by impairment losses totalling
€ 254 million (2018: € 302 million) recognised on leased
products. Income from the reversal of impairment
losses on leased products amounted to € 95 million
(2018: € 118 million).
The Other Entities’ segment result includes interest
and similar income amounting to € 1,515 million (2018:
€ 1,178 million) and interest and similar expenses
amounting to € 1,419 million (2018: € 1,145 million).
The information disclosed for 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
2019
2018*
Reconciliation of segment result
Total for reportable segments
6,869
8,455
Financial result of Automotive segment
Financial result of Motorcycles segment
Elimination of inter-segment items
– 32
– 7
288
795
– 6
383
Group profit before tax from
continuing operations
7,118
9,627
Reconciliation of capital expenditure
on non-current assets
Total for reportable segments
Elimination of inter-segment items
35,300
– 7,003
32,767
– 6,174
Total Group capital expenditure
on non-current assets
28,297
26,593
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
17,105
– 6,356
15,201
– 6,600
Total Group depreciation and
amortisation on non-current assets
10,749
8,601
in € million
31. 12. 2019
31. 12. 2018*
Reconciliation of segment assets
Total for reportable segments
138,488
113,772
Non-operating assets – Automotive
58,612
48,639
Liabilities of Automotive segment
not subject to interest
Non-operating assets – Motorcycles
Liabilities of Motorcycles segment
not subject to interest
Total liabilities –
Financial Services segment
Non-operating assets –
Other Entities segment
38,257
34,643
47
688
45
613
140,955
131,415
6,859
7,084
Elimination of inter-segment items
– 155,872
– 127,273
Total Group assets
228,034
208,938
* Prior year’s figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6. In addition, figures for the prior year have been adjusted
due to changes in presentation of selected items, which are not material overall.
Group Financial Statements The reconciliation of segment figures to the corre-
sponding total Group figures shows the elimination
of inter-segment items. Revenues with other segments
result mainly from the sale of vehicles, for which the
Financial Services segment has concluded a financing
or lease contract. Eliminations of inter-segment items
in the reconciliation to the Group profit before tax,
capital expenditure and depreciation and amortisation
mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for
as leased vehicles in the Financial Services segment.
In the reconciliation of segment assets to Group assets,
eliminations relate mainly to intragroup financing
balances.
In the information by region, external sales are based
on the location of the customer. The information dis-
closed 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.
189
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
2019
2018*
2019
2018*
13,428
20,564
19,720
32,805
11,344
3,904
2,445
–
13,556
18,959
15,979
31,154
10,975
3,591
2,641
–
104,210
96,855
39,237
199
22,470
17,373
1,756
3,834
453
– 7,739
77,583
34,856
90
21,297
15,284
1,565
3,406
388
– 7,855
69,031
* Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year have
been adjusted due to changes in presentation of selected items, which are not material overall.
190
Notes to the Group
Financial Statements
List of Investments
at 31 December 2019
LIST OF INVESTMENTS AT
31 DECEMBER 2019
46
List of investments at 31 December 2019
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 publica-
tion 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 consoli-
dated financial statements for these companies.
Affiliated companies (subsidiaries) of BMW AG at 31 December 2019
• 71
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
Parkhaus Oberwiesenfeld GmbH, Munich
BMW High Power Charging Beteiligungs GmbH, Munich 4, 6
Alphabet Fuhrparkmanagement GmbH, Munich 4
Alphabet International GmbH, Munich 4, 5, 6
BMW Hams Hall Motoren GmbH, Munich 4, 5, 6
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Anlagen Verwaltungs GmbH, Munich 3, 6
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
BAVARIA-LLOYD Reisebüro GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
BMW Vermögensverwaltungs GmbH, Munich
Bürohaus Petuelring GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
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 International Investment B. V., The Hague
BMW España Finance S. L., Madrid
BMW Financial Services (GB) Ltd., Farnborough
BMW (Schweiz) AG, Dielsdorf
BMW Motoren GmbH, Steyr
BMW (UK) Manufacturing Ltd., Farnborough
BMW Finance S. N. C., Guyancourt
BMW Italia S. p. A., San Donato Milanese
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
4,594
3,558
1,988
327
153
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,702
9,111
3,106
1,431
1,246
1,125
1,085
1,020
968
578
495
380
– 6
–
–
1
– 1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,941
1,141
791
589
7
55
219
95
193
97
44
43
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
100
100
Group Financial Statements
BMW (UK) Ltd., Farnborough
BMW Russland Trading OOO, Moscow
BMW i Ventures SCS SICAV-RAIF, Senningerberg
ALPHABET (GB) Ltd., Farnborough
Rolls-Royce Motor Cars Ltd., Farnborough
BMW Iberica S. A., Madrid
BMW France S. A. S., Montigny-le-Bretonneux
BMW Finance N. V., The Hague
BMW Austria Leasing GmbH, Salzburg
BMW Financial Services Scandinavia AB, Sollentuna
BMW Austria Bank GmbH, Salzburg
Alphabet Nederland B. V., Breda 10
BMW Vertriebs GmbH, Salzburg
Alphabet Belgium Long Term Rental NV, Aartselaar
BMW Bank OOO, Moscow
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
Bavaria Reinsurance Malta Ltd., Floriana
BMW Malta Ltd., Floriana
BMW Financial Services Belgium S. A. / N. V., Bornem
BMW Belgium Luxembourg S. A. / N. V., Bornem
BMW Northern Europe AB, Stockholm
BMW Financial Services B. V., Rijswijk 10
BMW Norge AS, Fornebu
Alphabet Italia Fleet Management S. p. A., Rome
Alphabet España Fleet Management S. A. U., Madrid
Swindon Pressings Ltd., Farnborough
BMW Financial Services Polska Sp. z o. o., Warsaw
BMW Austria GmbH, Salzburg
BMW Services Ltd., Farnborough
Alphabet France Fleet Management S. N. C., Saint-Quentin-en-Yvelines
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
BMW Retail Nederland B. V., The Hague
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Portugal Lda., Porto Salvo
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services Denmark A / S, Copenhagen
BMW Hellas Trade of Cars A. E., Kifissia
BMW Nederland B. V., Rijswijk
Oy BMW Suomi AB, Helsinki
BMW Distribution S. A. S., Vélizy-Villacoublay
BMW Amsterdam B. V., Amsterdam
Park Lane Ltd., Farnborough
BMW Renting (Portugal) Lda., Porto Salvo
BMW Romania S. R. L., Bucharest 11
BMW Italia Retail S. r. l., Rome
BMW Automotive (Ireland) Ltd., Dublin
Alphabet France S. A. S., Saint-Quentin-en-Yvelines
BMW Danmark A / S, Copenhagen
BMW Czech Republic s. r. o., Prague
BMW Madrid S. L., Madrid
BMW Slovenská republika s. r. o., Bratislava
Alphabet UK Ltd., Glasgow
BMW Slovenia distribucija motornih vozil d. o. o., Ljubljana 11
BMW Bulgaria EOOD, Sofia 11
191
373
291
288
277
233
228
225
211
176
165
138
129
121
100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90
189
20
58
91
34
35
2
22
22
11
29
30
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
192
Notes to the Group
Financial Statements
List of Investments
at 31 December 2019
Alphabet Polska Fleet Management Sp. z o. o., Warsaw
Société Nouvelle WATT Automobiles S. A. R. L., Saint-Quentin-en-Yvelines
BMW (UK) Investments Ltd., Farnborough
BiV Carry I SCS, Senningerberg
BMW (UK) Capital plc, Farnborough
Alphabet Luxembourg S. A., Leudelange
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BLMC Ltd., Farnborough
Sutum ROM GmbH, Salzburg 11, 14
Bavarian Sky S. A., Compartment German Auto Loans 6, Luxembourg 13
Bavarian Sky S. A., Compartment German Auto Loans 7, Luxembourg 13
Bavarian Sky S. A., Compartment German Auto Loans 8, Luxembourg 13
Bavarian Sky S. A., Compartment German Auto Loans 9, Luxembourg 13
Bavarian Sky S. A., Compartment German Auto Leases 5, Luxembourg 13
Bavarian Sky S. A., Compartment A, Luxembourg 13
Bavarian Sky S. A., Compartment B, Luxembourg 13
Bavarian Sky Europe S. A. Compartment A, Luxembourg 13
Bavarian Sky FTC, Compartment French Auto Leases 3, Paris 13
Bavarian Sky UK 1 plc, London 13
Bavarian Sky UK 2 plc, London 13
Bavarian Sky UK A Ltd., London 13
Bavarian Sky UK B Ltd., London 13
Bavarian Sky UK C Ltd., London 13
The Americas
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 Financial Services NA LLC, Wilmington, Delaware
BMW Canada Inc., Richmond Hill, Ontario
BMW of North America LLC, Wilmington, Delaware
BMW do Brasil Ltda., Araquari
BMW US Capital LLC, Wilmington, Delaware
BMW Financeira S. A. Credito, Financiamento e Investimento, São Paulo
BMW SLP, S. A. de C. V., Villa de Reyes
BMW de Mexico S. A. de C. V., Mexico City
BMW of Manhattan Inc., Wilmington, Delaware
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
BMW Financial Services de Mexico S. A. de C. V. SOFOM, Mexico City
BMW Leasing de Mexico S. A. de C. V., Mexico City
BMW Insurance Agency Inc., Wilmington, Delaware
BMW de Argentina S. A., Buenos Aires
BMW Consolidation Services Co. LLC, Wilmington, Delaware
BMW Leasing do Brasil S. A., São Paulo
BMW Acquisitions Ltda., São Paulo
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
SB Acquisitions LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,012
2,281
1,480
889
692
586
493
179
140
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
52
452
160
– 670
968
174
632
9
– 97
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
0
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 Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp., Wilmington, Delaware
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Extended Service Corp., Wilmington, Delaware
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2018-1, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2019-1, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2018-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2019-A, Wilmington, Delaware 13
BMW Floorplan Master Owner Trust Series 2018-1, Wilmington, Delaware 13
BMW Canada 2018-A, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2018-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2019-1, Richmond Hill, Ontario 13
Africa
BMW (South Africa) (Pty) Ltd., Pretoria
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
SuperDrive Investments (RF) Ltd., Cape Town 13
Asia
BMW Automotive Finance (China) Co. Ltd., Beijing
BMW Financial Services Korea Co. Ltd., Seoul
BMW Japan Finance Corp., Tokyo
BMW China Automotive Trading Ltd., Beijing
BMW Japan Corp., Tokyo
Herald International Financial Leasing Co. Ltd., Tianjin
BMW (Thailand) Co. Ltd., Bangkok
BMW Korea Co. Ltd., Seoul
BMW Leasing (Thailand) Co. Ltd., Bangkok
BMW India Financial Services Private Ltd., Gurgaon
BMW Manufacturing (Thailand) Co. Ltd., Rayong
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW China Services Ltd., Beijing
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
BMW India Private Ltd., Gurgaon
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokio Corp., Tokyo
2015-2 ABL, Tokyo 13
2016-1 ABL, Tokyo 13
2016-2 ABL, Tokyo 13
2017-1 ABL, Tokyo 13
2017-2 ABL, Tokyo 13
2017-3 ABL, Tokyo 13
2018-1 ABL, Tokyo 13
2018-2 ABL, Tokyo 13
193
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
861
167
–
2,441
568
541
502
232
228
205
196
174
112
107
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
109
11
–
321
49
65
456
64
29
83
32
18
1
45
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
0
0
0
0
0
0
0
0
0
0
0
100
100
0
58
100
100
100
100
58
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
0
0
0
0
0
0
0
0
194
Notes to the Group
Financial Statements
List of Investments
at 31 December 2019
2018-3 ABL, Tokyo 13
2019-1 ABL, Tokyo 13
2019-2 ABL, Tokyo 13
2019-3 ABL, Tokyo 13
Bavarian Sky China 2018-1, Beijing 13
Bavarian Sky China 2018-2, Beijing 13
Bavarian Sky China 2019-1, Beijing 13
Bavarian Sky China 2019-2, Beijing 13
Bavarian Sky China 2019-3, Beijing 13
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 2011-2, Mulgrave 13
Bavarian Sky Australia Trust A, Mulgrave 13
bMW AG’s non-consolidated companies at 31 december 2019
• 72
Companies
DoMESTic 7
Alphabet Fleetservices GmbH, Munich 4
Automag GmbH, Munich
BMW Car IT GmbH, Munich 4
BMW i Ventures GmbH, Munich
FoREiGn 7
Europe
Alphabet Insurance Services Polska Sp. z o. o., Warsaw
BMW (GB) Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW Car Club Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Financial Services Czech Republic s. r. o., Prague
BMW Group Benefit Trust Ltd., Farnborough
BMW Hungary Korlátolt Felelősségű Társaság, Vecsés
BMW i Ventures B. V., The Hague
BMW Manufacturing Hungary Kft., Vecsés
BMW Manufacturing Russland OOO, Kaliningrad
BMW Mobility Development Center s. r. o., Prague
BMW Motorsport Ltd., Farnborough
BMW Russland Automotive OOO, Kaliningrad
Cezwei HU GmbH, Salzburg
Cezwei PL GmbH, Salzburg
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
OOO BMW Leasing, Moscow
U. T. E. Alphabet España-Bujarkay, Sevilla
–
–
–
–
–
–
–
–
–
400
169
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29
12
–
–
–
–
–
–
0
0
0
0
0
0
0
0
0
100
100
100
100
100
100
0
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
100
90
Group Financial Statements The Americas
217-07 Northern Boulevard Corp., Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures Inc., Wilmington, Delaware
BMW i Ventures LLC, Wilmington, Delaware
BMW Leasing de Argentina S. A., Buenos Aires
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks / USA Inc., Newbury Park, California
MINI Business Innovation LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV LLC, Wilmington, Delaware
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 China Investment Ltd., Beijing
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Ltd., Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Hong Kong Services Ltd., Hong Kong
BMW India Foundation, Gurgaon
BMW India Leasing Private Ltd., Gurgaon
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
BMW Philippines Corp., Manila
BMW Technology Office Israel Ltd., Tel Aviv
Herald Hezhong (Peking) Automotive Trading Co. Ltd., Beijing
THEPSATRI Co. Ltd., Bangkok
195
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
70
100
100
100
196
Notes to the Group
Financial Statements
List of Investments
at 31 December 2019
bMW AG’s associated companies, joint ventures
and joint operations at 31 december 2019
• 73
Companies
Joint ventures – equity accounted
doMeStIC
IONITY Holding GmbH & Co. KG, Munich 8
Blitz 18-353 GmbH, Munich 8, 11, 14
FoReIGn
BMW Brilliance Automotive Ltd., Shenyang 8
Associated companies – equity accounted
FoReIGn
THERE Holding B. V., Amsterdam 8
Joint operations – proportionately consolidated entities
FoReIGn
Spotlight Automotive Ltd., Zhangjiagang 8, 11
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
PDB – Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
FoREiGn 7
Bavarian & Co Co. Ltd., Incheon
BMW Albatha Finance PSC, Dubai
BMW Albatha Leasing LLC, Dubai
BMW AVTOTOR Holding B. V., Amsterdam
Critical TW S. A., Porto
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
205
2,106
– 24
– 1,805
5,293
1,947
25
50
50
1,597
– 383
29.7
218
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50
50
50
50
20
20
40
40
50
51
Group Financial Statements bMW AG’s participations at 31 december 2019
• 74
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
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
FoREiGn 7
SGL Composites LLC, Dover, Delaware
197
Equity
in € million
Profit / loss
in € million
Capital invest-
ment in %
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,6
3,1
15,6
20,4
9,8
16,7
6,2
9,1
18,3
49,0
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 2019: DriveNow GmbH & Co. KG, Munich, DriveNow Verwaltungs GmbH, Munich, DriveNow Austria GmbH, Vienna, DriveNow UK Ltd., London, DriveNow Sverige AB,
Sollentuna, DriveNow Belgium S. p. r. l., Brussels, DriveNow Italy S. r. l., Milan, BMW Coordination Center V. o. F., Bornem, BMW Services Belgium N. V., Bornem, BMW Roma S. r. l., Rome (merger),
APD Industries plc, Birmingham, BMW Den Haag B. V., The Hague
13 Control on basis of economic dependence.
14 Other: Blitz 18-353 GmbH, Munich, has been operating under the name YOUR NOW GmbH since 3 January 2020. Sutum ROM GmbH was merged with BMW Romania S. R. L., Bucharest, effective
14 January 2020.
198
Notes to the Group
Financial Statements
List of Investments
at 31 December 2019
Munich, 16 March 2020
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Oliver Zipse
Klaus Fröhlich
Ilka Horstmeier
Dr. Milan Nedeljković
Pieter Nota
Dr. Nicolas Peter
Dr.-Ing. Andreas Wendt
Group Financial Statements 4
Corporate
Governance
Company’s Govern-
ing Constitution
Board of
Management
Supervisory Board
Compliance
Compensation
Report
CORPORATE
GOVERNANCE
Page 200 Corporate Governance
(Part of the Combined Management Report)
Information on the Company’s Governing Constitution
Page 200
Page 201 Board of Management
Page 201 Supervisory Board
Page 202 Shareholders and Annual General Meeting
Page 202 Declaration of Compliance
Page 202 Corporate Governance Statement
Page 203 Members of the Board of Management
Page 204 Members of the Supervisory Board
Page 207 Overview of Supervisory Board committees and their composition
Page 208 Compliance and Human Rights in the BMW Group
Page 211 Compensation Report
(Part of the Combined Management Report)
Page 242 Glossary – Explanation of Key Figures
Page 246 Responsibility Statement by the Company’s
Legal Representatives
Page 247
Independent Auditor’s Report
200
Information on the
Company’s
Governing
Constitution
Board of
Management
Supervisory Board
CORPORATE
GOVERNANCE
Good corporate governance – acting in accordance
with the principles of responsible management
aimed at increasing enterprise value 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 internal 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 below on corporate governance at BMW AG in
accordance with Section 3.10 of the German Corpo-
rate Governance Code (DCGK) in the version dated
7 February 2017 and principle 22 DCGK in the version
dated 16 December 2019.
Information on the Company’s
Governing Constitution
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
its Group entities. BMW AG is a stock corporation
(Aktien gesellschaft) 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 Arti-
cles of Incorporation of BMW AG. Shareholders, as
the owners of the business, exercise their rights at
the Annual General Meeting. The Board of Manage-
ment is responsible for managing the enterprise 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 rea-
son, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehen-
sively, in line with the principles of conscientious
and faithful accountability 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 business proceedings. The Supervisory
Board is not, however, authorised to undertake man-
agement measures itself.
The close interaction between Board of Management
and Supervisory Board in the interests of the enter-
prise as described above is also known as a “two-tier
board structure”.
Corporate Governance Board of Management
The Board of Management manages the enterprise
under its own responsibility, acting in the best inter-
ests of the BMW Group with the aim of achieving sus-
tainable growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
In accordance with § 7 of the Articles of Incorporation,
the Board of Management of BMW AG comprises two
or more persons; other than that the number of mem-
bers of the Board of Management is determined by the
Supervisory Board. At 31 December 2019, the Board
of Management comprised seven members. The Board
of Management decides on the principal guidelines
for managing the enterprise, determines and agrees
upon the strategic orientation with the Supervisory
Board, and ensures its implementation. The Board of
Management is also responsible for ensuring that all
provisions of law and internal regulations are com-
plied with. Further details on compliance within the
BMW Group are available in the section “Corporate
Governance, Compliance and Human Rights in the
BMW Group” 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.
Members of the Board of Management 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
benefit of the BMW Group. Individual members of
the Board of Management of BMW AG are required
to disclose any conflicts of interest to the Supervisory
Board without delay and inform the other members
of the Board of Management accordingly.
Deliberations are held and decisions taken by the
Board of Management as a collegiate body at full Board
meetings, at Product and Customer full Board meetings
(since 1 November 2019) and at Sustainability Board
meetings (combined with full Board meetings with
effect from 1 November 2019). The Board of Manage-
ment also deliberates and makes decisions at meetings
of its Customer committee (since 1 November 2019) and
its Senior Executives and Operations committees. The
overall framework for developing business strategies,
the use of resources, the implementation of strategies
and matters of particular importance to BMW AG are
decided upon at full Board of Management meetings.
Terms of procedure approved by the Board of Man-
agement contain a plan for the allocation of areas of
responsibility among the individual Board members.
Further information on the composition and work
pro cedures of the Board of Management and its com-
mittees is available at
www.bmwgroup.com / scg (Corporate
Governance).
201
Supervisory Board
BMW AG’s Supervisory Board is composed of ten
shareholder representatives (elected by the Annual
General Meeting) and ten employee representatives
(elected in accordance with the Co-Determination
Act). The ten Supervisory Board members represent-
ing employees comprise seven Company employees,
including one executive staff representative, and three
members elected following nomination by unions. The
Supervisory Board has the task of advising and super-
vising the Board of Management in its management of
BMW AG. It is involved in all decisions of fundamental
importance for BMW AG. The Supervisory Board
appoints the members of the Board of Management
and decides upon the level of compensation they
receive. The Supervisory Board can revoke appoint-
ments for important reasons.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interests of the enterprise 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 full Supervisory Board of any conflicts
of interest, in particular those resulting from a
consultant or executive function with clients, sup-
pliers, 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. Significant and non-temporary conflicts of
interest of a Supervisory Board member result in the
termination of mandate.
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.
The Supervisory Board has stated specific targets for
its composition, agreed to a diversity concept and
determined a competency profile. Members of the
Supervisory Board are responsible for undertaking
any training required for the performance of their
duties. The Company provides them with appropriate
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 Medi-
ation Committee. These serve to raise the efficiency
of the Supervisory Board’s work and facilitate the
handling of complex issues.
Declaration of Compliance
Once a year, the Board of Management and the Super-
visory Board of BMW AG issue a Declaration of Compli-
ance pursuant to § 161 of the German Stock Corporation
Act (AktG) with regard to the recommendations of the
“Government Commission on the German Corporate
Governance Code”, as officially published and valid
at the date of the Declaration. BMW AG’s current and
previous Declarations of Compliance are available
online at
www.bmwgroup.com / compliancedeclaration (Corporate
Governance). In the Declaration of Compliance issued
in December 2019, the Board of Management and
the Supervisory Board declared that all recommen-
dations of the German Corporate Governance Code
(version dated 7 February 2017) will be complied with
going forward.
Corporate Governance Statement
Further information on corporate management and
governance, including the declaration of compliance
according to § 161 of the German Stock Corporation
Act, can be found in the Corporate Governance State-
ment (sections 289 f and 315 of the German Commer-
cial Code (HGB)) at
www.bmwgroup.com / compliancedeclaration
(Corporate Governance).
202
Supervisory Board
Shareholders and
Annual General
Meeting
Declaration of
Compliance
Corporate Govern-
ance Statement
Members of the
Board of
Management
Composition of the Presiding Board and the various
committees is based on legal requirements, the Arti-
cles of Incorporation, rules of procedure and corporate
governance principles, while taking into particular
account the expertise of Board members.
BMW AG ensures that the Supervisory Board and
its committees are appropriately equipped to carry
out their duties. This includes providing a central
Supervisory Board office to support the chairpersons
in their coordination work.
Further information on the composition and work
procedures of the Supervisory Board and its com-
mittees is available at
www.bmwgroup.com / scg (Corporate
Governance).
Shareholders and Annual General Meeting
The shareholders of BMW AG exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
specified capital measures and elects the shareholders’
representatives to the Supervisory Board.
Moreover, the system for the compensation of mem-
bers of the Board of Management is presented to the
Annual General Meeting for approval in the case of
significant changes, but at least every four years.
Shareholders may exercise their voting rights at the
Annual General Meeting either in person, via a proxy
or via a representative designated by BMW AG. Voting
rights may also be exercised by postal vote.
Corporate Governance 203
Dr. Milan nedeljković (b.1969)
Production (since 1 October 2019)
Mandates
BMW (South Africa) (Pty) Ltd.♦, Chairman
(since 1 November 2019)
BMW Motoren GmbH ♦, Chairman
(Member since 7 October 2019,
Chairman since 4 December)
pieter nota (b.1964)
Customer, Brands, Sales (since 1 April 2019)
Sales and Brand BMW, Aftersales BMW Group
(until 31 March 2019)
Mandates
Rolls-Royce Motor Cars Limited ♦, Chairman
(since 1 April 2019)
dr. nicolas peter (b.1962)
Finance
Mandates
BMW Brilliance Automotive Ltd.♦,
Deputy Chairman
peter Schwarzenbauer (b.1959)
Transformation Electromobility
(1 April 2019 until 31 October 2019)
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business
Innovation BMW Group (until 31 March 2019)
Mandates
Scout24 AG
Rolls-Royce Motor Cars Limited ♦, Chairman
(until 31 March 2019)
dr.-Ing. Andreas Wendt (b.1958)
Purchasing and Supplier Network
Production
(16 August 2019 until 30 September 2019)
General Counsel:
dr. Andreas liepe
MEMBERS OF THE
BOARD OF MANAGEMENT
oliver Zipse (b.1964)
Chairman (since 16 August 2019)
Production (until 15 August 2019)
Mandates
BMW (South Africa) (Pty) Ltd.♦, Chairman
(until 31 October 2019)
BMW Motoren GmbH ♦, Chairman
(until 7 October 2019)
harald Krüger (b.1965)
Chairman (until 15 August 2019)
Mandates
Deutsche Telekom AG
Milagros Caiña Carreiro-Andree (b.1962)
Human Resources, Labour Relations Director
(until 31 October 2019)
Mandates
LOGISTRIAL Real Estate AG ♦
(23 September 2019 until 17 December 2019)
Klaus Fröhlich (b.1960)
Development
Mandates
E.ON SE
ilka Horstmeier (b.1969)
Human Resources, Labour Relations Director
(since 1 November 2019)
♦ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Dr. jur. Karl-Ludwig Kley (b.1951)
Member since 2008, elected until the AGM 2021
Deputy Chairman of the Supervisory Board
Chairman of the Supervisory Board of E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Mandates
E.ON SE, Chairman
Deutsche Lufthansa Aktiengesellschaft, Chairman
christiane Benner 2 (b.1968)
Member since 2014, elected until the AGM 2024
Second Chairwoman of IG Metall
Mandates
Continental AG, Deputy Chairwoman
Dr. rer. pol. Kurt Bock (b.1958)
Member since 2018, elected until the AGM 2023
Former Chairman of the Board of
Management of BASF SE
Mandates
FUCHS PETROLUB SE, Chairman
(since 7 May 2019)
Fresenius Management SE ♦
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in Munich
Verena zu Dohna-Jaeger 2 (b.1975)
Member since 16 May 2019,
elected until the AGM 2024
Department head with the Executive Board of
IG Metall
Mandates
ABB AG
Franz Haniel (b.1955)
Member since 2004 until 16 May 2019
Entrepreneur
Mandates
Franz Haniel & Cie. GmbH ♦, Chairman
DELTON Technology SE ♦
Heraeus Holding GmbH ♦
TBG AG ♦
204
Members of the
Supervisory Board
MEMBERS OF THE
SUPERVISORY BOARD
Dr.-ing. Dr.-ing. E. h. norbert Reithofer (b.1956)
Member since 2015, elected until the
Annual General Meeting (AGM) 2020
Chairman of the Supervisory Board
Former Chairman of the Board of
Management of BMW AG
Mandates
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders’ Committee)
Manfred Schoch 1 (b.1955)
Member since 1988, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the European
and General Works Council
Industrial Engineer
Stefan quandt (b.1966)
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
Mandates
DELTON Health AG ♦, Chairman
DELTON Technology SE ♦, Chairman
Frankfurter Allgemeine Zeitung GmbH ♦
(since 24 June 2019)
AQTON SE ♦, Chairman
Entrust Datacard Corp.♦
Stefan Schmid 1 (b.1965)
Member since 2007, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the Works Council, Dingolfing
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
♦ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Corporate Governance
205
Horst Lischka 2 (b.1963)
Member since 2009, elected until the AGM 2024
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH ♦
MAN Truck & Bus SE ♦
(since 19 March 2019, former MAN Truck & Bus AG)
Städtisches Klinikum München GmbH ♦
Willibald Löw 1 (b.1956)
Member since 1999, elected until the AGM 2024
Chairman of the Works Council, Landshut
Simone Menne (b.1960)
Member since 2015, elected until the AGM 2021
Member of supervisory boards
Mandates
Deutsche Post AG
Springer Nature AG & Co. KGaA ♦
Johnson Controls International plc
Russell Reynolds Associates Inc.♦
(since 19 January 2019)
Dr. Dominique Mohabeer 1 (b.1963)
Member since 2012, elected until the AGM 2024
Member of the Works Council, Munich
Brigitte Rödig 1 (b.1963)
Member since 2013, elected until the AGM 2024
Member of the Works Council, Dingolfing
Dr. Vishal Sikka (b.1967)
Member since 16 May 2019,
elected until the AGM 2024
CEO & Founder, Vianai Systems, Inc.
Mandates
Oracle Corporation (since 6 December 2019)
Ralf Hattler 3 (b.1968)
Member since 2017 until 16 May 2019
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
dr.-Ing. heinrich hiesinger (b.1960)
Member since 2017, elected until the AGM 2022
Former Chairman of the Board of Management
of thyssenkrupp AG
Mandates
Deutsche Post AG (since 15 May 2019)
prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (b.1957)
Member since 2008, elected until the AGM 2023
Chairman of the Executive Board
of Helmholtz-Zentrum Potsdam
Deutsches GeoForschungsZentrum – GFZ
University Professor
Susanne Klatten (b.1962)
Member since 1997, elected until the AGM 2024
Entrepreneur
Mandates
SGL Carbon SE, Chairwoman
ALTANA AG ♦, Deputy Chairwoman
UnternehmerTUM GmbH ♦, Chairwoman
prof. dr. rer. pol. Renate Köcher (b.1952)
Member since 2008, elected until the AGM 2022
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Mandates
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).
♦ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
206
Members of the
Supervisory Board
Overview of
Super visory Board
committees and
their composition
Jürgen Wechsler 2 (b.1955)
Member since 2011 until 16 May 2019
Former Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG, Deputy Chairman
Siemens Healthcare GmbH ♦, Deputy Chairman
(until 18 March 2019)
Dr. Thomas Wittig 3 (b.1960)
Member since 16 May 2019,
elected until the AGM 2024
Senior Vice President Financial Services
Mandates
BMW Bank GmbH ♦, Chairman
BMW Automotive Finance (China) Co., Ltd.♦,
Chairman
Werner Zierer 1 (b.1959)
Member since 2001, elected until the AGM 2024
Chairman of the Works Council, Regensburg
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
♦ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Corporate Governance
Overview of Supervisory Board committees
and their composition
Principal duties, basis for activities
Members
207
pReSIdInG boARd
— preparation of Supervisory Board meetings to the extent that the subject matter to be
— activities based on terms of procedure
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)
— established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
AudIt CoMMIttee
— supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, as well as the performance of Supervisory
Board duties in connection with audits pursuant to § 32 of the German Securities Trading
Act (WpHG)
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
— 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 (recommendation) of external auditor, determination of additional areas of
audit emphasis and fee agreements with external auditor
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
— supervision of internal audit system and compliance as well as the audit and supervision of
any needs for action related to possible violations of duties by members of the Board of
Management in preparation of a resolution in the Supervisory Board
— decision on approval for utilisation of Authorised Capital 2019
— amendments to Articles of Incorporation only affecting wording
— established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
noMInAtIon CoMMIttee
— identification of suitable candidates 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
— established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
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
— established as required by law
1 Chair.
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
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.)
It is planned to bring about a change in the position
of Chair of the Audit Committee directly following
the 2020 Annual General Meeting. In line with the
requirements profile, the intention is for an indepen-
dent financial expert to continue to hold this position
in the future.
208
Compliance and
Human Rights in
the BMW Group
COMPLIANCE AND
HUMAN RIGHTS IN
THE BMW GROUP
Responsible and lawful conduct is fundamental to
the success of the BMW Group. Compliance is an
integral part of our corporate culture and the reason
why customers, shareholders, business partners and
the general public place their trust in us. The Board of
Management and the employees of the BMW Group
are obliged to act responsibly and in compliance with
applicable laws and regulations. The BMW Group also
expects its business partners to conduct themselves
in the same manner.
The BMW Group Compliance Management System
is designed 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 ensure compliance with antitrust legislation and
avoid the risk of corruption or money laundering.
Activities to avoid non-compliance with the law
are managed and monitored by the BMW Group
Compliance Committee. These activities include
legal monitoring, internal compliance regulations,
communications and training activities, complaint
and case management, compliance reporting and
compliance controls, as well as following through
with sanctions in cases of non-compliance.
The BMW Group Compliance Committee reports
regularly and on a case-by-case basis to the Board of
Management and the Audit Committee of the Super-
visory Board on all compliance-related issues, includ-
ing the progress made in refining the BMW Group
Compliance Management System, details of inves-
tigations performed, known infringements of the
law, sanctions imposed and corrective / preventative
measures implemented. This also ensures the Board of
Management and Supervisory Board are immediately
notified of any cases of particular significance. On
the basis of this information, the Board of Manage-
ment keeps track of and analyses compliance-related
developments and trends and initiates the measures
needed to improve the Compliance Management
System. In 2019 the system was further enhanced, par-
ticularly with a focus on the characteristics of the roles
and responsibilities in the Group-wide Compliance
Management as well as the monitoring of compliance
training and additional preventative activities.
bMW Group Compliance Management System
• 75
Supervisory board bMW AG
board of Management bMW AG
bMW Group Compliance Committee
bMW Group Compliance Committee
office
bMW Group Compliance
network
Annual
Report
Annual
Report
Annual
Compliance
Reporting Run
Compliance Instruments
of the bMW Group
Compliance Controls
Compliance Reporting
Compliance Case
Management
Compliance Strategy
Legal Compliance
Monitoring and Trends
Compliance
Risks and
Preventive Excellence
Compliance Processes
and IT Systems
Compliance Codes and
Internal Regulations
Compliance Academy and Culture
Compliance Communications
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 Commit-
tee Office has more than 20 employees and is allocated
in organisational terms to the Chairman of the Board
of Management. For operational implementation of
compliance topics, it is supported by a Group-wide
compliance network of around 240 BMW Group
Compliance Responsibles (heads of the local units)
and over 70 local Compliance Officers (heads of the
local compliance functions). The specific compliance
activ ities required for financial services business are
coordinated by a separate compliance department
within the Financial Services segment.
Corporate Governance 209
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, which forms the core of the
Group’s Compliance Management System, is supple-
mented by an internal set of rules. The BMW Group
Policy “Antitrust Compliance”, which establishes
binding rules of conduct for all employees across the
BMW Group to prevent unlawful restriction of compe-
tition, deserves particular mention. The BMW Group
Policy “Corruption Prevention” and the BMW Group
Instruction “Corporate Hospitality and Gifts” deal with
lawful handling of gifts and benefits and define appro-
priate assessment criteria and approval procedures.
Compliance measures are determined and prioritised
on the basis of a regular Group-wide compliance risk
assessment that relies on data-based risk indicators
and transaction validation, among other methods.
Various internal media and communications materi-
als are used to raise employee awareness across all
compliance issues, including newsletters, employee
newspapers and the compliance homepage in the
BMW Group intranet, where employees can find all
compliance-related information and training materi-
als. A Group-wide Compliance Day was organised for
the first time in 2019 to boost employee awareness of
the importance of creating a culture of transparency
and trust.
Existing employee training activities were restructured
and refined with the creation of the BMW Group
Compliance Academy in 2019. As well as impart-
ing knowledge, its online and classroom training
options with Company-specific case studies play
an important role in reinforcing compliance in the
corporate culture. The online training modules must
be repeated by the required target groups every two
years and include a final test. Successful completion
of the test is confirmed by a certificate. More than
48,500 managers and staff worldwide have so far
received training in the basic principles of compli-
ance and hold a valid training certificate. Successful
completion of the training programme is mandatory
for all BMW Group managers. The Company makes
sure that newly recruited managers and promoted
staff undergo compliance training. In this way, the
BMW Group achieves almost full training coverage for
its managers in compliance matters. Online training
in antitrust compliance is mandatory for managers
and staff exposed to antitrust risks as a result of their
functions or on specific occasions. A total of more
than 35,000 managers and employees worldwide have
so far completed antitrust compliance training and
currently hold a valid certificate. Additional classroom
training and multi-day coaching sessions are also held
for all key compliance topics in local markets. The main
emphasis here is on training in antitrust law.
Any member of staff with questions or concerns
relating to compliance is expected to discuss these
matters with their managers and with the relevant
departments within the BMW Group: in particular,
with the BMW Group Compliance Committee Office,
Legal Affairs and Corporate Audit. The BMW Group
Compliance Contact also serves as a further point of
contact and provides non-employees with a system for
reporting concerns relating to compliance. Commu-
nication with the BMW Group Compliance Contact
may remain anonymous, if preferred. BMW Group
employees worldwide also have the opportunity to
submit information about possible breaches of the law
within the Company anonymously and confidentially
in several languages via the BMW Group SpeakUP
Line. All compliance-related queries and concerns
are documented and followed up 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 called upon to assist in
the process.
Various IT systems support BMW Group employees
with the assessment, approval and documentation
of compliance-relevant matters. For example, all
exchange activities with competitors must be docu-
mented and approved in a special compliance IT system.
The same applies to verifying legal admissibility and
documenting benefits, especially in connection with
corporate hospitality. The BMW Group also uses an
IT-based Business Relations Compliance programme
to ensure the reliability of its business relations. Rel-
evant business partners are checked and evaluated
for potential compliance risks. Appropriate measures
are implemented to manage compliance risks based
on the results of the evaluation. A further IT system
is used to verify customer integrity as required under
anti-money-laundering regulations.
Through the Group-wide reporting system, compli-
ance responsibles across all organisational units of
the BMW Group report, on both a regular and ad hoc
basis, on the compliance status of their respective
units, on any identified legal risks and incidences of
non-compliance, as well as on sanctions and correc-
tive / preventative measures implemented.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this
in mind, the Board of Management and the national
and international employee representative bodies of
the BMW Group have agreed on a binding set of joint
principles for lawful conduct. Employee representa-
tives are regularly involved in the process of refining
compliance management within the BMW Group.
210
Compliance and
Human Rights in
the BMW Group
Compensation
Report
Compliance with and implementation of compli-
ance rules and processes are audited regularly by
Corporate Audit and subjected to control checks
by the BMW Group Compliance Committee Office.
Corporate Audit carries out on-site audits as part of
its regular activities. The BMW Group Compliance
Committee also engages Corporate Audit to perform
compliance-specific checks and, if necessary, brings
in Corporate Security to investigate suspected cases.
A BMW Group Compliance Spot Check, a sample test
specifically designed to identify potential corruption
risks, and two antitrust compliance validations (to
identify and audit possible antitrust risks) were
carried out in addition in 2019.
Managers, in particular, bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to make staff working for them aware of legal risks.
Managers must, at regular intervals and on their
own initiative, verify compliance with the law. It
is important to signal to employees that they take
compliance risks seriously and that disclosing rele-
vant information is extremely valuable. In dealings
with their staff, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously and
judiciously investigated.
It is essential for compliance at the BMW Group that
employees are aware of and comply with applicable
legal regulations. The BMW Group does not tolerate
violations of the law by its employees. Culpable
violations of the law result in employment-contract
sanctions and may involve personal liability conse-
quences for the employee involved.
The BMW Group is committed to respecting interna-
tionally recognised human rights and gears its due dil-
igence process towards 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 stated its
position clearly back in 2005, with the Joint Decla-
ration on Human Rights and Working Conditions at
the BMW Group, which was updated in 2010. In 2018,
for further clarification, the BMW Group published
its Code on Human Rights and Working Conditions,
which strengthens the Company’s commitment to
human rights and outlines how it promotes human
rights and implements the core labour standards
of the ILO.
Corporate Governance 211
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 compensa-
tion system at the BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, executive management and employ-
ees 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, both 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 used 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 Board member,
the economic situation as well as the performance and
future prospects of the BMW Group. The Supervisory
Board sets ambitious and relevant parameters as the
basis for variable compensation. It also ensures that
variable components 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.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
The following section describes the principles govern-
ing the compensation of the Board of Management
for financial years since 2018. A description of the
stipulations set out in the Company’s statutes relat-
ing to the compensation of the Supervisory Board is
also provided. In addition to explaining the system of
compensation, details of components of compensation
are also provided with figures. Furthermore, the com-
pensation of each member of the Board of Management
and the Supervisory Board for the financial year 2019
is disclosed by individual member and analysed with
its component parts.
1. board of Management compensation
Responsibilities
The full Supervisory Board is responsible for determin-
ing and regularly reviewing the system and structure
of the Board of Management’s compensation as well
as for determining the compensation of individual
Board members. The Supervisory Board’s Personnel
Committee is responsible for the preparatory work
relating to those tasks.
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
especially 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 salary devel-
opment over time. During the consultative process,
consideration is also given to the recommendations
of an independent external remuneration expert as
well as to input from investors and analysts.
The Supervisory Board presents the compensation
system to the Annual General Meeting for shareholder
approval whenever significant changes are proposed,
but at least once every four years. The currently valid
compensation system was approved by the Annual
General Meeting in 2018.
212
Compensation
Report
Compensation system, compensation components
Board of Management compensation comprises fixed
and variable cash elements as well as a share-based
component. Retirement and surviving dependants’
benefit entitlements are also in place. The compensa-
tion components are described in more detail below.
overview of compensation system: depiction of
allocation to cash benefits (target compensation)
and pension contribution 1
• 76
in %
Pension contribution
approx. 8
Share-based
remuneration
approx. 14
Performance
Cash Plan
approx. 24
Base salary
approx. 27
Earn-
ings-based
component of
the bonus
approx. 8
Performance component
of the bonus approx. 19
1 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management and pension contribution. Excludes other remuneration.
Based on the assumption that the share price remains unchanged for the calculation of the
matching component.
overview of compensation system: depiction of
variable remuneration (target compensation) 2
• 77
in %
Share-based remuneration
approx. 22
Performance
Cash Plan
approx. 37
Earnings-based
component
of the bonus
approx. 12
Performance
component
of the bonus
approx. 29
2 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes basic salary, other remuneration and pension
contribution. Based on the assumption that the share price remains unchanged for the
calculation of the matching component.
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). With effect from the financial year 2018, the
base salary is € 0.8 million p. a. for a Board member
during 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 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 three components:
— bonus
— Performance Cash Plan and
— share-based remuneration
Payment of a discretionary additional bonus is not
provided for. An upper limit has been set for each
component of variable remuneration (see Overview of
compensation system and compensation components).
bonus
In the case of 100 % target achievement, the bonus
comprises an earnings-related component of 30 %
and a performance-related component of 70 %. The
target bonus (100 %) is € 0.85 million p. a. for a Board
member during the first period of office, € 1.0 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. For all Board members, the
upper limit of the bonus is set at 180 % of the relevant
target bonus.
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
(from the financial year 2022: earnings share of the
shareholders of BMW AG) and Group 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 of 1.8. The bonus is paid out after the end
of the Annual General Meeting, at which the sepa-
rate financial statements of BMW AG for the relevant
financial year are presented.
Corporate Governance 213
An earnings factor of 1.000 would give rise to a profit-
related component of € 0.255 million for a Board
member 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. For instance, in the event
of a Group net profit of € 5.3 billion and a post-tax
return on sales of 5.6 %, the earnings factor is 1.000.
Similarly, a Group net profit of € 6.9 billion and a post-
tax return on sales of 7.3 % gives rise to an earnings
factor of 1.500 and a Group net profit of € 9.0 billion
and a post-tax return on sales of 8.0 % to one of 1.637.
A minimum earnings factor of 0.135 arises in the
event of a Group net profit of € 3 billion and a post-
tax return on sales of 3 %. 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, a profit-related component would not be paid.
The maximum earnings factor of 1.800 is reached in
the event of a Group net profit of € 11 billion and
a post-tax return on sales of 9 %. In exceptional
circumstances, for instance major acquisitions or
disposals, the Supervisory Board may adjust the
earnings factor.
Earnings components: allocation table for calculating earnings factor 1
• 78
9.0 Upper limit
8.0
7.4
7.3
5.6
4.8
3.0 Lower limit
0.135
%
n
i
s
e
l
a
s
n
o
n
r
u
t
e
r
x
a
t
-
t
s
o
p
p
u
o
r
G
1.000
0.798 ³
1.637
1.800
1.520 ²
1.500
3.0
Lower limit
5.0
5.3
6.9 7.2
9.0
11.0
Upper limit
Group net profit after tax (in € billion)
1 Simplified depiction.
2 Earnings factor 2018.
3 Earnings factor 2019.
The performance-related component is calculated using
a performance factor which the Supervisory Board sets
for each member of the Board of Management and
which is multiplied by 70 % of the target bonus amount.
The Supervisory Board sets the performance factor on
the basis of a detailed evaluation of the contribution
made by Board members to sustain able 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 and stakeholders as well as social
responsibility.
The criteria include in particular innovation (economic
and ecological, for example in the reduction of car-
bon 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. The Supervisory
Board also draws comparisons with competitors. The
individual performance factor lies between zero and
a maximum 1.8.
214
Compensation
Report
Bonus overview
• 79
eARnInGS CoMponent bonuS
Earnings factor
x 0.3 of target amount
— Value between 0 and 1.8
Basis for earnings factor:
— Group net profit
— Group post-tax return on sales
+ peRFoRMAnCe CoMponent
Performance factor
x 0.7 of target amount
— Value between 0 and 1.8
= totAl
— Cash payment
— Capped at 180 %
of target amount
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
performance Cash plan
Since the financial year 2018, variable cash com-
pensation includes a multi-year and future-oriented
Performance Cash Plan (PCP). The PCP is calculated
at the end of a three-year evaluation period by mul-
tiplying a predefined target amount by a factor that
is based on multi-year target achievement (the PCP
factor). The PCP target amount (100 %) amounts to
€ 0.85 million p. a. for a Board member in the first
period of office, € 0.95 million p. a. from the second
period of office or the fourth year of mandate and
€ 1.6 million p. a. for the Chairman of the Board of
Management. 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. PCP
entitlements are paid in cash. The bonus is paid out
after the end of the Annual General Meeting, at which
the separate financial statements of BMW AG for the
third year of the evaluation period are presented.
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.
performance cash plan overview
• 80
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. The underlying
measurement values are determined in advance for
a period of three financial years and may not be
changed retrospectively.
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 of
in particular 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.
tARGet AMount
x pCp FACtoR
= CASh pAyMent
— Cash payment at end of evaluation period
— Capped at 180 % of target amount
Corporate Governance 215
pcp factor overview
• 81
MultI-yeAR eARnInGS FACtoR
— Average earnings factor
— Based on Group net profit and
Group post-tax return on sales
— Value between 0 and 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 and 1.1
area of responsibility
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 under spec-
ified circumstances. During that one-year period,
the former Board member is entitled to receive
monthly compensation equivalent to 60 % of his or
her previous base remuneration, reduced by any
amount of other income exceeding 40 % of the base
remuneration. The Company may unilaterally waive
the requirement to comply with the post-contractual
non-competition clause.
Members of the Board of Management who were
Board members on 1 January 2018 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 each relevant evaluation period,
the advance payment is set off or repaid, depending
on the amount then determined. The advance pay-
ment for each relevant year is € 0.5 million for a Board
member 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.
Share-based remuneration
At the end of the Annual General Meeting at which
the separate financial statements of BMW AG for the
relevant financial year are presented, members of the
Board of Management receive a cash compensation
(investment component) for the specific purpose of
investment – after tax and deductions – in shares of
common stock of BMW AG. The investment compo-
nent corresponds to 45 % of the gross bonus. The
shares of common stock are purchased immediately
after the investment component has been paid out.
As a general rule, the acquired shares are required
to be held by Board members for four years. This
period also applies if a Board member leaves the
Board of Management.
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 invest-
ment component and the matching component
(see Overview of compensation system and compen-
sation components).
216
Compensation
Report
overview of compensation system and compensation
components
Component
bASe SAlARy
Parameter / measurement base
Member of the Board of Management:
— € 0.80 million p. a. (first period of office)
— € 0.95 million p. a. (from second period of office or fourth year of mandate)
Chairman of the Board of Management:
— € 1.80 million p. a.
vARIAble ReMuneRAtIon
Bonus
(sum of earnings-related bonus and performance-related bonus)
a) Earnings-related bonus
(at 100 % target achievement corresponds to 30 % of target amount)
b) Performance-related bonus
(at 100 % target achievement corresponds to 70 % of target amount)
Target amount p. a. (at 100 % target achievement):
— € 0.85 million (first period of office)
— € 1.0 million (from second period of office or fourth year of mandate)
— € 1.8 million (Chairman of the Board of Management)
— Capped at 180 % of target amount, see section Remuneration caps
— Payment at the end of the Annual General Meeting at which the separate
financial statements of BMW AG are presented
— Formula: 30 % target amount x earnings factor
— Base amount p. a. (30 % target amount per bonus):
— € 0.255 million (first period of office)
— € 0.30 million (from second period of office or fourth year of mandate)
— € 0.54 million (Chairman of the Board of Management)
share of the shareholders of BMW AG) and Group post-tax return on sales
— Earnings factor is derived from Group net profit (from the financial year 2022: earnings
— Allocation table fixed in advance for a period of three financial years
— 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
— Maximum amount of earnings-related bonus p. a.:
return on sales of 5.6 %
— € 0.459 million (first period of office)
— € 0.54 million (from second period of office or fourth year of mandate)
— € 0.972 million (Chairman of the Board of Management)
— Formula: 70 % target amount x performance factor
— Base amount p. a. (70 % target amount per bonus):
— € 0.595 million (first period of office)
— € 0.70 million (from second period of office or fourth year of mandate)
— € 1.26 million (Chairman of the Board of Management)
— 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
development and the future viability of the Company over a period of at least three finan-
cial years
— 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
— Performance factor may not exceed 1.8
— Maximum amount of performance-related bonus p. a.:
— € 1.071 million (first period of office)
— € 1.26 million (from second period of office or fourth year of mandate)
— € 2.268 million (Chairman of the Board of Management)
Corporate Governance Component
Parameter / measurement base
217
vARIAble ReMuneRAtIon
Performance Cash Plan
a) Multi-year earnings factor
b) Multi-year performance factor
Share-based remuneration programme
a) Cash remuneration component
(investment component)
b) Share-based remuneration component
(matching component)
otheR ReMuneRAtIon
Target amount p. a. (at 100 % target achievement):
— € 0.85 million (first period of office)
— € 0.95 million (from second period of office or fourth year of mandate)
— € 1.6 million (Chairman of the Board of Management)
— Three-year evaluation period
— Capped at 180 % of target amount, see section Remuneration caps
— Formula: PCP factor x target amount
— PCP factor: multi-year earnings factor x multi-year performance factor
— PCP factor may not exceed 1.8
— Payment at the end of the Annual General Meeting at which the separate financial state-
ments of BMW AG for the third year of the evaluation period are presented
and Group post-tax return on sale
— 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
period, the forecast trend in business development, individual contribution to profitability
and the status of compliance within the Board member’s area of responsibility
— 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
— Requirement for Board of Management members to hold the acquired shares of common
gross bonus after tax and contributions in BMW AG common stock
stock for four years
— Earmarked cash remuneration amounting to 45 % of the gross bonus
— Cash remuneration p. a. at 100 % target achievement of the bonus:
— € 0.3825 million (first period of office)
— € 0.45 million (from second period of office or fourth year of mandate)
— € 0.81 million (Chairman of the Board of Management)
— Maximum remuneration, see section Remuneration caps
— Payment at the end of the Annual General Meeting at which the separate financial
— Share acquisition immediately after payment of earmarked cash remuneration
— Once the four-year holding period requirement is fulfilled, Board of Management mem-
statements of BMW AG for the relevant financial year are presented
bers receive for each three common stock shares held either – at the Company’s option –
one further share of common stock or the equivalent amount in cash
— Maximum remuneration, see section Remuneration caps
Contractual agreement, main points: non-cash benefits from use of Company car, insurance
premiums, contributions towards security systems
218
Compensation
Report
overview of compensation system and compensation
components onwards
RetIReMent And SuRvIvInG dependAntS’ beneFItS
Model
Principal features
Defined contribution system with guaranteed minimum rate of return
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: € 350,000
Chairman of the Board of Management: € 500,000
ReMuneRAtIon CA pS (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.
Retirement benefits
With effect from 1 January 2010, the provision of
retirement benefits for members of the Board of
Management was changed to a defined contribution
system with a guaranteed minimum return. Retire-
ment benefits remain unchanged as part of the new
compensation system applicable for financial years
from 2018 onwards, as they are appropriate and in
line with customary market practice.
If a mandate is terminated, the defined contribution
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.
For entitlements arising before 2016, there is an
option to receive payment as a lifelong pension or in
a combined form. Former Board members are entitled
to receive the retirement benefit at the earliest upon
reaching the age of 60, or in the case of entitlements
awarded for the first time 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 contributions
possible up to the age of 60 (subject to maximum of
ten contributions).
The annual contribution paid by the Company is
€ 350,000 for a Board member and € 500,000 for the
Chairman of the Board of Management. The guaran-
teed 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.
Corporate Governance 219
to € 0.06 million. The expected cash value of the match-
ing component for the relevant proportionate period in
the financial year 2020 amounts to € 0.05 million. The
Company will pay a pension contribution of € 0.2 mil-
lion for the period from the date of departure from the
Board of Management up to 31 December 2019 and a
corresponding proportionate amount of € 0.2 million
for the financial year 2020. Compensation for the
agreed one-year post-contractual non-competition
clause amounts to € 1.1 million. A provision has been
recognised for remuneration relating to the period
after 31 December 2019.
Ms Caiña Carreiro-Andree left the Board of Manage-
ment at the end of 31 October 2019 and was released
from her duties for the remaining period of her ser-
vice contract (until 30 June 2020). The proportionate
amount of base and other remuneration relating to
the period after her departure from the Board and
to the financial year 2019 amounts to € 0.2 million.
Fixed remuneration relating to the financial year 2020
amounts to € 0.5 million.
Contributions falling due under the defined contri-
bution model are paid into an external fund in con-
junction 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 instal-
ment payments. In addition, certain circumstances
have been specified, in the event of which the Com-
pany no longer has any obligation to pay benefits.
Transitional payments are not provided.
In the event of the death of a Board member during
the service contract term, the base remuneration
for the month of death and a maximum of three
further calendar months are paid to entitled surviving
dependants.
Members of the Board of Management who retire
immediately after their service on the Board, or
who are deemed to be in an equivalent position, 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 departments. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of departments, and depending on availability
and against payment, use BMW chauffeur services.
Termination benefits on premature termination of
Board activities, benefits paid by third parties
In agreement with the Supervisory Board, Mr Krüger
resigned from the Board of Management at the end of
15 August 2019 and was released from his duties for
the remaining term of his service contract, which ends
on 30 April 2020. The proportionate amount of base
and other remuneration relating to the period after
his departure from the Board and to the financial year
2019 amounted to € 0.7 million. The proportionate
amount of base remuneration relating to the finan-
cial year 2020 amounts to € 0.6 million. The expected
amount of variable cash remuneration (bonus, cash
component of share-based remuneration, PCP) for
the remaining term of the contract from the date
of departure from the Board of Management totals
€ 3.5 million, where necessary taking into account
forecast figures. This includes the bonus for the pe riod
from 16 August to 31 December 2019 amounting to
€ 0.8 million as well as the proportionate amount of
the cash component of remuneration (investment
component) for this period amounting to € 0.3 million.
The cash value of the cash component of share-based
remuneration (match ing component) for the period
from 16 August 2019 to 31 December 2019 amounts
Remuneration caps
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of members of the Board of Manage-
ment in total. The upper limits are shown in the table
Overview of compensation system and compensation
components.
The overall upper limits (caps) have not changed in
conjunction with the revised compensation system
for financial years from 2018 onwards and are lower
than the sum of the maximum amounts of the various
individual components.
Revision of board of Management compensation for
financial years from 2021 onwards
Regulations governing management board compen-
sation and the reporting thereof were again reformed
by lawmakers through the implementation of the EU’s
Second Shareholder Rights Directive (ARUG II). More-
over, the Government Commission on the German
Corporate Governance Code revised the recommenda-
tions and suggestions relating to management board
compensation in its revised version of the German
Corporate Governance Code dated 16 December 2019.
The Supervisory Board has examined the new regula-
tions and intends to revise the compensation system
for the Board of Management of BMW AG during the
financial year 2020. The revised compensation system
will be submitted for approval by the shareholders at
the Annual General Meeting held during the finan-
cial year 2021. The Supervisory Board will also take
account of input from investors when revising the
compensation system.
220
Compensation
Report
The expected amount of variable cash remuneration
(bonus, cash component of share-based remuneration,
PCP) for the remaining term of the contract from the
date of departure from the Board of Management totals
€ 1.9 million, where necessary taking into account
forecast figures. This includes a bonus for the period
from 1 November to 31 December 2019 amounting to
€ 0.2 million and the proportionate amount of the cash
component of remuneration (investment component)
for this period amounting to € 0.1 million. The cash
value of the cash remuneration component of the
share-based remuneration programme (matching
component) for the period from 1 November 2019
to 31 December 2019 amounts to € 0.01 million. The
expected cash value of the matching component for
the relevant proportionate period in the financial year
2020 amounts to € 0.05 million. The proportionate
amount of pension contribution for the 2019 and
2020 financial years is € 0.1 million and € 0.2 million
respectively. Compensation for the agreed one-year
non-competition clause amounts to € 0.6 million.
A provision has been recognised for remuneration
relating to the period after 31 December 2019.
Mr Schwarzenbauer left the Board of Management at
the end of 31 October 2019. Under the terms of his
service contract, a one-year post-contractual non-com-
petition clause applies. The proportionate amount of
compensation relating to the financial year 2019 is
€ 0.1 million. The corresponding figure for the remain-
ing period from 1 January 2020 to 31 October 2020 is
€ 0.5 million, for which a provision has been recognised.
In line with the recommendation of the German
Corporate Governance Code dated 7 February 2017,
Board of Management service contracts provide for
severance pay to be paid to the Board member in
the event of premature termination 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 base 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 2019 on account of their activities
as members of the Board of Management.
Corporate Governance 221
total compensation of the board of Management for
the financial year 2019 (2018)
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2019 amounted to € 21.4 million (2018: € 24.0 mil-
lion), of which € 8.1 million (2018: € 8.2 million) relates
to fixed components including other remuneration.
Variable components amounted to € 12.6 million (2018:
€ 15.0 million) and the share-based remuneration com-
ponent to € 0.7 million (2018: € 0.8 million).
The BMW Group achieved a net profit of € 5,022 mil-
lion (2018: € 7,207 million) and a post-tax return on
sales of 4.8 % (2018: 7.4 %). According to the defined
allocation table, these results yield an earnings factor
of 0.798 (2018: 1.520) for the earnings component
relevant for the bonus of members of the Board of
Management in office during the financial year 2019.
The Supervisory Board set a performance factor of
1.20 (2018: 1.20) for the performance component of
Board members for the financial year 2019.
In determining the performance factor, the Super-
visory Board uses various criteria to evaluate the
contribution of Board members to the sustainable
and long-term development and future viability of
the Company. In this context, the Supervisory Board
considers developments over recent years as well as
the impact of planning decisions going forward.
A central topic of focus was innovation performance,
particularly in the area of electrification. The Super-
visory Board took into account continuous growth in
the number of electrified vehicles delivered in recent
years as well as the measures taken to accelerate the
penetration of technologies relating to electrification,
including the opening of the new battery cell com-
petence centre. Also considered were the continuous
progress made in reducing the fleet’s CO2 emissions
as well as the planning decisions taken – such as
the development of the product portfolio – to ensure
compliance with emission thresholds. The develop-
ment of the market position was another focus area
of the evaluation. Here, the Supervisory Board took
into account in particular the BMW Group’s achieve-
ments in confirming its position as the world’s lead-
ing pre mium automobile manufacturer for the 16th
consecutive year and setting a new delivery volume
record for the ninth consecutive year. Furthermore,
the Supervisory Board also considered the Board
of Management’s decision to successively integrate
electrified models into the production system. The
focus on flexible plant structures is a prerequisite for
the further expansion of electrification. As part of the
evaluation of other performance criteria, the Supervi-
sory Board also assessed in particular the Company’s
ability to adapt to change, measured for example in
terms of developments in the area of cooperation
arrangements and strategic investments. In the area
of Corporate Social Responsibility, consideration
was given to the BMW Group’s activities to promote
children and young people through educational
programmes and road safety education as well as to
the BMW Group’s excellent performance in various
sustainability indices over a number of years. The
BMW Group’s attractiveness as an employer was eval-
uated by reference to various studies over a period of
several years, in which the BMW Group was ranked
among the top employers.
in € million
Amount
Proportion in %
Amount
Proportion in %
2019
2018
Fixed compensation
Variable cash compensation
Share-based compensation component*
Total compensation
8.1
12.6
0.7
21.4
37.8
58.9
3.3
100.0
8.2
15.0
0.8
24.0
34.2
62.5
3.3
100.0
* Matching component; provisional number / cash value calculated at grant date (date on which the entitlement became binding in accordance with German Accounting Standard 17 (DRS 17)).
The final number of matching shares is determined in each case when the requirement to invest in BMW AG common stock has been fulfilled.
The following table shows the compensation of the
members of the Board of Management in accordance
with commercial law and the accounting principles
required to be applied.
222
Compensation
Report
Compensation of the individual members
of the board of Management for the
financial year 2019 (2018)
in € or
number of matching shares
Base salary
Other
compensation
Total
Bonus
Share-based
compensation
component (invest-
ment component)
Performance
Cash Plan
2018 – 20208
Performance
Cash Plan
2019 – 20218
Total
Number
Monetary value
Fixed compensation
Variable cash compensation
Variable cash compensation
Share-based
compensation component
(matching component) 9
Compensation
Total
Oliver Zipse 1
Harald Krüger 2
Milagros Caiña Carreiro-Andree 3
Klaus Fröhlich
Ilka Horstmeier 4
Milan Nedeljković 5
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer 6
Andreas Wendt
Total 7
1,269,892
(900,000)
1,122,581
50,947
1,320,839
1,404,380
(24,994)
(924,994)
(1,231,200)
87,597
1,210,178
1,279,742
631,971
(554,040)
575,884
(1,800,000)
(22,392)
(1,822,392)
(2,332,800)
(1,049,760)
791,667
(950,000)
950,000
(950,000)
133,333
(–)
200,000
(–)
800,000
(800,000)
800,000
(800,000)
791,667
(950,000)
800,000
(200,000)
7,659,140
205,105
229,373
103,218
60,607
852,274
899,500
(74,964)
(1,024,964)
(1,296,000)
71,822
1,021,822
1,079,400
(64,033)
(1,014,033)
(1,296,000)
29,375
162,708
152,915
(–)
(–)
(–)
5,105
(–)
20,782
(90,369)
29,988
(38,612)
37,347
102,701
(13,029)
496,271
(–)
(–)
820,782
917,490
(890,369)
(1,101,600)
829,988
917,490
(838,612)
(1,101,600)
829,014
899,500
902,701
(213,029)
917,490
(275,400)
(51,777)
(1,001,777)
(1,296,000)
404,775
(583,200)
485,730
(583,200)
68,812
(–)
(–)
412,871
(495,720)
412,871
(495,720)
404,775
(583,200)
412,871
(123,930)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
2,036,351
(–)
(1,785,240)
1,855,626
(–)
(3,382,560)
1,304,275
(–)
(1,879,200)
1,565,130
(–)
(1,879,200)
221,727
332,591
(–)
(–)
1,330,361
(–)
(1,597,320)
1,330,361
(–)
(1,597,320)
1,304,275
(–)
(1,879,200)
1,330,361
(–)
(399,330)
12,611,058
(–)
(–)
–
–
–
–
–
–
–
–
–
–
–
1,725
(1,045)
1,346
(1,981)
1,016
(1,181)
1,135
(1,100)
173
(–)
280
(–)
1,036
(1,004)
965
(935)
1,016
(1,181)
1,036
(277)
9,728
103,037
3,460,227
(90,288)
(2,800,522)
93,870
3,159,674
(171,158)
(5,376,110)
70,856
2,227,405
(102,038)
(3,006,202)
79,155
2,666,107
(95,040)
(2,988,273)
12,013
396,448
(–)
(–)
(–)
(–)
72,251
2,223,394
(86,746)
(2,574,435)
67,299
2,227,648
(80,784)
(2,516,716)
70,856
2,204,145
(102,038)
(2,983,015)
72,251
2,305,313
(21,645)
(634,004)
659,614
21,426,083
(–)
(15,008,860)
(9,087)
(782,828)
(24,014,510)
Milagros Caiña Carreiro-Andree3
Oliver Zipse 1
Harald Krüger 2
Klaus Fröhlich
Ilka Horstmeier 4
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer6
Andreas Wendt
Total 7
18,026
555,722
Milan Nedeljković5
8,155,411
8,697,280
3,913,778
(7,801,613)
(421,209)
(8,222,822)
(10,350,938)
(4,657,922)
1 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
2 Member and Chairman of the Board of Management until 15 August 2019.
3 Member of the Board of Management until 31 October 2019.
4 Member of the Board of Management since 1 November 2019.
5 Member of the Board of Management since 1 October 2019.
6 Member of the Board of Management until 31 October 2019.
7 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2018.
8 PCP is paid out after the end of the relevant three-year evaluation period.
9 Provisional amount / cash value calculated at grant date (date on which the entitlement became binding in law in accordance with German Accounting Standard 17 (DRS 17).
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 41 to the Group Financial Statements
for a description of the accounting treatment of the share-based compensation component.
Corporate Governance in € or
number of matching shares
Base salary
compensation
Total
Other
Share-based
compensation
component (invest-
Bonus
ment component)
Performance
Cash Plan
2018 – 20208
Performance
Cash Plan
2019 – 20218
Total
Number
Monetary value
Fixed compensation
Variable cash compensation
Variable cash compensation
Share-based
compensation component
(matching component) 9
Compensation
Total
Milan Nedeljković 5
200,000
5,105
205,105
229,373
103,218
Oliver Zipse 1
Harald Krüger 2
Klaus Fröhlich
Ilka Horstmeier 4
Milagros Caiña Carreiro-Andree 3
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer 6
Andreas Wendt
Total 7
(1,800,000)
(22,392)
(1,822,392)
(2,332,800)
(1,049,760)
1,269,892
(900,000)
1,122,581
791,667
(950,000)
950,000
(950,000)
133,333
(–)
(–)
800,000
(800,000)
800,000
(800,000)
791,667
(950,000)
800,000
(200,000)
7,659,140
50,947
1,320,839
1,404,380
(24,994)
(924,994)
(1,231,200)
87,597
1,210,178
1,279,742
60,607
852,274
899,500
(74,964)
(1,024,964)
(1,296,000)
71,822
1,021,822
1,079,400
(64,033)
(1,014,033)
(1,296,000)
29,375
162,708
152,915
(–)
(–)
20,782
(90,369)
29,988
(38,612)
37,347
102,701
(13,029)
496,271
(–)
(–)
(–)
(–)
820,782
917,490
(890,369)
(1,101,600)
829,988
917,490
(838,612)
(1,101,600)
829,014
899,500
902,701
(213,029)
917,490
(275,400)
(51,777)
(1,001,777)
(1,296,000)
631,971
(554,040)
575,884
404,775
(583,200)
485,730
(583,200)
68,812
(–)
(–)
412,871
(495,720)
412,871
(495,720)
404,775
(583,200)
412,871
(123,930)
(7,801,613)
(421,209)
(8,222,822)
(10,350,938)
(4,657,922)
8,155,411
8,697,280
3,913,778
(–)
(–)
(–)
(–)
(–)
(–)
–
–
–
–
–
–
–
–
–
–
–
(–)
(–)
(–)
(–)
(–)
1 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
2 Member and Chairman of the Board of Management until 15 August 2019.
3 Member of the Board of Management until 31 October 2019.
4 Member of the Board of Management since 1 November 2019.
5 Member of the Board of Management since 1 October 2019.
6 Member of the Board of Management until 31 October 2019.
8 PCP is paid out after the end of the relevant three-year evaluation period.
7 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2018.
9 Provisional amount / cash value calculated at grant date (date on which the entitlement became binding in law in accordance with German Accounting Standard 17 (DRS 17).
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 41 to the Group Financial Statements
for a description of the accounting treatment of the share-based compensation component.
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
–
(–)
2,036,351
(1,785,240)
1,855,626
(3,382,560)
1,304,275
(1,879,200)
1,565,130
(1,879,200)
221,727
(–)
332,591
(–)
1,330,361
(1,597,320)
1,330,361
(1,597,320)
1,304,275
(1,879,200)
1,330,361
(399,330)
12,611,058
(15,008,860)
1,725
(1,045)
1,346
(1,981)
1,016
(1,181)
1,135
(1,100)
173
(–)
280
(–)
1,036
(1,004)
965
(935)
1,016
(1,181)
1,036
(277)
9,728
103,037
3,460,227
(90,288)
(2,800,522)
93,870
3,159,674
(171,158)
(5,376,110)
70,856
2,227,405
(102,038)
(3,006,202)
79,155
2,666,107
(95,040)
(2,988,273)
12,013
396,448
(–)
(–)
18,026
555,722
(–)
(–)
72,251
2,223,394
(86,746)
(2,574,435)
67,299
2,227,648
(80,784)
(2,516,716)
70,856
2,204,145
(102,038)
(2,983,015)
72,251
2,305,313
(21,645)
(634,004)
659,614
21,426,083
(9,087)
(782,828)
(24,014,510)
223
Oliver Zipse 1
Harald Krüger 2
Milagros Caiña Carreiro-Andree3
Klaus Fröhlich
Ilka Horstmeier 4
Milan Nedeljković5
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer6
Andreas Wendt
Total 7
224
Compensation
Report
In addition to the disclosures required by German
commercial law and the accounting principles required
to be applied, the following tables show the amounts
awarded and payments made to individual members
of the Board of Management in accordance with the
requirements of the German Corporate Governance
Code in the version dated 7 February 2017.
Oliver Zipse
Chairman of the board of Management
since 16 August 2019
Member of the board of Management
since 13 May 2015
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
1,269,892
1,269,892
1,269,892
900,000
1,269,892
900,000
Fringe benefits (other compensation)
50,947
50,947
50,947
24,994
50,947
24,994
Total
1,320,839
1,320,839
1,320,839
924,994
1,320,839
924,994
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
390,323
0
702,581
285,000
311,477
433,200
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
910,753
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
–
1,194,624
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
–
585,484
Share-based remuneration component
(matching component) 2015 for holding obligation 2016 – 2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017 – 2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018 – 2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
–
–
–
103,037
–
–
0
–
0
–
0
–
–
–
–
0
–
–
665,000
–
798,000
1,639,355
–
1,092,903
–
–
916,667
–
566,666
2,150,323
712,900
–
–
427,500
–
554,040
1,053,871
–
–
–
–
526,935
–
–
–
–
–
90,288
–
–
631,971
–
–
–
–
–
–
–
–
–
–
–
–
–
4,505,060
1,320,839
7,393,904
3,309,449
4,070,090
3,276,900
406,452
406,452
406,452
353,289
406,452
353,289
Total compensation
4,911,512
1,727,291
7,137,097 4
3,662,738
4,476,542
3,630,189
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Corporate Governance 225
Harald Krüger
Chairman of the board of Management
13 May 2015 until 15 August 2019
Member of the board of Management
since 1 december 2008 until 13 May 2015
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
1,122,581
1,122,581
1,122,581
1,800,000
1,122,581
1,800,000
Fringe benefits (other compensation)
87,597
87,597
87,597
22,392
87,597
22,392
Total
1,210,178
1,210,178
1,210,178
1,822,392
1,210,178
1,822,392
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
336,774
336,774
606,194
540,000
336,774
820,000
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
–
–
1,260,000
–
1,512,000
Performance component of the bonus 2019 (three-year plan term) 1
903,677
903,677
1,414,452
–
942,968
–
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
–
997,849
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
–
–
0
–
–
1,600,000
–
900,000
1,796,129
–
561,290
–
–
810,000
–
1,049,760
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
558,203
558,203
909,290
Share-based remuneration component
(matching component) 2013 for holding obligation 2014 – 2018
Share-based remuneration component
(matching component) 2014 for holding obligation 2015 – 2019
Share-based remuneration component
(matching component) 2015 for holding obligation 2016 – 2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017 – 2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018 – 2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
93,870
91,011
454,645
–
–
–
–
–
–
–
–
–
171,158
–
–
575,884
–
–
88,157
57,105
–
–
–
–
–
–
–
–
–
–
–
–
–
4,100,551
3,099,843
6,390,888
6,203,550
3,684,199
6,192,309
316,758
316,758
316,758
504,831
316,758
504,831
Total compensation
4,417,309
3,416,601
6,143,011 4
6,708,381
4,000,957
6,697,140
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
226
Compensation
Report
Milagros Caiña Carreiro-Andree
human Resources, Industrial Relations director
Member of the board of Management
1 July 2012 until 31 october 2019
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
791,667
791,667
791,667
950,000
791,667
950,000
Fringe benefits (other compensation)
60,607
60,607
60,607
74,964
60,607
74,964
Total
852,274
852,274
852,274
1,024,964
852,274
1,024,964
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
250,000
0
450,000
300,000
199,500
456,000
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
–
–
700,000
–
840,000
Performance component of the bonus 2019 (three-year plan term) 1
700,000
700,000
1,050,000
–
700,000
–
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
–
791,667
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
–
–
0
–
–
950,000
–
600,000
1,425,000
–
500,000
–
–
450,000
–
583,200
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
375,000
315,000
675,000
Share-based remuneration component
(matching component) 2013 for holding obligation 2014 – 2018
Share-based remuneration component
(matching component) 2014 for holding obligation 2015 – 2019
Share-based remuneration component
(matching component) 2015 for holding obligation 2016 – 2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017 – 2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018 – 2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
70,856
55,095
337,500
–
–
–
–
–
–
–
–
–
102,038
–
–
404,775
–
–
81,130
52,520
–
–
–
–
–
–
–
–
–
–
–
–
–
3,039,797
1,922,369
4,789,774
3,527,002
2,709,069
3,585,294
295,446
295,446
295,446
354,224
295,446
354,224
Total compensation
3,335,243
2,217,815
4,583,333 4
3,881,226
3,004,515
3,939,518
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Corporate Governance 227
Klaus Fröhlich
development
Member of the board of Management
since 9 december 2014
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
950,000
950,000
950,000
950,000
950,000
950,000
Fringe benefits (other compensation)
71,822
71,822
71,822
64,033
71,822
64,033
Total
1,021,822
1,021,822
1,021,822
1,014,033
1,021,822
1,014,033
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
300,000
0
540,000
300,000
239,400
456,000
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
700,000
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2014 for holding obligation 2015 – 2019
Share-based remuneration component
(matching component) 2015 for holding obligation 2016 – 2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017 – 2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018 – 2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
950,000
–
450,000
–
–
–
–
–
79,155
–
–
0
–
0
–
0
–
–
–
–
–
0
–
–
700,000
–
840,000
1,260,000
–
840,000
–
–
950,000
–
600,000
1,710,000
–
600,000
–
–
450,000
–
583,200
810,000
–
–
–
–
–
405,000
–
–
–
–
–
–
95,040
–
–
485,730
2,966
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,500,977
1,021,822
5,746,822
3,509,073
3,189,918
3,493,233
353,327
353,327
353,327
353,119
353,327
353,119
Total compensation
3,854,304
1,375,149
5,500,000 4
3,862,192
3,543,245
3,846,352
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
228
Compensation
Report
Ilka Horstmeier
human Resources, Industrial Relations director
Member of the board of Management
since 1 november 2019
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
Fringe benefits (other compensation)
Total
133,333
133,333
133,333
29,375
29,375
29,375
162,708
162,708
162,708
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
42,500
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
99,167
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
141,667
–
63,750
12,013
–
0
–
0
–
0
–
0
0
–
76,500
–
178,500
–
255,000
–
114,750
57,417
–
521,805
162,708
844,875
58,333
58,333
58,333
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
133,333
29,375
162,708
33,915
–
119,000
–
0
–
68,812
–
–
384,435
58,333
442,768
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total compensation
580,138
221,041
820,833 4
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Corporate Governance Milan Nedeljković
production
Member of the board of Management
since 1 october 2019
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
229
bASe SAlARy
Fixed compensation
Fringe benefits (other compensation)
Total
200,000
200,000
200,000
5,105
5,105
5,105
205,105
205,105
205,105
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
63,750
0
114,750
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
148,750
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
212,500
–
95,625
18,026
–
–
0
–
0
–
0
0
–
–
267,750
–
382,500
–
172,125
86,125
–
743,756
205,105
1,228,355
87,500
87,500
87,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
200,000
5,105
205,105
50,873
–
178,500
–
0
–
103,218
–
–
537,696
87,500
625,196
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total compensation
831,256
292,605
1,231,250 4
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
230
Compensation
Report
Pieter Nota
Customer, brands, Sales
Member of the board of Management
since 1 April 2018
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
800,000
800,000
800,000
800,000
800,000
800,000
Fringe benefits (other compensation)
20,782
20,782
20,782
90,396
20,782
90,396
Total
820,782
820,782
820,782
890,396
820,782
890,396
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
255,000
0
459,000
255,000
203,490
387,600
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
595,000
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
850,000
–
382,500
–
72,251
–
–
0
–
0
–
0
–
0
–
–
595,000
–
714,000
1,071,000
–
714,000
–
–
850,000
–
500,000
1,530,000
–
500,000
–
–
382,500
–
495,720
688,500
–
412,871
–
86,746
344,500
–
–
–
–
–
–
–
–
–
–
2,975,533
820,782
4,913,782
3,059,642
2,651,143
2,987,716
359,979
359,979
359,979
350,000
359,979
350,000
Total compensation
3,335,512
1,180,761
4,925,000 4
3,409,642
3,011,122
3,337,716
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Corporate Governance 231
Nicolas Peter
Finance
Member of the board of Management
since 1 January 2017
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
800,000
800,000
800,000
800,000
800,000
800,000
Fringe benefits (other compensation)
29,988
29,988
29,988
38,612
29,988
38,612
Total
829,988
829,988
829,988
838,612
829,988
838,612
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
255,000
0
459,000
255,000
203,490
387,600
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
595,000
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2017 for holding obligation 2018 – 2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
850,000
–
382,500
–
–
67,299
–
–
0
–
0
–
0
–
–
0
–
–
595,000
–
714,000
1,071,000
–
714,000
–
–
850,000
–
500,000
1,530,000
–
500,000
–
–
382,500
–
495,720
688,500
–
–
344,500
–
–
–
80,784
–
–
412,871
–
–
–
–
–
–
–
–
–
2,979,787
829,988
4,922,988
3,001,896
2,660,349
2,935,932
353,327
353,327
353,327
353,119
353,327
353,119
Total compensation
3,333,114
1,183,315
4,925,000 4
3,355,015
3,013,676
3,289,051
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
232
Compensation
Report
Peter Schwarzenbauer
transformation electromobility
Member of the board of Management
since 1 April 2013 until 31 october 2019
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
791,667
791,667
791,667
950,000
791,667
950,000
Fringe benefits (other compensation)
37,347
37,347
37,347
51,777
37,347
51,777
Total
829,014
829,014
829,014
1,001,777
829,014
1,001,777
one-yeAR vARIAble ReMuneRAtIon
Earnings-based component of the bonus 1
250,000
0
450,000
300,000
199,500
456,000
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
583,333
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2013 for holding obligation 2014 – 2018
Share-based remuneration component
(matching component) 2014 for holding obligation 2015 – 2019
Share-based remuneration component
(matching component) 2015 for holding obligation 2016 – 2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017 – 2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018 – 2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
791,667
–
375,000
–
–
–
–
–
–
70,856
–
–
0
–
0
–
0
–
–
–
–
–
–
0
–
–
700,000
–
840,000
1,050,000
–
700,000
–
–
950,000
–
600,000
1,425,000
–
500,000
–
–
450,000
–
583,200
675,000
–
–
–
–
–
–
337,500
–
–
–
–
–
–
–
102,038
–
–
404,775
–
–
60,779
52,520
–
–
–
–
–
–
–
–
–
–
–
–
–
2,899,870
829,014
4,766,514
3,503,815
2,685,809
3,541,756
291,667
291,667
291,667
353,119
291,667
353,119
Total compensation
3,191,537
1,120,681
4,583,333 4
3,856,934
2,977,476
3,894,875
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Corporate Governance 233
Andreas Wendt
purchasing and Supplier network
Member of the board of Management
since 1 october 2018
in €
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
FY 2018
Grants
Payout
bASe SAlARy
Fixed compensation
Fringe benefits (other compensation)
Total
one-yeAR vARIAble ReMuneRAtIon
800,000
102,701
800,000
102,701
800,000
102,701
200,000
800,000
200,000
13,029
102,701
13,029
902,701
902,701
902,701
213,029
902,701
213,029
Earnings-based component of the bonus 1
255,000
0
459,000
63,750
203,490
96,900
MultI-yeAR vARIAble ReMuneRAtIon
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term) 1
–
Performance component of the bonus 2019 (three-year plan term) 1
595,000
Performance Cash Plan
PCP 2018 – 2020 2
PCP 2019 – 2021 2
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019 – 2023 1
Cash remuneration component
(investment component) 2019 for holding obligation 2020 – 2024 1
Share-based remuneration component
(matching component) 2018 for holding obligation 2019 – 2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020 – 2024
Other
Total
Pension expense 3
–
850,000
–
382,500
–
72,251
–
–
0
–
0
–
0
–
0
–
–
148,750
–
178,500
1,071,000
–
714,000
–
212,500
1,530,000
–
–
95,625
–
0
–
688,500
–
412,871
–
21,645
344,500
–
–
–
–
–
–
–
0
–
123,930
–
–
–
–
3,057,452
902,701
4,995,701
755,299
2,233,062
612,359
353,327
353,327
353,327
132,500
353,327
132,500
Total compensation
3,410,779
1,256,028
4,925,000 4
887,799
2,586,389
744,859
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019 – 2021 and the PCP 2018 – 2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
234
Compensation
Report
For financial years from 2018 onwards, a new variable
compensation component was introduced in the form
of the Performance Cash Plan. The PCP is paid out after
the end of the relevant three-year evaluation pe riod. In
the case of the PCP for the financial year 2019, the eval-
uation period covers the financial years 2019 to 2021.
The target amount for the PCP 2019 – 2021 is € 1.195 mil-
lion for Mr Zipse, € 0.95 million for Mr Fröhlich,
€ 0.142 million for Ms Horstmeier, € 0.213 million for
Mr Nedeljković and € 0.85 million each for Mr Nota,
Dr Peter and Dr Wendt. The proportionate amount of
the target amount is € 0.998 million for Mr Krüger and
€ 0.792 million each for Ms Caiña Carreiro-Andree and
Mr Schwarzenbauer. Due to the fact that the criteria for
the evaluation period 2019 to 2021 have not yet been
fully met, this component is not included in variable
compensation for the financial year 2019.
In the financial year 2019, advance payments totalling
€ 4.27 million were made to the members of the
Board of Management, who belonged to the Board at
1 January 2018, for the PCP 2018 – 2020. This figure
includes advance payments to Mr Krüger, Ms Caiña
Carreiro-Andree and Mr Schwarzenbauer totalling
€ 2.10 million.
At the end of each relevant evaluation period, the
advance payments are set off or repaid, depending
on the amount then determined. In the financial year
2019, an expense of € 8.3 million (2018: € 5.3 million)
was recognised for the PCP in accordance with IAS 19.
Members of the Board of Management hold a total of
92,519 shares of BMW common stock (2018: 65,690)
which are subject to holding requirements relating
to the financial years 2015 – 2018 (cash remuneration
components 2015 – 2018). The cash remuneration
component for the financial year 2019 will be paid
after the Annual General Meeting 2020. The purchase
of shares of BMW common stock takes place imme-
diately thereafter.
Corporate Governance Shares of BMW common stock held by individual
members of the board of Management subject to
holding requirements in connection with share-based
remuneration for the financial years 2015 – 2018 1
in €
Oliver Zipse 2
Harald Krüger 3
Milagros Caiña Carreiro-Andree 4
Klaus Fröhlich
Ilka Horstmeier 5
Milan Nedeljković 6
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer 7
Andreas Wendt
Total
235
Total1
11,938
(7,821)
24,788
(19,528)
15,608
(13,294)
13,305
(9,106)
–
(–)
–
(–)
3,954
(–)
6,736
(3,053)
15,202
(12,888)
988
(–)
92,519
(65,690)
1 Only takes into account shares of BMW common stock acquired with the cash remuneration component relating to the Board of Management’s
share-based remuneration programme and for which the four-year holding requirement has not yet expired.
2 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
3 Member and Chairman of the Board of Management until 15 August 2019.
4 Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
In addition, an expense of € 2.9 million (2018: € 3.4 mil-
lion) was recognised in the financial year 2019 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 in accordance with IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2019 amounted to € 16.0 million (2018:
€ 9.2 million). This total figure of former members
of the Board of Management also includes amounts
totalling € 10.3 million, as reported above, in con-
nection with the departure of Mr Krüger, Ms Caiña
Carreiro-Andree and Mr Schwarzenbauer from the
Board of Management. Some of these amounts have
not yet been paid.
Pension obligations to former members of the Board
of Management and their surviving dependants are
fully covered by pension provisions amounting to
€ 113.1 million (2018: € 91.0 million), recognised in
accordance with IAS 19.
236
Compensation
Report
Share-based component of the individual members
of the board of Management for the
financial year 2019 (2018) 1
in €
Oliver Zipse 2
Harald Krüger 3
Milagros Caiña Carreiro-Andree 4
Klaus Fröhlich
Ilka Horstmeier 5
Milan Nedeljković 6
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer 7
Andreas Wendt
Total 8
Expense in 2019
in accordance with
HGB and IFRS
Provision at
31. 12. 2019 in
accordance with
HGB and IFRS1
135,272
(29,002)
170,267
(30,821)
143,912
(46,218)
104,384
(– 19,097)
668
(–)
1,516
(–)
76,736
(23,661)
150,428
(51,812)
139,649
(32,264)
34,672
(1,632)
358,043
(222,771)
571,504
(458,341)
359,649
(268,257)
356,008
(254,591)
668
(–)
1,516
(–)
100,397
(23,661)
231,415
(80,987)
441,254
(354,125)
36,304
(1,632)
957,504
2,456,758
(274,927)
(1,786,110)
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2019 (€ 73.14) (fair value at reporting date).
2 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
3 Member and Chairman of the Board of Management until 15 August 2019.
4 Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
8 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2018.
Corporate Governance pension entitlements
in €
Oliver Zipse 2
Harald Krüger 3
Milagros Caiña Carreiro-Andree 4
Klaus Fröhlich
Ilka Horstmeier 5
Milan Nedeljković 6
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer 7
Andreas Wendt
Total 8
237
Service cost in
accordance with
IFRS for the
financial year 20191
Service cost in
accordance with
HGB for the
financial year 20191
Defined benefit
obligation IFRS1
Defined benefit
obligation HGB1
406,452
(353,289)
316,758
(504,831)
406,452
3,054,273
3,054,125
(356,550)
(2,298,444)
(2,298,405)
319,966
7,259,148
7,259,148
(509,486)
(5,753,913)
(5,753,776)
295,446
297,688
3,463,676
3,463,676
(354,224)
(357,468)
(2,561,031)
(2,560,943)
353,327
(353,119)
58,333
(–)
87,500
(–)
359,979
(350,000)
353,327
(353,119)
355,573
3,256,267
3,256,267
(356,382)
(2,660,630)
(2,660,630)
58,333
993,548
992,662
(–)
(–)
(–)
87,500
1,421,605
1,421,152
(–)
(–)
(–)
362,125
760,562
760,306
(350,000)
(350,276)
(350,041)
355,573
2,656,550
2,656,550
(356,382)
(2,004,567)
(2,004,567)
291,667
291,667
2,682,925
2,682,925
(353,119)
(356,382)
(2,188,161)
(2,188,159)
353,327
(132,500)
355,573
2,414,082
2,414,082
(132,500)
(1,886,766)
(1,886,766)
2,876,116
2,890,450
27,962,636
27,960,893
(2,754,201)
(2,775,150)
(19,703,788)
(19,703,287)
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 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
3 Member and Chairman of the Board of Management until 15 August 2019.
4 Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
8 Prior year’s figures comprise only members of the Board of Management at 31 December 2018.
238
Compensation
Report
2. Supervisory board compensation
Responsibilities, provisions of Articles of
Incorporation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation 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
www.bmwgroup.com
Incorporation, which are available at
within the section “Company” (menu items “Company
Portrait” and “Corporate Governance”) as well as in
“BMW Group Download Centre”.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-
related 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 exceeds 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 earnings-related compensation. The limit for a
member of the Supervisory Board with no additional
compensation-relevant function is set at € 140,000.
With fixed compensation elements and an earnings-
related compensation component oriented toward
sustainable growth, the compensation structure in
place for BMW AG’s Supervisory Board complies with
the recommendation on supervisory board compensa-
tion contained in section 5.4.6 paragraph 2 sentence 2
of the German Corporate Governance Code (version
dated 7 February 2017).
The German Corporate Governance Code (version
dated 7 February 2017) also recommends in sec-
tion 5.4.6 paragraph 1 sentence 2 that the exercising
of chair and deputy chair positions in the Supervisory
Board as well as the chair and membership of commit-
tees 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 Deputy
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.
Corporate Governance total compensation of the Supervisory board for the
financial year 2019
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2019 totalled
€ 5.6 million (2018: € 5.6 million). This includes fixed
remuneration of € 2.0 million (2018: € 2.0 million)
and variable remuneration of € 3.6 million (2018:
€ 3.6 million). The earnings-related remuneration for
the financial year 2019 was capped at the maximum
amount stipulated in the Articles of Incorporation.
239
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.
2019
2018
Amount
Proportion in %
Amount
Proportion in %
2.0
3.6
5.6
35.7
64.3
100.0
2.0
3.6
5.6
35.7
64.3
100.0
240
Compensation of the individual members of the
Supervisory Board for the financial year 2019 (2018)
Compensation
Report
in €
Fixed
compensation
Attendance fee
Variable
compensation
Norbert Reithofer (Chairman)
Manfred Schoch (Deputy Chairman) 1
Stefan Quandt (Deputy Chairman)
Stefan Schmid (Deputy Chairman) 1
Karl-Ludwig Kley (Deputy Chairman)
Christiane Benner 1
Kurt Bock
Verena zu Dohna-Jaeger 1, 2
Franz Haniel 3
Ralf Hattler 3
Heinrich Hiesinger
Reinhard Hüttl 4
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
(43,656)
43,844
(–)
26,344
(70,000)
26,344
(70,000)
70,000
(70,000)
70,000
(70,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(8,000)
8,000
(10,000)
10,000
(8,000)
10,000
(8,000)
8,000
(–)
2,000
(8,000)
2,000
(10,000)
10,000
(10,000)
8,000
420,000
(420,000)
280,000
(280,000)
280,000
(280,000)
280,000
(280,000)
280,000
(280,000)
140,000
(140,000)
140,000
(87,312)
87,688
(–)
52,688
52,688
(140,000)
140,000
(140,000)
122,000 4
1 These employee representatives have – in line with the guidelines of the Deutscher Gewerkschaftsbund – requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of the Supervisory Board since 16 May 2019.
3 Member of the Supervisory Board until 16 May 2019.
4 Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that such compensation exceeds the amount of € 200,000
(excluding value added tax) p. a.
(10,000)
(120,000)
(140,000)
(218,000)
Total
640,000
(640,000)
430,000
(430,000)
430,000
(430,000)
430,000
(428,000)
428,000
(430,000)
220,000
(218,000)
220,000
(138,968)
139,532
(–)
81,032
81,032
(220,000)
220,000
(220,000)
200,000
(200,000)
Corporate Governance Compensation of the individual members of the
Supervisory Board for the financial year 2019 (2018)
241
in €
Susanne Klatten
Renate Köcher
Horst Lischka 1
Willibald Löw 1
Simone Menne
Dominique Mohabeer 1
Brigitte Rödig 1
Vishal Sikka 2
Jürgen Wechsler 1, 3
Thomas Wittig 2
Werner Zierer 1
Total 4
Fixed
compensation
Attendance fee
Variable
compensation
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)
43,844
(–)
26,344
(70,000)
43,844
(–)
70,000
(70,000)
1,820,564
10,000
(8,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(8,000)
10,000
(10,000)
10,000
(10,000)
8,000
(–)
2,000
(8,000)
8,000
(–)
10,000
(10,000)
196,000
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
87,688
(–)
52,688
(140,000)
87,688
(–)
140,000
(140,000)
Total
220,000
(218,000)
220,000
(220,000)
220,000
(220,000)
220,000
(220,000)
220,000
(218,000)
220,000
(220,000)
220,000
(220,000)
139,532
(–)
81,032
(218,000)
139,532
(–)
220,000
(220,000)
3,623,128
5,639,692
1 These employee representatives have – in line with the guidelines of the Deutscher Gewerkschaftsbund – requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of the Supervisory Board since 16 May 2019.
3 Member of the Supervisory Board until 16 May 2019.
4 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2018.
(1,820,188)
(188,000)
(3,620,377)
(5,628,565)
3. other
With the exception of purchase, rental, leasing and
financing contracts for vehicles on customary terms
and conditions and the advance payments relating to
the PCP 2018 – 2020 described above, neither BMW AG
nor any of its subsidiaries granted loans or advances to
members of the Board of Management or the Super-
visory Board during the financial year 2019, nor were
any contingent liabilities entered into on their behalf.
Revision of Supervisory board compensation for
financial years from 2020 onwards
The Supervisory Board and Board of Management
propose to submit a proposal to the Annual General
Meeting 2020 to change Supervisory Board compensa-
tion for financial years beginning after 1 January 2020
to an exclusively fixed compensation. The proposal of
an exclusively fixed compensation model also corre-
sponds to the new suggestion for supervisory board
remuneration put forward by the Government Com-
mission on the German Corporate Governance Code
in the Code version dated 16 December 2019, section
G.18. The proposed model is intended to strengthen
the independent advisory and control function of the
Supervisory Board. At the same time, the proposal will
also help to simplify the compensation system.
A detailed description of the proposal will be included
in the invitation to the Annual General Meeting 2020.
242
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.
Cash flow hedge
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
CO2 fleet emissions
The calculation of average CO2 fleet emissions of a
manufacturer is reported through the weighted aver-
age of CO2 emissions by all vehicles newly registered
in the reporting period. The calculation is based on
the volume of new registrations of the manufacturer
in the EU in the calendar year as well as the individual
vehicle- specific CO2 emissions, which have been cal-
culated based on the WLTP test cycle and adapted to
the New European Driving Cycle (NEDC). Additional
effects from the recognition of eco-innovations are not
taken into consideration in the disclosure of fleet emis-
sions for 2019. For the 2020 forecast, the disclosure
relates purely to a reduction of the CO2 fleet emissions
and not the CO2 fleet limit, which the BMW Group
needs to achieve. This means that the recognition of
super credits, phase-in and eco-innovations is not part
of the forecast.
Capital expenditure ratio
Investments in property, plant and equipment and
other intangible assets (excluding capitalised devel-
opment costs) as a percentage of Group revenues.
Commercial paper
Short-term debt instruments with a term of less than
one year which are usually issued at a discount to
their face value.
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.
Cash flow at risk
Similar to “value at risk” (see definition below).
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.
Corporate Governance 243
EBIT
Abbreviation for “Earnings Before Interest and Taxes”,
equivalent in the BMW Group income statement to
“Profit / loss before financial result”. This is comprised
of revenues less cost of sales, selling and administra-
tive expenses and the net amount of other operating
income and expenses.
EBIT margin
Profit / loss before financial result as a percentage of
revenues.
EBT
EBIT plus financial result.
Effective tax rate
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Equity ratio
Equity capital as a percentage of the balance sheet
total.
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.
Deliveries
A new or used vehicle will be recorded as a deliv-
ery once handed over to the end user (which also
includes leaseholders under lease contracts with
BMW Financial Services). In the US and Canada, end
users also include (1) dealers when they designate a
vehicle as a service loaner or demonstrator vehicle
and (2) dealers and other third parties when they
purchase a company vehicle at auction and dealers
when they purchase company vehicles directly from
BMW Group. Deliveries may be made by BMW AG,
one of its international subsidiaries, a BMW Group
retail outlet, or independent third party dealers. The
vast majority of deliveries – and hence the reporting
to BMW Group of deliveries – is made by independent
third party dealers. Retail vehicle deliveries during
a given reporting period do not correlate directly to
the revenue that BMW Group recognises in respect
of such reporting period.
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.
244
Glossary –
Explanation
of Key Figures
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.
Free cash flow
Free cash flow is derived from cash flows from oper-
ating and investing activities. The cash flows from
investing activities from the purchase and sale of
marketable securities and investment funds is not
included. Cash flows from the purchase and sale of
shares and the dividend payout from investments
accounted for using the equity method are included
in the cash flows from investing activities.
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 profit 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.
Research and development locations
The engineering, IT and process expertise required for
the (pre-)development of hardware and software for
all BMW Group products and services is combined at
the Group’s international research and development
locations.
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 – at the end of the last five quar-
ters – in the segment concerned. Capital employed
corresponds to the sum of all current and non-current
operational assets, less liabilities that generally do not
incur interest.
Corporate Governance 245
Return on equity (RoE)
RoE in the Financial Services segment is calculated
as segment profit before taxes, divided by the aver-
age amount of equity capital – at the end of the last
five quarters – 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.
Vocational and further training
Comprises in-house vocational training provided by
the BMW Group in 11 countries as well as the further
training of BMW Group employees and temporary
staff working for consolidated companies worldwide.
Workforce size
The BMW Group’s workforce comprises the employees
of BMW AG and those of all companies in which it
holds a majority interest, irrespective of the treat-
ment of those companies for consolidation purposes.
Employees with dormant employment contracts,
employees in the non-work phases of pre-retirement
part-time working arrangements and low-income
earners are not included.
246
Responsibility
Statement by the
Company’s Legal
Representatives
Independent
Auditor’s Report
RESPONSIBILITY
STATEMENT BY THE
COMPANY’S LEGAL
REPRESENTATIVES
Statement pursuant to § 117 No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
5 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, 16 March 2020
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Oliver Zipse
Klaus Fröhlich
Ilka Horstmeier
Dr. Milan Nedeljković
Pieter Nota
Dr. Nicolas Peter
Dr.-Ing. Andreas Wendt
Corporate Governance INDEPENDENT
AUDITOR’S REPORT
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
Report on the Audit of the Consoli-
dated Financial Statements and of
the Group Management Report
Audit Opinions
We have audited the consolidated financial statements
of Bayerische Motoren Werke Aktiengesellschaft,
Munich, and its subsidiaries (the Group), which com-
prise the consolidated balance sheet as at Decem-
ber 31, 2019, the consolidated income statement,
consolidated statement of comprehensive income,
consolidated statement of changes in equity and
consolidated statement of cash flows for the financial
year from January 1 to December 31, 2019, and notes
to the consolidated financial statements, including a
summary of significant accounting policies.
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 IFRS as adopted by the EU, and the addi-
tional requirements of German commercial
law pursuant to § [Article] 315e Abs. [paragraph] 1
HGB [Handelsgesetzbuch: German Commer-
cial Code] and, in compliance with these require-
ments, give a true and fair view of the assets,
liabilities, and financial position of the Group as
at December 31, 2019, and of its financial per-
formance for the financial year from January 1
to December 31, 2019, and
247
— 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 audit opinion on
the group management report does not cover
the content of those parts of the group man-
agement report listed in the “Other Information”
section of our auditor’s report.
Pursuant to § 322 Abs. 3 Satz [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 manage-
ment report.
Basis for the Audit Opinions
We conducted our audit of the consolidated financial
statements and of the group management report
in accordance with § 317 HGB and the EU Audit
Regulation (No. 537 / 2014, referred to subsequently
as “EU Audit Regulation”) in compliance with Ger-
man 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
responsibilities in accordance with these require-
ments. 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 audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
audit opinions on the consolidated financial state-
ments and on the group management report.
248
Independent
Auditor’s Report
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the consolidated financial statements
for the financial year from January 1 to December 31,
2019. These matters were addressed in the context
of our audit of the consolidated financial state-
ments as a whole, and in forming our audit opinion
thereon; we do not provide a separate audit opinion
on these matters.
In our view, the matters of most significance in our
audit were as follows:
— Measurement of leased products
— Valuation of receivables from sales financing
— Valuation of provisions for statutory and non-
statutory warranty obligations and product
guarantees
— Measurement and recognition of YOUR NOW
equity investments
— Measurement of provision for risks relating to
an EU antitrust proceeding
Our presentation of these key audit matters has been
structured in each case as follows:
— Matter and issue
— Audit approach and findings
— Reference to further information
Hereinafter we present the key audit matters:
Measurement of leased products
The BMW Group leases vehicles to end customers
under operating leases (leased products). At the
balance sheet date, the figure reported under the
“leased products” line item for operating leases was
EUR 42,609 million (approximately 18.7 % of total
assets). Leased products are measured at cost, which is
depreciated on a straight-line basis over the lease term
to the expected residual value (recoverable amount). A
key estimated value for subsequent measurement of
leased products is the expected residual value at the
end of the lease term. The BMW Group uses internally
available data on historical empirical values, current
market data and market estimates as well as forecasts
by external market research institutes. The estimation
of future residual values is subject to judgment due to
the large number of assumptions to be made by the
executive directors and the amount of data included
in the determination.
Against this background and due to the resulting
significant uncertainties with regard to estimates
in the context of measuring the residual values of
the leased products, this matter was of particular
significance in the context of our audit.
As part of our audit we obtained an understanding of
the development of operating leases, the underlying
residual value risks as well as the business processes
for the identification, management, monitoring and
measurement of residual value risks, among other
things by inquiries and inspection of documents
re lated to the internal calculation methods. Further-
more we evaluated the appropriateness and effec-
tiveness of the internal control system, particularly
regarding the determination of expected residual
values. This included the evaluation of the propriety
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 measurement of the residual
values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the
BMW Group’s experts responsible for the management
and monitoring of residual value risks and inspected
the internal analysis on residual value developments
and residual value forecasts as well as the validation
results. We examined the mathematically correctness
of the forecast values using the key calculation steps.
Based on our audit procedures, we were able to
satisfy ourselves that the methods and processes for
determining the expected residual values of leased
products underlying the valuation are appropriate
and the assumptions and parameters included in the
forecast model for the residual value are appropriate
as a whole.
The Company’s disclosures on the applied “Accounting
policies, assumptions, judgments and estimations” are
contained in the notes to the consolidated financial
statements under note 4 and on leased products are
contained under note 23.
Corporate Governance 249
In our view, the assumptions and parameters used in
the measurement of receivables from sales financing
were appropriate overall.
The Company’s disclosures on the applied “Accounting
policies, assumptions, judgments and estimations” are
contained in the notes to the consolidated financial
statements under note 4 and on “receivables from
sales financing” are contained under note 25.
valuation of provisions for statutory and non-statu-
tory warranty obligations and product guarantees
Provisions for statutory and non-statutory war-
ranty obligations as well as product guarantees are
included in the consolidated financial statements of
BMW Group as a material amount in other provi-
sions. The provisions amounted to EUR 5,550 million
(approximately 2.4 % of total assets) as at December
31, 2019. BMW Group is responsible for the legally
required warranty and product guarantees in the
respective sales market. In order to estimate the
liabilities arising from statutory and non-statutory
warranty obligations and product guarantees for
vehicles sold, information on the type and volume
of damages arising and on remedial measures is
recorded and analyzed at vehicle model level. The
expected amount of obligations is extrapolated from
costs of the past and recognized as a provision in
the corresponding amount, if the criteria of IAS 37
have been met. For specific or anticipated individual
circumstances, for example recalls, additional provi-
sions are recognized provided they have not already
been taken into account.
The determination of provisions is associated with
unavoidable estimation uncertainties and is subject
to a high risk of change, depending on factors such
as notification of detected defects as well as claims
made by vehicle owners. Against this background,
this matter was of particular significance during
our audit.
Valuation of receivables from sales financing
The BMW Group offers end customers, dealerships
and importers various financing models for vehicles.
In this context, current and non-current receivables
from sales financing totaling EUR 92,437 million are
reported in the consolidated statement of financial
position as at the balance sheet date (approximately
EUR 40.4 % of total assets). Impairment losses amount-
ing to EUR 1,099 million were recognized on these
receivables as at the balance sheet date. In order to
determine the amount of the necessary valuation
allowances to be recognized with respect to receiv-
ables from sales financing, the BMW Group, among
others, evaluates the creditworthiness of the dealers,
importers and end customers, as well as any loss ratios,
and risk provisioning parameters are derived based on
historical default probabilities and loss ratios.
The determination of the valuation allowances by the
executive directors is subject to a significant degree
of judgment due to several value-influencing factors
such as the estimation of creditworthiness, the deter-
mination of probabilities of default and loss ratios and
was therefore of particular significance in the context
of our audit.
As part of our audit we obtained a comprehensive
understanding of the development of receivables from
sales financing, the associated default-related risks
as well as the business processes for the identifica-
tion, management, monitoring and measurement of
default risks, among other things by inquiries and
inspection of documents on the internal calculation
methods. Furthermore we evaluated the appropriate-
ness and effectiveness of the internal control system
regarding the determination of the impairment loss
to recognize. In this context, we also evaluated the
relevant IT systems and internal processes. The eval-
uation included an assessment 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. As part of our audit we assessed in
particular the appropriateness of the risk classification
procedures as well as the risk provisioning parameters
used. For this purpose, we analyzed in particular the
validations of parameters that are regularly conducted
by the Company. To assess the default risk, we also
used targeted sampling of individual cases to examine
whether the attributes for assignment to the respective
risk categories were suitably available and the impair-
ment losses had been calculated using the parameters
defined for these risk categories.
250
Independent
Auditor’s Report
In order to assess the appropriateness of the valuation
method used for the determination of the provisions
for statutory and non-statutory warranty obligations
as well as product guarantees including the assump-
tions and parameters, we primarily obtained an
understanding of the process for determining the
assumptions and parameters through discussions with
the responsible employees of the BMW Group. We
also evaluated the appropriateness as well as effective-
ness of controls for determining the assumptions and
parameters. With the involvement of our IT specialists,
we checked the IT systems used regarding their com-
pliance. We compared the expenses for claims and
technical actions with actual costs incurred in order to
draw conclusions on the forecast accuracy. Based on a
targeted sample of vehicle models, the mathematically
correctness of the valuation model used across the
Group was examined. We examined and evaluated the
assumptions used by the BMW Group concerning the
extent to which the past values were representative of
the expected susceptibility of damage, the expected
value of damage per vehicle (comprising parts and
labor input) as well as the expected assertion of claims
from statutory and non-statutory warranties.
In our view, the method for the valuation of provisions
for statutory and non-statutory warranty obligations
as well as product guarantees is overall appropriate.
Taking into consideration the information available,
we believe that, overall, the measurement parameters
and assumptions used by the executive directors
are appropriate.
The Company’s disclosures on the applied “Accounting
policies, assumptions, judgments and estimations” are
contained in the notes to the consolidated financial
statements under note 4 and on “Other provisions”
are contained under note 33.
Measurement and recognition of youR noW
equity investments
In the BMW Group’s consolidated financial state-
ments as at December 31, 2019, the line item “Invest-
ments accounted for using the equity method” the
YOUR NOW equity investments with a carrying
amount of EUR 987 million (approximately 0.4 %
of total assets) is reported. The BMW Group and a
competitor have bundled mobility services within
YOUR NOW. As a result of the combination with
the competitor, the BMW Group contributed its
investment in DriveNow GmbH & Co. KG, Munich,
Parkmobile Group Holding B. V., Amsterdam, Digital
Charging Solutions GmbH, Berlin and Reach Now
LLC, Seattle. In the course of the transaction, disposal
proceeds amounting to EUR 232 million were realized
and a reversal of impairment losses amounting to
EUR 97 million was recognized. YOUR NOW gen-
erated negative operating earnings amounting to
EUR 662 million in the past financial year, which were
recognized in the consolidated financial statements.
Furthermore, there was a triggering event at the level
of the BMW Group and a EUR 240 million impair-
ment loss was recognized. The Company has defined
a triggering event to be in particular a significant
deviation from target figures.
The determination of the reversal of impairment
losses, the purchase price allocation as well as the
impairment loss is based on the exercise of judg-
ment by the executive directors, which is subject
to significant estimation uncertainties. Against this
background, this matter was of particular significance
during our audit.
As part of our audit, we examined and evaluated the
methodological procedure adopted for the purposes
of calculating the fair value for the determination of
the reversal of impairment losses, among other things.
We compared the future cash inflows used in the cal-
culation against the underlying budget and assessed
their appropriateness. Moreover, we examined the
methodological procedure used in the purchase price
allocation. In connection with the impairment loss,
we assessed whether a triggering event had occurred.
We examined the impairment test conducted by the
BMW Group based on the occurrence of a triggering
event and assessed its methodical correctness. After
comparing the future cash inflows used against the
budget adopted by the shareholders, we examined
in particular the derivation of the discount rate used.
The valuation parameters and assumptions used by the
executive directors are overall in line with our expec-
tations and are also within the ranges considered by
us to be acceptable.
The Company’s disclosures on the applied “Account-
ing policies, assumptions, judgments and estimations”
are contained in the notes to the consolidated finan-
cial statements under note 2 and on the YOUR NOW
equity investments are contained under note 24.
Corporate Governance 251
Other Information
The executive directors are responsible for the other
information. The other information comprises the
following non-audited parts of the group management
report:
— the statement on corporate governance pur-
suant to § 289 f HGB and § 315 d HGB included
in section “Statement on Corporate Gover-
nance (§ 289 f HGB)” of the group management
report
— the corporate governance report pursuant to
No. 3.10 of the German Corporate Governance
Code
— the separate non-financial report pursuant to
§ 289 b Abs. 3 HGB and § 315 b Abs. 3 HGB
The other information comprises further the remaining
parts of the annual report – excluding cross-references
to external information – with the exception of the
audited consolidated financial statements, the audited
group management report and our auditor’s report.
Our audit 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 audit 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.
Measurement of provision for risks relating to an
eu antitrust proceeding
In April 2019, the BMW Group was notified by the
European Commission of complaints in a pending
antitrust proceeding. The European Commission
accuses various manufacturers of colluding to restrict
competition in the field of innovation. In this con-
nection, a EUR 1.4 billion provision for litigation and
risk provisioning was recognized in the consolidated
financial statements under the balance sheet item
“Other provisions”. The risk assessment to be made
on developments in the EU antitrust proceeding and
the estimation of whether or not a provision must
be recognized to cover the risks, and if so, in what
amount the current obligation must be measured, is
subject to a high degree of uncertainties and charac-
terized by the estimates and assumptions made by
the executive directors.
In our view, this matter was of particular significance
for our audit due to the significant uncertainties con-
cerning the outcome of the EU antitrust proceeding
and the potential effects on BMW AG’s assets, liabil-
ities, financial position and financial performance.
With the knowledge that estimated values result in an
increased risk of accounting misstatements and that
the executive directors’ recognition and measurement
decisions have a direct effect on consolidated result,
we evaluated the appropriateness of the carrying
amounts, with the involvement of an internal PwC
antitrust law expert. Furthermore, we also held reg-
ular meetings with the Company’s legal department
in order to receive information regarding updates
on current developments and the reasons for the
corresponding estimates. The development of the
aforementioned risks arising from the EU antitrust
proceeding, including the executive directors’ esti-
mates concerning the potential proceeding outcomes,
was provided to us by the Company in writing. In
addition, we obtained and evaluated an external legal
confirmation as at the balance sheet date.
In our view, the estimates made by the executive
directors regarding the recognition and measurement
of the provision for the risks from the EU antitrust
proceeding described above and the associated risk
provision in the consolidated financial statements are
sufficiently documented and substantiated.
The Company’s disclosures on the applied “Accounting
policies, assumptions, judgments and estimations” are
contained in the notes to the consolidated financial
statements under note 4 and on “Other operating
expenses” are contained under note 10.
252
Independent
Auditor’s Report
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
The executive directors are responsible for the prepa-
ration of the consolidated financial statements that
comply, in all material respects, with IFRS as adopted
by the EU and the additional requirements of German
commercial law pursuant to § 315 e Abs. 1 HGB and
that the consolidated financial statements, in com-
pliance with these requirements, give a true and fair
view of the assets, liabilities, financial position, and
financial performance of the Group. In addition the
executive directors are responsible for such internal
control 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,
the executive directors are 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 report-
ing 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, the executive directors are 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 appro-
priately presents the opportunities and risks of future
development. In addition, the executive directors
are 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 appropri-
ate 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 requirements and
appropriately presents the opportunities and risks
of future development, as well as to issue an audi-
tor’s report that includes our audit 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 accor-
dance with § 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 audit opinions. The
risk of not detecting a material misstatement
resulting from fraud is higher than for one result-
ing from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresenta-
tions, or the override of internal controls.
Corporate Governance — Obtain an understanding of internal control rele-
vant to the audit of the consolidated financial
statements and of arrangements and measures
(systems) relevant to the audit of the group man-
agement report in order to design audit proce-
dures that are appropriate in the circumstances,
but not for the purpose of expressing an audit
opinion on the effectiveness of these systems.
— Evaluate the appropriateness of accounting poli-
cies used by the executive directors and the
reasonableness of estimates made by the execu-
tive directors and related disclosures.
— Conclude on the appropriateness of the execu-
tive directors’ use of the going concern basis of
accounting 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 con-
tinue as a going concern. If we conclude that
a material uncertainty 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 disclosures are inadequate, to mod-
ify our respective audit opinions. Our conclusions
are based on the audit evidence obtained up
to the date of our auditor’s report. How ever, fu-
ture events or conditions 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 un-
derlying transactions and events in a manner that
the consolidated financial statements give a
true and fair view of the assets, liabilities, finan-
cial position and financial performance of the
Group in compliance with IFRS as adopted by
the EU and the additional requirements of
German commercial law pursuant to § 315 e
Abs. 1 HGB.
253
— Obtain sufficient appropriate audit evidence
regard ing the financial information of the enti-
ties or business activities within the Group to
express audit opinions on the consolidated finan-
cial statements and on the group management
report. We are responsible for the direction, su-
pervision and performance of the group audit.
We remain solely responsible for our audit
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 provides.
— Perform audit procedures on the prospective in-
formation presented by the executive directors
in the group management report. On the basis
of sufficient appropriate audit evidence we eval-
uate, in particular, the significant assumptions
used by the executive directors as a basis for
the prospective information, and evaluate the
proper derivation of the prospective informa-
tion from these assumptions. We do not express
a separate audit opinion on the prospective
information and on the assumptions used as a
basis. There is a substantial unavoidable risk
that future events will differ 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.
254
Independent
Auditor’s Report
Other Legal and Regulatory
Requirements
German Public Auditor Responsible
for the Engagement
The German Public Auditor responsible for the
engagement is Andreas Fell.
Munich, 11 March 2020 / limited to the amendment
referred to in the Information on the Supplementary
Audit: 16 March 2020
pricewaterhousecoopers GmbH
Wirtschaftsprüfungsgesellschaft
Petra Justenhoven
Wirtschaftsprüferin
[German Public Auditor]
Andreas Fell
Wirtschaftsprüfer
[German Public Auditor]
Further Information pursuant to Article 10 of the
EU Audit Regulation
We were elected as group auditor by the annual gen-
eral meeting on May 16, 2019. We were engaged by
the supervisory board on May 17, 2019. We have been
the group auditor of the Bayerische Motoren Werke
Aktiengesellschaft, Munich, without interruption
since the financial year 2019.
We declare that the audit opinions expressed in this
auditor’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).
Information on the
Supplementary Audit
We issue this auditor’s report on the amended con-
solidated financial statements and amended group
management report on the basis of our statutory audit
completed on March 11, 2020 and our supplementary
audit completed on March 16, 2020, which concerned
the amendments to disclosures in the notes to the con-
solidated financial statements and the group manage-
ment report due to the updated reporting on expected
developments and on risks and opportunities taking
into account new information on the effects of the
spread of coronavirus. Please refer to the presentation
of the amendments by the executive directors in the
sections entitled “Basis of preparation” and “Report on
post-balance sheet date events” in the amended notes
to the consolidated financial statements, and in the
sections entitled “Organization and business model”,
“Report on economic position”, “Report on expected
developments” and “Report on risks and opportunities”
in the amended group management report.
Corporate Governance OTHER
INFORMATION
Page 256 BMW Group Ten-year Comparison
5
Other
Information
Ten-year
Comparison
256
BMW Group
Ten-year
Comparison
BMW GROUP
TEN-YEAR COMPARISON
delIveRIeS
Automobiles 2
Motorcycles 3
pRoduCtIon voluMe
Automobiles
Motorcycles 3
FInAnCIAl SeRvICeS
Contract portfolio
2019
2018 1
2017
2016
2015
2014
2013
2012
2011
2010
units
units
units
units
2,538,367
2,483,292
2,468,658
2,352,440
175,162
165,566
164,153
145,032
2,257,851
2,117,965
1,963,798
1,845,186
1,668,982
1,461,166
136,963
123,495
115,215
106,358
104,286
98,047
2,564,025
2,541,534
2,505,741
2,359,756
187,116
162,687
185,682
145,555
2,279,503
2,165,566
2,006,366
1,861,826
1,738,160
1,481,253
151,004
133,615
110,127
113,811
110,360
99,236
contracts
5,973,682
5,235,207
5,380,785
5,114,906
4,718,970
4,359,572
4,130,002
3,846,364
3,592,093
3,190,353
Business volume (based on balance sheet carrying amounts)
€ million
142,834
133,147
124,719
123,394
111,191
96,390
84,347
80,974
75,245
66,233
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 4
Personnel cost per employee
dIvIdend
Dividend total
€ million
104,210
96,855
98,282
94,163
92,175
80,401
76,059
76,848
68,821
60,477
%
€ million
€ million
%
€ million
%
€ million
€ million
€ million
€ million
%
%
€ million
€ million
€ million
17.3
7,411
7,118
6.8
2,140
30.1
5,022
19.0
8,933
9,627
9.9
2,530
26.3
7,064
20.3
9,899
10,675
10.9
2,000
18.7
8,675
19.9
9,386
9,665
10.3
2,755
28.5
6,910
137,404
124,202
121,964
121,671
90,630
5,650
5.4
26.3
85,502
82,625
84,736
5,029
5.2
57,829
27.7
79,698
71,411
73,542
4,688
4.8
54,107
27.7
69,634
71,765
66,864
3,731
4.0
47,363
25.1
73,183
67,989
€ million
59,907
228,034
208,938
195,506
188,535
172,174
154,803
138,377
131,835
123,429
110,164
€ million
€ million
12,036
2,567
10,979
2,713
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
133,778
€
98,901
134,682
101,178
129,932
100,760
124,729
99,575
122,244
116,324
110,351
105,876
100,306
97,136
92,337
89,869
89,161
84,887
95,453
83,141
€ million
1,646
2,303
2,630
2,300
2,102
1,904
1,707
1,640
1,508
852
Dividend per share of common stock / preferred stock
€
2.50 5 / 2.52 5
3.50 / 3.52
4.00 / 4.02
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
Dividend per share of common stock / preferred stock
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group’s
most important markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found
in the section “Comparison of Forecasts for 2019 with Actual Results in 2019”.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
4 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time working arrangements and low wage earners.
5 Proposal by management.
19.7
9,593
9,224
10.0
2,828
30.7
6,396
110,343
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
delIveRIeS
Automobiles 2
Motorcycles 3
pRoduCtIon voluMe
Automobiles
Motorcycles 3
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 4
Personnel cost per employee
dIvIdend
Dividend total
Other Information
2019
2018 1
2017
2016
2015
2014
2013
2012
2011
2010
2,538,367
2,483,292
2,468,658
2,352,440
175,162
165,566
164,153
145,032
2,257,851
2,117,965
1,963,798
1,845,186
1,668,982
1,461,166
136,963
123,495
115,215
106,358
104,286
98,047
2,564,025
2,541,534
2,505,741
2,359,756
187,116
162,687
185,682
145,555
2,279,503
2,165,566
2,006,366
1,861,826
1,738,160
1,481,253
151,004
133,615
110,127
113,811
110,360
99,236
contracts
5,973,682
5,235,207
5,380,785
5,114,906
4,718,970
4,359,572
4,130,002
3,846,364
3,592,093
3,190,353
257
delIveRIeS
Automobiles 2
Motorcycles 3
pRoduCtIon voluMe
Automobiles
Motorcycles 3
FInAnCIAl SeRvICeS
Contract portfolio
Business volume (based on balance sheet carrying amounts)
€ million
142,834
133,147
124,719
123,394
111,191
96,390
84,347
80,974
75,245
66,233
Business volume (based on balance sheet carrying amounts)
€ million
104,210
96,855
98,282
94,163
92,175
80,401
76,059
76,848
68,821
60,477
19.7
9,593
9,224
10.0
2,828
30.7
6,396
110,343
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
228,034
208,938
195,506
188,535
172,174
154,803
138,377
131,835
123,429
110,164
€ million
€ million
12,036
2,567
10,979
2,713
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
133,778
€
98,901
134,682
101,178
129,932
100,760
124,729
99,575
122,244
116,324
110,351
105,876
100,306
97,136
92,337
89,869
89,161
84,887
95,453
83,141
€ million
1,646
2,303
2,630
2,300
2,102
1,904
1,707
1,640
1,508
852
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 4
Personnel cost per employee
dIvIdend
Dividend total
Dividend per share of common stock / preferred stock
€
2.50 5 / 2.52 5
3.50 / 3.52
4.00 / 4.02
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
Dividend per share of common stock / preferred stock
1 Prior year’s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group’s
most important markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found
in the section “Comparison of Forecasts for 2019 with Actual Results in 2019”.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
4 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time working arrangements and low wage earners.
5 Proposal by management.
units
units
units
units
%
%
%
€ million
€ million
€ million
€ million
€ million
€ million
€ million
%
%
€ million
€ million
€ million
17.3
7,411
7,118
6.8
2,140
30.1
5,022
90,630
5,650
5.4
26.3
85,502
82,625
19.0
8,933
9,627
9.9
2,530
26.3
7,064
84,736
5,029
5.2
57,829
27.7
79,698
71,411
20.3
9,899
10,675
10.9
2,000
18.7
8,675
73,542
4,688
4.8
54,107
27.7
69,634
71,765
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
137,404
124,202
121,964
121,671
€ million
59,907
delIveRIeS
Automobiles 2
Motorcycles 3
Automobiles
Motorcycles 3
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 4
Personnel cost per employee
dIvIdend
Dividend total
258
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
P U B L I S H E D B Y
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0