Automotive   |   BMW AG
Annual Report 2007  
Facts and  
figures 2007  
0
2
4
BMW Group in figures  
0
Report of the Supervisory Board  
10  
10  
13  
17  
41  
44  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds in 2007  
Disclosures relating toTakeover Regulations and Explanatory Report  
Financial Analysis  
– Group Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on Financial Statements of BMW AG  
Risk Management  
Outlook  
73  
73  
74  
76  
78  
79  
Group Financial Statements  
Group and Sub-group Income Statements  
Group and Sub-group Balance Sheets  
Group and Sub-group Cash Flow Statements  
Group Statement of Changes in Equity  
Statement of Income and Expenses  
recognised directly in Equity  
80  
Notes to the Group  
Financial Statements  
80  
89  
96  
– Accounting Principles and Policies  
– Notes to the Income Statement  
– Notes to the Balance Sheet  
117 – Other Disclosures  
131 – Segment Information  
135 Responsibility Statement by Company’s Legal Representatives  
136 Auditors’ Report  
1
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
41 Corporate Governance at BMW Group  
42 Compensation Report  
Sub-section of Management Report)  
46 Shareholdings of Members of the Board of  
Management and the Supervisory Board  
1
(
1
147 Declaration of the Board of Management and of  
the Supervisory Board pursuant to §161 AktG  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
BMW Group in figures  
Revenues  
Capital expenditure  
in euro billion  
in euro million  
55  
50  
45  
40  
35  
30  
5,000  
4,500  
4,000  
3,500  
3,000  
2,500  
03  
04  
05  
06  
07  
03  
04  
05  
06  
07  
41.5  
44.3  
46.7  
49.0  
56.0  
4,245  
4,347  
3,993  
4,313  
4,267  
Deliveries of automobiles  
Profit before tax  
in thousand units  
in euro million  
1,500  
1,400  
1,300  
1,200  
1,100  
1,000  
4,000  
3,500  
3,000  
2,500  
2,000  
1,500  
*
03  
04  
05  
06  
07  
03  
04  
05  
06  
07  
1,104.9 1,208.7 1,328.0 1,374.0  
1,500.7  
3,205  
3,583  
3,287  
4,124  
3,873  
*
adjusted for new accounting treatment of pension obligations  
A portrait of the Company  
Bayerische Motoren Werke G. m.b.H. came into  
being in 1917, having been founded in 1916 as  
The Number ONE strategy, adopted in 2007,  
has set the BMW Group on course for a successful  
future. The business has been given a new strategic  
direction with the emphasis on profitability and long-  
term value growth.The BMW Group’s activities  
will remain firmly focused on the premium segments  
of the international automobile markets.The mission  
statement up to the year 2020 is clearly defined:  
the BMW Group is the world’s leading provider of  
premium products and premium services for indi-  
vidual mobility.  
“Bayerische Flugzeugwerke AG” (BFW); it became  
Bayerische Motoren Werke Aktiengesellschaft  
(“BMW AG”) in 1918.  
Today, the BMW Group is one of the ten largest  
car manufacturers in the world and possesses, with  
its BMW, MINI and Rolls-Royce brands, three of the  
strongest premium brands in the car industry. The  
BMW Group also has a strong market position in the  
motorcycle sector and operates successfully in the  
area of financial services.  
03  
BMW Group in figures  
2003  
2004  
2005  
2006  
2007  
Change  
in %  
Vehicle production  
BMW  
944,072  
174,366  
502  
1,059,978  
189,492  
875  
1,122,308  
200,119  
692  
1,179,317  
186,674  
847  
1,302,774  
237,700  
1,029  
10.5  
27.3  
21.5  
0.6  
MINI  
Rolls-Royce  
Motorcycles1  
]
89,745  
93,836  
92,012  
103,759  
104,396  
Deliveries to customers  
BMW  
928,151  
176,465  
300  
1,023,583  
184,357  
792  
1,126,768  
200,428  
796  
1,185,088  
188,077  
805  
1,276,793  
222,875  
1,010  
7.7  
18.5  
25.5  
2.4  
MINI  
Rolls-Royce  
Motorcycles2  
]
92,962  
92,266  
97,474  
100,064  
102,467  
Workforce at end of year3  
]
104,342  
2003  
105,972  
2004  
105,798  
2005  
106,5754]  
2006  
107,539  
2007  
0.9  
in euro million  
Change  
in %  
Revenues  
41,525  
4,245  
2,370  
4,970  
3,205  
1,947  
44,335  
4,347  
2,672  
6,157  
3,5835  
2,2425  
46,656  
3,993  
3,025  
6,184  
3,287  
2,239  
48,999  
4,313  
3,272  
5,373  
4,124  
2,874  
56,018  
4,267  
3,683  
6,340  
3,873  
3,134  
14.3  
–1.1  
12.6  
18.0  
–6.1  
9.0  
Capital expenditure  
Depreciation and amortisation  
Operating cash flow6  
Profit before tax  
]
]
]
Net profit  
1
2
3
4
5
6
] from 2006 including BMW G 650 X assembly by Piaggio S.p.A.  
] excluding C1, sales volume to 2003: 32,859 units  
] Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.  
] Including acquired entities, the comparable number of employees was 107,345 employees at 31 December 2006.  
] adjusted for new accounting treatment of pension obligations  
] In its financial statements for 2005, the BMW Group brought the cash flow computation into line with standards normally applied on the financial markets. Since then,  
the BMW Group discloses the figures for the cash flow from operating activities (operating cash flow), corresponding to the cash flow from Industrial Operations reported in  
the cash flow statement.  
04  
Report of the Supervisory Board  
Joachim Milberg  
Chairman of the  
Supervisory Board  
05  
Ladies and Gentlemen,  
The Supervisory Board monitored the business affairs and governance of the BMW Group continuously  
during the financial year 2007 and supported the Board of Management throughout in an advisory capacity.  
Main focus of the work of the  
Supervisory Board  
In a total of five meetings, the Supervisory Board deliberated at length on the performance and financial  
position of the BMW Group, corporate planning, the composition of the Board of Management and risk  
management issues. The Supervisory Board made use of regular business status reports to keep abreast of  
business performance, including the degree to which stated objectives have been achieved. It also selected  
a number of topics for more in-depth review and discussion based on reports and planning documents pro-  
vided by the Board of Management. Two of the main areas of focus of the Supervisory Board in 2007 were  
currency management and the Board of Management’s decisions concerning the future strategic direction  
of the BMW Group.  
The Board of Management also kept the Supervisory Board informed of key performance indicators, personnel  
developments and other significant matters, both at scheduled meetings and at other times as the need  
arose. The Chairman of the Supervisory Board was also kept informed regularly and directly by the Chairman  
of the Board of Management of all major business transactions and projects.  
The growing need to reduce CO emissions in the transport sector, the challenges that this poses for the  
2
BMW Group as a premium car maker and the technical measures introduced by the Board of Management  
to reduce emissions and fuel consumption were reported on in detail by the Board of Management and  
discussed within the Supervisory Board. In the opinion of the Supervisory Board, the package of measures  
known as EfficientDynamics – designed to improve fuel economy whilst simultaneously emphasising agile  
and dynamic vehicle concepts – represents a clear competitive advantage for the BMW Group. For this  
reason, the Supervisory Board fully supports the Board of Management’s strategy to extend the BMW Group’s  
lead in this area. In this context, the Board of Management also reported to the Supervisory Board on one  
particular ground-breaking project which is looking, amongst other things, at new ways of achieving greater  
individual mobility in the world’s megacities.  
One meeting of the Supervisory Board was held at the Oxford plant, enabling the Supervisory Board to see  
at first hand the expansion measures undertaken at the plant. It was also given an insight into the integration  
of the new generation of MINI models into existing manufacturing structures and the benefits of the flexible  
working time model devised for the plant.  
After detailed consideration of the BMW Group’s long-term business plan, the Supervisory Board concurred  
with the Board of Management’s conclusion that the plan is feasible and formally gave its approval to the plan.  
06  
Report of the Supervisory Board  
As part of a special review of value-added and currency management within the BMW Group, the Board of  
Management provided the Supervisory Board with an overview of current and planned currency measures  
as well as natural hedging activities and explained the various alternatives available to the BMW Group. On  
the basis of this information, joint discussions were held on the future strategy in this area.  
The Supervisory Board meeting in September 2007 primarily involved a discussion of the Board of Manage-  
ment’s detailed report on the BMW Group’s strategy process. At the same meeting, the Supervisory Board  
also deliberated on and made its decisions regarding the composition of the Board of Management.  
The Supervisory Board was appreciative of the Board of Management’s in-depth review of the current busi-  
ness model and its thorough analysis of the options open to the BMW Group to achieve continued long-term  
growth. From the perspective of the Supervisory Board, the results presented and the objectives set by the  
Board of Management on the basis of their analysis were convincing and well-founded. The Supervisory  
Board supports the strategic objective set by the Board of Management – to be the world’s leading provider  
of premium products and premium services for individual mobility. The Supervisory Board agrees with the  
Board of Management that profitability and quality of earnings should play a central role in the Group’s strate-  
gic realignment. It therefore encouraged the Board of Management to press ahead with the implementation  
of the stated strategy and gives its full backing to the measures and targets adopted by the Board of Manage-  
ment. This includes plans to generate some euro 6 billion of efficiency benefits by 2012 and to successively  
take pension obligations to employees in Germany off the balance sheet by creating external pension  
funds. The Supervisory Board believes that these measures will help to strengthen the Group’s competitive-  
ness in the long term.  
To coincide with the BMW Group’s strategic realignment, the Board of Management has formulated a set of  
core principles that are intended to serve as guidelines for managers and employees. In the opinion of the  
Supervisory Board, these core principles provide an excellent basis for open and objective-oriented coopera-  
tion throughout the Group.  
The Supervisory Board carefully considered the annual budget for the financial year 2008 presented by the  
Board of Management and approved the planned measures to improve profitability.The Supervisory Board  
was also fully informed of solutions and specific measures discussed with staff representatives to reduce  
personnel expense.  
The Board of Management also kept the Supervisory Board informed of the progress of the acquisition of  
the motorcycle company Husqvarna. This move complements the Group’s activities in the single-cylinder  
segment and will appeal to younger customer groups in the off-road and supermoto segments.  
In response to the increased complexity of tasks facing the Board of Management and with implementation  
of the new strategy in mind, the Supervisory Board decided to increase the size of the Board of Management  
by two members: Dr. Herbert Diess, who has been responsible for the Motorcycles segment since 2003, was  
appointed to the Board of Management with effect from 1 October 2007, taking over responsibility for the  
newly created Purchasing and Supplier Network division. Dr. Friedrich Eichiner, who has been responsible  
for Group planning since 2002, was also appointed to the Board of Management with effect from 1 October  
2007 and now heads the newly created Corporate and Brand Development division. At his own request,  
Stefan Krause’s mandate as member of the Board of Management came to an end on 13 March 2008.The  
Supervisory Board thanked Mr. Krause for the successful work that he performed on behalf of the BMW Group.  
At its meeting on 13 March 2008, the Supervisory Board appointed Ian Robertson with immediate effect as  
member of the Board of Management. Mr. Robertson thereupon took over board responsibility for sales and  
07  
marketing. Since 2005, he has been Chairman and Chief Executive Officer of Rolls-Royce Motor Cars Ltd.,  
a subsidiary of BMW AG.  
Corporate governance  
and Declaration of Compliance  
During the financial year 2007, the Supervisory Board and the Board of Management again discussed the  
subject of corporate governance in great detail and issued a joint Declaration of Compliance with the Ger-  
man Corporate Governance Code (GCGC) pursuant to §161 AktG. The recommendations of the Govern-  
ment Commission on the German Corporate Governance contained in the revised code issued on 20 July  
007 will be complied with in the future except for one divergence: the discussion and regular review of  
2
the structure of the compensation system of the Board of Management is still performed by the Personnel  
Committee and not, additionally, by the Supervisory Board. This task has been delegated to the Personnel  
Committee which reports in detail to the full Supervisory Board. All other recommendations are being  
complied with.  
A detailed report on the amount and structure of the compensation of the Board of Management and the  
Supervisory Board can be found in the corporate governance report. In conjunction with the code recommen-  
dations issued on 20 July 2007, the Supervisory Board decided to amend its own procedural rules regarding  
the remit of the Audit Committee, to create a Nomination Committee and to expand the reporting duties of  
the Board of Management.  
The Supervisory Board sees it as an ongoing task to improve the quality of its work, both in plenum and  
at committee level, and in its collaboration with the Board of Management. The efficiency of the Super-  
visory Board’s work is therefore not only assessed, as recommended by the GCGC, on the basis of written  
comments of all Supervisory Board members and open debate at year-end meetings, but also during the  
year in the context of personal dialogue, whereby the Chairman of the Supervisory Board plays a key role in  
proposing areas of improvement.  
There was no indication during the past year of any conflicts of interest on the part of members of the Super-  
visory Board and Board of Management.  
Description of Presiding Board  
activities and committee work  
In a total of five meetings, the Presiding Board mainly focussed on preparing the plenum meetings, including  
the selection of special topics of report. During the past year, the Presiding Board took a close look at the  
Company’s dividend policy and the Group’s currency management. At a number of meetings during the  
course of the year, it also considered alternative concepts for the compensation of Supervisory Board work,  
culminating in the formulation of a proposed amendment to §15 of the Articles of Incorporation that will be  
put forward for resolution at the Annual General Meeting.  
In view of the fact that the tasks performed by the Audit Committee go well beyond accounting and financial  
reporting matters (e.g. in the field of compliance), the Audit Committee changed its name in German from  
Bilanzausschuss to Prüfungsausschuss, bringing it into line with the name already used in English. The Audit  
Committee convened three times during the period under report. One of these meetings served primarily to  
prepare for the Supervisory Board meeting in spring 2007, the main purpose of which was to consider the  
drafts of the Company and Group financial statements for the financial year 2006. Apart from examining the  
drafts, the Audit Committee also obtained a Declaration of Independence from the external auditors, deter-  
mined areas of audit emphasis and, after the Annual General Meeting, issued the audit engagement letter for  
the financial year 2007. A further area of focus for the Audit Committee in 2007 was risk management. The  
Audit Committee was kept informed by the Board of Management of progress made to date to implement  
the Group’s compliance programme which emphasises the vital role played by managers in ensuring com-  
pliance with existing law.  
08  
Report of the Supervisory Board  
The six meetings of the Personnel Committee in 2007 were mainly dedicated to preparing for Board of  
Management appointment decisions, in particular pre-selecting candidates and deliberating on compensa-  
tion matters. The Personnel Committee again reviewed the appropriateness of the compensation of the  
members of the Board of Management – including individually agreed upper limits – in view of the tasks per-  
formed, the financial condition of the Group and compensation levels within the automotive industry and  
at other DAX-listed companies. In individual cases, the Personnel Committee authorised the acceptance of  
external mandates by current and former members of the Board of Management.  
In line with the recommendation of the German Corporate Governance Code, the Supervisory Board created  
a Nomination Committee in 2007 in addition to the existing committees. The Nomination Committee com-  
prises the Chairman of the Supervisory Board (as chairman) and two further members of the Supervisory  
Board representing the interests of shareholders. The Nomination Committee is charged with the task of  
finding suitable candidates for election to the Supervisory Board and for inclusion in the Supervisory Board’s  
proposals for election at the Annual General Meeting. The Nomination Committee did not hold any meetings  
in 2007 but convened for the first time in January 2008 to propose candidates for the forthcoming elections  
at the Annual General Meeting 2008.  
The statutory Mediation Committee (§27 (3) of the Law on Worker Participation) was not required to convene  
during the financial year 2007.  
The Chairman reported regularly at Supervisory Board meetings on the status of Presiding Board and com-  
mittee work.  
Composition of the Super-  
visory Board, the Presiding  
Board and the committees  
The names of the members of the Supervisory Board committees, including those of the newly created  
Nomination Committee, are shown in the corporate governance report.  
There were no other changes in the composition of the Supervisory Board during the year under report. The  
mandates of Dr. Hans-Dietrich Winkhaus and Mr. Arthur L. Kelly come to an end at the close of the Annual  
General Meeting on 8 May 2008. The two members will not be standing for re-election due to the age limit  
applicable to Supervisory Board members. Mr. Konrad Gottinger resigned as member of the Supervisory  
Board with effect from 15 February 2008. Mr. Heinz-Joachim Neubürger resigned with effect from the close  
of the Annual General Meeting 2007. Both Mr. Gottinger and Dr. Winkhaus were elected to the Supervisory  
Board in 1999 and carried out important functions in the Presiding Board and in various committees. Mr. Kelly,  
who joined the Supervisory Board back in 1992, has provided valuable services to the BMW Group during  
his long period of office. The Supervisory Board would like to thank the members leaving office for the dedi-  
cated and commendable services they have performed in the interests of the BMW Group.  
09  
Examination of Company and  
Group financial statements  
and the proposed appropria-  
tion of profit  
The Company and Group financial statements of Bayerische Motoren Werke Aktiengesellschaft for the year  
ended 31 December 2007 and the combined Company and Group Management Report were audited by  
KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Munich, and  
given an unqualified audit opinion. The Audit Committee examined these documents initially at its meeting  
on 3 March 2008, discussing matters in person with representatives of the external auditors. The Super-  
visory Board subsequently examined the relevant drafts of the Board of Management at its meeting on  
13 March 2008, after hearing the chairman’s report on the meeting of the Audit Committee. The external  
auditors were also present at this meeting to report on the main findings of their audit and to provide additional  
information as necessary. The long-form audit reports of the external auditors were made available to all  
members of the Supervisory Board in good time. The Supervisory Board concurred with the results of the  
external audit and approved the Company and Group Financial Statements of Bayerische Motoren Werke  
Aktiengesellschaft for the financial year 2007 prepared by the Board of Management. The Company financial  
statements are therefore adopted. The Supervisory Board also reviewed the Board of Management’s pro-  
posal for the appropriation of profit. The Supervisory Board considers the proposal appropriate and therefore  
concurs with it. In accordance with the conclusion reached on the Supervisory Board’s examination, no  
objections were raised.  
The Board of Management and employees of the BMW Group have once again enabled the BMW Group to  
post excellent earnings for the financial year 2007. The Board of Management has also defined a new stra-  
tegic direction for the BMW Group which puts it on course for long-term success. The Supervisory Board  
wishes to thank the members of the Board of Management and indeed all employees of the BMW Group for  
their hard work and their contribution to the past year’s performance.  
Munich, 13 March 2008  
The Supervisory Board  
Yours,  
Joachim Milberg  
Chairman of the Supervisory Board  
10  
Group Management Report  
Group Management Report  
A Review of the Financial Year  
BMW Group on course despite difficult  
conditions  
Dynamic revenues growth, earnings targets  
achieved  
The BMW Group continued to perform successfully  
in 2007 despite difficult conditions. By achieving  
a sharp sales volume increase, the company has  
again confirmed its position as the leading provider  
within the premium segments of the automobile  
markets. External factors did, however, continue to  
affect reported figures adversely. The continuing  
weakness of the US dollar and the Japanese yen,  
the generally high cost of raw materials and less  
favourable financing conditions all continued to have  
a negative impact. This was exacerbated by costs  
of market launches for numerous new models.  
In its automobile business, the BMW Group  
registered new sales volume records for all three  
brands in 2007. For the first time ever, sales volume  
exceeded 1.5 million units, with a total of 1,500,678  
BMW, MINI and Rolls-Royce brand cars sold. This  
represented an increase of 9.2% over the previous  
year. As expected, automobile business gained  
pace particularly during the second half of 2007 fol-  
lowing the introduction of numerous new models.  
The motorcycles business also remained firmly  
on course in 2007 despite divergent developments  
on the major motorcycle markets. In total, 102,467  
BMW motorcycles were delivered to customers,  
representing a new sales volume record for the  
BMW Group (+2.4%).  
The Financial Services business continued to  
grow profitably in 2007, again making an important  
contribution to the overall performance of the BMW  
Group. As predicted, the general deterioration in  
business conditions in the face of higher financing  
costs and the intensely competitive market situation  
continued to have an adverse impact in 2007.These  
external factors were successfully countered by  
achieving dynamic growth with new products, pur-  
suing a strategy of targeted regional expansion and  
exploiting synergy benefits wherever possible.  
External factors again significantly influenced  
the amounts reported as Reconciliations in 2007.  
Settlement of the exchangeable bond on shares in  
Rolls-Royce plc, London, which was completed in  
Revenues of the BMW Group rose at an above-aver-  
age rate on the back of a pleasing sales volume per-  
formance and thanks to the dynamic growth of its  
financial services business. Group revenues rose to  
euro 56,018 million in 2007 and were therefore up  
by 14.3% on a year-on-year comparison. Excluding  
the exchange rate impact, revenues would have  
risen by 17.6%. The BMW Group profit before tax,  
at euro 3,873 million, was 6.1% below the record  
level achieved in the previous year. Excluding the  
effect of the settlement of the exchangeable bond  
on shares in Rolls-Royce plc, London, pre-tax earn-  
ings were, as forecasted, slightly above the previous  
year’s level.  
Automobile business revenues reached a new  
high level. They rose by 12.7% to euro 53,818 mil-  
lion, underlining the overall strength of business  
operations. Despite the impact of adverse foreign  
exchange factors and high raw material prices, the  
Automobiles segment reported a profit before tax  
of euro 3,232 million, 7.3% up on the previous year.  
Motorcycles business revenues fell short of the  
previous year, dropping marginally to euro 1,228 mil-  
lion (–2.9%). However, process optimisation and  
efficiency improvement programmes implemented  
in the past continued to have a positive impact,  
enabling the segment to increase its profit before tax  
by 7.6% to euro 71 million.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
Financial services business continued to grow at  
an extremely dynamic pace, with revenues rising by  
25.8% to euro 13,940 million. This strong growth is  
reflected in the segment profit before tax which, at  
euro 743 million, was 8.5% up on the previous year.  
Segment earnings improved despite increasingly  
difficult refinancing conditions.  
Business tax reform in Germany had a positive  
impact on earnings, reducing the tax expense sharply.  
The effective tax rate for 2007 fell by11.2 percentage  
points to 19.1% (2006: 30.3%).  
The Group net profit of euro 3,134 million at-  
tained a new high level, surpassing the previous year’s  
figure by 9.0%.  
2007, resulted in a gain of euro 97 million in 2007,  
compared to one of euro 372 million in the previous  
year. In addition to this, losses had to be recognised  
on other derivative financial instruments, in particular  
on stand-alone interest rate derivatives. A changed  
market interest rate structure caused the fair values  
of these financial instruments to decrease.  
Increased dividend proposal  
The Board of Management and the Supervisory Board  
will propose to shareholders at the Annual General  
Meeting to use the unappropriated profit available  
for distribution in BMW AG, amounting to euro  
694 million, to pay an increased dividend of euro1.06  
11  
BMW Group Revenues by region  
in euro million  
2
1
1
1
1
0,000  
7,500  
5,000  
2,500  
0,000  
Rest of Europe  
North America  
Germany  
Asia/Oceania  
United Kingdom  
7
,500  
,000  
,500  
5
2
Other markets  
03  
04  
05  
06  
07  
Rest of Europe  
North America  
Germany  
8,728  
10,574  
10,205  
11,961  
4,915  
5,249  
1,431  
12,141  
10,957  
11,001  
5,538  
5,125  
1,894  
13,226  
11,779  
10,601  
6,200  
5,214  
1,979  
16,450  
12,161  
11,918  
7,353  
11,252  
10,590  
5,130  
4,661  
1,164  
Asia/Oceania  
United Kingdom  
Other markets  
5,945  
2,191  
for each share of common stock (2006: euro 0.70/  
51.4%) and an increased dividend of euro 1.08  
for each share of preferred stock (2006: euro 0.72/  
50.0%).  
The significant increase in dividend proposed  
for the financial year 2007 demonstrates the BMW  
Group’s commitment to a greater focus on the capi-  
tal markets.  
again the continued expansion of the BMW Group’s  
production and sales networks. 2007 saw the open-  
ing of the BMW Welt in Munich, the new event and  
delivery centre for the BMW brand. Other further  
major areas of capital expenditure were the continued  
expansion of the Spartanburg plant in the USA and  
investment in the Dingolfing site.  
+
+
In 2007, the BMW Group invested a total of euro  
2,934 million in property, plant and equipment and  
Capital expenditure remains at previous  
year’s level  
The capital expenditure volume, at euro 4,267 mil-  
intangible assets, 5.7% more than in the previous  
year. This includes goodwill of euro 97 million arising  
on the acquisition of DEKRA SüdLeasing Services  
lion, was roughly in line with the previous year’s level. GmbH (renamed to: BMW Fuhrparkmanagement  
The main focus of capital expenditure in 2007 was  
Beteiligungs GmbH) and that entity’s subsidiaries.  
BMW Group Capital expenditure and operating cash flow  
in euro million  
8,000  
7,000  
6,000  
5,000  
4,000  
3,000  
2,000  
1,000  
0
3
04  
4,347  
6,157*  
05  
3,993  
6,184  
06  
4,313  
5,373  
07  
4,267  
6,340  
Capital expenditure  
Operating cash flow  
4,245  
4,970  
*adjusted for new accounting treatment of pension obligations  
In its financial statements for 2005, the BMW Group brought the cash flow computation into line with standards normally applied on the financial markets. Since then, the  
BMW Group discloses the figures for the cash flow from operating activities (operating cash flow), corresponding to the cash flow from Industrial Operations reported in the  
cash flow statement.  
12  
Group Management Report  
In addition, development expenditure of euro 1,333  
million was recognised as assets in accordance  
with IAS 38 (2006: euro 1,536 million/–13.2%).  
The decrease in capitalised development costs  
was due to the lower volume of series development  
projects required to be recognised as assets. The  
proportion of development costs recognised as  
assets went down from 47.9% in 2006 to 42.4% in  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
2007.  
– Internal Management System  
– Earnings Performance  
– Financial Position  
The capital expenditure ratio (i.e. the ratio of  
capital expenditure to revenues) accordingly de-  
creased in 2007 to 7.6% (2006: 8.8%).  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Strategic realignment of the BMW Group  
announced  
Outlook  
At the end of September 2007, the BMW Group  
took on a new strategic direction. Up to the year  
2020, the BMW Group intends to strengthen its  
position within the global premium automobile mar-  
ket by increasing volume of sales to more than two  
million units per annum. The mission statement is  
clearly defined: the BMW Group is the world’s lead-  
ing provider of premium products and premium  
services for individual mobility. This means that in  
addition to striving for organic growth in the core  
line of business, the BMW Group will also engage in  
new and profitable areas of activity throughout the  
automotive life-cycle and all the way along the value-  
added chain. At the same time, the BMW Group  
will invest substantially in future technologies, new  
vehicle concepts and pioneering drive systems.  
The new strategy, which has been given the name  
Number ONE, is aimed at profitability and increasing  
value over the long term. In order to achieve these  
objectives, two new areas of responsibility have been  
created within the Board of Management for the  
“Corporate and Brand Development” and “Purchas-  
ing and Supplier Network” divisions.  
13  
General Economic Environment  
Economic developments in 2007  
seen in previous years and stagnated in 2007. One  
The global economy again grew strongly in 2007,  
albeit at a slightly slower pace than in the previous  
year. In addition to rising interest rates and the con-  
tinuing high level of raw material prices, the main  
reason for this development was the weakening of  
the US residential property market and the resulting  
weaker economic growth in the USA. Although the  
credit crisis became acute from the middle of the  
year onwards, the effects it had on the economy in  
of the main negative factors was the value-added tax  
increase that took effect in Germany at the beginning  
of the year. Although the employment market im-  
proved, and large numbers of new jobs were creat-  
ed, this did not motivate consumers to spend more.  
On top of this, from the summer onwards, the impe-  
tus generated by the construction industry tailed off  
sharply. Despite these adverse factors, the growth  
rate of 2.5% was only marginally below the previous  
year’s level.  
2007 were relatively minor and mainly restricted  
to the USA. In other countries, primarily the financial  
markets were affected. In a number of instances,  
central banks were forced to take measures to en-  
sure that sufficient liquid funds were available on  
the markets.  
The economies of the new EU member coun-  
tries also continued to grow robustly in 2007. Private  
consumption and investment rose sharply in many  
countries, but in spite of the increase in exports,  
the current accounts of these countries remained,  
for the most part, negative and in some cases quite  
considerably so.  
The Japanese economy remained on a stable  
growth course in 2007 with momentum coming  
from both domestic demand and exports. However,  
the persisting worry of deflation remained in 2007,  
resulting in price stagnation during the year. The  
general price level increased only marginally, almost  
entirely due to higher energy prices. The Japanese  
Central Bank was therefore only able to raise interest  
rates very slightly above zero. Overall, Japan’s gross  
domestic product grew by approximately 2.1% in  
2007.  
Alongside the emerging economies of Eastern  
Europe, the fastest growth rates were again recorded  
in 2007 by the markets in Latin America and East  
Asia. Once again, China was one of the fastest grow-  
ing markets. The investment boom there continued  
in 2007 with the export surplus reaching a new record  
figure. The monetary policy measures taken, includ-  
ing higher interest rates, failed to hold down eco-  
nomic growth and a growth rate in excess of11% was  
registered for the year. In India, too, economic growth  
remained extremely strong at over 8%. As in previous  
After a slow start at the beginning of the year,  
the US economy picked up pace again over the  
course of 2007, despite the enormous pressure  
coming from the residential property sector. Rising  
interest rates in recent years resulted in a large vol-  
ume of bad debt losses, primarily in the area of sub-  
prime borrowers. As a consequence, investment on  
new residential property fell to an all-time low, with  
property prices dropping for the first time in more  
than 15 years. Despite these developments, private  
consumption nevertheless grew sharply due to the  
employment market remaining strong up to autumn.  
In the face of the weak residential property market,  
the rise in investment volumes was far lower than  
that of the previous year. On the back of a weaker US  
dollar, exports provided some momentum for the first  
time in years with the result that the USA’s current  
account deficit decreased slightly. Overall, the USA’s  
gross domestic product grew by 2.2% in 2007.  
The euro region also registered strong growth  
in 2007, albeit at a somewhat slower rate than in the  
previous year. Despite the positive changes evident  
on the employment market, consumers were more  
reluctant to spend than one year earlier, whereas in-  
vestment activity continued to increase sharply. Ex- years, however, the Indian current account remained  
ports grew despite the strong euro. The current bal-  
ance of the region as a whole was slightly positive,  
negative.  
although the results in individual countries varied con- US dollar continues to lose value over the  
siderably. Overall, the euro region’s economy grew  
by 2.7% in 2007.  
course of the year  
The US dollar continued to lose value sharply over  
Economic growth in Germany weakened slightly the course of 2007. After standing at US dollar1.32  
in 2007, reflecting the trend seen in the euro region to the euro in January, it closed the year almost  
as a whole. Investment and exports again contributed 10% weaker at US dollar 1.46 to the euro. A rate of  
strongly to economic growth. By contrast, private almost US dollar1.50 to the euro was recorded at  
consumption failed to match the mildly positive trends some stage during the period.  
14  
Group Management Report  
The British pound was slightly more volatile in  
007 than in preceding years. Following a healthy  
start, it lost in value over the course of the year, finish-  
ing at about GBP 0.73 to the euro.  
The Japanese yen remained weak against the  
euro. After a short period of appreciation around the  
middle of the year 2007, the yen then went on to lose  
value and closed at yen 164 to the euro, some 4.5%  
lower than one year earlier.  
Automobile markets in 2007  
2
The sale of cars rose worldwide by approximately 4%  
in 2007 and therefore slightly faster than in the pre-  
vious year. As in the preceding years, the three main  
traditional car markets (the USA, Japan and Western  
Europe) did not show any significant momentum  
in terms of growth rates, whereas the car markets in  
Asian and Latin American emerging economies  
again grew strongly.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
Sales of passenger cars in the USA fell again,  
this time by approximately 2.5% to 16.1 million units.  
Whereas in the previous year the market for light  
trucks had contracted drastically, the reduction in  
2007 was spread across all segments of the market.  
– Net Assets Position  
Further increases in raw material prices  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
The average price of oil in 2007 was once again  
higher than in the previous year. After dropping to  
approximately US dollar 50 per barrel in January, the  
Outlook  
price almost doubled over the course of the year and The market share held by US manufacturers con-  
by autumn it had risen to almost US dollar100 per  
barrel. The average cost during the year was roughly  
US dollar 70 per barrel, up by more than 10% com-  
pared to 2006. The main reasons for this were on-  
going shortages in oil production and processing  
capacities, supplies being held back by OPEC and  
the fact that some of the world’s oil-producing coun-  
tries are currently unstable. This situation was fur-  
ther exacerbated by rising demand, mainly from the  
emerging markets and also by a certain amount of  
speculation.  
tinued to decline and stood at just over 50%.  
The number of cars sold in Western Europe was  
static with new vehicle registrations stagnating at  
around the 14.8 million mark. This was largely due  
to the sharp decrease in Germany, where car sales  
fell by more than 9% to below 3.2 million units.  
Steel price trend  
(Index: January 2003 = 100)  
The price of steel again exceeded the level of  
the previous year. This was also largely due to a fur-  
ther sharp rise in demand coming mainly from the  
emerging markets. The prices of most precious  
metals have been rising continually for several years  
and this trend continued in 2007. In addition to in-  
creased demand, the loss in value of the US dollar  
has created additional demand for precious metals  
as investments, in particular in the emerging mar-  
kets.  
180  
170  
160  
150  
140  
130  
120  
110  
100  
03  
04  
05  
06  
07  
Source: German Federal Statistical Agency  
Exchange rates compared to the Euro  
(Index: 31 December 2002 = 100)  
1
40  
35  
30  
25  
20  
15  
10  
05  
00  
1
1
1
1
1
1
1
1
03  
04  
05  
06  
07  
US Dollar  
Source: Reuters  
Japanese Yen  
British Pound  
15  
Oil price  
Price per barrel of Brent Crude  
Euro  
US Dollar  
1
00  
100  
90  
80  
70  
60  
50  
40  
30  
9
0
0
0
0
0
0
0
8
7
6
5
4
3
03  
04  
05  
06  
07  
Price in US Dollar  
Source: Reuters  
Price in Euro  
The value-added tax increase, high fuel prices and  
the climate change debate all made themselves felt.  
The Latin American automobile markets again  
generated strong growth in 2007, with the Brazilian  
Most of the other major European countries did, how- and Argentinian markets each growing by approxi-  
ever, experience some growth, with new registra- mately 25%. By contrast, the Mexican market con-  
tions up by almost 7% in Italy, by 2.5% in the United tracted slightly.  
Kingdom and by more than 3% in France. By con-  
trast, the Spanish market contracted slightly by just  
over 1%.  
Motorcycle markets in 2007  
As in previous years, the motorcycle markets rele-  
vant for the BMW Group again developed diver-  
gently in 2007. Worldwide motorcycles sales in the  
500 cc plus segment were 0.2% down on the pre-  
vious year. The drop was particularly pronounced  
in the USA where 4.1% fewer motorcycles were  
sold. By contrast, the motorcycle markets relevant  
for the BMW Group grew by 3.0% in Europe, al-  
though developments varied from one country to  
the next. Whereas the markets contracted in Ger-  
many (–0.6%) and Italy (–4.9%), there was growth  
in France (+0.4%), Spain (+13.0%) and the United  
Kingdom (+8.3%). Motorcycle sales in Japan were  
down by 2.0%.  
Eastern Europe registered strong growth for  
the first time in years. This was mainly due to a sharp  
increase in new car sales in Poland, where the  
number of new registrations rose by almost a quarter  
despite the continued high volume of used car im-  
ports. Russia again saw double-digit growth, with  
passenger car sales up by more than a quarter.  
Unit sales again rose steeply in the emerging  
markets of Asia. The Chinese market grew at the  
fastest rate (26%), while India recorded a growth  
rate of15%. The South Korean market grew by 7%.  
By contrast, the Japanese car market failed once  
again to benefit from the general improvement in  
the economy and contracted by approximately 5%.  
Precious metals price trend  
(Index: 31 December 2002 = 100)  
310  
280  
250  
220  
190  
160  
130  
100  
7
0
03  
04  
05  
06  
07  
Palladium  
Source: Reuters  
Silver  
Gold  
Platinum  
16  
Group Management Report  
Business environment for financial services  
in 2007  
As in the previous year, the financial services busi-  
ness during the first half of 2007 was influenced by  
high interest rate levels on the money and capital  
markets. The European Central Bank (ECB) con-  
tinued to pursue the tighter monetary policies initi-  
ated in 2006, increasing the reference interest rate  
over the course of the year by a further 50 basis  
points to 4.00%. By the middle of the year, the Bank  
of England (BoE) had also raised its reference inter-  
est rate by a further 75 basis points to 5.75%,  
whereas the US Federal Reserve (Fed) kept its rate  
at the same level.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
The second half of 2007 saw the onset of the  
subprime crisis on the US mortgage market and  
a resulting confidence crisis on the financial markets.  
The BMW Group has not been left unaffected by  
these developments. While the ECB decided not to  
change the reference interest rate, the BoE reduced  
its rate by 25 basis points. The Fed even reduced  
its rate by a total of 100 basis points. Despite these  
moves, refinancing conditions deteriorated signifi-  
cantly as credit spreads widened sharply across all  
sectors, thereby putting strain on the earnings of the  
financial services sector worldwide.  
Competition on the market for automobile-re-  
lated financial services increased in intensity. The  
trend is likely to continue due to products being of-  
fered by banks (private customer business) and other  
manufacturer-related financial service providers.  
The trend towards leasing-related products remains  
unchanged. These are being supplemented increas-  
ingly by other products such as insurance policies.  
17  
Review of Operations  
BMW Group remains best-selling premium  
manufacturer  
BMW Group – key automobile markets 2007  
as a percentage of sales volume  
The BMW Group registered new sales volume records  
in 2007 for all three brands. In total, 1,500,678 BMW,  
MINI and Rolls-Royce brand cars were sold during  
USA  
2
7.0  
22.4  
Germany  
United Kingdom  
Italy  
2
007, an increase of 9.2% compared to the previous  
year.  
The number of BMW brand cars sold rose by  
.7% to 1,276,793 units. The MINI achieved a par-  
Spain  
4
4
.0  
.3  
4.9  
18.7  
France  
7
Japan  
ticularly encouraging increase. This brand recorded  
an 18.5% rise, with 222,875 units handed over to  
customers. The Rolls-Royce brand also reported  
strong volume growth (+25.5%) in 2007. With  
7.1  
11.6  
Other  
1
,010 units sold, it was able to surpass the 1,000  
compared to the previous year. In Italy, the 100,000  
mark was surpassed for the first time. The sales  
volume there rose by 10.9% with 106,992 units  
sold. In Spain, the sales volume climbed by 15.6%  
mark for the first time.  
Sales volume increases on nearly all markets  
The car sales volume increase recorded by the BMW to 72,853 units. The increase in France (+23.1%)  
Group in 2007 was spread over practically all mar-  
kets. Particularly high growth rates were achieved in  
the emerging markets of South America and Asia,  
notably China.  
was particularly sharp with a sales volume of 65,093  
units. Sales also grew strongly in Poland (3,543  
units/+65.0%) and in Russia (14,712 units/+54.5%).  
A sales volume increase of12.2% was recorded  
In North America, retail sales increased by 7.9% in Asia. In total, 159,508 vehicles were handed over  
to 363,966 units. In total, 336,225 vehicles were sold to customers in this region. Strong growth was again  
in the USA, the BMW Group’s largest single market,  
recorded on the Chinese markets (China, Hong Kong,  
Taiwan), with 61,195 units sold (+36.7%). The 2.6%  
decrease in sales volume in Japan (60,488 units)  
should be seen in the light of the 5% contraction  
of the market as a whole. In India, where the BMW  
Group operates its own assembly plant since March  
2007, sales were up five-fold to 1,398 units  
(+429.5%).  
7.1% more than in the previous year.  
In Europe, the number of cars sold in 2007 in-  
creased by 10.0% to 898,339 units. Whereas the  
German market as a whole contracted by 9%, the  
number of cars delivered by the BMW Group fell by  
only 1.5% to 280,938 units. The BMW Group sold  
173,818 units in the United Kingdom, up 12.8%  
BMW Group Deliveries of automobiles by region and market  
in 1,000 units  
4
4
3
3
2
1
1
80  
20  
60  
00  
40  
80  
20  
Rest of Europe  
North America  
Germany  
United Kingdom  
Asia  
Other markets  
6
0
03  
04  
05  
06  
07  
Rest of Europe  
North America  
Germany  
264.6  
294.9  
255.8  
134.5  
103.5  
51.6  
299.7  
315.9  
283.6  
145.3  
106.4  
57.9  
350.8  
329.0  
295.9  
156.2  
125.7  
70.4  
375.0  
337.4  
285.3  
154.1  
142.2  
80.0  
443.6  
364.0  
280.9  
173.8  
159.5  
78.9  
United Kingdom  
Asia  
Other markets  
18  
Group Management Report  
BMW remains the most successful premium  
car brand in the world  
In total, 1,276,793 BMW brand cars were sold in  
the sales volume fell to 19,626 units (–10.6%) for  
model life-cycle reasons. This figure comprised  
9,967 BMW 6 Series Coupés (–16.5%) and 9,659  
BMW 6 Series Convertibles (–3.5%).  
2
007, 7.7% more than in the previous year, thereby  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
creating a new retail sales volume record. No other  
premium automobile brand was selected by so many the sales performance of the BMW 7 Series was in  
customers in 2007.  
Now nearing the end of its product life-cycle,  
line with expectations. In total, 44,421 units (–11.6%)  
of the BMW 7 Series were handed over to customers  
in 2007.  
In its fourth year since market launch, sales of  
the BMW X3 Sports Activity Vehicle remained at a  
high level of 111,879 units (–1.9%).  
The new BMW X5, on the North American mar-  
kets since November 2006, has also been available  
in Europe and Asia since March 2007. Sales of  
the BMW X5 grew sharply in 2007 with a total of  
120,617 units (+60.1%) handed over to customers.  
Now in its sixth year since market introduction,  
the BMW Z4 could not match the sales volume figure  
achieved in 2006. 28,383 units of the BMW Z4 were  
sold, down 8.4% against the previous year.  
165,803 units of the BMW 1 Series (+9.1%)  
were sold. This increase was driven in particular by  
the introduction of the three-door version in May  
2007. Additional impetus came from the new BMW  
Series Coupé towards the end of the year. The  
BMW 1Series Convertible available from spring 2008  
will further add to the appeal of this model series.  
The BMW 3 Series with its Sedan, Touring,  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
1
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
Coupé and Convertible versions was once again the  
best-selling BMW model series (43.5%) and was  
also well ahead of its nearest competitors. Altogether,  
5
55,219 units of this model series were sold, 9.2%  
more than the previous year’s figure. This includes  
10,194 units of the BMW 3 Series Sedan (–7.7%)  
and 102,399 of the BMW 3 Series Touring model  
–2.9%). Sales of the BMW 3 Series Coupé con-  
3
(
Proportion of diesel-powered cars continues  
to rise  
tinued to make good progress in 2007, its first year  
of full availability. 89,572 units of the BMW 3 Series  
Coupé were handed over to customers, representing  
a117.5% increase over the previous year.The BMW  
Series Convertible, available on the markets since  
March 2007, also enjoyed a similarly good perform-  
ance with sales up by 109.9% to 52,970 units.  
The revised BMW 5 Series has been available  
since the end of March 2007. In total, 230,845 units  
were sold in 2007, slightly fewer (–0.6%) than the  
The BMW brand was the most successful supplier of  
diesel vehicles in the premium segment in 2007. In  
many European countries, the proportion of diesel-  
powered cars is significantly higher than the equiva-  
lent petrol-powered versions. The highest proportion  
(93%) of BMW brand diesel vehicles was recorded  
in Portugal. Similarly high proportions were also re-  
corded in France and Italy (both 89%) and Belgium  
(including Luxembourg), where the proportion was  
3
previous year’s high level. Sales of the BMW 5 Series 88%. In Germany, the proportion of diesel-powered  
Sedan, at 181,534 units, were down 0.6% on the  
previous year and the figure for the BMW 5 Series  
Touring was down by 0.7% to 49,311 units.  
Due to the fact that the revised BMW 6 Series  
did not become available until September 2007,  
BMW brand cars rose by four percentage points in  
2007 to 63%.  
Diesel-powered BMW brand cars will also be  
sold in the USA in future. This was confirmed by the  
BMW Group during the North American International  
BMW brand cars in 2007 – analysis by series  
Deliveries of BMW diesel automobiles  
as a percentage of total BMW brand sales volume  
in 1,000 units and as a percentage of total volume  
2.2  
9.4  
13.0  
550  
1
3
5
6
7
Series  
Series  
Series  
Series  
Series  
500  
450  
400  
350  
300  
250  
8.8  
.5  
3
1.5  
X3  
X5  
Z4  
18.1  
43.5  
03  
04  
05  
06  
07  
units  
273.7 352.5 438.3 472.7  
525.9  
as a percentage of  
total volume  
29  
34  
39  
40  
41  
19  
Auto Show in Detroit in January 2008. From autumn Rolls-Royce brand cars left the BMW Group plants in  
008 onwards, the BMW X5 and the BMW 335d, 2007 (+12.8%).  
1,302,774 BMW brand cars were manufactured,  
10.5% more than in the previous year. In addition,  
37,700 MINI brand cars were manufactured in the  
MINI Production Triangle in the United Kingdom in  
2
both powered by 3.0-litre in-line six-cylinder diesel  
engines will be available on the American market.  
2
MINI models performing successfully  
The new MINI has been available to customers since 2007, representing a 27.3% production volume  
November 2006 and created significant momentum  
in 2007. Sales of MINI brand cars were up by18.5%  
compared to the previous year, reaching a new retail  
sales volume record figure of 222,875 units.The  
new MINI Clubman was launched in November in  
the Cooper and Cooper S variants and has already  
achieved a sales volume of almost 5,000 units.  
The high-value model mix of the MINI brand  
increase.1,029 Rolls-Royce Phantoms were manu-  
factured at Goodwood, England, during the year  
(+21.5%), including 300 Drophead Coupés.  
Production network demonstrates high level  
of efficiency  
The BMW Group’s production network again dem-  
onstrated its capabilities in 2007 by handling a total  
of 16 model start-ups (eight new and eight model  
revisions) and 13 start-ups for engines.  
was raised even further in 2007. More than one half  
of customers (55.9%) opted for the MINI Cooper.  
The MINI Cooper S and the MINI One accounted for  
Productivity of the BMW Group’s production  
29.9% and 14.2% respectively of the sales volume. network improved by well over10% in 2007. One  
major contributing factor to this was the consistent  
ability to focus efforts on generating added value  
throughout the whole of the production process.  
The BMW Group continued to expand its pro-  
duction network in 2007. A new assembly plant for  
Rolls-Royce registers growth for the fourth  
time in succession  
The Rolls-Royce brand was again market leader in  
its segment during the past year. With 1,010 vehi-  
cles handed over to customers, it posted a new sales BMW 3 Series and 5 Series production was officially  
volume record (+25.5%). The new Rolls-Royce  
Phantom Drophead Coupé also made a good con-  
tribution towards this performance. Since its sales  
launch in summer 2007 it has been purchased by  
opened in March 2007 in Chennai, India.This is  
part of the “production follows the market” strategy,  
creating opportunities to engage in markets with  
long-term growth potential. The first BMW 3 Series  
vehicle rolled off the assembly line in Chennai in  
February 2007 and production of BMW 5 Series  
vehicles commenced in May.  
205,044 units of the BMW 3 Series Sedan and  
the BMW 3 Series Touring were produced at the  
BMW plant Munich in 2007. In October, the new  
visitors’ walkway through the Munich plant – the so-  
called “production mile” – was commissioned to  
coincide with the opening of the BMW Welt. Visitors  
are able to obtain an insight into the production of  
253 customers.  
Preparations for the Coupé version announced  
in September 2007 are running according to plan.  
The first Phantom Coupés will be handed over to  
customers in the second half of 2008.  
Car production volume at all-time high level  
The BMW Group also increased its production  
volume figure, recording new high levels for all  
three brands. In total, 1,541,503 BMW, MINI and  
MINI brand cars in 2007 – analysis by model variant  
MINI brand cars in 2007 – analysis by engine variant  
as a percentage of total MINI brand sales volume  
as a percentage of total MINI brand sales volume  
2.2  
14.2  
MINI  
15.8  
MINI Cooper (includingCooper D)  
MINI Convertible  
MINI Clubman  
MINI Cooper S  
MINI One  
55.9  
29.9  
82.0  
20  
Group Management Report  
B
MW cars during a two-hour visit. Since it opened,  
Automobile production of the BMW Group by plant in 2007  
in 1,000 units  
some 20 tours (with up to 30 visitors) take place each  
day. The production mile, which starts and finishes in  
the BMW Welt, runs through the pressing plant, chas-  
sis construction, paint shop, engine construction and  
assembly areas. This will enable up to 150,000 guests  
to visit the BMW plant in Munich each year.  
The BMW plant Dingolfing celebrated its 40th  
anniversary in March 2007. More than seven million  
BMW brand cars have rolled off the production lines  
since it opened. In 2007, a total of 282,867 vehicles  
left the plant. In addition to the model revisions of  
the BMW 5 Series Sedan, the BMW 5 Series Touring  
and the two M5 models in March, the revised BMW  
Regensburg  
Dingolfing  
111.7  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
32.8  
1.0  
50.2  
Oxford  
303.8  
Munich  
157.5  
Leipzig  
Spartanburg  
Rosslyn  
158.9  
282.9  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
Goodwood  
Shenyang ( joint venture)  
Contract production Magna Steyr  
205.0  
237.7  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
6
Series rolled off the production lines for the first  
Three new start-ups were implemented at the  
time in September. Construction work began in mid- BMW plant Regensburg in 2007, namely the model  
November on a new building in which, from 2009  
onwards, a completely new method of pressing com-  
ponents will be introduced, namely hot forming.  
Compared to conventional techniques, hot forming  
increases the stability of components by a factor of  
two to three. Depending on the specifications for  
their intended functions, components can be made  
thinner and therefore lighter.  
revision of the BMW 1 Series five-door version in  
March, the new M3 Coupé in June and the new  
M3 Sedan in December. In total, 303,766 BMW cars  
were manufactured at the site in the course of  
2007. In August, the BMW plant Regensburg was  
presented the J.D. Power Plant Award for the best  
plant in Europe. In December, construction com-  
menced on the extension of the pressing plant  
The BMW plant Landshut has also been operat- which will have 80% more capacity and will start  
ing as a BMW production site for 40 years, supplying operations at the end of 2009.This will increase  
innovative vehicle components to the production  
network. In January, a new highly automated pro-  
the Group’s own share of value-added to the  
vehicle and at the same time reduce logistics  
duction line was commissioned to produce the light- costs.  
weight roof for the new BMW M3. The BMW Group  
In total, 158,974 vehicles were produced at  
is thus setting new standards in the industrialised  
production of vehicle components made of carbon  
reinforced plastic (CRP). Following completion of  
the second construction phase, the new replace-  
ment engine production facilities in Landshut were  
commissioned in May 2007.The new structures are  
enabling the process chain to be optimised further  
by eliminating activities which do not add value and  
by reducing set-up and throughput times. A new  
building for the production of car interior compo-  
nents for future models also went into operation to-  
wards the end of 2007.  
the BMW plant Leipzig in 2007. Following the  
production start-ups for the new BMW 1 Series  
models (three-door version, Coupé and Convert-  
ible), several model variants are now being manu-  
factured at the Leipzig plant. Rapid and flexible  
processes have made it possible to achieve the  
planned daily production volume after only three  
months. In September, the decision was taken  
to expand the BMW plant Leipzig by the end of  
2009 with a planned capital expenditure volume  
of approximately euro 100 million. Over the coming  
two years, a pressing plant and component manu-  
facturing facilities for door, bonnet and boot panels  
will be built at the BMW site.  
The new Vocational and FurtherTraining Centre  
at the BMW Landshut plant also took up activities in  
July 2007. Approximately 100 apprentices and their  
trainers at the plant now have access to a modern  
816,900 engines were built at the BMW Group’s  
largest engine plant in Steyr, Austria, in 2007, two  
training workshop with additional space for teaching. thirds (67%) of which were diesel engines. Since  
The further training and adult education facilities  
comprise four training and seminar rooms. The new  
centre will ensure the long-term supply of suitably  
trained high-quality staff for the Landshut plant.  
starting operations 25 years ago, more than ten  
million BMW engines have left the plant. January  
saw the start of production of the fourth genera-  
tion of four-cylinder diesel engines, an important  
21  
element in the overall package of measures labelled  
EfficientDynamics.  
version of the BMW 5 Series Sedan.This model is  
only manufactured at the Shenyang plant and is in-  
tended exclusively for the Chinese market.  
BMW cooperation partner Magna Steyr  
Fahrzeugtechnik, based in Graz, Austria, manufac-  
tured 111,665 units of the BMW X3 for the BMW  
Group in 2007. The decision to have the MINI brand  
Sports Activity Vehicle manufactured by Magna Steyr  
was taken in December.  
In February, the BMW Group announced that  
it would be investing euro 14 million to expand its  
diesel development centre in Steyr. The focus will  
be on increasing capacities in the area of vehicle  
measurement technology and function testing.  
The Hams Hall engine plant is the only site  
within the production network that produces engines  
for both the BMW and MINI brands. In total, 367,000  
engines left the plant in 2007, of which 172,600  
units were intended for MINI vehicles and 194,400  
units for BMW vehicles. In mid-April, the one-mil-  
lionth engine came off the production lines since  
the Hams Hall plant was commissioned.  
One millionth MINI produced  
Six years after going into production, the one-mil-  
lionth MINI rolled off the production line at the Oxford  
plant at the beginning of April 2007. This specially  
equipped and uniquely painted MINI was added to  
the BMW Group Mobile Tradition collection.  
In September, series production of the third  
model variant, the MINI Clubman, began at the MINI  
Production Triangle, comprising the Hams Hall,  
Oxford and Swindon plants. The BMW Group an-  
nounced that annual production capacity at the  
Oxford plant will be increased in the medium  
term to 260,000 units without additional capital  
expenditure.  
The first new-generation BMW four-cylinder  
petrol engine left the plant in January. It incorporates  
High Precision Injection technology and boasts sig-  
nificantly lower fuel consumption and CO emission  
2
values.  
The BMW plant Rosslyn in South Africa manu-  
factures only BMW 3 Series Sedans. In 2007, a total  
of 50,168 vehicles left the plant. As part of the on-  
going process of optimising logistics workflows, a  
nearby supplier was linked directly to the Rosslyn  
plant in 2007. This results in shorter and faster trans-  
port routes and reduces logistics costs. As further  
advantages, it is no longer necessary to use the  
public road system and environmental pollution is  
reduced.  
Successful production start for the  
Rolls-Royce Phantom Drophead Coupé  
For the first time, more than1,000 Rolls-Royce vehi-  
cles were manufactured in a single year at Goodwood,  
England. The first Rolls-Royce Drophead Coupé  
left the factory in June 2007.  
In total, 157,530 units of the BMW X5 and Z4  
Series left the BMW plant Spartanburg, USA, in  
In October 2007, Rolls-Royce Motor Cars  
2
007. As part of its strategic realignment, the BMW  
announced that it would be increasing production  
capacity at the Goodwood plant. This step was  
necessary as a result of the decision to develop a  
further model in addition to the Phantom family and  
in the light of the high demand for existing models.  
Group has announced that annual production ca-  
pacity at the Spartanburg plant will be increased in  
the medium term to 240,000 units. It is planned  
that the X6 and a possible successor to the X3  
will be built there alongside the BMW X5 and Z4. In  
February 2007 the US Environmental Protection  
Agency designated the BMW plant Spartanburg as  
“
Energy Partner of the Year”. The award was given  
in recognition of the fact that the Spartanburg plant  
had converted its energy supply for the paint shop  
to run on methane gas collected from a local waste  
disposal site, thereby avoiding some 59,000 tons of  
CO emissions per annum.  
2
The plant in Shenyang, North China, is oper-  
ated by the distribution and production joint venture  
BMW Brilliance Automotive Ltd. In total, 32,760 units  
of the BMW 3 Series and 5 Series were produced  
there in 2007, including 21,192 units of the extended  
22  
Group Management Report  
Motorcycles segment sets new sales volume  
record  
With 102,467 BMW motorcycles sold in 2007, the  
BMW Group registered a new sales volume record,  
surpassing the previous year’s figure by 2.4%. An  
and the G 650 Xchallenge, G 650 Xmoto and  
G 650 Xcountry models were all introduced to the  
markets in spring 2007, followed by the HP2 Mega-  
moto in June.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
The new HP2 Sport was presented at the end of  
important contribution to this development was made September at the motorcycle fair in Paris and will be  
by the new models of the G 650 X series which have  
been available on the markets since spring 2007.  
available on the markets from March 2008 onwards.  
The HP2 Sport is the sportiest, most powerful, but  
also the lightest series Boxer to date and is designed  
primarily to attract ambitious, sports-minded motor-  
cyclists.  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
BMW motorcycles sales develop divergently  
from country to country  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
The number of BMW motorcycles sold continued  
to develop divergently from one country to the next  
in 2007. The BMW Group sold 72,567 motorcycles  
in Europe, 1.7% fewer than one year earlier. In Ger-  
many, sales of BMW motorcycles, at 21,507 units,  
were down by 8.9% as the market continued to  
contract. By contrast, sales were up in Italy (14,424  
units/+5.7%) and Spain (10,384 units/+3.8%).  
In the USA, where the market also contracted,  
the number of BMW motorcycles sold fell by 5.7%  
to 12,094 units.  
Five new BMW motorcycles made their world  
debuts at the International Motorcycle Fair in Milan  
in November 2007. The R1200 GS and R1200 GS  
Adventure models have been available to customers  
since the end of January 2008. Both of these mod-  
els have been enhanced and are now fitted with  
more powerful boxer engines, resulting in a 5% bet-  
ter performance, and new gear ratios. These features  
result in a significant increase in both traction and  
acceleration.  
Outlook  
The new medium-class BMW F 800 GS long-  
distance enduro combines excellent off-road char-  
Sales recorded in Japan, however, jumped by  
25.2% to 3,311 units, bolstered in particular by sales acteristics and above-average long-distance quali-  
of the lighter models of the G 650 X series.  
ties. This motorcycle is powered by the two-cylinder  
engine from the F 800 Series. The related BMW  
F 650 GS model is another new addition. As an all-  
round variant for newcomers, this model is designed  
for easier control and mainly for use on roads and is  
also powered by the same two-cylinder engine with  
a somewhat lower performance capability. Both of  
R1200 GS remains the most popular  
BMW motorcycle  
As in the previous year, the R1200 GS (a long-dis-  
tance enduro) was again the best-selling BMW  
motorcycle. Including the Adventure version, 30,077  
units of this model were sold in 2007.The R1200 RT these models will be available on the markets for the  
touring bike came in second place with 12,201 units  
sold, followed by the F 650 GS, of which 10,461 units  
were sold (including the Dakar version).  
start of the 2008 season.  
The BMW Group also presented the BMW  
G 450 X Sports Enduro as a fifth new product. This  
model, exclusively developed for enduro sports  
activities, will be launched in the second half of  
2008.  
Model initiative continued  
The BMW Group’s Motorcycles segment contin-  
ued its model initiative in 2007. The K1200 R Sport  
BMW motorcycles delivered  
BMW Group – key motorcycle markets 2007  
in 1,000 units  
as a percentage of sales volume  
1
05  
00  
Germany  
30.5  
21.0  
1
Italy  
9
5
0
5
0
5
USA  
9
8
8
7
Spain  
14.1  
France  
United Kingdom  
Other  
5.1  
11. 8  
7.4  
03  
04  
05  
06  
07  
10.1  
93.0  
92.3  
97.5 100.1  
102.5  
23  
BMW motorcycles in 2007 – analysis by series  
as a percentage of sales volume  
Successful year for the Financial Services  
segment in 2007  
The Financial Services business achieved further  
15.8  
profitable growth in 2007 and again made an impor-  
tant contribution to the overall performance of the  
BMW Group. The total business volume as disclosed  
in the balance sheet increased by 16.5% to euro  
R Series  
F Series  
K Series  
26.1  
58.1  
51,257 million. At the year-end, 2,629,949 lease and  
financing contracts were in place with dealers and  
retail customers, representing an increase of 15.8%  
over the previous year. The proportion of new BMW  
Group vehicles leased or financed by the Financial  
Services segment was 44.7%, 2.3 points above the  
percentage recorded in the previous year.  
Motorcycle production volume at previous  
year’s level  
Motorcycle production volume in 2007, at104,396  
units, was 0.6% above the previous year’s level.  
Regional presence expanded  
The Financial Services segment continued its strat-  
egy of regional expansion by acquiring companies  
in Germany, Malaysia and Hong Kong, thereby open-  
ing up new opportunities for growth.  
96,006 units were produced at the BMW plant Berlin  
and 8,390 units by the cooperation partner, Piaggio  
S.p.A. in Noale, Italy.  
Four years after commencing production, the  
This was a further demonstration of the BMW  
Group’s determination to broaden the international  
scope of its financial services business. The Finan-  
cial Services segment now provides services to  
customers in more than 50 markets, either with its  
own companies and divisions or in the form of ven-  
tures based on cooperation agreements.  
The BMW Group acquired DEKRA SüdLeasing  
Services GmbH (renamed to: BMW Fuhrparkman-  
agement Beteiligungs GmbH) and that entity’s sub-  
sidiaries at the beginning of April.  
In mid-April, the BMW Group acquired Sime-  
Lease (Malaysia) Sdn Bhd and its subsidiary, Sime-  
Credit (Malaysia) Sdn Bhd. These entities are oper-  
ating in the meantime as BMW Lease (Malaysia) Sdn  
Bhd and BMW Credit (Malaysia) Sdn Bhd. In Octo-  
ber, the BMW Group acquired 51% of the shares  
of CEC Finance Ltd. (renamed to: BMW Financial  
Services Hong Kong Limited), based in Hong Kong.  
These acquisitions in Malaysia and Hong Kong  
1
00,000th R1200 GS (including the Adventure  
version) left the BMW plant Berlin at the end of July  
007. Never before have so many units of one  
model been produced at the Berlin plant in such a  
short space of time.  
Five new models came off the production line  
for the first time in 2007. Production of the BMW  
HP2 Megamoto commenced at the beginning of  
May. This was followed in October by the BMW  
R1200 GS and the Adventure variant and in Novem-  
ber by the BMW F 800 GS and the F 650 GS.  
2
BMW Group acquires Husqvarna  
The BMW Group completed the acquisition of the  
motorcycle manufacturer Husqvarna on 1 October.  
This company operates under the name Husqvarna  
*
Motorcycles S.r.l., Cassinetta di Biandronno.  
The Husqvarna models are mainly intended for  
the competitive sports market. With this move, the  
BMW Group is therefore expanding its product range have opened up two further fast-growing markets in  
with a view to increasing its appeal to younger buyers Asia.  
and to covering the off-road and supermoto seg- The Financial Services segment set up a new  
ments. The acquisition will also give the Motorcycles company in Argentina in 2007. This entity offers  
segment access to a worldwide sales network in the  
off-road segment.  
financing and insurance products to retail customers  
and financing to dealers.  
In addition, cooperation arrangements were  
put in place in the Czech Republic and Slovakia and  
organisational units created in Poland, Hungary and  
India during 2007.  
*
Motorcycles S.r.l., Cassinetta di Biandronno  
, is not included in the con-  
Husqvarna  
solidated financial statements for the financial year 2007.  
24  
Group Management Report  
Retail customer business remains strong  
Finance and lease business with retail customers,  
the segment’s largest line of business, was further  
expanded in 2007. New contracts were signed with  
retail customers to the value of euro 28,462 million,  
representing a 16.4% increase over the previous  
year. The number of new contracts signed in a sin-  
gle year surpassed the one million mark for the first  
time and, at 1,086,493 contracts, exceeded the  
previous year’s level by 18.6%. Approximately 60%  
of these contracts related to new vehicles manufac-  
tured by the BMW Group.  
tended during the period to Malaysia and Hong Kong.  
This means that credit financing and lease contracts  
are now being offered under the name “Alphera” and  
“up2drive” in 25 markets, either via multiple-brand  
dealerships or directly by Group companies. The  
“up2drive” brand name was introduced successfully  
in the area of direct business in order to meet differ-  
ing marketing needs. Business via dealers continues  
to be transacted under the name “Alphera”. One  
advantage of this is that it takes account of the trend  
amongst dealers to look for financing solutions with  
a single business partner. At the same time, it also  
takes into account the growing practise, particularly  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
At 31 December 2007, leasing business ac-  
counted for 38.2% of total new retail customer busi- amongst younger customers, of obtaining financing  
ness, 0.8 percentage points above the proportion  
recorded one year earlier. Lease business grew by  
Outlook  
via the internet.  
New business with multi-brand financing in 2007  
21.0% and credit financing increased by17.2% com- was highly encouraging. In total, 124,556 new con-  
pared to the previous year.  
tracts were signed, more than doubling the number  
achieved in the previous year. The largest proportion  
of new contracts related to the Americas region.  
The number of new contracts signed for used  
cars rose in 2007 by 15.0%. Approximately three-  
quarters of these were related to the credit financing  
of used BMW and MINI brand cars.  
Continuous growth in the area of dealer  
financing  
At 31 December 2007, 2,401,208 contracts  
were in place with retail customers, 15.6% more  
than one year earlier. The growth was spread across  
all regions. The portfolio of retail customer business  
contracts was up by 16.8% in Germany, by 13.9%  
in the remaining European markets and by 16.2%  
for the markets in the Asia/Oceania/Africa region.  
There was another sharp rise (+16.0%) in the  
Americas region, which, with 790,808 contracts,  
also accounts for the largest proportion of contracts  
in the retail customer business.  
The Financial Services segment supports the BMW  
Group dealer organisation with a comprehensive  
range of products. In addition to the financing of vehi-  
cle inventories held by dealerships, these activities  
also include real estate and equipment financing.  
By the end of the period under report, dealer  
financing had attained a total business volume of  
euro 8,364 million, corresponding to a growth rate  
of 15.4%. 228,741 dealer financing contracts were  
in place at 31 December 2007.  
As in the previous year, organic growth gener-  
ated within the multi-brand line of business and  
geographical expansion both contributed to this de-  
velopment.  
Multi-brand financing accelerates growth  
Business with multi-brand financing continued to  
make good progress in 2007. Operations were ex-  
Contract portfolio of BMW Group Financial Services  
in 1,000 units  
Contract portfolio retail customer financing of  
BMW Group Financial Services 2007  
as a percentage by region  
2,800  
2,600  
2,400  
2,200  
2,000  
1,800  
1,600  
13.3  
America  
Rest of Europe  
Germany  
32.9  
Asia/Oceania/Africa  
25.9  
03  
04  
05  
06  
07  
27.9  
1,623 1,843 2,087 2,271  
2,630  
25  
Fleet business activities attain new magnitude  
The BMW Group operates internationally in the field  
of multi-brand fleet business via the Alphabet group  
of companies as a provider of financing, full-service  
leasing and fleet management services. Business  
volumes expanded rapidly in 2007 following the ac-  
quisition of DEKRA SüdLeasing Services GmbH (re-  
with 395,039 insurance contracts signed. At the  
end of 2007, the Financial Services segment had  
a worldwide portfolio of 947,394 insurance con-  
tracts.  
Deposit business influenced by increased  
competition  
named to: BMW Fuhrparkmanagement Beteiligungs The intense level of competition in the area of de-  
GmbH) and as a result of continued organic growth.  
Alphabet has commenced operations in Mexico,  
thus establishing a foothold for the first time on the  
American continent. Operations have also been  
taken up in Denmark, which means that Alphabet is  
now represented throughout the whole of Scandina-  
via. The international customer base also grew sig-  
nificantly in the 15 countries where Alphabet oper-  
ates. At the year-end, the contract portfolio covered  
posit business remained evident in 2007. The seg-  
ment’s deposit volume worldwide at 31 December  
2007 amounted to euro 5,732 million and there-  
fore 0.8% lower than the figure recorded one year  
earlier.  
The main success factors for investment fund  
business were the exclusive certificates introduced in  
the previous year and the new fund-of-funds product  
concept “ComfortInvest”. The unabated trend to-  
wards private old-age pension arrangements by  
making regular transfers to investment funds also  
had a positive impact.In order to meet the growing  
advisory needs of customers, the range of services  
on offer in Germany was expanded accordingly,  
including the opportunity for customers to obtain in-  
vestment advice by telephone.  
By the year-end, the number of customer deposit  
accounts had increased by 6.0% to 31,801.  
BMW and MINI Card activities increased world-  
wide in 2007. At the end of the year under report,  
the Financial Services segment serviced 393,741  
credit card accounts, 15.9% more than one year  
earlier.The BMW Card is available in eleven countries.  
The MINI Card is part of the product range offered  
in Germany, the USA, the United Kingdom and  
Japan.  
2
79,843 units, up by 55.6% compared to the end  
of the previous year. Excluding the contracts taken  
over in conjunction with the acquisition of DEKRA  
SüdLeasing Services GmbH (renamed to: BMW  
Fuhrparkmanagement Beteiligungs GmbH), the vol-  
ume increased by 21.2%. Thanks to organic growth  
and targeted acquisitions, a major provider of fleet  
business services has meanwhile emerged in Ger-  
many within the BMW Group stable. The BMW  
Group has also moved into a new magnitude in this  
dynamic business sector in international terms and  
is now one of the top ten fleet service providers in  
Europe.  
Continued growth in the area of insurance  
business  
In addition to credit financing and lease contracts,  
the Financial Services segment also operates as an  
agent for motor vehicle, residual liability and other  
vehicle-related insurance policies. These services  
are now being offered in more than 30 markets via  
cooperation arrangements entered into with local  
insurance companies. The segment continued its  
strategy of expanding insurance business with cus-  
tomers in international markets and entered into  
new cooperation agreements with partners in India,  
China, Greece, Hungary, Argentina and Portugal.  
The range of products on offer in existing markets  
was also expanded and new products launched on  
the markets in Italy and Spain.  
Awards for service quality  
The excellent cooperation between the Financial  
Services segment and the dealer organisation re-  
ceived recognition in 2007 with a number of awards  
won. The BMW Group was presented the J.D. Power  
and Associates “Dealer Satisfaction Award” in both  
the USA and Japan.  
A strong, customer-friendly approach repre-  
sents an important factor for the ongoing success of  
the BMW Financial Services segment in the area of  
retail customer business. This was documented in  
2007 by the presentation of the J.D. Power and  
Associates “Customer Satisfaction Award” to BMW  
Group Financial Services in the USA.  
These measures contributed to the fact that  
new insurance business grew by 12.2% in 2007  
26  
Group Management Report  
Risk situation remains evenly balanced  
Workforce virtually unchanged  
During the financial year 2007, the credit risk for  
credit and lease financing activities remained, with  
the exception of the USA, at a similar level to that  
of 2006. There, the risk situation was negatively in-  
fluenced by the credit crisis. Compared to the pre-  
vious year, the bad debts ratio increased by 5 basis  
points to 0.46%. The interest rate risk is managed  
using a risk-return approach. Diversified value-at-  
The BMW Group’s workforce increased slightly  
(+0.9%) during the financial year 2007 to stand at  
107,539 employees at 31 December 2007. This  
was largely attributable to acquisitions made by the  
BMW Group in the financial services sector. Approx-  
imately 75% of the Group workforce is employed in  
Germany, where the number of employees edged  
up by 232 in 2007.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
risk, as measured by the Financial Services segment  
The employee fluctuation ratio at the BMW  
*
– Net Assets Position  
to quantify the interest rate risk , increased during the Group has been at a low level for many years in com-  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
year from euro 34.9 million to euro 37.3 million.  
parison with other automobile manufacturers and  
with companies operating in other sectors.The BMW  
Group continues to recruit employees on a targeted  
basis in order to compensate for fluctuation. In addi-  
tion to more than 1,200 new apprentices taken on,  
a total of 886 permanent jobs were advertised and  
filled externally by BMW AG.  
*
based on a 99% confidence level and a holding period of ten days  
Outlook  
Softlab changes name to Cirquent  
The softlab Group offers consultancy and other  
services along the entire value-added chain, with its  
main focus on the banking, insurance, telecommu-  
nication and manufacturing sectors. In order to un-  
derline its strong position as an organisation offering  
first-class service under one single brand name,  
the softlab Group changed its name to Cirquent at  
the end of 2007.  
High number of apprenticeships  
1,214 young people commenced apprenticeships  
with the BMW Group at the start of the new training  
year. A total of 4,281 apprentices were undergoing  
Cirquent has continued to strengthen its market their training with the BMW Group at the end of  
position over the past year. This is highlighted by  
the rise in revenues from euro 262 million in 2006 to  
euro 286 million in 2007. One of the cornerstones  
on which this growth has been built is the expansion  
consultancy business, including the Finance Trans-  
formation Unit, a new line of business which spe-  
cialises in providing advisory services to finance de-  
partments of corporate enterprises.  
In addition to sector-specific consultancy ser-  
vices, Cirquent also offers customer management,  
finance transformation, IT management, SAP con-  
sulting and application management services.  
2007, 1.8% fewer than at the end of the previous year.  
This small decrease came about despite the steady  
number of apprentices recruited and reflects the fact  
that some apprentices were able to complete their  
vocational training early as a result of their above-  
average performance. These vacated positions can-  
not be replaced, however, until the next round of re-  
cruitment. This is also the reason why the apprentice  
ratio in Germany (i.e. the ratio of apprentices to the  
total workforce) fell by 0.1 percentage points in 2007  
to a level of 4.8%.  
Starter programmes for high school leavers and  
university graduates are also in place to complement  
the range of opportunities available to those about  
BMW Group apprentices at 31December  
5,500  
5,000  
4,500  
4,000  
3,500  
3,000  
2,500  
03  
04  
05  
06  
07  
4,306 4,464 4,464 4,359  
4,281  
27  
to begin their careers. This includes the “Fastlane”  
programme (a programme to help university and  
works students that have previously excelled on work  
experience with the BMW Group) and the “Drive”  
programme (a starter and development programme  
for university graduates with up to three years’ pro-  
fessional experience).  
Employee fluctuation ratio BMW AG*  
as a percentage of workforce  
3.5  
3.0  
2.5  
2.0  
1.5  
1.0  
0.5  
Further training tailored to requirements  
As a premium provider, the BMW Group attaches  
great importance to both the basic and the further  
training of its workforce. Further training is always  
tailored to suit requirements and carried out with  
specific objectives in mind. Further training activities  
in 2007 were therefore focused on specific priority  
topics and selected target groups. In 2007, the  
BMW Group invested a total of euro 181 million on  
basic and further training courses for its employees,  
03  
04  
05  
06  
07  
1.43  
1.91  
2.45  
2.68  
2.66  
*
Number of employees on unlimited employment contracts leaving the company  
placements, employees remain abroad for an aver-  
age period of three years. This is a sufficient length  
of time for them to pass on process and technical  
know-how, receive further training while abroad  
and, at the same time, gain international experience  
which will stand them in good stead during the  
course of their subsequent careers. Apart from over  
900 employees who have worked abroad for longer  
periods, more than 500 people were also called up  
1.6% less than in 2006.  
Internationalisation supported by placements  
abroad  
The international transfer of knowledge and network- for short-term international duty.  
ing at all levels are crucial factors for globally operat-  
ing businesses such as the BMW Group. For exam-  
ple, key specialists are moved around between the  
various production sites as start-ups commence for  
new models, thus ensuring the same high quality  
each time.  
In 2007, more than 750 BMW AG employees  
were deployed at foreign locations. The main target  
countries were again the Group’s business locations  
in markets currently experiencing dynamic growth,  
in particular North America, the United Kingdom  
and Asia. Furthermore, approximately175 employees  
from non-German locations were working in Ger-  
many or at other international locations away from  
their home countries. In the case of longer-term  
The BMW Group remains a highly attractive  
employer  
Numerous studies and ranking lists in 2007 con-  
firmed the BMW Group’s reputation as an attractive  
company to work for. In the study “Germany’s Most  
Popular Employers” (Trendence), young academics  
from both the business and engineering fields chose  
the BMW Group as the most popular employer for  
the sixth year running. As documented in the study  
“The Ideal Employer 2007” (Universum), engineers  
and business management graduate career begin-  
ners judge the BMW Group to be one of the most  
attractive employers. The BMW Group’s excellent  
reputation as an employer helps greatly towards  
BMW Group employees  
31.12. 2007  
31.12. 2006  
Change  
in %  
Automobiles  
98,548  
2,989  
4,097  
1,905  
1,793  
98,505  
2,782  
3,478  
1,810  
1,743  
–
7.4  
Motorcycles  
Financial Services  
Other  
17.8  
5.2  
thereof consultancy/software  
2.9  
BMW Group  
107,539  
106,575  
0.9  
adjusted*  
107,539  
107,345  
0.2  
*
Figure for end of previous year including acquired entities  
28  
Group Management Report  
attracting well-qualified newcomers to join the com-  
pany. This special appeal as an employer is not re-  
stricted to the external perception of the company;  
it is also reflected in the outcome of the most recent  
employee survey carried out in 2007. Almost 90%  
of employees stated that they were either satisfied or of action:  
very satisfied with their working situation at the BMW  
Group.This means that employee satisfaction and  
identification with the company have remained at a  
consistently high level since 2002. This employee  
survey is carried out regularly on a worldwide basis  
The necessary overall framework and specific in-  
struments are being developed in conjunction with  
the “Today forTomorrow” project, which takes a  
comprehensive approach.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
The BMW Group has defined five principal areas  
Health management and prophylaxis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Within the action area “health management”, a pro-  
phylactic programme has been developed to en-  
courage employees to adopt a responsible attitude  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
every two years. It is a useful instrument for manage- towards their own health. A new concept has been  
ment, providing the basis for a continuous improve-  
ment process within the company.  
devised for corporate health forums which are not  
confined to specific corporate locations. These fo-  
rums will have an important part to play in the future.  
Any knowledge gained there will be used to identify  
areas where action needs to be taken. They will also  
be the basis for measures (such as weight loss pro-  
grammes) that may need to be aimed at specific  
target groups. It should then be possible to monitor  
the long-term efficacy of any measures taken. So far,  
some 28,000 employees have participated in the  
Outlook  
Joint agreement for BMW AG’s blue-collar and  
white-collar staff implemented  
The new Remuneration Framework Agreement  
(Entgelt-Rahmen-Abkommen – ERA) came into  
force at BMW AG on 1June 2007. Parallel to the in-  
troduction of ERA, a wide-ranging concept for im-  
proving company competitiveness was drawn up in  
cooperation with employee representatives. This new company’s health forums.  
concept includes plans to provide financing for pre-  
retirement part-time working agreements even after  
the current legal requirement for such arrangements  
has expired. This ensures that employees will also  
be able to retire before reaching the statutory retire-  
ment age. BMW AG is the first company to put a  
model in place to follow the statutory regulations.  
Information about healthy living is being offered  
both in seminars and in the health forum.The “Fit for  
Job” seminar is aimed at all employees, while the  
“Fit for Leadership” seminar is specifically tailored to  
the needs of managers. Both seminars show partici-  
pants how they can pay more attention to healthy  
nutrition, physical fitness and mental equilibrium in  
their daily lives.  
“
Today for Tomorrow” project – seeing  
Another outcome is the newly designed reha-  
bilitation network which has already supported over  
800 employees with a shortened, effective rehabili-  
tation programme.  
demographic change as an opportunity  
The ageing of populations of many industrialised  
nations can no longer be avoided. This is having an  
impact on the economy as a whole as well as on  
each individual company.  
Working environment  
In a few years’ time, the BMW Group workforce  
The action area “working environment” is mainly  
will also be considerably older on average than it is at concerned with creating age-compatible working  
present. The ever-rising requirement for greater per-  
formance will have to be fulfilled by an on-average  
conditions in technical and organisational terms –  
with particular regard to workplaces, working hours  
older workforce in future. Older employees also have and job structures. All of these factors can contrib-  
quite specific advantages. They have a wealth of  
experience and are able to pass on their knowledge  
ute enormously to maintaining and extending the  
working capacity of employees in the long term.  
of the organisation and cultural values. The more de- A further objective is to improve the employment  
cisive a company is in encouraging its employees to  
achieve and be engaged, the more successful it will  
be. The BMW Group is already taking appropriate  
action in anticipation of these future developments.  
opportunities for personnel with health-related limi-  
tations.  
A concept for systematic rotation is currently  
being drawn up for use in the production area with  
29  
the aim of reducing repetitive physical strain and  
thus preserving employees’ physical and mental  
flexibility.  
Group Intranet. It is the first communication platform  
to be created specifically aimed at increasing em-  
ployees’ awareness of their responsibility to make  
personal provision for the future. It contains a wealth  
of information and some specific aids relating to  
training, health, working environment and personal  
provision. The BMW Group’s internal media are reg-  
ularly updated on different aspects of saving for the  
Qualification and expertise  
In the future, traditional training methods will be en-  
hanced and to some extent replaced by “hands-on”  
learning. In the action area “qualification”, studies  
are being carried out to identify how learning can best future and highlighting possible areas for action.  
be promoted, both at the workplace and for specific  
functions. Based on the results of these studies, it  
should be possible to determine the most suitable  
This information is wholly aimed at encouraging em-  
ployees to take a pro-active approach to making pro-  
vision for their own future.  
(direct or indirect) methods of learning.These findings  
are also taken into account in the company’s training  
concepts for employee and management staff de-  
velopment.  
One of the functions of qualitative personnel  
planning is to examine how skills and expertise are  
likely to develop within the company. By analysing  
the requirements that result from a changed age  
structure of its workforce, the company will find clues  
as to when and what type of know-how it will require  
Competitive level of personnel expense  
Within an intensely competitive environment, the  
management of personnel expense becomes in-  
creasingly significant. A competitive level of per-  
sonnel expense contributes enormously to the suc-  
cess of the BMW Group.This is primarily concerned  
with bringing the idea of performance into the fore-  
front rather than just a one-sided cost-oriented  
approach. The high degree of motivation amongst  
in the future as well as (and how and when) that know- employees and the positive approach taken to the  
how will disappear as employees leave the company.  
workforce are maintained by a combination of rewards  
determined individually on the basis of performance  
and success and with the aid of flexible working  
time models. Remuneration, working time arrange-  
Individual life-time working models  
In spite of improvements in preventative care, some  
employees may not be able, or may not wish, to con- ments and other benefits are reviewed and modified  
tinue working until they reach the statutory retire-  
ment age. The BMW Group has, together with em-  
ployee representatives, devised new retirement  
models which best suit the needs of those concerned.  
These models are intended to fit in with each  
employee’s future plans and with the company’s  
requirements. The financial basis for these models is  
being set aside.  
regularly and in close cooperation with employee  
representatives.  
In order to give employees the opportunity to  
supplement any self-financed pension plan, an attrac-  
tive deferred remuneration retirement scheme has  
been available to the workforce for several years now,  
allowing part of an employee’s remuneration to be  
converted into pension provision.  
Communication  
Appropriate communication measures help to  
keep managers and employees aware of changes  
taking place in society and within the company. One  
example of this is the electronic portal “My Future  
Provision” which employees can access on the BMW  
30  
Group Management Report  
Design for recycling – EU directive on  
end-of-life vehicles  
models was also extended to other model series.  
For example, the wheel arch liners produced from  
In 2007, the BMW Group pushed ahead with its strat- recycled bumper fascia previously used in the  
egy of designing vehicles with subsequent recycling  
in mind. One of the areas of focus during the year  
was the development of a recycling concept for hy-  
brid vehicles.  
BMW 1 Series and BMW 3 Series are also being  
used in the X5 from 2007 onwards.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Group-wide environmental protection  
measures set standards  
Over the last few years, a network of recovery  
centres for end-of-life vehicles has been set up  
throughout the European Union. Since 1 January  
2007, customers in the EU have been able to return  
their BMW, MINI or Rolls-Royce vehicles to these  
recovery centres to be recycled free of charge.Dur-  
ing 2007, the BMW Group increased the number  
of end-of-life vehicle recovery centres by 7.8%.  
In order to meet the mandatory requirements  
resulting from the EU End-of-life Vehicles Directive,  
both in ecological and commercial terms, plans are  
underway to increase the use of so-called “Post  
Shredder Technology” (PST) in the future. After  
completion of the vehicle shredder process, shred-  
der residue fractions are sorted and sifted into their  
various constituent materials such as metals, plastics  
and minerals, in preparation for further processing.  
On the basis of a large-scale trial performed in 2007  
with approximately 500 vehicles from the current  
model range, the BMW Group was able to demon-  
strate that, with the aid of PST, it meets the manda-  
tory requirements relating to the recycling of end-of-  
life vehicles.  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
The BMW Group’s “Clean Production” philosophy  
is based on the idea of preventative environmental  
protection. Certified environmental management  
systems throughout the BMW Group have been in  
place since 1996. These systems serve as the basis  
for coordinating and optimising the Group’s environ-  
ment protection activities and hence the careful con-  
sumption of resources. The certification audit of the  
production function, in accordance with DIN EN ISO  
9001 and DIN EN ISO 14001, was successfully con-  
cluded in December 2007, once again confirming  
the high standards prevailing at all locations in the  
field of quality and environmental protection. Spe-  
cialist external auditors (the German TÜV organisa-  
tion) once again confirmed a very high standard  
in terms of quality and environmental performance,  
highlighting several processes as exemplary. A  
new objectives-based process was introduced for  
production in 2007, making it easier to measure and  
manage the effective use of resources. Performance  
indicators relevant to environmental protection, such  
as energy consumption and waste levels at the BMW  
Group production sites, are measured and reported  
on a monthly basis and a so-called “environment effi-  
ciency ratio” is calculated. The aim is to improve the  
efficiency ratio by 5% a year. The new “eco-facts” IT  
system was implemented in mid-2007. This system  
collates data for some 150 environmentally relevant  
performance indicators and is therefore an extremely  
useful tool for managing environmental protection  
activities.The introduction of “eco-facts” meant that  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
The EU End-of-life Vehicles Directive also re-  
quires that recycled materials are used in new vehi-  
cles. This involves recycling waste materials from  
production processes or those won from end-of-life  
parts. In 2007, experts at the BMW Group suc-  
ceeded in extending the use of recycled materials  
to other components, such as the mountings for  
bumpers and soundproofing covers for diesel  
engines. The use of recycled materials in individual  
Volatile organic compounds (VOC) per unit produced  
in kg/unit  
Process waste water per unit produced  
in m /unit  
3
3.25  
3.00  
2.75  
2.50  
2.25  
2.00  
1.00  
0.90  
0.80  
0.70  
0.60  
0.50  
*
*
03  
04  
05  
06  
07  
03  
04  
05  
06  
07  
2.88  
2.26  
2.07  
2.04  
2.36  
0.98  
0.83  
0.76  
0.67  
0.64  
*
*
Basis for data expanded in 2007 from ten to 17 locations: Munich, Dingolfing,  
Landshut, Regensburg, Leipzig, Steyr, Rosslyn, Spartanburg, Hams Hall, Oxford  
and, since 2007, Berlin (brake disc production), Eisenach, Swindon, Goodwood,  
Rayong (assembly), Chennai (assembly) and BMW Brilliance in Shenyang.  
Basis for data expanded in 2007 from ten to 17 locations: Munich, Dingolfing,  
Landshut, Regensburg, Leipzig, Steyr, Rosslyn, Spartanburg, Hams Hall, Oxford  
and, since 2007, Berlin (brake disc production), Eisenach, Swindon, Goodwood,  
Rayong (assembly), Chennai (assembly) and BMW Brilliance in Shenyang.  
31  
the number of plants covered by the Group’s envi-  
ronmental protection reporting system went up from  
ten to 17.  
levels already achieved by the longer-standing pro-  
duction sites.  
The plants in Regensburg, Dingolfing and Leip-  
Compared to 2006, the BMW Group reduced  
energy consumption per unit produced by 4.1%  
zig already use powder-based paint technology.  
The BMW plant Landshut set a new benchmark in  
and CO emissions by 10.6%.These reductions  
were achieved by an array of innovative projects and  
measures:  
2007 by reducing solvent emissions in its light metal  
foundry operations. The sand grains needed for  
the casting process are no longer produced using  
synthetic resin binders. Instead, mineral binders are  
2
–
Combined heat and power generation facilities  
(
80% efficiency rate compared to 35% efficiency used which cause practically no smell or emissions.  
rate of conventional energy production) generate  
electricity and heat at plants in Dingolfing, Lands-  
hut, Regensburg, Steyr, Oxford, Spartanburg and  
at the Research and Innovation Centre (FIZ) in  
Munich.  
The BMW Group is the only automobile manufacturer  
in the world currently using this technology on motor  
components such as crankcases and cylinder heads.  
This process reduces the proportion of organic ele-  
ments discharged into the air by 98%.  
–
–
A groundwater cooling system ensures environ-  
ment-friendly air conditioning at the FIZ. This  
involves using near-surface ground water to cool  
parts of buildings, thus saving some 8,000 MWh  
Over the last five years, the BMW Group has  
also significantly reduced the volume of waste water  
it produces. During this period, the amount of water  
used per unit produced was cut by almost 35%.  
The BMW Group accomplished this by using closed  
water circulation systems and by treating waste water  
created during the production process. For example,  
water used in the paint shop, in car washes and for  
waterproof testing on new vehicles is re-used. An  
innovative combination of membrane technologies  
has been in use at the BMW Steyr location since  
the beginning of 2007. At this plant, all waste water  
of electricity and 5,000 tons of CO annually.  
2
The BMW plant Spartanburg meets 63% of its  
energy requirements by using methane gas from  
a nearby landfill site.The gas, which had previously  
gone unused, is used as a source of energy, thus  
reducing the consumption of natural gas. As a  
result, almost 59,000 tons of CO emissions were  
2
avoided in the Spartanburg region in 2007.  
–
In autumn 2007, the BMW Group’s second photo- created during the production process is purified  
voltaic installation was put into operation at the  
BMW Welt in Munich, in addition to the smaller  
one already in place in Leipzig.  
and fed back into the production system. This en-  
abled the plant to save approximately 30 million litres  
of water in 2007.  
Over the past ten years, the BMW Group has suc-  
ceeded in reducing emissions of solvents by nearly  
Environment-friendly transportation solutions  
Logistics experts within the BMW Group analyse  
and optimise all flows of goods – from procurement  
through to delivery – with the objective of keeping  
environmental pollution caused by transportation to  
a minimum. The focus is on cutting down the volume  
of traffic, redeploying to more ecologically favourable  
3
7%. However, due to the fact that the number of  
production sites now covered by the reporting sys-  
tem rose from ten to 17, solvent emissions per unit  
produced were higher in 2007 than in 2006.The  
emissions of the sites recently added to the system  
will be brought down in stages to the low emission  
Energy consumed per unit produced  
CO2 emissions per unit produced  
in MWh/unit  
in tons/unit  
3.10  
3.00  
2.90  
2.80  
2.70  
2.60  
1.05  
1.00  
0.95  
0.90  
0.85  
0.80  
*
1]  
2]  
07  
03  
04  
05  
06  
07  
03  
04  
05  
06  
2.94  
2.94  
2.94  
2.90  
2.78  
1.00  
0.94  
0.99  
0.94  
0.84  
*
1] The increase is attributable to a change in the energy mix.  
Basis for data expanded in 2007 from ten to 17 locations: Munich, Dingolfing,  
Landshut, Regensburg, Leipzig, Steyr, Rosslyn, Spartanburg, Hams Hall, Oxford  
and, since 2007, Berlin (brake disc production), Eisenach, Swindon, Goodwood,  
Rayong (assembly), Chennai (assembly) and BMW Brilliance in Shenyang.  
2] Basis for data expanded in 2007 from ten to 17 locations: Munich, Dingolfing,  
Landshut, Regensburg, Leipzig, Steyr, Rosslyn, Spartanburg, Hams Hall, Oxford  
and, since 2007, Berlin (brake disc production), Eisenach, Swindon, Goodwood,  
Rayong (assembly), Chennai (assembly) and BMW Brilliance in Shenyang.  
32  
Group Management Report  
carrier forms and reducing the surface protection  
used on new cars.  
to a wide range of hybrid solutions. In the long term,  
the BMW Group is committed to the use of hydro-  
gen gained from various renewable energy sources.  
A new procedure for transporting materials  
within the US market was introduced in July 2007  
for the BMW plant Spartanburg, as a result of which  
billing is now based on performance. Since then,  
haulage contractors have only been remunerated on  
the basis of the volume carried, thus automatically  
providing an incentive to plan and use transport ca-  
pacities more efficiently.  
1
1
1
1
4
4
0
0
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7
1
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Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Consistent CO reduction at all levels  
2
The efficient use of fuel is a fundamental criterion  
for every vehicle developed by the BMW Group.  
The status report produced for each vehicle project  
provides clear and transparent information on fuel  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
consumption and CO emissions, highlighting the  
2
– Net Assets Position  
Transportation by sea accounted for 76.8% of  
the total volume transported in 2007, almost on par  
with the previous year’s high level of 76.9%. By  
contrast, as a consequence of wage disputes at the  
Deutsche Bahn (German Railways), the proportion  
degree to which emission reduction targets have  
been achieved.  
The agreement between the European Auto-  
mobile Manufacturers (ACEA) and the European  
Commission included a target of 140 g/km of CO2  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
of goods transported by rail fell from 7.2% in 2006 to emissions for the combined new car fleet of all  
6
.9% in 2007.  
European car manufacturers for 2008. This repre-  
sents a reduction of 25% compared to the base  
year, 1995. The BMW Group is also making its con-  
Overall, 54.8% of all new vehicles left their re-  
spective production plants by rail, slightly down  
(–0.6%) on the previous year. In absolute terms, how- tribution and stands by its commitment to reduce  
ever, approximately 95,000 more vehicles left plants  
by rail than in the previous year. For the first time,  
the BMW plant Leipzig switched to rail on a major  
CO emissions for its own fleet by 25% during the  
period from 1995 to 2008.  
2
The BMW Group has also cut back CO emis-  
2
scale in 2007, supplying the British and Spanish mar- sions significantly outside Europe in recent years.  
kets from the beginning of 2007 onwards mainly by  
rail. As a result, the proportion of vehicles leaving  
the BMW plant Leipzig by rail jumped to 27% in a  
single year.  
The BMW Group again significantly reduced  
the volume of wax or adhesive films used to protect  
the outside surfaces of vehicles. This also enabled  
the use of solvents and other chemicals to be re-  
duced in 2007. In total, approximately 72% of vehi-  
cles were delivered without surface protection in  
A study by the US organisation Environmental De-  
fense recently confirmed that the BMW Group takes  
top position in this area. The result of the study: of  
all automobile manufacturers represented in the  
USA, the BMW Group has made the best progress  
in terms of the reduction of CO emissions for its  
2
vehicle fleet during the period from 1990 to 2005.  
EfficientDynamics benefit entire vehicle fleet  
Apart from the use of highly efficient petrol and die-  
sel engines, the EfficientDynamics measures intro-  
duced by the BMW Group in 2007 also comprise  
energy management measures, weight reduction  
and improved aerodynamics. Examples of energy  
management improvements within the vehicle are  
Brake Energy Regeneration, the Auto Start Stop  
Function and the gear shift indicator. These innova-  
tions, which all help to reduce fuel consumption,  
were introduced on the BMW 1 Series, the BMW 5  
Series and the new BMW 3 Series Convertible and  
Coupé models in March 2007. Since autumn 2007,  
model-specific EfficientDynamics packages also  
2007, compared to 53% in the previous year. In  
addition, some 3,500 tons of CO emissions were  
2
avoided in 2007 by transporting vehicles without  
surface protection. This avoided extensive cleaning  
on arrival, causing 80% less CO emissions.  
2
Making progress towards sustainable mobility  
The BMW Group is aware of its responsibility in the  
area of climate protection and has been working for  
many years on reducing the fuel consumption of its  
fleet. The strategy of working towards sustainable  
mobility comprises three main stages. The BMW  
Group is continuously improving fuel economy in its became standard in the BMW 3 Series Sedan, the  
vehicles with a combination of highly efficient engines, BMW 3 Series Touring and the X models as well as in  
optimised energy management, innovative light-  
construction design and improved aerodynamics. In  
the medium term, the BMW Group is working on  
the revised BMW 6 Series Coupé and Convertible  
models. All MINI models apart from the convertible  
have been fitted with Brake Energy Regeneration,  
achieving additional fuel economy benefits by various the Auto Start Stop Function and the gear shift indi-  
measures, from electrification of the drivetrain through cator since autumn 2007.  
33  
Roadmap of the BMW Group for sustainable mobility  
Adoption of the  
>
BMW Group cuts  
fuel consumption  
in Germany  
>
2006 BMW Hydro-  
gen 7 is presented  
to the public.  
>
2007 Introduction  
of EfficientDynam-  
ics measures in  
numerous BMW  
and MINI models.  
> About 40% of  
the BMW Group’s  
new vehicles in  
Europe will be  
emitting a maxi-  
mum of  
>
First BMW Group  
vehicles with  
hybrid drive.  
>
Use of regenera-  
tive hydrogen as  
fuel in motor traffic.  
EfficientDynamics  
strategy  
.
pursuant to VDA  
agreement of  
1990 by 2005 by  
almost 30%.  
140 g CO2/km.  
2000  
2005  
2006  
2007  
2008  
2009  
long-term  
>
The principle of introducing the EfficientDynamics to. It will enable nationwide introduction of BMW  
innovations as standard for all cars manufactured  
by the BMW Group, and not just for niche models,  
AdvancedDiesel with BluePerformance as a 50-  
state model (BIN5).  
is helping to reduce CO emission levels across  
2
the whole fleet. This policy means that more than  
Comprehensive energy management within  
the car  
450,000 BMW and MINI cars driving on Europe’s  
roads were equipped with these fuel-saving innova-  
tions by the end of 2007. By spring 2008 emission  
Improved energy management has enabled the  
BMW Group to achieve far greater fuel economy  
levels for 26 BMW and MINI models will be at a maxi- throughout its latest range of models. The Auto  
mum of 140 g/km CO2.  
Start Stop Function, which switches the engine off  
automatically when the vehicle comes to a halt,  
serves to save fuel. Brake Energy Regeneration  
technology makes use of both braking and acceler-  
ation phases to charge the vehicle’s battery and re-  
duces drag on the engine. During these phases, as  
Highly efficient engines for lower fuel  
consumption  
The engine is one of the main areas where fuel con-  
sumption can be reduced. BMW’s High Precision  
Injection system enables four- and six-cylinder petrol soon as the driver stops accelerating, kinetic energy  
engines to achieve consumption levels during lean  
operation that had previously only been attained by  
diesel engines. BMW 1 and 5 Series vehicles sold  
in Europe have been equipped with this system  
since March 2007. In autumn 2007, this innovation  
also became available throughout Europe in the top-  
selling BMW 3 Series. In markets such as the USA,  
however, the sulphur-free fuel necessary for the lean  
is automatically harnessed and fed into the battery.  
By contrast, the alternator is disengaged during  
acceleration. This results in lower fuel consumption  
and maximum thrust when accelerating. Electric  
steering assistance and the efficient, demand-con-  
trolled operation of fuel, coolant and oil pumps en-  
sure that aggregates are only activated for as long  
as necessary. A gear shift indicator informs the  
operation of these engines is not yet on sale nation- driver of the optimum moment to change gear in  
wide. On these markets, the efficient VALVETRONIC  
engines featuring fully variable valve drive help  
to reduce fuel consumption. The new BMW diesel  
engines, equipped with third-generation Common-  
Rail injection technology and employing injection  
terms of energy efficiency. Active aerodynamics  
measures enable air flaps at the front of the vehicle  
to be opened only for as long as the engine requires  
air from outside for cooling purposes.This helps to  
speed up the warming-up phase and improve aero-  
pressures of up to 2,000 bar, now use less fuel whilst dynamics at the same time.  
still delivering higher performance.  
The BMW Group’s EfficientDynamics concept  
In autumn 2008, the BMW Group will launch  
the first diesel engines under the name “BMW  
AdvancedDiesel with BluePerformance” on the US  
and Canadian markets. An oxidation catalytic con-  
verter and a diesel particle filter will be responsible  
for optimising emission levels in these engines. An  
SCR (Selective Catalytic Reduction) system featur-  
ing urea injection will reduce nitric oxide emissions  
was awarded numerous prizes in 2007. These in-  
clude, among others, the “Grüne Lenkrad” prize  
awarded by the German Sunday newspaper “Bild  
am Sonntag” and the “Green Award” presented by  
the British motoring magazine “CAR”.  
Hybrid technology improves fuel economy  
From the BMW Group’s perspective, hybrid technol-  
ogy offers potential to further improve fuel economy.  
The Group’s aim is to develop hybrid engines that  
not only reduce consumption in city traffic but also  
(
NO ). The use of this SCR system ensures that  
x
the particularly strict emission limits applicable in  
California and other US federal states are adhered  
34  
Group Management Report  
The BMW EfficientDynamics measures – an overview  
Roll resistance-reduced  
tires  
Gear shift  
indicator  
Diesel engines with third-generation  
common rail and lightweight construction  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Brake Energy  
Regeneration  
Electric steering  
assistance  
Auto Start Stop  
Function  
Petrol engines with High Precision  
Injection and lean operation  
Additional devices (demand-con-  
trolled fuel, coolant and oil pumps)  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
Air flap control  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
offer benefits when driving on non-urban roads and  
motorways.  
of renewably produced hydrogen in combustion en-  
gines. Major milestones for the BMW Group were  
the commencement of series development of a  
hydrogen-powered vehicle in 2001 and the presen-  
tation of the BMW Hydrogen 7 at the end of 2006.  
The BMW Hydrogen 7 is the world’s first hydrogen-  
driven luxury sedan designed for everyday use and  
is equipped with a bivalent combustion engine that  
can be fuelled by either petrol or hydrogen.This  
car has gone through the full series development  
process and has now been approved for road use.  
The Hydrogen 7 therefore meets all requirements  
stipulated for conventional road vehicles. The 100  
cars of the BMW Hydrogen 7 small series have been  
made available to selected persons from politics,  
business and other areas of society for general daily  
use since April 2007 with the aim of creating a mul-  
tiplier effect. In addition, numerous celebrities from  
the film world and show business are taking the  
opportunity to experience the future of mobility by  
taking a drive in a BMW Hydrogen 7. Within a few  
months, these “pioneers” of hydrogen technology  
have covered more than 2.7 million kilometres in  
Europe, the USA and other regions of the world with  
the BMW Hydrogen 7.  
Since September 2005, the BMW Group has  
been working on a modular system for hybrid-driven  
vehicles in collaboration with Daimler, Chrysler and  
General Motors at a joint development centre near  
Detroit, USA. The objective of these cooperation  
arrangements is to bundle the extensive know-how  
held by each of the entities involved, exploit benefits  
and realise potential efficiency improvements.  
In September 2007 the BMW Group presented  
its hybrid car, the BMW Concept X6 ActiveHybrid,  
at the Frankfurt International Motor Show (IAA) in  
Frankfurt. The drive concept of this vehicle, which  
will go into series production at the end of 2009,  
offers a far more dynamic driving performance than  
conventional hybrid cars. At the same time, the  
ActiveHybrid requires up to 20% less fuel than a  
comparable car powered only by a combustion  
engine. With this development, EfficientDynamics is  
moving closer to its objective of sustainable mobility.  
Shaping the future with hydrogen  
In the third phase of its EfficientDynamics strategy,  
the BMW Group remains committed to the use  
Development of CO2 emissions of BMW Group cars in Europe (EU-15)  
(Index: 1995 = 100; Basis: fleet consumption of newly registered cars in Europe (EU-15) measured on the basis of the New European Driving Cycle in accordance  
with the ACEA commitment)  
105  
100  
9
5
0
5
0
5
9
8
8
7
95  
96  
97  
98  
99  
00  
01  
02  
03  
04  
05  
06  
07  
100.0 101.0  
102.4  
101.0  
98.6  
96.7  
96.7  
92.9  
92.9  
94.8  
90.0  
88.6  
80.0  
35  
Research and development expenditure  
reduced  
40% of new cars sold by the BMW Group in Europe  
will emit a maximum of 140 g CO /km.  
2
In 2007, research and development expenditure  
amounted to euro 3,144 million, a 2.0% reduction  
on the previous year. Further information regarding  
research and development expenditure is provided  
in Note [11] of the Group financial statements. The  
research and development expenditure ratio was  
Third crash-test facility taken into operation  
Approximately 350 to 400 tests are carried out an-  
nually at the Research and Innovation Centre (FIZ)  
as part of the vehicle development process. Tests are  
also carried out to ensure vehicles fulfil legal and  
consumer protection requirements.  
5.6% (2006: 6.5%).  
The BMW Group’s innovation network com-  
prises ten sites in five countries with a total of 9,800  
employees.  
The BMW Group’s third crash-test facility was  
commissioned in mid-2007. Up to 100 tests will be  
carried out each year at the new facility near Munich.  
In a new building at the facility, all tests (including  
roll-over tests) can be carried out regardless of pre-  
vailing weather conditions.  
Leading position amongst premium  
manufacturers  
The strength of the BMW Group’s innovation network  
was again underlined with the receipt of numerous  
awards in 2007.  
For the third consecutive time, the BMW Group  
took the main prize in the “International Engine of  
the Year Award” in 2007. The award went to the new  
BMW 3.0-litre Twin Turbo petrol engine which now  
The new test facility supplements the one  
built at the FIZ in 2005. An additional, smaller crash-  
test facility within the FIZ complex completes the  
company’s crash-testing capability for testing at  
speeds of up to approximately 30 km/h.These addi-  
tional capacities enable the Group’s engineers to  
conduct time-consuming tests that had previously  
powers the entire range of models in the BMW 3 Se- only been feasible at the facilities of third-party pro-  
ries. The BMW Group was the most successful car  
manufacturer in this competition and came out  
winner in seven of the twelve categories as well as  
gaining four second places and two third places.  
The BMW Group won the prize for the design  
team of the year in the “red dot award 2007”. This  
accolade was awarded for exceptional achievements  
for its overall performance in the field of design.  
Eight further awards were received for two cars, three  
motorcycles and three products created by BMW  
Group DesignworksUSA.  
viders.  
The three crash-test facilities now permit a higher  
number of tests and greater flexibility than the “all-in-  
one” solutions favoured by competitors, but which  
entail substantially higher costs. In addition, a wide  
range of modern computer-based crash simulation  
methods are employed, particularly during the  
early stages of vehicle development projects. Such  
methods cannot, however, replace real crash tests  
using prototypes.  
In November, the BMW Group won the newly in- Research to promote greater road safety  
troduced “Grüne Lenkrad” award from the German After a four-year period, the European Commission-  
Sunday newspaper “Bild am Sonntag” in recognition backed research project PreVENT was concluded  
of its EfficientDynamics measures package, which  
includes highly efficient petrol and diesel engines,  
Brake Energy Regeneration, the Auto Start Stop  
Function, active aerodynamics and intelligent light-  
weight construction innovations. EfficientDynamics  
is designed to boost performance while simulta-  
neously improving fuel economy and reducing CO2  
emissions. The BMW Group offers EfficientDynam-  
ics as standard in all BMW models from the BMW 1  
Series through to the BMW X5 and also in many of  
the MINI models. For the model year 2008, around  
in 2007, in line with schedule. The project supports  
the target set by the European Commission to halve  
the number of accidents on European roads by  
2010. The objective was to raise road safety stand-  
ards even further through the use of preventative  
technologies. These applications, aimed at assisting  
the driver, are designed to prevent or at least mini-  
mise the consequences of accidents. The research  
shows that it will be possible to develop systems  
in the future that will be able, for example, to recog-  
nise the nature and urgency of a hazard whilst simul-  
36  
Group Management Report  
taneously taking the current condition of the driver  
into account. The BMW Group played a leading role  
in some of PreVENT’s sub-projects.  
the “Automobile Network”. The technical basis for  
this is the Internet Protocol (IP).  
The new, IP-based vehicle on-board system  
adds flexibility to the car’s infrastructure and also  
provides many other benefits. It will, for instance,  
enable the customer to use portable devices more  
easily in the car in the future. It will also make it easier  
for service staff to integrate new control units and/or  
new functions. It will no longer be necessary to install  
all applications permanently in the vehicle because  
the IP-based on-board network will keep systems  
connected to the internet. As far as driver assistance  
systems are concerned, the new developments in  
on-board network technology will create many op-  
portunities, in particular for complex systems which  
access information from various sources such as  
sensors, cameras, etc.  
Road safety research carried out by the BMW  
Group does not only focus on identifying solutions  
that will increase the safety of vehicle occupants. It  
is also aimed at benefiting other road users. Current  
research projects in the field of driver assistance  
systems include emergency braking to increase the  
safety of pedestrians, cross-traffic and traffic light  
assistance as well as information on wrong-way  
drivers and upcoming bends. However, the same  
basic principle remains valid for all systems – the  
responsibility always remains with the driver; it is  
the driver who has to make the decisions; and he  
or she must be able to override or even deactivate  
systems.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
Expertise in driving dynamics expanded  
The Dynamic Performance Control (DPC) devel-  
oped by the BMW Group actively improves driving  
stability, whether under load, when coasting or when  
the clutch is engaged. This innovative system will  
be available in the new BMW X6 from 2008 onwards.  
DPC distributes the drive torque to the two drive  
wheels at the rear, irrespective of engine perform-  
ance, thus improving steering behaviour and pre-  
cision, straight-line stability and traction. This simul-  
taneously improves steering response, thereby  
requiring far fewer steering corrections on the part of  
the driver or intervention from electronic stabilising  
systems.  
Further development to Dynamic Stability Con-  
trol (DSC), now in combination with the xDrive four-  
wheel drive system, have also led to significant  
improvements in car handling characteristics and in  
active safety aspects, particularly on slippery road  
surfaces. This enhancement has been available in all  
four-wheel drive models of the BMW 5 Series since  
March 2007. Further BMW brand models and series  
will be equipped with this technology in the future.  
Integrated on-board network technology  
offers numerous benefits  
Up to five different bus systems operate in modern  
cars to transmit electronic data throughout the  
vehicle. When information from various systems is  
being used, the data must first be synchronised  
accordingly. The BMW Group is therefore conduct-  
ing research on a standard language to simplify  
37  
New purchasing and supplier network  
corporate division  
Regional mix of BMW Group purchase volumes 2007  
in %, basis: production material  
As part of its strategic realignment and in the light of  
the ever-increasing complexity of the supplier chain  
structure, the BMW Group created a new Purchas-  
ing and Supplier Network corporate division with  
effect from 1 October 2007. In addition to purchas-  
ing, the following functions have been assigned to  
the division: quality management of parts, logistics,  
vehicle components and systems. This new division  
has been charged with the task of achieving even  
further improvements in the areas of quality, supplier  
loyalty and costs. This will involve keeping the num-  
ber of system interfaces to a minimum and opti-  
mising processes right from the raw material stage  
through to the finished product.  
3 2  
1
0
Germany  
Rest of Western Europe  
Central and Eastern Europe  
NAFTA  
11  
Asia/Australia  
Africa  
53  
21  
respectively in 2007. By contrast, the price of alu-  
minium fell by 5% and that of copper by 1%.  
Overall, the prices of industrial raw materials,  
non-ferrous metals and energy raw materials in-  
creased by 7%, 4% and 2% respectively in 2007.  
Compared to the previous year, the prices of pre-  
cious metals relevant for the BMW Group went up  
in 2007 by rates of between 11% and 35%. In the  
case of precious metals (rhodium, palladium, plati-  
Purchase volume increased in Central and  
Eastern Europe  
The BMW Group’s purchase volume went up in  
2007 in line with the expansion of production activi-  
ties. Increased global sourcing activities as well as  
the successful implementation of a quality and cost  
initiative resulted in an increase in the volume of  
purchases sourced in Central and Eastern Europe.  
The purchase volume in Western Europe also in-  
creased, reflecting increased production of the  
MINI. The purchase volume in the NAFTA region  
was also up, due to the first full year of production  
of the new BMW X5 at the Spartanburg plant in the  
USA. The volume of purchases sourced in South  
America fell sharply due to the fact that the engine  
cooperation arrangements with TRITEC are wound  
down.  
num), purchase price hedges reduced the impact of  
sharp market price rises for the BMW Group.  
Close cooperation with suppliers strengthens  
competitiveness  
Given the high share of suppliers in the value-added,  
cooperating closely with them represents a major  
factor in improving products and processes. The  
BMW Group is involving its large system suppliers  
from the very initial stage of a development project  
even more intensively. Joint analyses are carried out  
to identify potential areas where efficiency can be  
The proportion of production material purchases improved and development and manufacturing costs  
sourced in Germany was down in percentage terms  
and accounted for approximately one half of material  
procurements. In the remaining regions, volumes in-  
creased in line with production growth. The ratio of  
material procurements to the total purchase volume  
remained practically unchanged.  
reduced. Any solutions that these joint teams come  
up with are taken into account in current and future  
development projects.  
Further investigations are made along the entire  
value-added chain to identify potential ways of  
achieving further product and/or process improve-  
ments. Ensuring that close networks are in place  
between internal and external partners has an impor-  
tant role to play here. Increasing the transparency  
of activities with suppliers is also seen as being vital  
for the BMW Group.  
One of the main objectives of supplier manage-  
ment is to raise the quality of bought-in material.  
Suppliers to the Group are increasingly taking over  
responsibility in this respect. As part of the process  
of managing supplier performance and expertise,  
Situation on the commodity markets  
remains tense  
The high price levels on the raw material markets  
once again represented a major challenge for the  
Group’s purchasing departments in 2007. The addi-  
tional costs were spread over the entire value-added  
chain with the BMW Group also bearing its share.  
Compared to the previous year, the average market  
prices of steel and plastics were up by 10% and 6%  
38  
Group Management Report  
the BMW Group provides its suppliers with supply  
quality performance indicators for all plants in real  
Model initiative continued  
The growth recorded by the BMW Group in 2007  
time. Similarly, data concerning customer complaints was driven by the introduction of a wide range of  
and warranty costs can also be called up by sup-  
pliers at any time.  
new vehicles and model revisions.Ten new or revised  
models were introduced for the BMW brand alone.  
In addition to the new M5 Touring, model improve-  
ment measures were carried out for the BMW 5 and  
6 Series as well as for the five-door version of the  
BMW 1 Series.The three-door version of the BMW 1  
Series and the BMW 1 Series Coupé also came onto  
the market. The BMW 1 Series Convertible was pre-  
sented to the public in autumn 2007 and will be on  
sale on the markets from spring 2008 onwards.  
In spring 2007, the focus was on the introduc-  
tion of the new BMW 3 Series Convertible, available  
for the first time with a hardtop option. The M version  
of the 3 Series Coupé followed later in the year and  
the M3 Sedan will celebrate its debut in 2008. The  
new BMW X5, which had already been launched  
in the USA in autumn 2006, reached dealers world-  
1
1
1
1
4
4
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3
7
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Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
International focus sharpened by regional  
purchasing centres  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
One of the main tasks taken on by the BMW Group’s  
international purchasing centres in 2007 was to en-  
gage in new procurement markets and keep abreast  
of any innovations relevant for the BMW Group  
emerging from the procurement markets. Following  
the opening of new purchasing centres in India,  
Turkey and Hungary, the BMW Group now has a  
presence on all major procurement markets. The  
capacities of existing purchasing centres, such as in  
China and Singapore, were also increased. In 2007,  
the sphere of expertise of the Group’s purchasing  
centres was also significantly expanded after they  
– Internal Management System  
– Earnings performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
took over responsibility for parts quality management wide during the course of 2007.  
and for logistics. Amongst other benefits, this will  
help to ensure the quality and availability of parts.  
Cost benefits have also been achieved, particu-  
The second generation of the MINI was also  
available on the market for the first time for a full year  
in 2007. The new MINI is repeating the success of  
larly in the emerging markets. The BMW Group takes its predecessor. A further step in expanding the MINI  
a pro-active approach to the procurement markets  
and also encourages its suppliers to take full advan-  
tage of the available potential. The positive impact  
that this has on purchase prices helps to increase  
the competitiveness of the BMW Group.  
model family was taken in November with the launch  
of the MINI Clubman in Europe.  
The Rolls-Royce convertible, the Phantom  
Drophead Coupé, has been available since summer  
2007. The positive response received from media  
and customers alike was also reflected in the sales  
volume performance.  
High ecological and social standards expected  
of suppliers  
The BMW Group is aware of its responsibility to  
ensure that its suppliers also adhere to social and  
ecological standards. Apart from dealing with quality  
targets and cost aspects, the BMW Group’s national  
and international purchasing terms and conditions  
also stipulate social and ecological standards. The  
BMW Welt opened  
The outstanding event for the BMW marketing de-  
partment in 2007 was the opening of the BMW Welt  
in Munich. Since October, a wide range of experi-  
ences have been on offer there to customers, visi-  
tors and local inhabitants alike. With this building,  
ability to adhere to these principles is taken into ac- which explores the limits of the technically feasible,  
count when selecting potential suppliers.  
the BMW Group has set a new architectural bench-  
mark. The BMW Welt is the new home of the BMW  
brand. It stands for dynamism and elegance and  
reflects the premium standards of the BMW brand.  
The centrepiece of this multifunctional building is its  
individualised personal delivery centre. Each year,  
approximately 45,000 people from all over the world  
will come here to collect their vehicles. In addition  
to the exclusive presentation of all current car and  
motorcycle model series, multimedia shows and  
39  
exhibits will provide an insight into the research, de-  
velopment, design and production activities of the  
BMW Group, giving visitors the chance to enjoy an  
all-round experience of the BMW brand and of the  
company as a whole. The BMW Welt also boasts an  
events forum including state-of-the-art technology  
for staging all kinds of events, such as receptions  
and seminars, concerts, exhibitions, conferences  
and live transmissions. More than 500,000 people  
visited the BMW Welt within the first100 days of  
opening.  
BMW’s sport sponsoring activities were focused  
on motor sports, golf and sailing in 2007. The event  
that created the greatest media attention around the  
world for BMW in 2007 was The America’s Cup held  
in Valencia. The participation of the US American  
BMW Oracle Team clearly helped to raise the profile  
and awareness of the BMW brand. The BMW Sauber  
F1 Team firmly established itself as the third force in  
Formula One in 2007.  
MINI pushed ahead with the creation of a global  
MINI Community. In this context, another MINI United  
Festival was held at Zandvoort, near Amsterdam,  
under the motto “Friends. Festival. Challenge.” More  
than 8,000 visitors from 50 countries took part in the  
three-day event. The MINI Challenge, a special MINI  
club sports series, has become an established com-  
ponent of the Community idea, combining profes-  
sional sport with modern lifestyle.  
Marketing activities for the MINI in 2007 were  
mainly focused on the market launch of the MINI  
Clubman. The global marketing campaign with the  
slogan “The other MINI.” fitted perfectly with the  
vehicle’s claim to set new trends and created a few  
surprises with its snappy ads and “guerrilla” market-  
ing approach.  
At the forefront of marketing activities for the  
Rolls-Royce brand were the world premiere (in  
Detroit, USA) and the market launch (in L’Andana,  
Italy) of the Phantom Drophead Coupé. This exclu-  
sive convertible was presented at the Rolls-Royce  
dealerships in conjunction with numerous events.  
Rolls-Royce also set in motion a project for Rolls-  
Royce dealerships specifically aimed at attracting  
and providing services to customers in the ultra-  
luxury segment.  
Innovative marketing and investment in  
brands  
Numerous vehicle presentations represented an im-  
portant aspect of the BMW Group’s marketing and  
communication activities in 2007. Marketing cam-  
paigns and similar activities, targeted purposefully at  
specific groups, ranged from international test-drive  
events for the launch of the BMW X5 through to  
enhanced activities on Web 2.0 to coincide with the  
launch of the BMW 1 Series Coupé.  
Campaigns were run for both specific models  
and for the BMW Group’s brands in general. In the  
European markets, the focus was primarily on com-  
municating the benefits of BMW EfficientDynamics,  
the designation used to cover the whole range of  
measures adopted by the BMW Group in its bid to  
reduce fuel consumption and emissions.  
For several years now, the BMW CleanEnergy  
project has not only been working on the reduction  
of emissions, but has also embraced the vision of  
emission-free driving based on the use of hydrogen.  
The Hydrogen 7 vehicle, based on the BMW 7 Se-  
ries, was first presented to the public back in 2006.  
In 2007 the Hydrogen 7 was made available to se-  
lected persons from the worlds of politics, business,  
science and show business, thus bringing the so-  
called “Club of Pioneers” into being. The idea  
behind this is to accelerate the change towards a  
Sales network expanded further  
The BMW Group intensified its sales activities in  
the established markets in 2007, whilst at the same  
time expanding activities in the growth markets.  
The global presence of the BMW, MINI and  
“hydrogen society”, including the construction of  
an appropriate infrastructure.  
Rolls-Royce brands was strengthened further during  
the past year with the opening of four new sales  
locations. A subsidiary was set up in India and a  
sales office opened in Slovenia on 1 January 2007,  
followed by sales offices in Rumania and Bulgaria  
on 1 July. As a result of this expansion, which has  
taken place mainly in the growth markets of Asia and  
Eastern Europe, the BMW Group is now represented  
by its own sales organisations in 41 markets.  
One of BMW Marketing’s responses to the up-  
and-coming trend towards new media was to set  
up BMW web.tv in 2007. Using this online TV plat-  
form, BMW now broadcasts reports and articles  
every week on brand-related issues, including some  
advertising content. Right from the outset, several  
hundred thousand videos were viewed each month  
on average via BMW web.tv.  
40  
Group Management Report  
The infrastructure and quality of the dealer  
organisation in China, where there are currently well  
over 100 dealerships, was further improved. The  
dealer network is also being expanded in India, a  
new market for the BMW Group.  
Worldwide, more than 3,000 dealerships sell  
BMW brand cars. The MINI brand is sold at approxi-  
mately 1,500 locations. In total, the dealerships which tries, was held in this vein for the new BMW 3 Series  
work with the BMW Group have some 100,000 em-  
ployees worldwide. In addition, the BMW Group has  
its own branches at 37 locations in 14 countries.  
Rolls-Royce cars are currently sold in 30 coun-  
tries. The sales network for this brand has been ex-  
panded to 80 dealerships, including four in China.  
Training centre network further expanded  
The global initiative to improve skills within the BMW  
Group was successfully continued in 2007 as part  
of the premium service strategy. One of the tasks  
is to pass on knowledge quickly and directly to the  
markets. In 2007, for example, a train-the-trainer  
conference, attended by 160 trainers from 68 coun-  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Convertible and the new BMW X5.  
– Internal Management System  
– Earnings Performance  
– Financial Position  
Training courses for dealers took place in San  
Diego, Newbury and Kyoto ahead of the launch of  
the Rolls-Royce Drophead Coupé.  
In 2007 the BMW Group opened up new training  
centres in India, South Korea, Portugal, Denmark,  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
Future plans of BMW Group’s sales organisation Japan and Greece to ensure optimal training condi-  
are currently focused on the following: tions for people working in the dealer organisations.  
–
improving the infrastructure and quality of the  
dealer organisation in anticipation of further volume Internationalisation of distribution centres  
and model expansion,  
continued  
–
–
increasing marketing activities in the area of used  
car business,  
systematically developing relationships with cus-  
tomers and potential customers in all aspects.  
The distribution centre in Krefeld was expanded and  
now supplies the markets in Belgium, the Nether-  
lands and Luxembourg. In September 2007, the  
second of three planned regional distribution centres  
in China commenced operations in Shanghai. Parts  
are supplied directly from the centralised parts distri-  
Premium service also in customer services  
Taking care of customers’ needs throughout the whole bution centre in Dingolfing. Plans to supply parts to  
of the product life-cycle is one of the BMW Group’s  
main priorities. The objective is to provide premium  
the new sales company and dealerships in India via  
the regional distribution centre in Mumbai are taking  
quality services – not just to meet customers’ expec- shape.  
tations, but to exceed them. The quality of processes  
and structures in place in service reception areas  
and workshops is constantly under scrutiny.  
Using its unique BMW TeleServices system,  
BMW is able to guarantee customers the highest  
levels of comfort and safety. Where necessary, a  
vehicle’s details can be transmitted directly via a  
data link to the BMW service partner, for example to  
a dealership prior to a forthcoming inspection or  
to a mobile services unit in the case of a malfunction.  
This automated link between vehicle and BMW  
service partner reduces the length of time a custom-  
er’s car needs to be kept at the service point and, in  
the event of a malfunction, allows immediate and  
expert help to be given on the spot.  
The new BMW TeleServices system has been  
available since September 2007 in a number of  
markets (Germany, Austria and France) for all new  
BMW 1, 3, 5, 6 and X5 series vehicles.  
41  
BMW Stock and Bonds in 2007  
Crisis on US credit market has impact on  
world’s stock exchanges  
The world’s stock markets were in general highly  
volatile in 2007. During the first half of the year, market  
increase (+34.3%) in 2006. The bank unwound these  
positions in 2007, thus significantly influencing the  
market price of BMW preferred stock in 2007.  
Precious metal prices rose during the year, in  
prices benefited sharply from good corporate figures. some cases quite sharply. For the first time since  
In the second half, however, the markets were influ- 1980, the price of gold went above US dollar 800  
enced by the credit crisis in the USA. The weakness per ounce, closing at the end of the year at US dollar  
of the US dollar against the euro also had an increas- 834.00 per ounce (+30.9%). Oil prices developed  
ingly adverse impact on the share prices of European similarly. The price for one barrel of Brent Crude  
exporting companies.  
at 31 December 2007 was US 94.33, well above  
(+61.2%) its level one year earlier.  
The US dollar lost 9.5% in value against the  
euro during the period, closing at US dollar 1.46 to  
the euro on the last day of trading (29 December  
Programme to buy back shares of common  
stock  
2006: US dollar1.32 to the euro). In November 2007,  
the US dollar even dropped to US dollar1.50 to the  
euro, thus reaching its record low value since intro-  
duction of the common European currency in 2002.  
As the subprime crisis took hold in the USA,  
Following on from the buy-back and withdrawal from  
circulation of treasury shares in 2005 and 2006, a  
new authorisation was passed at the Annual General  
Meeting on 15 May 2007. On that date, the share-  
some of the gains recorded by the world’s stock mar- holders authorised the Board of Management to ac-  
kets during the first half of the year were lost. On the quire up to a maximum of 10% of the share capital  
last day of trading in 2007, the leading German stock in place at the date of the resolution and to withdraw  
index, the DAX, closed at 8,067.32 points, 22.3%  
ahead for the year, but short of its record high level  
of 8,151 points in July 2007. The Dow Jones EURO  
STOXX 50 ended the year with a gain of 6.8%.  
The Prime Automobile sector index performed very  
strongly over the year, gaining 37.9% after closing  
at 785.54 points.  
these shares from circulation without any further res-  
olution by the Annual General Meeting. At the same  
time, the authorisation from 16 May 2006 to acquire  
treasury shares was rescinded. The authorisation  
from 15 May 2007 is valid until 14 November 2008.  
There are currently no plans to exercise the authori-  
sation.The option of a share buy-back does, however,  
remain open to BMW AG.  
BMW common stock stood at euro 42.35 on  
the last day of trading, compared to a price of euro  
4
3.51 one year earlier. With this 2.7% drop, BMW  
Buy-back of shares of preferred stock for  
employee stock plan  
BMW AG has allowed employees to participate in  
common stock was unable in 2007 to repeat the  
gains made in preceding years. During the year un-  
der report, BMW preferred stock lost sharply in value, its success for more than 30 years. In this context,  
finishing the year16.6% lower at euro 36.30. The  
change in the price of preferred stock reflects a high  
degree of market price speculation during 2006 and  
employee participation was changed back in 1989  
to an employee share scheme. In conjunction with  
this scheme, BMW AG purchased a total of 660,305  
shares of preferred stock in 2007 via the stock ex-  
change at an average price of euro 45.48 and issued  
these to employees.  
2007. According to media reports, one major Ger-  
man bank took up large-scale positions in BMW  
preferred stock, resulting in a sharp market price  
Development of BMW stock compared to stock exchange indices  
(Index: 30.12.1997 = 100)  
350  
300  
250  
200  
150  
100  
5
0
0
98  
99  
00  
01  
02  
03  
04  
05  
06  
07  
BMW preferred stock  
BMW common stock  
Prime Automobile  
DAX  
42  
Group Management Report  
The Board of Management of BMW AG has  
decided to continue this scheme in 2008. In order to  
be able to issue shares to employees, it is planned,  
from 1 January 2008 onwards, to buy back up  
to 1 million shares of preferred stock via the stock  
exchange. The BMW Group will report on the  
progress of the buy-back at its internet address  
www.bmwgroup.com/ir. The buy-back will be exe-  
cuted under the leadership of a number of securities  
houses or banks, which will be able to determine  
the timing of individual buy-backs independently of,  
and uninfluenced by, BMW AG. The buy-back will  
be carried out in compliance with the trading con-  
ditions contained in Article 5 of Regulation (EC) No.  
rities issued by the BMW Group were – as in pre-  
vious years – highly sought after by institutional and  
private investors alike. Compared to 2006, refinanc-  
ing conditions deteriorated slightly in the euro region  
over the course of 2007. With credit markets suffer-  
ing under the effects of the subprime crisis in the  
USA during the second half of the year, the US Fed-  
eral Reserve was forced, for the first time since 2003,  
to announce several interest rate reductions.  
The difficult market conditions – particularly in  
the second half of 2007 as a result of the credit crisis  
in the USA – did not in any way impair the issuing  
activities of the BMW Group. The underlying strength  
of the BMW Group as one of the world’s leading  
suppliers of premium vehicles is therefore also re-  
flected in its dealings with the international capital  
markets.  
1
1
1
1
4
4
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1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
2273/2003 of the European Commission dated  
2 December 2003.  
2
BMW Group as a successful bond issuer  
In order to refinance the strong growth of the Finan-  
cial Services segment, the BMW Group stepped up  
Using the internet to communicate with the  
capital markets  
its activities in 2007 as an issuer of bonds and asset- The internet plays a key role for the BMW Group in  
backed securities (ABS).  
the process of communicating financial information.  
The nature and detail of information provided is  
therefore continually being improved and expanded  
(www.bmwgroup.com/ir). Alongside much informa-  
tion aimed at shareholders, all of the BMW Group’s  
financial publications, presentations and additional  
material on financial statements are available for  
download at the Group’s corporate website. For  
During the year 2007, two benchmark bonds  
with a total issue volume of euro 2.4 billion were  
placed on the European capital markets. The BMW  
Group also issued bonds denominated in pounds  
sterling, Swiss franks and US dollars with a total vol-  
ume of approximately euro 680 million.  
It also issued a public ABS bond for the first  
time in the euro zone. The euro 800 million bond se- several years now, recordings of annual and quarterly  
curitises trade receivables and leases.  
financial reporting conferences have also been avail-  
able as audio or video files.  
The American capital market was used in 2007  
primarily for ABS transactions and commercial  
paper. In October 2007, for instance, a public lease-  
securitised ABS bond with a total volume of US dol-  
lar 1.25 billion was issued in the USA.  
Sustainability growing in significance  
Sustainability plays an increasingly important role in  
investors’ decisions. For this reason, socially respon-  
sible investment (SRI) became an even more im-  
portant issue in the context of the company’s capital  
Thanks to above-average ratings and regular  
provision of information to the capital markets, secu-  
Development in the value of a BMW stock investment in euro thousand  
Investment of euro 10,000 at 1.1.1998, including dividends and proceeds from subscription rights, values at end of year  
24  
21  
18  
15  
12  
9
6
3
98  
99  
00  
01  
02  
03  
04  
05  
06  
07  
euro thousand  
12.1  
14.7  
17.0  
19.7  
14.6  
18.8  
17.3  
19.7  
23.5  
23.2  
43  
market communication activities. Regular communi-  
cation with sustainability investors and analysts was  
supplemented by roadshows in London and Paris.  
In September 2007, the BMW Group was again  
included (as in 2005 and 2006) as sector leader in  
the Dow Jones Sustainability Indexes. The BMW  
Group is therefore the only company in the sector  
to have been included in this important group of in-  
dices for sustainable investment for the ninth time in  
with leading environmental practices. In December  
2007, the BMW Group took third place overall (as  
the best automobile company) in the DAX 30 sustain-  
ability ratings compiled by Scoris.  
The BMW Group keeps the public informed  
of its commitment and the progress made in the  
field of sustainable business in its Sustainable Value  
Report, which is published once every two years.  
The current Sustainable Value Report 2007/2008  
succession. It has also been included for six consec- was presented to the public in mid-September to  
utive years in the relevant FTSE4Good indices pub- coincide with the IAA. The report can be down-  
lished by the London Stock Exchange and the Finan- loaded from the internet at www.bmwgroup.com/  
cial Times. In 2007, the BMW Group was also taken sustainability. A printed version can also be ordered  
into the FTSE4Good Environmental Leaders Europe at that address.  
0 Index. This index comprises European companies  
4
BMW stock  
2007  
2006  
2005  
2004  
2003  
Common stock  
Number of shares in 1,000  
Shares bought back at the reporting date  
Stock exchange price in euro1  
Year-end closing price  
High  
601,995  
–
601,995  
–
622,228  
13,488  
622,228  
–
622,228  
–
]
42.35  
50.73  
39.81  
43.51  
46.47  
35.52  
37.05  
39.97  
32.04  
33.20  
37.44  
31.78  
36.75  
38.40  
21.12  
Low  
Preferred stock  
Number of shares in 1,000  
Stock exchange price in euro1  
Year-end closing price  
High  
52,196  
52,196  
52,196  
52,196  
52,196  
]
36.30  
47.52  
33.64  
43.52  
45.91  
31.80  
33.00  
33.98  
24.48  
24.80  
26.20  
22.86  
24.65  
26.25  
14.86  
Low  
20045  
]
2003  
2007  
2006  
2005  
Key data per share in euro  
Dividend  
Common stock  
1.062]  
1.082]  
4.78  
0.70  
0.72  
4.38  
4.40  
8.21  
29.24  
0.64  
0.66  
3.33  
3.35  
9.17  
25.17  
0.62  
0.64  
3.33  
3.35  
9.13  
24.52  
0.58  
0.60  
2.89  
2.91  
7.37  
23.95  
Preferred stock  
Earnings per share of common stock3  
Earnings per share of preferred stock4  
Cash flow6  
]
]
4.80  
]
9.70  
Equity  
33.24  
1
2
3
4
5
6
] Xetra closing prices  
] proposed by management  
] annual average weighted amount  
] stock weighted according to dividend entitlements  
] adjusted for new accounting treatment of pension obligations  
] calculated on the basis of operating cash flow  
44  
Group Management Report  
Disclosures relating to Takeover Regulations to §289 (4) HGB and  
315 (4) HGB and Explanatory Report  
§
The share capital of BMW AG, totalling euro  
54,191,358 is, pursuant to Article 4 (1) of the Arti-  
the shareholders do not resolve otherwise at the  
Annual General Meeting.  
6
cles of Incorporation, sub-divided into 601,995,196  
shares of common stock and 52,196,162 non-voting  
shares of preferred stock, each with a par value of  
euro 1. The shares are issued to bearer. The rights  
and duties of shareholders derive from the German  
Stock Corporation Act (AktG) in conjunction with  
the Company’s Articles of Incorporation, the full text  
of which is available at www.bmwgroup.com. The  
voting power attached to each share corresponds to  
its par value. Each euro 1 of par value of share capital  
represented in a vote is entitled to one vote (Article  
The right of shareholders to have their shares evi-  
denced in writing is excluded.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Shareholders are only entitled to participate at  
the Annual General Meeting and exercise their voting  
rights if, prior to the meeting, they have given notice  
(in the written form prescribed by §126b of the Ger-  
man Civil Code), either in German or English, of their  
intention to participate at the meeting. Shareholders  
are also required to provide evidence of their entitle-  
ment to participate and exercise their voting rights at  
the Annual General Meeting. For this purpose, doc-  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
18 (1) of the Articles of Incorporation). The Company’s umentary evidence of the shareholding, issued by  
Outlook  
shares of preferred stock are non-voting within the  
meaning of §139 AktG et seq., i.e. they only confer  
voting rights in exceptional cases stipulated by law  
such as when the preference amount has not been  
paid or has not been fully paid in one year and the  
arrears are not paid in the subsequent year. Except  
for voting rights, shares of preferred stock give the  
same rights as shares of common stock. Article 24  
of the Articles of Incorporation confers preferential  
the custodian bank (in the written form prescribed by  
§126b BGB), in either German or English, is required.  
Votes may also be exercised by proxy.The Company  
may determine that proxy authorisations may be  
granted electronically or by fax, and may stipulate  
the specific rules for granting proxy authorisations  
(see Article 17 of the Articles of Incorporation). The  
chairperson may determine a reasonable time limit  
with respect to the right of shareholders to raise  
treatment to the non-voting shares of preferred stock questions and speak (Article 19 (2) of the Articles of  
with regard to the appropriation of the Company’s  
unappropriated profit. Accordingly, the unappropriated  
profit is required to be appropriated in the following  
order:  
Incorporation).  
When the Company issues shares to employees  
in conjunction with its employee share scheme,  
the shares are subject to a company-imposed vest-  
ing period of four years, during which time the shares  
may not be sold. The shares issued in conjunction  
with the employee share scheme are shares of non-  
(
(
(
a) subsequent payment of any arrears on dividends  
on non-voting preferred shares in the order of ac-  
cruement,  
b) payment of an additional dividend of euro 0.02 per voting preferred stock which are transferred solely  
euro 1 par value on non-voting preferred shares  
and  
and directly to employees.  
Based on the information available to the Compa-  
ny, the following direct or indirect holdings exceeding  
10% of the voting rights were held at the date stated:  
c) uniform payment of any other dividends on  
shares on common and preferred stock, provided  
Direct share of  
voting rights (%)  
Indirect share of  
voting rights (%)  
Date  
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d.Höhe  
Johanna Quandt, Bad Homburg v.d.Höhe  
15.4  
1.3  
1.4.2002*  
1.4.2002*  
1.4.2002  
1.4.2002  
1.4.2002*  
1.4.2002*  
15.4  
11.5  
16.1  
Susanne Klatten GmbH & Co. KG für Automobilwerte, Bad Homburg v.d.Höhe  
Susanne Klatten, Munich  
11.5  
1.0  
Stefan Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d.Höhe  
16.1  
1.3  
Stefan Quandt, Bad Homburg v.d.Höhe  
*
Confirmed by notifications as at 20 January 2007.  
45  
The voting power percentages disclosed above  
may have changed subsequent to the stated date  
if these changes were not required to be reported to  
the Company. Due to the fact that the Company’s  
shares are issued to bearer, the Company is gener-  
ally only aware of changes in shareholdings if such  
changes are subject to mandatory notification rules.  
There are no shares with special rights which  
confer control rights.  
ations specified in §71 AktG, e.g. to avert serious  
and imminent damage to the Company or for the  
purposes of an employee share scheme. There is no  
authorised or conditional capital at the reporting  
date.  
The BMW AG is party to the following significant  
agreements which contain special provisions for  
the event of a change in control or the acquisition of  
control which could arise, for example, from a take-  
over offer:  
The appointment and removal of members of  
the Board of Management are based on the rules  
contained in §84 et seq. AktG in conjunction with §31  
of the German Co-Determination Law (MitbestG). In  
accordance with Article 7 of the Articles of Incorpo-  
ration, the Board of Management consists of two or  
more members. The Supervisory Board determines  
the number of the members of the Board of Manage-  
ment. It is responsible for appointing members to  
the Board of Management and for revoking appoint-  
ments. It also designates one of the members as  
the Chairman of the Board of Management.  
Amendments to the Articles of Incorporation  
must comply with §179 et seq. AktG. All amend-  
ments must be resolved by the shareholders at the  
Annual General Meeting (§119 (1) no.5, §179 (1)  
AktG). The Supervisory Board is authorised to ap-  
prove amendments to the Articles of Incorporation  
which only affect its wording (Article 14 no.3 of the  
Articles of Incorporation). Resolutions are passed at  
the Annual General Meeting by simple majority of  
shares unless otherwise explicitly required by binding  
provisions of law (§20 of the Articles of Incorpora-  
tion).  
– 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 ex-  
traordinary 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 acquisi-  
tion of more than 50% of the share capital of  
BMW AG, the right to receive more than 50% of  
the dividend or the right to direct the affairs of the  
Company or appoint the majority of members of  
the Supervisory Board.  
– A cooperation agreement concluded with Peugeot  
SA relating to the joint development and produc-  
tion of a new family of small (1to 1.6-litre) petrol-  
driven engines entitles each of the cooperation  
partners to give extraordinary notification of termi-  
nation in the event of a competitor acquiring con-  
trol over the other contractual party and if any con-  
cerns of the other contractual party concerning  
the impact of the change of control on the cooper-  
ation arrangements are not allayed during the  
subsequent discussion process.  
– Under the terms of a contractual agreement with  
Daimler, Chrysler and General Motors, BMW AG  
acquires intellectual property rights in conjunction  
with a cooperation for the development of a hybrid  
propulsion system. The cooperation can be ter-  
minated with immediate effect by either party if a  
change of control occurs with respect to any other  
contractual party or an affiliate of another con-  
tractual party. Examples of change of control are  
the acquisition of beneficial ownership of securities  
which confer the majority of voting power or the  
acquisition of beneficial ownership of securities  
which confer 20% of the voting power provided  
In accordance with the resolution passed at the  
Annual General Meeting on 15 May 2007, the Board  
of Management is authorised, up to 14 November  
2008 and subject to the price limits stipulated in the  
resolution, to acquire shares of common and/or non-  
voting preferred stock via the stock exchange, up  
to a maximum of 10% of the share capital in place  
at the date of the resolution. The Board of Manage-  
ment is also authorised, without any further resolu-  
tion by the Annual General Meeting, to withdraw  
from circulation the treasury shares (common and/or  
non-voting preferred stock) acquired in accordance  
with the authorisation described above. Further-  
more, the Board of Management is authorised to  
buy back shares and sell bought-back shares in situ-  
46  
Group Management Report  
that within 18 months a majority of the shareholder-  
elected members of the Supervisory Board are  
the nominees of the new beneficial owner as well  
as certain merger transactions and the transfer of  
all or substantially all of the assets involved in the  
performance of the cooperation agreement.  
BMW AG acts as the guarantor for all of the obliga-  
tions arising from the joint venture agreement re-  
lating to BMW Brilliance Automotive Ltd. in China.  
This agreement grants an extraordinary right of  
termination to either joint venture partner in the  
event that, either directly or indirectly, more than  
25% of the shares of the other party are acquired  
by a third party or the other party is merged with  
another legal entity. The 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.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
–
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
–
Regarding the trading of derivative financial in-  
struments, framework agreements are in place  
with financial institutions and banks (ISDA Master  
Agreements), each of which contain extraordinary  
rights of termination which trigger the immediate  
settlement of all current transactions, in the event  
that the creditworthiness of the respective party  
is materially weaker following the direct or indirect  
acquisition of beneficial ownership of equity se-  
curities having the power to elect a majority of the  
Supervisory Board of a contractual party or any  
other ownership interest enabling the acquirer to  
exercise control of a contractual party or a merger  
or transfer of assets.  
The BMW Group has not concluded any compen-  
sation agreements with members of the Board  
of Management or with employees for situations in-  
volving a takeover offer.  
47  
Analysis of the Group Financial Statements  
Group internal management system  
segment and the objectives defined for specific  
The underlying long-term objective of the Group’s  
internal management system is to increase the  
value of the BMW Group. The targets set for the  
Automobiles, Motorcycles and Financial Services  
segments all stem from this objective. Within the  
Automobiles and Motorcycles segments, this ap-  
proach is put into practise for specific product,  
process and structure-related projects. By contrast,  
the Financial Services segment is primarily con-  
cerned with cash flows and risk positions resulting  
from its credit and lease portfolio.  
projects. Once a project decision has been reached,  
the task is to manage each individual project over  
time. Projects are therefore monitored continuously  
and resources reallocated according to require-  
ments.  
The project decision and related project selec-  
tion are therefore important aspects of value-based  
management. Net present values (NPVs) and rates  
of return are computed as part of the decision-mak-  
ing process. This involves computing the present  
value of cash flows and the internal project rate of  
return (or model rate of return in the case of vehicle  
projects) which are expected to be generated by  
a project decision and comparing them with the  
minimum rate of return derived from capital market  
data.  
Using this method, the amount by which a  
project will contribute to the total value of the seg-  
ment can be documented when the project decision  
is taken. Targets and performance are controlled  
using project-related target NPVs and individual cash  
flow related parameters which have an impact on  
those values.  
The NPV of a project programme is computed  
by aggregating the amounts for all projects and  
discounting them back to a specific date. This  
value serves as an important target for the Auto-  
mobiles and Motorcycles segments. The business  
value of each segment is then computed by de-  
ducting the market value of debt capital. For both  
of these segments, the objective is to increase  
business value, as computed above, on a con-  
tinuous basis.  
Minimum rate of return derived from cost of  
capital  
The cornerstone of the value-added management  
of the BMW Group is the entity-specific minimum  
rate of return, derived from capital market data, and  
based on the weighted average cost of capital:  
Cost of equity capital x market value of equity capital  
Market value of equity and debt capital  
WACC =  
+
Cost of debt capital x market value of debt capital  
Market value of equity and debt capital  
The cost of equity capital is measured using the  
Capital Asset Pricing Model (CAPM). The cost of  
debt capital is partly based on the average interest  
rate paid for long-term external debt and partly on  
the interest rate applicable for pension obligations.  
Value management in the context of project  
control  
The strategies set for each segment (and also the  
ensuing project decisions) give rise to the areas of  
strategic emphasis which are then implemented at  
a functional level. The overall project development  
process becomes more targeted as a result of the  
closer link between the strategies defined for each  
Return on capital used to measure value on  
a periodic basis  
The management of product projects and product  
programmes is subject to basic conditions which  
result from periodic planning. The aim here is to  
Return on Capital Employed  
Profit before financial result  
in euro million  
Capital employed  
in euro million  
Return on Capital Employed  
in %  
2007  
2006  
2007  
2006  
2007  
2006  
Automobiles  
Motorcycles  
3,450  
80  
3,055  
75  
15,108  
440  
14,056  
423  
22.8  
18.2  
21.7  
17.7  
48  
Group Management Report  
Capital employed by  
automobiles segment  
in euro million  
2007  
2006  
to the return on assets, the Financial Services seg-  
ment also manages its business using risk-based  
performance indicators such as value-at-risk.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Assets employed  
28,515  
– 13,407  
15,108  
27,227  
–13,171  
14,056  
Profit before financial result  
ROCE =  
less: Non-interest bearing liabilities  
Capital employed  
Capital employed  
Profit before interest expense and taxes  
ROA Group =  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Balance sheet total  
– Internal Management System  
– Earnings Performance  
– Financial Position  
monitor and manage periodic targets on a long-term  
basis in order to ensure that the BMW Group’s earn-  
ings performance can develop at a steady pace.  
Periodic performance is managed in the light of de-  
fined accounting policies and external financial re-  
porting requirements. The BMW Group primarily  
uses profit before tax and segment-specific rates of  
– Net Assets Position  
Profit before tax  
ROA Financial Services =  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Operating assets  
The ROCE is derived by dividing segment operat-  
ing profit by segment capital employed.The latter  
comprises all current and non-current operational  
Outlook  
return as the key indicator figures by which it manages assets of the segment, less liabilities used opera-  
operating performance.  
tionally and which are not subject to interest e.g.  
trade payables. This net amount is the capital em-  
ployed.  
The ROCE target value for the Automobiles  
segment (i.e. the minimum required rate of return  
derived from the cost of capital) is at least 26%.  
For example, return on capital employed is used  
as the main performance indicator for the Automo-  
biles and Motorcycles segments. Return on sales is  
also used as a performance indicator. The return on  
assets is used for the Group as a whole. In addition  
Return on Assets  
Profit before tax/Profit before  
interest expense and taxes  
Operating assets/  
Return on Assets  
Total assets  
in euro million  
in euro million  
in %  
2007  
2006  
2007  
2006  
2007  
2006  
Financial Services  
BMW Group  
743  
685  
59,040  
88,997  
50,529  
79,057  
1.3  
5.3  
1.4  
6.3  
4,721  
4,979  
Key performance indicators  
2007  
2006  
2005  
2004*  
2003  
in %  
Return on Capital Employed  
Automobiles  
22.8  
18.2  
21.7  
17.7  
23.2  
17.8  
25.4  
10.4  
23.8  
16.7  
Motorcycles  
Return on Assets  
Financial Services  
BMW Group  
1.3  
5.3  
1.4  
6.3  
1.3  
5.6  
1.4  
6.5  
1.4  
6.6  
*adjusted for new accounting treatment of pension obligations  
49  
Long-term creation of value  
The overall target set for earnings is continuous  
Revenue growth was spread across all regions.  
Group revenues increased by 12.4% in Germany  
growth, whereby the relevant performance indicators and by 21.4% in the rest of Europe. Revenues for the  
are measured against the Group’s minimum rate of  
return. These periodic targets are supplementary to  
project and programme targets.  
Americas region rose by 5.5%. For the Africa, Asia  
and Oceania regions, they grew in total by 14.0%,  
mainly as a result of the sharp sales volume increase  
In order to implement this comprehensive target recorded in China. Cost of sales went up 2.1 per-  
and management system, whilst at the same time centage points faster than revenues. This develop-  
satisfying periodic reporting and accounting require- ment reflected the impact of additional costs which  
ments, the model analyses show for each project  
decision reached the impact of cash flows on the  
NPV and on the model rate of return as well as the  
impact on periodic earnings. This approach enables  
the BMW Group has reported on since the begin-  
ning of 2007, namely the effect of less favourable ex-  
change rates and higher raw material prices. Despite  
these adverse factors, gross profit increased in ab-  
the BMW Group to analyse the effect of each project- solute terms by 7.5%, giving a gross profit percent-  
based decision on business value (quantified in  
terms of the NPV of the project programme) as well  
as on earnings and rates of return. “Multi-project  
planning” data gleaned from these procedures al-  
lows ongoing comparison between dynamic multi-  
period targets and periodic performance.  
age of 21.8% (2006: 23.1%). The gross profit per-  
centage for Industrial Operations was down by 0.5  
percentage points and that of Financial Operations  
by 1.1 percentage points. Information regarding the  
composition of these sub-groups is provided in  
Note [1].  
Sales and administrative costs increased by  
5.7% due to the high level of business volumes; the  
increase was, however, lower than that of revenues.  
They represented 9.4% of revenues and were there-  
fore 0.7 percentage points lower on a year-to-year  
comparison.  
Research and development costs were 14.8%  
higher than in 2006, unchanged as a percentage of  
revenues at 5.2%. They include amortisation of cap-  
italised development costs amounting to euro 1,109  
million (2006: euro 872 million). Total research and  
development costs amounted to euro 3,144 million  
Strategic realignment  
The BMW Group’s strategic realignment will also  
bring with it changes to the Group internal manage-  
ment system. In future, the BMW Group intends  
to focus even more on profitability and increasing  
business value in the long-term. This means that  
the efficient use of capital at a project, segment and  
Group level will play an even greater role.  
Earnings Performance  
The BMW Group recorded a net profit of euro  
3,134 million (2006: euro 2,874 million) for the finan- (2006: euro 3,208 million). This figure comprises  
cial year 2007. The post-tax return on sales was  
research costs, development costs not recognised  
as assets and capitalised development costs. The  
research and development expenditure ratio for 2007  
was 5.6% (2006: 6.5%).  
5.6% (2006: 5.9%). Earnings per share of common  
and preferred stock were euro 4.78 and euro 4.80  
respectively.  
Group revenues rose by 14.3% compared to  
the previous year. Excluding exchange rate factors,  
Group revenues would have increased by 17.6% or  
euro 8,397 million. Revenues from the sale of BMW,  
MINI and Rolls-Royce brand cars went up by 11.8%.  
Revenues from motorcycles business fell by 2.5%.  
Revenues from financial services business climbed  
by 26.5% on the back of volume growth. Revenues  
from other activities of the Group amounted to euro  
Depreciation and amortisation of property, plant  
and equipment and intangible assets included in  
cost of sales, sales and administrative costs and re-  
search and development costs amounted to euro  
3,683 million (2006: euro 3,272 million).  
Pension obligations decreased as a result of  
the Retirement Age Amendment Act passed in  
2007 which raised the statutory retirement age for  
the state pension scheme in Germany.The euro  
103 million positive impact on earnings is spread  
over the relevant income statement cost lines by  
function.  
2
14 million and related mainly to the Cirquent Group  
previously: softlab Group). The comparable figure  
for the previous year was euro 193 million.  
(
50  
Group Management Report  
Group Income Statement  
in euro million  
2007  
2006  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Revenues  
56,018  
–43,832  
12,186  
48,999  
–37,660  
11,339  
Cost of sales  
Gross profit  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Sales and administrative costs  
Research and development costs  
Other operating income  
–5,254  
–2,920  
730  
–4,972  
–2,544  
744  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Other operating expenses  
–530  
–517  
Profit before financial result  
4,212  
4,050  
Outlook  
Result from equity accounted investments  
Other financial result  
11  
–350  
–339  
3,873  
–25  
99  
Financial result  
74  
Profit before tax  
4,124  
Income taxes  
–739  
–1,250  
Net profit  
3,134  
2,874  
The positive net amount from other operating in-  
come and expenses fell by 11.9% compared to the  
previous year. Other operating income decreased  
on the BMW Group investment in TRITEC Motors  
Ltda., Campo Largo. These shares were sold to  
the Chrysler Group in 2007. The net positive result  
primarily as a result of lower income from the reversal from investments decreased by euro 35 million. Net  
of provisions. Other operating expenses increased  
slightly by euro 13 million or 2.5%.  
The profit before financial result increased by  
euro 162 million (4.0%) against the previous year  
and therefore reached a new high level.  
interest expense improved by euro 31 million. Within  
the net interest result, the net negative amount re-  
sulting from unwinding the discounting on pension  
obligations and recognising income for the expected  
return on pension plan assets improved by 3.8% on  
a year-on-year basis.  
As a result of the changes in the financial result  
described above, profit before tax fell by 6.1% com-  
pared to the previous year. The pre-tax return on  
The financial result deteriorated by euro 413 mil-  
lion, of which euro 445 million relates to the line  
“Other financial result”. As stated above, earnings in  
2006 included a gain of euro 372 million resulting  
from the partial settlement of the exchangeable bond sales was 6.9% (2006: 8.4%). Excluding the impact  
on shares in Rolls-Royce plc, London. Further con-  
versions in 2007 gave rise to a gain of euro 97 mil-  
lion.The bond was completely settled by the end  
of 2007. In addition to the gain on the exchangeable  
bond, other financial result also includes losses on  
other derivative financial instruments, in particular  
stand-alone interest-rate derivatives. A changed  
market interest rate structure caused the fair values  
of these financial instruments to decrease. The net  
result from using the equity method improved by  
euro 36 million. This was primarily attributable to  
an impairment loss recognised in the previous year  
of the settlement of the exchangeable bond on  
shares in Rolls-Royce plc, London, and the fair mar-  
ket loss on the option obligation, the profit before tax  
improved by 0.6% to euro 3,776 million.  
The Group net profit was euro 260 million or  
9.0% above the figure reported in the previous year.  
The significantly lower effective tax rate is due to  
effect of the Business Tax Reform Act 2008 and the  
resulting decrease in deferred taxes.  
The Automobiles segment recorded a 9.2%  
increase in sales volume and a 12.7% increase in  
revenues. Segment profit improved by 7.3% to euro  
51  
3
,232 million despite the adverse factors described  
above.  
Revenues of the Motorcycles segment fell by  
.9%. Ongoing efficiency improvements neverthe-  
Cash flows from operating activities are deter-  
mined indirectly starting with the Group net profit. By  
contrast, cash flows from investing and financing ac-  
tivities are based on actual payments and receipts.  
Cash and cash equivalents in the cash flow state-  
ment correspond to the amount disclosed in the  
balance sheet.  
2
less allowed the segment result to improve. The  
segment profit before tax, at euro 71 million, im-  
proved by 7.6% compared to the previous year.  
The Financial Services segment was again able  
Operating activities of the BMW Group gener-  
to expand its business successfully in 2007, enabling ated a positive cash flow of euro 11,794 million in  
the segment profit to be improved by 8.5% on a  
year-on-year comparison. Reconciliations to the  
Group profit from ordinary activities were again neg-  
ative in 2007, with a net expense of euro 173 million;  
this represented a deterioration of euro 534 million  
compared to the previous year. This was largely due  
to the higher gain recognised in the previous year on  
the settlement of the exchangeable bond on shares  
in Rolls-Royce plc, London, and to fair value losses  
recognised on derivative financial instruments.  
2007, an increase of euro 1,814 million or18.2%  
compared to the previous year. Changes in net cur-  
rent assets during 2007 generated a cash inflow of  
euro 204 million (2006: euro 174 million). The cash  
outflow for investing activities amounted to euro  
17,248 million and was therefore euro 3,578 million  
higher than in 2006. Capital expenditure for intangi-  
ble assets and property, plant and equipment result-  
ed in the cash outflow for investing activities de-  
creasing by euro 46 million on a year-on-year  
comparison. The cash outflow for net investments  
in financial services activities rose steeply and was  
euro 3,604 million higher than in the previous year.  
Financing activities in 2007 generated a positive  
Financial Position  
The Group cash flow statement shows the sources  
and applications of cash flows for the financial years  
2007 and 2006, classified into cash flows from oper- cash flow of euro 6,557 million (2006: euro 3,323  
ating, investing and financing activities.  
million). Cash inflows from the issue of bonds to-  
Revenues by segment  
in euro million  
2007  
2006  
Automobiles  
Motorcycles  
Financial Services  
Reconciliations  
Group  
53,818  
1,228  
47,767  
1,265  
13,940  
–12,968  
56,018  
11,079  
–11,112  
48,999  
Profit before tax by segment  
in euro million  
2007  
2006  
Automobiles  
Motorcycles  
Financial Services  
Reconciliations  
Group  
3,232  
71  
3,012  
66  
743  
685  
–173  
3,873  
361  
4,124  
52  
Group Management Report  
talled euro 6,038 million (2006: euro 6,876 million),  
and euro 4,152 million (2006: euro 4,491 million)  
was used to repay bonds. The dividend payment  
in 2007 totalled euro 458 million.The cash inflow  
from other financial liabilities and commercial paper  
increased by euro 3,519 million.  
Net interest-bearing assets relating to Industrial  
Operations (including receivables from Financial  
Operations) amounted to euro 7,052 million at the  
year-end, representing an increase of euro 1,667  
million since 31 December 2006. Net interest-bear-  
ing assets relating to Industrial Operations comprise  
cash and cash equivalents (euro 1,887 million), mar-  
ketable securities relating to Industrial Operations  
(euro 1,933 million) and receivables from the Finan-  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
68.4% (2006: 73.0%) of the cash outflow for  
investing activities was covered by the cash inflow  
from operating activities. The cash flow statement  
for Industrial Operations shows that the cash outflow cial Operations (euro 5,910 million) less financial lia-  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
for operating activities exceeded the cash inflow  
from investing activities by 56.6% (2006: 21.6%).  
As expected, the cash flow statement for Financial  
Operations shows that cash inflow from operating  
activities did not cover the cash outflow for investing  
activities due to the high level of capital expenditure  
on leased products and receivables from sales fi-  
nancing. The shortfall was 58.7% (2006: 50.2%).  
After adjustment for the effects of exchange-  
bilities of Industrial Operations. Excluding interest  
and currency derivatives, the latter amounts to euro  
2,678 million.  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
Net Assets Position  
The Group balance sheet total increased by euro  
9,940 million or12.6% to euro 88,997 million. Cur-  
rency effects, largely attributable to a weaker US  
dollar, again held down the increase in the balance  
sheet total in 2007. Adjusted for changes in ex-  
change rates, the balance sheet total would have  
increased by 16.7% to euro 12,703 million. The  
main factors behind the increase on the assets  
side were the increased level of leased products  
(+24.7%), financial assets (+21.4%), cash and  
rate fluctuations and changes in the composition  
of the BMW Group amounting to a negative amount  
of euro 46 million (2006: positive amount of euro  
82 million), the various cash flows resulted in an in-  
crease in cash and cash equivalents of euro 1,057  
million (2006: decrease of euro 285 million).  
Change in cash and cash equivalents  
in euro million  
1
3,000  
2,000  
1,000  
0,000  
1
1
1
9
,000  
,000  
,000  
,000  
,000  
,000  
,000  
,000  
8
7
6
5
4
3
2
1,000  
0
1,000  
2,000  
3,000  
4,000  
–
–
–
–
Cash and cash  
equivalents  
Cash inflow from  
operating activities  
Cash outflow from  
investing activities  
Cash inflow from  
financing activities  
Currency trans-  
lation, changes in  
Group composition  
Cash and cash  
equivalents  
31.12. 2007  
31.12. 2006  
1,336  
+11,794  
–17,248  
+6,557  
– 46  
2,393  
53  
cash equivalents (+79.1%) and receivables from  
sales financing (+12.8%). On the equity and liabili-  
ties side of the balance sheet, the main increases  
related to equity (+13.7%) and financial liabilities  
due to higher business volumes. Trade receivables  
went up by 18.3% compared to one year earlier.  
Financial assets increased by 21.4% to euro  
4,795 million, mainly as a result of higher fair values  
of derivative financial instruments.  
(
+20.5%).  
Intangible assets increased by 6.7% to euro  
,670 million. Within intangible assets, capitalised  
Liquid funds increased by 29.1% to euro 4,352  
5
million. Whereas marketable securities were roughly  
at the previous year’s level, cash and cash equiva-  
lents increased by euro 1,057 million compared to  
one year earlier.  
On the equity and liabilities side of the balance  
sheet, equity grew by 13.7% to euro 21,744 million.  
The profit for the year attributable to shareholders of  
BMW AG increased equity by euro 3,126 million. Fair  
value changes recognised directly in other accumu-  
lated equity reduced equity by euro 61 million (2006:  
reduction of euro 43 million). The latter comprises  
translation differences, fair value gains and losses  
development costs went up by 4.7% to euro 5,034  
million. Development costs recognised as assets  
during the year under report amounted to euro 1,333  
million (–13.2%), equivalent to a capitalisation ratio  
of 42.4% (2006: 47.9%). The lower level of addi-  
tions to capitalised development costs in 2007 was  
due to the smaller number of projects in the series  
development phase. Amortisation on intangible  
assets amounted to euro 1,109 million (+27.2%).  
The carrying amount of property, plant and  
equipment decreased slightly (–1.6%) to euro  
1
1,108 million. The bulk of capital expenditure related on financial instruments and available-for-sale secu-  
to further expansion of the worldwide production rities as well as actuarial gains and losses for pension  
and sales networks. Capital expenditure on property, provisions. The increase in the discount factor applied,  
plant and equipment was euro 2,684 million or 1.1% especially in Germany, in 2007 gave rise to actuarial  
more than in the previous year. Depreciation on prop- gains totalling euro 528 million.The carrying amounts  
erty, plant and equipment totalled euro 2,471 million  
+6.8%). Balances brought forward for subsidiaries  
being consolidated for the first time amounted to  
euro 5 million. Capital expenditure on intangible as-  
sets and property, plant and equipment totalled euro  
of investments decreased, mainly reflecting the  
settlement of the exchangeable bond on shares in  
Rolls-Royce plc, London. Translation differences re-  
duced accumulated other equity by a further euro  
384 million. By contrast, derivative financial instru-  
ments increased by euro 366 million. Deferred taxes  
on fair value gains and losses recognised directly  
in equity corresponded to a negative amount of euro  
388 million at 31 December 2007.  
(
4,267 million (–1.1%), which, as in the previous year,  
was financed fully out of cash flow. Capital expendi-  
ture as a percentage of revenues was 7.6% (2006:  
8.8%).  
As a result of the growth of financial services busi-  
Minority interests amounted to euro 11 million.  
The equity ratio of the BMW Group therefore im-  
proved by 0.2 percentage points to 24.4%.  
The equity ratio for Industrial Operations was  
43.8% compared to 40.6% at the end of the previ-  
ous year. The equity ratio for Financial Operations fell  
from 10.4% at the end of the previous year to 9.2%  
ness, the total carrying amount of leased products  
increased sharply by 24.7% to euro 17,013 million.  
Adjusted for changes in exchange rates, leased  
products would have risen by 33.2%.  
The carrying amount of other investments de-  
creased by 47.9% to euro 209 million, mainly as a  
result of the settlement of the exchangeable bond on at 31 December 2007.  
the investment in Rolls-Royce plc, London, com-  
The amount recognised in the balance sheet  
pleted in 2007. The BMW Group no longer holds any for pension obligations decreased by 7.8% to euro  
shares in Rolls-Royce plc, London.  
4,627 million. As in the previous year, the amount re-  
ported under pension provisions corresponds to the  
full defined benefit obligation (DBO). In the case of  
pension plans with fund assets, the fair value of fund  
assets is offset against the defined benefit obliga-  
tion. The decrease in pension obligations was attrib-  
utable principally to the higher discount factor in  
Receivables from sales financing were up by  
12.8% to euro 34,244 million due to higher busi-  
ness volumes. Of this amount, retail customer and  
dealer financing accounted for euro 26,181 million  
(
8
+13.6%) and finance leases accounted for euro  
,063 million (+10.0%). Inventories increased by  
euro 555 million or 8.2% to euro 7,349 million, mainly Germany.  
54  
Group Management Report  
Balance sheet structure Group  
in euro billion  
89  
79  
79  
89  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Non-current assets  
64%  
24%  
38%  
Equity  
6
4%  
24%  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Non-current provisions and liabilities  
– Internal Management System  
– Earnings Performance  
– Financial Position  
40%  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
38%  
Current provisions and liabilities  
Current assets  
36%  
3%  
36%  
2%  
36%  
Outlook  
of which cash and cash equivalents  
and marketable securities  
2007  
2006  
2006  
2007  
Balance sheet structure Industrial Operations  
in euro billion  
40  
38  
38  
40  
Non-current assets  
48%  
44%  
Equity  
51 %  
41 %  
3
1 %  
28%  
28%  
Non-current provisions and liabilities  
Current provisions and liabilities  
Current assets  
52%  
49%  
28%  
of which cash and cash equivalents  
and marketable securities  
5%  
3%  
2007  
2006  
2006  
2007  
55  
Other provisions went down slightly (–0.6%) to  
euro 5,502 million. Deferred tax liabilities were down  
by euro 44 million to euro 2,714 million, whereby  
the deferred tax effects of the Business Tax Reform  
Act, fair value gains and losses recognised directly in  
equity and translation differences largely offset each  
other. Financial liabilities went up by 20.5%, reflect-  
ing the strong growth of the financial services busi-  
ness. Within financial liabilities, bonds increased by  
penses are treated as bought-in costs in the value  
added calculation. The allocation statement applies  
value added to each of the participants involved in  
the value added process. It should be noted that the  
gross value added treats depreciation as a com-  
ponent of value added which, in the allocation state-  
ment, is treated as internal financing.  
Net value added by the BMW Group in 2007 in-  
creased by 3.8% to euro 14,096 million. The in-  
crease over the previous year was largely attributable  
to the higher level of revenues. The increase in gross  
value added, at 9.5%, was even more pronounced  
since it is not affected by depreciation and amortisa-  
tion, which are higher than in the previous year.  
The bulk of the net value added (53.3%) is ap-  
plied to employees. The amount applied to providers  
of finance increased to 16.1% as a result of the high-  
er funding volume required for financial services  
business. The government/public sector (including  
deferred tax expense) accounted for 8.4%. The pro-  
portion of net value added applied to shareholders,  
at 4.9%, was higher than in the previous year. The  
remaining proportion of net value added (17.3%)  
will be retained in the Group to finance future oper-  
ations. It decreased by 0.4 percentage points com-  
pared to one year earlier.  
12.0% to euro 18,383 million. Liabilities to banks,  
asset backed financing obligations and commercial  
paper were all also up.  
Trade payables amounted to euro 3,551 million  
and were thus 5.0% lower than one year earlier.  
Other liabilities were 4.7% higher at euro  
6,130 million, mainly due to the increase in deferred  
income relating to service and repair contracts and  
lease financing.  
Compensation Report  
The compensation of the Board of Management  
comprises fixed and variable remuneration compo-  
nents. In addition, benefits are also payable at the  
end of members’ mandates, primarily in the form  
of pension benefits. Further details, including an  
analysis of remuneration by individual, are disclosed  
in the Compensation Report which can be found in  
the “Corporate Governance” section of the Annual  
Report on pages 142 to 145. The Compensation  
Report is a sub-section of the Management Report.  
Subsequent Events Report  
No events have occurred after the balance sheet date  
which could have a major impact on the earnings  
performance, financial position and net assets of the  
BMW Group.  
Value Added Statement  
The value added statement shows the value of work  
performed less the value of work bought in by the  
BMW Group during the financial year. Depreciation  
and amortisation, cost of materials and other ex-  
56  
Group Management Report  
BMW Group value added statement  
in euro million  
2007  
2007  
in %  
2006  
2006  
in %  
Change  
in %  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Work performed  
Revenues  
56,018  
–114  
98.9  
–0.2  
48,999  
393  
97.7  
0.8  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
Financial income  
Other income  
Total output  
– Internal Management System  
– Earnings Performance  
– Financial Position  
730  
1.3  
744  
1.5  
56,634  
100.0  
50,136  
100.0  
13.0  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Cost of materials  
Other expenses  
Bought-in costs  
31,019  
5,355  
54.8  
9.4  
26,598  
5,037  
53.1  
10.0  
63.1  
36,374  
64.2  
31,635  
15.0  
9.5  
Outlook  
Gross value added  
Depreciation and amortisation  
Net value added  
20,260  
6,164  
35.8  
10.9  
24.9  
18,501  
4,916  
36.9  
9.8  
14,096  
13,585  
27.1  
3.8  
Applied to:  
Employees  
7,511  
2,270  
1,181  
694  
53.3  
16.1  
8.4  
7,448  
1,627  
1,636  
458  
54.9  
12.0  
12.0  
3.4  
0.8  
39.5  
27.8  
51.5  
0.9  
Providers of finance  
Government/public sector  
Shareholders  
4.9  
Group  
2,432  
8
17.3  
–
2,410  
6
17.7  
–
Minority interest  
Net value added  
33.3  
3.8  
14,096  
100.0  
13,585  
100.0  
BMW Group value added 2007  
in %  
10.9  
9.4  
53.3%  
16.1%  
Employees  
Net value added  
Cost of materials  
Depreciation and amortisation  
Other expenses  
24.9  
Providers of finance  
8
.4% Government/public sector  
.9%  
Shareholders  
Group  
4
54.8  
17.3%  
57  
Key Performance Figures  
2007  
2006  
Gross margin  
%
%
%
%
%
%
%
21.8  
14.1  
7.5  
23.1  
14.9  
8.3  
EBITDA margin  
EBIT margin  
Pre-tax return on sales  
Post-tax return on sales  
Pre-tax return on equity  
Post-tax return on equity  
6.9  
8.4  
5.6  
5.9  
20.2  
16.4  
24.3  
16.9  
Equity ratio – Group  
Industrial Operations  
Financial Operations  
%
%
%
24.4  
43.8  
9.2  
24.2  
40.6  
10.4  
Coverage of intangible assets, property, plant and equipment by equity  
%
129.6  
115.3  
Return on Assets  
BMW Group  
%
%
5.3  
1.3  
6.3  
1.4  
Financial Services  
Return on Capital Employed  
Automobiles  
%
%
22.8  
18.2  
21.7  
17.7  
Motorcycles  
Cash inflow from operating activities  
euro million  
euro million  
%
11,794  
17,248  
68.4  
9,980  
13,670  
73.0  
Cash outflow from investing activities  
Coverage of cash outflow from investing activities by cash inflow from operating activities  
Net financial assets of Industrial Operations  
euro million  
7,052  
5,385  
58  
Group Management Report  
Comments on the financial statements of  
BMW AG  
Whereas the Group financial statements are drawn  
up in accordance with IFRSs issued by the IASB, the  
financial statements of BMW AG are drawn up in  
Capital expenditure on intangible assets and  
property, plant and equipment was increased by  
26.1% to euro 1,670 million (2006: euro 1,324 mil-  
lion), with the increase mainly attributable to the  
high level of product and infrastructure investments  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
accordance with the provisions of the German Com- made at the Dingolfing plant. Depreciation and  
mercial Code (HGB). Where it is permitted and con-  
sidered sensible, the principles and policies of IFRSs  
are also applied in the individual company financial  
statements. The pension provision in the individual  
company financial statements, for example, is also  
determined in accordance with IAS 19 and the full  
defined benefit obligation recognised. In numerous  
other cases, however, the accounting principles and  
policies in the individual company financial state-  
ments of BMW AG differ from those applied in the  
Group financial statements. The main differences  
relate to the recognition of intangible assets, depre-  
amortisation amounted to euro 1,791 million.  
Equity rose by euro 727 million to euro 5,648  
million.The existing authorisation to acquire treasury  
shares was not exercised during the financial year  
2007. The equity ratio increased from 23.4% to  
25.0%. Long-term external capital (registered profit-  
sharing certificates, special untaxed reserves, pen-  
sion provisions, the liability to the BMW Unterstüt-  
zungsverein e.V. and liabilities due after one year)  
decreased by 15.0% to euro 4,068 million.  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
A special untaxed reserve pursuant to §6b (3)  
German Income Tax Act (EStG) was recognised in  
ciation and amortisation methods, the measurement 2007.  
of inventories and provisions as well as the treatment  
As in previous years, the cash inflow from  
BMW AG’s operating activities was utilised in 2007  
of financial assets.  
BMW AG develops, manufactures and sells cars to finance the operations of affiliated companies.  
and motorcycles manufactured by itself and foreign  
subsidiaries. These vehicles are sold through the  
Company’s own branches, independent dealers, sub-  
sidiaries and importers. The number of cars manu-  
factured at German and foreign plants in 2007 rose  
by 12.8% to 1,541,503 units. At 31 December 2007,  
BMW AG had 76,064 employees, 92 fewer than one  
year earlier. Wage earners account for approximately  
53% of the workforce.  
In 2007, revenues were 13.9% higher than in  
the previous year. Sales to foreign Group sales com-  
panies accounted for euro 36.0 billion or approxi-  
mately 74.5% of the total revenues of euro 48.3 bil-  
lion. Cost of sales increased slightly faster than  
revenues. In absolute terms, gross profit improved  
by euro 0.8 billion (+13.4%) and amounted to euro  
6.9 billion.  
Adverse currency factors in the area of the US  
dollar and Japanese yen as well as continued in-  
tense competition on the automobile markets had  
a negative impact on BMW AG’s earnings. The  
change in the interest rate used to discount the pen-  
sion provision (raised from 4.40% in 2006 to 5.50%  
in 2007) and the new Retirement Age Amendment  
Act both had a positive impact on earnings.  
59  
BMW AG  
2007  
2006  
Balance Sheet at 31 December in euro million  
Assets  
Intangible assets  
109  
4,986  
4,814  
9,909  
80  
5,268  
Property, plant and equipment  
Investments  
4,823  
Tangible, intangible and investment assets  
10,171  
Inventories  
2,654  
1,218  
5,937  
644  
2,866  
1,075  
4,478  
693  
Trade receivables  
Receivables from subsidiaries  
Other receivables and other assets  
Marketable securities  
Cash and cash equivalents  
Current assets  
1,763  
436  
1,583  
106  
12,652  
10,801  
Prepayments  
Total assets  
55  
73  
22,616  
21,045  
Equity and liabilities  
Subscribed capital  
654  
1,991  
2,309  
694  
654  
1,991  
1,818  
458  
Capital reserves  
Revenue reserves  
Unappropriated profit available for distribution  
Equity  
5,648  
4,921  
Registered profit-sharing certificates  
34  
–
34  
1
Special untaxed reserve for emission rights granted free of charge  
Special untaxed reserves  
34  
–
Pension provisions  
Other provisions  
Provisions  
3,793  
6,292  
4,347  
6,131  
10,085  
10,478  
Liabilities to banks  
Trade payables  
394  
1,716  
2,597  
2,094  
6,801  
607  
2,046  
1,618  
1,313  
5,584  
Liabilities to subsidiaries  
Other liabilities  
Liabilities  
Deferred income  
14  
27  
Total equity and liabilities  
22,616  
21,045  
60  
Group Management Report  
BMW AG  
2007  
2006  
Income Statement in euro million  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Revenues  
48,310  
–41,448  
6,862  
42,417  
–36,364  
6,053  
Cost of sales  
Gross profit  
Sales costs  
–2,786  
–881  
–2,828  
731  
–2,560  
–917  
–2,966  
654  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
Administrative costs  
Research and development costs  
Other operating income and expenses  
Result on investments  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
255  
304  
Net interest result  
–38  
–8  
Profit from ordinary activities  
1,315  
560  
Outlook  
Income taxes  
Other taxes  
Net profit  
–115  
–16  
–60  
–15  
485  
1,184  
Profit carried over from previous year  
Transfer to revenue reserves  
1
–491  
694  
4
–31  
458  
Unappropriated profit available for distribution  
Revenues from the sale of vehicles to car rental  
companies are not recognised when there is an  
obligation to take back the vehicles. In accordance  
with the draft financial reporting pronouncement  
29 November 2006) issued by the German Institute  
of Public Accountants (IDW), vehicles remain on  
the balance sheet, measured at amortised cost,  
because, on the basis of the criteria set out in the  
pronouncement, beneficial ownership has not been  
transferred to the car rental companies.  
“Specific Issues relating to the Transfer of Beneficial  
Ownership and Profit Realisation in accordance  
with HGB” (IDW ERS HFA 13 revised version dated  
61  
KPMG Deutsche Treuhand-Gesellschaft Aktienge-  
sellschaft Wirtschaftsprüfungsgesellschaft, Munich,  
has issued an unqualified audit opinion on the finan-  
cial statements of BMW AG, of which the balance  
sheet and the income statement are presented here.  
The BMW AG Financial Statements and Manage-  
ment Report for the financial year 2007 will be sub-  
mitted to the operator of the electronic version of the  
German Federal Gazette and can be obtained via  
the Company Register website. These financial state-  
ments are available from BMW AG, 80788 Munich,  
Germany.  
62  
Group Management Report  
Risk Management  
Risk management in the BMW Group  
continuously to ensure that unfavourable develop-  
ments are identified at an early stage so that appro-  
priate countermeasures can be implemented.  
Overall risk management within the BMW Group  
is managed centrally and is reviewed for its appro-  
priateness and effectiveness by external auditors and  
by the Group’s internal audit department. The find-  
ings reached serve as the basis for further improve-  
ments.  
A network of risk managers is in place through-  
out the Group, regularly carrying out risk reviews in  
which significant risks are recorded, systematically  
identified, measured and reported upon on a timely  
basis. The reviews cover general economic, legal  
and compliance risks as well as risks specific to the  
automobile sector and to internal processes. Risk  
managers are allocated to predefined areas to carry  
out reviews for the risk network. The network can  
draw on experts with specialist knowledge in specific  
risk areas. Based on the BMW Group’s set of risk  
principles, decisions are made as to whether risks  
should be avoided, reduced, insured against or  
entered into if there are potential business opportu-  
nities.  
All entrepreneurial activities involve an element of  
risk. Some of those risks can be quite substantial.  
They may arise in conjunction with business opera-  
tions or they may affect a company as a result of  
external factors. Other risks arise as business be-  
comes more international. As a globally operating  
enterprise, the BMW Group is confronted with nu-  
merous risks. Price fluctuations on the global cur-  
rency, money, capital and commodity markets as  
well as shorter innovation cycles result in an ever-  
rising complexity which places great demands on  
enterprises with international operations.  
The BMW Group has long been founded on  
the idea of consciously taking reasonable (measur-  
able) risks and making full use of the opportunities  
relating to those risks. As part of the risk reporting  
system, the Board of Management and the Super-  
visory Board are regularly informed about risks  
which could have a significant impact on business  
development.  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
The BMW Group has an integrated risk man-  
agement system which provides it with the informa-  
tion to be prepared for changes in market and other  
conditions. The system also enables it to manage  
For the basis for an organisation that is per-  
the value-added process within the Group. Business manently learning, standardised rules are in place,  
decisions are reached after consideration of in-depth which are consistently applied throughout the  
project analyses which present potential risks and  
opportunities in detail. In addition, as part of the long-  
term planning strategy and short-term forecasting  
procedures, the risks and opportunities attached to  
specific business activities are evaluated and used  
Group. Risk management is an ongoing task, since  
changes in the legal, economic or regulatory envi-  
ronment or changes within the Group itself could  
lead to new risks or to known risks being assessed  
differently. By regularly sharing experiences with  
as the basis for setting targets and implementing ap- other companies, the BMW Group ensures that in-  
propriate risk-mitigation measures.  
novative ideas and approaches flow into the risk  
management system and that risk management is  
subjected to continual improvement. Regular train-  
ing sessions, continued education measures and  
The risk management process ensures that  
risks are identified at an early stage and that suitable  
instruments are employed for both the manage-  
ment and monitoring of those risks. The risk manage- information events are invaluable ways of preparing  
ment system comprises a wide range of organisa-  
tional and methodological components that are all  
finely tuned with each other. The system’s decen-  
tralised structure also encourages a balanced ap-  
proach to risks at all organisational levels.  
The Group reporting system provides the deci-  
sion makers with comprehensive, up-to-date in-  
formation on performance against targets and on  
new developments with regard to the market and  
competitors. Critical success factors are monitored  
people for new or additional requirements with  
regard to the processes in which they are involved.  
At present, no risks have been identified which  
could threaten the existence of the BMW Group or  
which could have a materially adverse impact on the  
net assets, financial position or results of operations  
of the Group. However, risks can never be entirely  
ruled out.  
In the course of its business activities, the BMW  
Group is exposed to various types of risk which are  
63  
addressed below. Additional comments on risks in  
conjunction with financial instruments are provided  
measured and limited both at a country and Group  
level on the basis of the value-at-risk concept.The  
in note [38] of the consolidated financial statements. risk-return ratio is also measured regularly using sim-  
ulated computations in conjunction with a present  
Risks relating to the general economic  
environment  
value-based interest-rate management system.  
Sensitivity analyses, which contain stress scenarios  
and show the potential impact of interest rate changes  
on earnings, are also used as tools to manage  
interest-rate risks. Credit lines with various banks  
and the use of various financing instruments ensure  
sufficient liquid funds are available to the Group. Li-  
quidity risk is continuously monitored at a separate  
entity level and documented in a rolling cash flow  
forecasting system.  
A major part of financing and lease business  
within the Financial Services segment is refinanced  
on the capital markets. As a result of its good credit  
standing, reflected in the long standing first-class  
short-term ratings issued by Moody’s (P-1) and  
Standard&Poor’s (A-1), the BMW Group is able to  
obtain competitive conditions. The long-term ratings  
for the BMW Group published by Standard&Poor’s  
and Moody’s in September 2005 remain unchanged,  
also helping the BMW Group to obtain competitive  
conditions. Moody’s issued an A1 rating and S&P  
an A+ rating, both with stable outlook. As a con-  
sequence of the general crisis of confidence on the  
financial markets, financing conditions also deterio-  
rated for the BMW Group in the second half of 2007,  
despite the good ratings that it enjoys.  
As a globally operating enterprise, the BMW Group  
is affected by global economic factors such as  
changes in currency parities and changes on the  
financial markets. The US dollar is particularly impor-  
tant for the development of Group revenues and  
earnings and represents the greatest individual risk  
within the BMW Group’s foreign currency portfolio.  
Exchange rate fluctuations of the Japanese yen, the  
British pound and the Chinese renminbi in relation  
to the euro can also have a material impact on earn-  
ings. Based on Group forecasts, these four curren-  
cies account for some 75% of the foreign currency  
exposure of the BMW Group.  
The BMW Group manages currency risks at  
both a strategic and an operating level. From a stra-  
tegic point of view, i.e. in the medium and long term,  
the BMW Group endeavours to manage foreign ex-  
change risks by “natural hedging”, in other words by  
increasing the volume of purchases denominated  
in foreign currency or increasing the volume of local  
production. In the short to medium term (i.e. for  
operative purposes), currency risks are hedged on  
the financial markets. Hedging transactions are en-  
tered into only with financial partners of first-class  
credit standing. The nature and scope of such meas-  
ures are set out in guidelines applicable throughout  
Changes in the international raw material mar-  
kets also have an impact on the business develop-  
the BMW Group. A cash-flow-at-risk model and sce- ment of the BMW Group. In order to safeguard the  
nario analyses are used to measure exchange rate  
risks. These instruments are also used as part of  
supply of production materials and to minimise  
the cost risk, the commodity markets relevant for  
the process of currency management for the purpose the BMW Group are closely monitored. The market  
of taking business decisions.  
price trend of precious metals such as platinum,  
palladium and rhodium, for which appropriate hedg-  
ing strategies are decided upon by the Raw Materials  
Committee, is also important in this context.  
Changes in the price of crude oil, which is an  
important basic material in the manufacture of com-  
ponents, have an indirect impact on production costs.  
As a manufacturing enterprise, the BMW Group is  
also affected by changes in energy prices, caused by  
both market factors and tax legislation.  
The BMW Group reduces currency risk by re-  
financing its financing and lease business as a gen-  
eral rule in the currency of the relevant market. If  
funds are raised in a foreign currency, swap con-  
tracts are concluded immediately afterwards in the  
corresponding local currency in order to reduce the  
risk exposure.  
Liquidity and interest-rate risks are managed  
within the BMW Group by raising refinancing funds  
with matching maturities and by employing deriva-  
tive financial instruments. Interest-rate risks are  
Cyclical economic fluctuations also represent  
risk factors for future business development. Unfore-  
64  
Group Management Report  
seeable interventionist economic policies can also  
impair the BMW Group’s performance in specific  
markets. The BMW Group anticipates these risks by  
monitoring the markets in detail and by observing  
early warning indicators. The BMW Group’s world-  
wide operations also have the effect of spreading  
risk. At the same time, determined engagement  
in new markets and segments with both existing  
and new products creates significant opportunities  
for the BMW Group to strengthen its competitive  
position.  
An escalation of political tensions, terrorist ac-  
tivities or possible pandemics could have a negative  
impact on the general economic situation, the inter-  
national capital markets and hence the business  
development of the BMW Group.  
achieving additional fuel economy by a wide range  
of measures from electrification of the drivetrain  
through to hybrid solutions. In the long-term, the  
BMW Group is committed to the use of hydrogen  
gained from various renewable sources to power  
engines. The need to reduce consumption and  
emissions is fully integrated into the Group’s product  
innovation process. A specialist department is  
studying the interplay of energy management, aero-  
dynamics, lightweight construction, drive perform-  
1
1
1
1
4
4
0
0
3
7
1
4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
ance and CO emissions. The BMW Group advo-  
2
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
cates the use of differentiated CO limits for different  
2
vehicle classes. These limits should be set at levels  
that are transparent and therefore meet customers’  
expectations. Achieving real improvements for the  
environment requires measures to be applied fairly to  
all vehicle classes. The BMW Group therefore sup-  
ports the current debate as to how ecological im-  
provements can be achieved that take all factors into  
account.  
Outlook  
Specific industry risks  
Fuel prices, whether influenced by market or gov-  
ernmental tax policies, and increasingly stringent  
requirements to reduce vehicle fuel consumption  
and emissions, all set high demands on the BMW  
Group’s engine and product development activities.  
One manifest result of this has been the reduction  
of consumption and emissions achieved with the  
BMW Group’s EfficientDynamics strategy.  
Operating risks  
Risks arising from business interruption and loss of  
production are insured up to economically reasonable  
levels. The BMW Group’s highly flexible production  
network and working time models also help to re-  
duce operating risks.  
The issue of CO emission limits based on the  
2
unladen weight of a vehicle has been taken up by  
the European Commission. This involves setting  
Close cooperation between manufacturers and  
suppliers is normal in the automotive sector, and  
whilst this provides economic benefits, it also creates  
a degree of mutual dependence. Some suppliers  
have become very important for the production ac-  
tivities of the BMW Group. Delivery delays, cancella-  
tions, strikes or poor quality can lead to production  
stoppages, and thus have a negative impact on profit-  
ability. The Group mitigates this risk by employing  
extensive procedures for selecting, monitoring and  
handling suppliers. Before selection, for example,  
both the technical competence and the financial  
differentiated CO emission limits on the basis of  
2
predefined vehicle classes. The proposal requires  
significantly higher CO reductions for larger vehicle  
2
classes than for smaller ones. Consumption effi-  
ciency requirements and proposals have also been  
put forward in the USA. The proposed rules for CO2  
emissions and fuel economy could have a materially  
adverse effect on the business development of  
the Automobiles segment and consequently on the  
Group’s earnings performance.  
The BMW Group is confronting these challenges strength of potential suppliers are appraised. A com-  
by rigorously applying its technological expertise prehensive Supplier Relationship Management  
and innovative strength to reduce the CO emissions system, which also takes account of social and eco-  
2
of its vehicles. The EfficientDynamics strategy was  
adopted back in 2000: a combination of highly effi-  
cient engines, improved aerodynamics, lightweight  
construction and energy management reduces  
the average fuel consumption of the vehicle fleet.  
In the medium term, the BMW Group is working on  
logical aspects, helps to reduce risk exposure.  
Risks relating to the provision of financial  
services  
As a consequence of the ongoing successful  
growth in lease business, the BMW Group also faces  
65  
a volume-induced increase in the residual value risk  
where necessary, risk mitigating measures put into  
on vehicles returned to the Group at the end of lease place. In line with the Group’s own mandatory risk  
contracts. Residual values of BMW Group vehicles  
on the used car markets are continuously monitored  
over time, and future developments forecasted. Ex-  
ternal market observations are also used in this con-  
text. The overall risk exposure is measured each  
quarter by comparing forecasted market values and  
contractual values according to model and market  
and the return ratio computed. Thanks to active life-  
guidelines and the stringent requirements imposed  
by Basle II, the main risk measurement methods used  
are customer scoring (retail customer business) and  
credit rating (commercial customer business). Close  
contacts with borrowers, a good understanding of  
the leased or financed vehicles involved, prudent  
measurement of collateral and the use of local credit  
audits all help to prevent losses. For risk manage-  
cycle management for current models and measures ment purposes, the BMW Group reverts to normal  
aimed at optimising the process of international  
reselling, residual value risks remained at a stable,  
albeit low, level compared to the previous year. Iden-  
tified risks are covered in the balance sheet either  
good banking practises, such as the use of maxi-  
mum unsecured risks for each rating category.  
Risk criteria such as arrears and bad debt ratios are  
analysed quarterly and used to actively manage  
by provisions or by write-downs on the lease vehicles the credit portfolio and improve portfolio quality.  
concerned. Market forecasts also confirm the stable  
trend for lease residuals of the Group’s car lease  
portfolio. Internal and external forecasts as well as  
actual prices achieved on the market, broadly docu-  
ment high residual values for cars manufactured by  
the BMW Group.  
The credit decision process comprises up to three  
phases. Depending on the credit volume applied for  
and the credit risk rating of the party involved, financ-  
ing applications for international dealers, importers  
and fleet customers are presented to the local, re-  
gional or global credit committees for approval. The  
dual control and segregation of duties principles  
Operational risks relating to the financial services  
business include the risk of damage caused by inap- apply worldwide and are rigorously implemented.  
propriate or failed internal procedures and systems,  
human error or external factors. The scope of proce-  
dures applied in each country to manage operational  
risks is set out in a Group manual which, amongst  
other things, addresses the requirements of the  
Basle II accord. This manual stipulates the rules for  
identifying and measuring potential risk scenarios  
and for computing key risk indicators on an ongoing  
basis. It also sets out the Group’s systematic ap-  
proach to recording losses and the nature of any  
agreed risk mitigation measures. Both qualitative  
and quantitative aspects are required to be taken  
into account in the decision process. The latter is  
backed up by various system-based solutions, all  
of which follow the principles of operational risk  
management, such as separation of duties, dual  
control and the documentation of system changes.  
In addition, the effectiveness and efficiency of the  
internal control system are tested regularly.  
In order to minimise risk further, the BMW Group is  
continuously making efforts to standardise its credit-  
decision processes and the quality of credit applica-  
tions, and to ensure that uniform and transparent  
rating systems are in place worldwide. Provisions are  
recognised in the balance sheet to cover identified  
risks.  
Legal risks  
The BMW Group is currently not involved in any court  
or arbitration proceedings which could have a signifi-  
cant impact on its financial condition.  
Compliance with the law is a basic prerequisite  
for the success of the BMW Group. Current law pro-  
vides the binding framework for the BMW Group’s  
various business activities around the world. The  
growing international scale of business and the huge  
number of complex legal regulations increase the  
risk of laws being broken simply because they are  
not known or fully understood. The BMW Group  
takes all necessary measures to ensure that its  
management bodies, managers and staff act lawful-  
ly. It is essential for all employees to know and to  
comply with current legal regulations. The extent of  
Credit risks affecting the retail customer busi-  
ness (leasing, financing) on the one hand and the  
commercial customer financing business (dealers,  
fleet customers, importers) on the other, are con-  
tinually monitored, assessed and measured, and  
66  
Group Management Report  
those legal regulations is set out in corporate guide-  
lines and in the BMW Group’s stated set of core  
principles. However, wrongdoing by individuals can  
never be entirely ruled out. It is the BMW Group’s  
objective to keep such risks to a minimum and to  
systematically uncover any cases of corruption,  
bribery or blackmail. The BMW Group set up a Com-  
pliance Committee in 2007 which reports directly to,  
on operations.The focus is on the following areas of  
action, aimed at creating and retaining a motivated  
workforce in the long-term:  
(1) the creation of a working environment for the  
future  
(2) promotion and maintenance of the workforce’s  
ability to perform with the appropriate set of skills  
(3) appropriate levels of qualification  
(4) increasing employees’ awareness of their re-  
sponsibility to make personal provisions for their  
future  
(5) individual employee working life-time models  
The BMW Group’s pension obligations to its em-  
ployees resulting from defined benefit plans are  
measured on the basis of actuarial reports. In accord-  
ance with IAS 19, future pension payments are dis-  
counted by reference to market yields on high-  
quality corporate bonds. These yields are subject to  
market fluctuation and influence the level of pension  
obligations. Furthermore, changes in other factors,  
such as longer life expectancies, can also have an  
impact on pension obligations. In the United King-  
dom, the USA and a number of other countries,  
funds intended to cover pension entitlements are  
held in pension funds which are kept separate from  
corporate assets and are mainly invested in fixed-  
income securities (with a high level of creditworthi-  
1
1
1
1
4
4
0
0
3
7
1
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Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
and advises, the Board of Management of BMW AG  
.
– Internal Management System  
– Earnings Performance  
– Financial Position  
Like all enterprises, the BMW Group is exposed  
to the risk of warranty claims. Adequate provisions  
have been recognised in the balance sheet to cover  
such claims. Part of the risk, especially where the  
American market is concerned, has been insured  
externally up to economically acceptable levels. The  
high quality of BMW Group products, additionally  
ensured by regular quality audits and ongoing im-  
provement measures, helps to reduce this risk. In  
comparison with competitors, this can give rise to  
benefits and opportunities for the BMW Group.  
Changes in the regulatory environment may im-  
pair the sales volume, revenues and earnings per-  
formance of the BMW Group in individual markets  
or economic regions. Further information is given in  
the section on sector-specific risks.  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
Outlook  
Personnel risks  
As an attractive employer, the BMW Group has found ness), equities and property. In Germany, by contrast,  
itself in a favourable position for many years in the in- the funds remain part of the enterprise’s assets.  
tense competition for qualified technical and manage-  
ment staff. Employee satisfaction and a low level of  
employee fluctuation also help to minimise the risk  
of know-how drift.The BMW Group’s attractiveness  
as an employer also helps to ensure that appropri-  
ately qualified staff can be recruited, particularly in  
conjunction with the implementation of the Group’s  
new strategy.  
Risks affecting pension funds are monitored  
continuously and managed from a risk and yield  
perspective. Regular asset-liability studies are per-  
formed and used to match the maturities of inter-  
est-generating investments with future pension  
payments, thereby reducing the interest rate risk  
attached to each pension fund. Investments are  
broadly spread in order to reduce risk. In addition,  
risk limits for investment activities have been de-  
An ageing and shrinking population in Germany  
will have a lasting impact on the conditions prevailing fined for each pension fund and are monitored con-  
in the labour, product, services and financial mar-  
kets. Demographic change will give rise to risks and  
opportunities which will affect enterprises more and  
more in the coming years.The BMW Group sees  
demographic change as one of its main challenges  
and is actively involved in planning for its effect  
tinuously.  
Risk indicators (e.g. value-at-risk) are regularly  
computed in order to identify risks at an early stage.  
Risk mitigation measures are put into place as soon  
as predefined risk limits are reached. Worst-case  
analyses are also carried out regularly to assess the  
67  
potential impact on the Group of unexpectedly high  
market fluctuations.  
The BMW Group protects its intellectual property  
by ensuring that the relevant departments have clear  
instructions regarding data protection and the use  
of information technology. Information underlying  
key areas of expertise is subject to particularly  
stringent security measures. In addition, employees  
working in such functions are increasingly receiving  
specific training in the area of data protection.  
From 2008 onwards, in a measure to reduce  
risks further, the BMW Group intends to set up pen-  
sion funds for all of its pension commitments that  
are not already externally funded. This will take place  
over the coming years in three stages.  
Information and IT risks  
Great importance is attached in the BMW Group to  
the protection of data, business secrets and inno-  
vative development against unauthorised access,  
damage and misuse. The protection of information  
and data is an integral component of business pro-  
cesses and is achieved within the BMW Group by ap-  
plying international security standards. Employees,  
process design and information technology each play  
a role in the Group’s comprehensive security concept.  
The Group’s procedures are documented in regular-  
ly updated manuals, guidelines and process descrip-  
tions. All of these require employees to handle infor-  
mation appropriately and ensure that information  
systems are properly used. Purposeful communica-  
tion and training measures create a high degree of  
security awareness on the part of all people involved.  
The technical data protection procedures used by  
the BMW Group include process-specific security  
measures as well as standard activities such as virus  
scanners, firewall systems and access controls at  
operating system and application level. Further  
measures include internal testing procedures and  
the regular back-up of data. A security network is  
in place throughout the Group to ensure compliance  
with security specifications. Regular analyses and  
rigorous security management ensure high-quality  
protection. This includes the activities of the BMW  
Group’s Security Operations Centre which is re-  
sponsible for the security of internal network com-  
munications. The Group’s core process “Product  
development” and the related IT infrastructure have  
been audited and certified to international security  
standard ISO 27001/17799. Protecting BMW  
Group-specific know-how is also treated as a major  
issue as far as cooperation arrangements and rela-  
tionships with partner companies are concerned.  
68  
Group Management Report  
Outlook  
The economic environment in 2008  
A generally strong euro expected  
The BMW Group forecasts that the global economy  
will again lose some of its momentum in 2008, but  
The euro again appreciated sharply against the US  
dollar in the course of 2007. Lower interest rates,  
will nevertheless continue to grow.The pace will again weaker growth and the USA’s high current account  
be set by the emerging markets in Asia, Latin America deficit all suggest that the US dollar is likely to remain  
and Eastern Europe, whereas growth in North America weak in the near future.  
1
1
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4
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Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
and the rest of Europe is likely to be robust, but no-  
where near as high. From today’s perspective, the  
US credit crisis is not expected to result in massive  
global economic upheaval. It could, however, hold  
down domestic demand somewhat, particularly in  
the USA itself, without causing a recession there.  
The US growth rate in 2008 will again remain  
Although the British pound fell steeply during  
the second half of 2007, it is not expected to suffer  
any further significant loss in value.  
The Japanese yen also depreciated sharply in  
2007. The fact that interest rates are still on the low  
side in Japan means that the yen is likely to remain  
undervalued for the time being.  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
below the average registered in recent years. The  
impact of the property and credit crisis is not likely  
to tail off until the second half of the year at the earli-  
Outlook  
Risks affecting economic growth  
Energy and commodity prices will remain high in  
est. The US Federal Reserve will no doubt endeavour 2008, reflecting the fact that demand – in particular  
to stimulate the economy with further interest rate  
cuts. It is nevertheless likely that consumers will be  
much more reluctant to spend than they were a  
year ago. Overall, the growth rate should remain at  
roughly the same level as in the previous year.  
By contrast, a slowdown in growth is forecasted  
for Europe in 2008. Firstly, higher interest rates will  
take their toll and hold down investment volumes.  
Secondly, export growth is likely to weaken once  
again. The sharp increase in the inflation rate at the  
turn of the year will probably deter the European  
Central Bank from lowering interest rates significantly.  
The growth rate for Germany will also weaken.  
Whereas private consumption is forecasted to re-  
main buoyant, exports and particularly investments  
are likely to grow at a much slower pace.  
from the emerging economies – will continue to  
grow strongly. With the global economy still enjoying  
robust growth and the US dollar weakening, com-  
modities are likely to remain in demand as an invest-  
ment in the near future. As a result of the extremely  
tense situation on the markets, the risk of specula-  
tive price rises remains present for the foreseeable  
future. The most significant risk emanates from the  
credit crisis in the USA. Should the crisis become  
more serious in the USA or spill over into other  
markets, this could result in a significantly lower  
global growth rate. All in all, the credit crisis causes  
forecasts for 2008 to be subject to a high degree of  
uncertainty.  
Economic outlook for the automobile industry  
in 2008  
The Japanese economy should grow in 2008  
at a somewhat lower pace to that of 2007, with  
momentum still coming from both the domestic  
market and abroad. The recent sharp rise in con-  
sumer prices – mostly due to higher energy prices  
The global automotive economy will again be driven  
by the emerging economies of Asia, Eastern Europe  
and Latin America, whereas sales on the three main  
traditional markets (Japan, the USA and Western  
Europe) are likely to stagnate.  
–
should make it easier for the Japanese central  
bank to increase interest rates in small steps.  
Double-digit growth is again forecasted for China  
The emerging economies of Asia, Latin America and India in 2008. The forecast for Russia and some  
and Eastern Europe will continue to expand rapidly  
with growth rates only marginally down on the pre-  
vious year.  
of the Latin American markets is on a similar scale.  
Growth will also remain strong overall in Eastern  
Europe.  
69  
By contrast, the car markets in the USA, Japan  
and Western Europe are still not generating any  
momentum. At best, the markets there will stagnate.  
Car sales will decrease slightly in the USA in the  
wake of the credit crisis. Japan is also unlikely to see  
any significant upturn. This also applies to Western  
Europe taken as a whole. A slight recovery is, how-  
ever, forecasted for Germany.  
As the basis for its continuing success, the  
BMW Group is also aiming for sales volume records  
with all three brands and is confident of being able to  
retain its position as the world’s leading premium  
manufacturer. Further expansion of the product  
range and targeted engagement on new markets  
will also help it to achieve these objectives. Against  
the background of these aims, the BMW Group fore-  
casts that business will grow faster in the first half of  
2008 and more moderately in the second.  
The BMW Group is also working hard to im-  
prove cost efficiency in order to achieve its profit-  
ability targets. This focus on costs, which needs  
to start during the development phase, involves  
avoiding unnecessary complexity, focusing firmly  
on achieving value for the customer and creating  
synergy benefits by the increased use of modular  
components.  
One of the objectives is to reduce research and  
development expenditure for new products and  
technologies as efficiently as possible, based on the  
principle “More output from less input”. This will  
enable the BMW Group to set the R&D ratio to a  
level of approximately 5.0% – 5.5% of revenues and  
still meet the same high standards.  
In this context, the BMW Group is also setting  
new targets for the ratio of internal and external input  
in strategically important technological areas. Further  
opportunities for better profitability will also come  
from more efficiently designed interfaces within the  
Motorcycle markets will continue to develop  
divergently  
The divergent development of the international mo-  
torcycle markets will continue in 2008. The BMW  
Group forecasts that the overall market for motor-  
cycle sales in the 500 cc plus segment should be  
close to the previous year’s level.  
Whereas the US market is forecasted to con-  
tract slightly, the markets in Europe and Asia should  
remain stable overall, with European markets in par-  
ticular again developing divergently.  
More difficult environment for the financial  
services sector  
The current market environment is having an ad-  
verse impact on the refinancing and liquidity situa-  
tion and on credit risk within the financial services  
sector. In combination with a stronger euro, this  
will put a strain on profitability within the sector.  
Outlook for the BMW Group in 2008  
In the light of the general economic environment dis- Group’s supplier network. In future, for example,  
cussed above, the BMW Group believes that it will suppliers will be involved at an even earlier stage in  
continue to perform successfully in the financial year the decision-making process within product and  
008 with the initial benefits of the Group’s new stra- technology projects. In future, wherever it makes  
tegic direction already becoming visible. commercial sense and the appropriate economies of  
With the Number ONE strategy, the BMW Group scale can be realised, the BMW Group will enter into  
2
will lay the foundation in 2008 for the planned im-  
provement in profitability. This will involve measures  
on both the revenue and expenditure side. In total,  
the BMW Group is aiming to achieve cumulative im-  
provements of some euro 6 billion compared to the  
original forecasts by 2012. The greatest potential for  
savings is seen in the cost of materials, the largest  
block of costs for the business.  
more cooperation arrangements.  
The BMW Group believes that, compared to  
the levels invested in the past, it will be able to  
reduce its capital expenditure ratio over the coming  
years whilst, at the same time, still remaining fully  
prepared to face any future challenges.The plan is  
to scale down the capital expenditure ratio to below  
7.0% of revenues.  
70  
Group Management Report  
Within an intensely competitive environment,  
personnel expense management takes on an ever-  
greater significance. Substantial efficiency improve-  
ments, particularly in production, will enable person-  
nel capacities to be reduced, resulting in lower per-  
sonnel expenditure. In this context, any opportunities Eastern Europe and Asia.  
to improve flexibility are made use of in close coop-  
eration with employee representatives.This includes strengthened, particularly in the area of direct channel  
established lines of business will be intensified by  
expanding the product range and paying even greater  
attention to the needs of dealers, dealer groups  
and retail customers. The process of geographical  
expansion will also be continued, particularly in  
1
1
1
1
4
4
0
0
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4
Group Management Report  
A Review of the Financial Year  
General Economic Environment  
Review of Operations  
BMW Stock and Bonds  
Disclosures relating to Takeover  
Regulations and Explanatory Report  
Financial Analysis  
Multi-brand financial services business will be  
47  
47  
49  
51  
52  
55  
55  
57  
58  
62  
68  
reducing the number of temporary personnel, the  
use of early retirement models and fluctuation.  
In addition to the earnings factors described  
operations. In this context, the “up2drive” brand  
name will be additionally promoted. Within the fleet  
business, the integration of the acquired fleet manage-  
– Internal Management System  
– Earnings Performance  
– Financial Position  
– Net Assets Position  
– Subsequent Events Report  
– Value Added Statement  
– Key Performance Figures  
– Comments on BMW AG  
Risk Management  
above, the BMW Group also intends to achieve better ment company, DEKRA SüdLeasing Services GmbH  
capital efficiency – return on capital employed – as  
part of its strategy to increase the value of the busi-  
ness in the long term. The BMW Group is therefore  
committed to making more use of performance in-  
(renamed to: BMW Fuhrparkmanagement Beteili-  
gungs GmbH), will be completed and organic growth  
continued. All lines of business will continue to be  
developed in 2008, building on the high quality of  
Outlook  
dicators that allow better management of capital em- service offered by the Financial Services segment in  
ployed.  
order to strengthen its outstanding market position.  
The various measures described above will result in  
a further increase in the volume of financial services  
Segments all expected to perform well  
In the coming years, the BMW Group will continue to business. Simultaneously, continuous measures will  
take full advantage of opportunities to achieve profit-  
able growth in all segments.  
be implemented in conjunction with a global project  
to improve process efficiency. All of these factors  
Adverse external factors caused by unfavourable give good reason to expect a further increase in seg-  
exchange rates and high commodity prices will again  
affect the Automobiles segment’s earnings during  
ment earnings in 2008.  
the financial year 2008. Nonetheless, the BMW Group Overall positive outlook for 2008  
is targeting a further improvement in segment earn-  
ings, with sales volumes continuing to develop posi-  
tively and the efficiency improvement measures  
described above beginning to bear fruit. The seg-  
ment should also achieve a higher return on capital  
employed.  
The BMW Group’s Motorcycles segment will  
continue with its model initiative in 2008. An increase  
in motorcycle sales is forecasted for all regions. This  
includes a reversal of the negative trends previously  
witnessed in Germany and the USA. Segment  
revenues and earnings will be slightly higher than in  
External factors will continue to have an adverse im-  
pact on the BMW Group’s earnings during the finan-  
cial year 2008. Currency factors (in particular the  
continuing weakness of the US dollar and the Japa-  
nese yen), higher raw material costs and less favour-  
able refinancing conditions as a consequence of  
the credit crisis still remain the principal challenges  
to future earnings.  
By contrast, the efficiency and productivity im-  
provements described above will have a positive  
impact on Group earnings. On top of this, the BMW  
Group forecasts further stable growth for its operat-  
ing segments which will, in turn, create further impe-  
tus for earnings in 2008. Overall, the BMW Group  
is aiming to improve the quality of earnings in 2008.  
2
007.  
The Financial Services segment will continue  
to grow in 2008. Market activities in the segment’s  
71  
This will also be reflected in the key performance  
figures such as return on sales and return on capital  
that are used to manage the BMW Group.  
Adjusted for the exceptional gain on the  
Rolls-Royce exchangeable bond in 2007, the  
BMW Group aims to achieve higher pre-tax earnings  
for the financial year 2008 than one year earlier.  
Numerous projects have already been initiated  
in conjunction with the Group’s strategic realign-  
ment, aimed at raising the quality of future earnings.  
By 2012, the BMW Group’s Automobiles segment  
is aiming to achieve a return on capital employed in  
excess of 26% and a return on sales in a range of  
8
% to 10%.  
72  
Group Financial Statements  
Contents  
Group Financial Statements  
Group and Sub-group Income Statements  
Group and Sub-group Balance Sheets at 31 December  
Group and Sub-group Cash Flow Statements  
Group Statement of Changes in Equity  
Statement of Income and Expenses recognised directly in Equity  
Notes to the Group Financial Statements  
Accounting Principles and Policies  
Notes to the Income Statement  
73  
74  
76  
78  
79  
80  
89  
Notes to the Balance Sheet  
96  
Other Disclosures  
Segment Information  
117  
131  
Responsibility Statement by the Company’s Legal Representatives  
Auditors’ Report  
135  
136  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
117 – Other Disclosures  
131 – Segment Information  
73  
BMW Group  
Group and Sub-group Income Statements  
in euro million  
Notes  
Group  
007  
Industrial Operations*  
Financial Operations*  
2
2006  
2007  
2006  
2007  
2006  
Revenues  
[8]  
[9]  
56,018  
48,999  
55,263  
49,227  
14,349  
11,349  
Cost of sales  
Gross profit  
–43,832 –37,660  
–44,331 –39,238  
10,932 9,989  
–12,877 –10,050  
12,186 11,339  
1,472  
1,299  
Sales and administrative costs  
Research and development costs  
Other operating income  
[10]  
[11]  
[12]  
[12]  
–5,254 –4,972  
–2,920 –2,544  
–4,647 –4,464  
–2,920 –2,544  
–609  
–
–535  
–
730  
–530  
744  
–517  
594  
–430  
626  
–450  
194  
–167  
890  
175  
–125  
814  
Other operating expenses  
Profit before financial result  
4,212  
4,050  
3,529  
3,157  
Result from equity accounted investments [13]  
11  
–350  
–339  
3,873  
–25  
99  
11  
–81  
–25  
383  
–
–139  
–139  
751  
–
–33  
–33  
781  
Other financial result  
Financial result  
[14]  
[15]  
74  
–70  
358  
Profit before tax  
4,124  
3,459  
3,515  
Income taxes  
–739 –1,250  
–496 –1,066  
–327  
–246  
Net profit  
3,134  
2,874  
2,963  
2,449  
424  
535  
Attributable to minority interest  
8
6
8
6
–
–
Attributable to shareholders of BMW AG  
3,126  
2,868  
2,955  
2,443  
424  
535  
Earnings per share  
of common stock in euro  
Earnings per share  
[16]  
[16]  
4.78  
4.80  
4.38  
4.40  
of preferred stock in euro  
*
before consolidation of transactions between the sub-groups; unaudited  
74  
Group Financial Statements  
BMW Group  
Group and Sub-group Balance Sheets at 31 December  
Assets  
Notes  
Group  
Industrial Operations*  
Financial Operations*  
in euro million  
2007  
2006  
2007  
2006  
2007  
2006  
Intangible assets  
[19]  
[20]  
[21]  
5,670  
11,108  
17,013  
5,312  
11,285  
13,642  
5,550  
11,083  
254  
5,276  
11,260  
254  
120  
25  
36  
25  
Property, plant and equipment  
Leased products  
19,911  
16,364  
Investments accounted for using the  
equity method  
[22]  
[22]  
[23]  
[24]  
[25]  
[26]  
63  
209  
60  
401  
63  
186  
–
60  
388  
–
–
23  
–
13  
Other investments  
Receivables from sales financing  
Financial assets  
20,248  
1,173  
720  
17,865  
816  
20,248  
1,092  
17,865  
755  
81  
61  
Deferred tax  
755  
1,201  
892  
1,192  
875  
–1,952 –1,828  
344 255  
39,811 33,485  
Other assets  
415  
378  
Non-current assets  
56,619 50,514  
19,310 19,366  
Inventories  
[27]  
[28]  
[23]  
[24]  
7,349  
2,672  
13,996  
3,622  
237  
6,794  
2,258  
12,503  
3,134  
246  
7,340  
2,592  
–
6,784  
2,214  
–
9
80  
10  
44  
Trade receivables  
Receivables from sales financing  
Financial assets  
13,996  
1,409  
12  
12,503  
786  
2,213  
225  
2,348  
222  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
[25]  
24  
7
7
7
7
Current tax  
Other assets  
[26]  
[29]  
2,109  
2,393  
2,272  
1,336  
6,932  
1,887  
5,574  
1,235  
863  
772  
Cash and cash equivalents  
Current assets  
506  
101  
32,378 28,543  
21,189 18,377  
16,875 14,240  
56,686 47,725  
79  
Total assets  
88,997 79,057  
40,499 37,743  
8
8
0
0
8
9
6
Total assets adjusted for  
asset backed financing transactions  
*
82,651  
74,556  
–
–
50,340  
43,224  
9
117 – Other Disclosures  
before consolidation of transactions between the sub-groups; unaudited  
131 – Segment Information  
75  
Equity and liabilities  
in euro million  
Notes  
Group  
2007  
Industrial Operations*  
2007 2006  
Financial Operations*  
2006  
654  
2007  
2006  
Subscribed capital  
Capital reserves  
Revenue reserves  
Accumulated other equity  
Minority interest  
Equity  
654  
1,911  
1,911  
20,789  
18,121  
–1,621 –1,560  
11  
21,744 19,130  
4
[30]  
17,755 15,315  
5,197  
4,965  
Pension provisions  
Other provisions  
[31]  
[32]  
[33]  
[34]  
[35]  
4,627  
2,676  
2,714  
21,428  
2,024  
5,017  
2,865  
2,758  
18,800  
1,932  
4,595  
2,417  
2,067  
716  
4,983  
2,462  
2,012  
882  
32  
259  
34  
403  
Deferred tax  
369  
464  
Financial liabilities  
20,712  
1,843  
17,918  
1,732  
Other liabilities  
1,514  
1,458  
Non-current provisions and liabilities  
33,469 31,372  
11,309 11,797  
23,215 20,551  
Other provisions  
[32]  
[33]  
[34]  
[36]  
[35]  
2,826  
808  
2,671  
567  
2,673  
654  
2,489  
437  
178  
154  
207  
130  
Current tax  
Financial liabilities  
Trade payables  
22,493  
3,551  
4,106  
17,656  
3,737  
3,924  
2,090  
2,938  
3,080  
1,407  
3,288  
3,010  
20,403  
613  
16,249  
449  
Other liabilities  
6,926  
5,174  
Current provisions and liabilities  
33,784 28,555  
11,435 10,631  
28,274 22,209  
56,686 47,725  
Total equity and liabilities  
88,997 79,057  
40,499 37,743  
Total equity and liabilities adjusted for  
asset backed financing transactions  
before consolidation of transactions between the sub-groups; unaudited  
82,651  
74,556  
–
–
50,340  
43,224  
*
76  
Group Financial Statements  
BMW Group  
Group and Sub-group Cash Flow Statements  
Notes3  
]
Group  
in euro million  
2
007  
20062  
2,874  
]
Net profit  
3,134  
Reconciliation of net profit to cash inflow from operating activities  
Current tax  
1,002  
4,698  
3,689  
221  
993  
3,808  
3,340  
–346  
242  
Depreciation of leased products  
Depreciation and amortisation of tangible, intangible and investment assets  
Change in provisions  
Change in deferred taxes  
–256  
111  
Other non-cash income and expense items  
Gain/loss on disposal of non-current assets and marketable securities  
Result from equity accounted investments  
Changes in current assets and current liabilities  
Change in inventories  
–329  
–68  
–181  
–11  
25  
–700  
10  
–265  
–611  
1,050  
–733  
9,980  
Change in receivables  
Change in liabilities  
894  
Income taxes paid  
–817  
11,794  
Cash inflow from operating activities  
[39]  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
Investment in intangible assets and property, plant and equipment  
Proceeds from the disposal of intangible assets and property, plant and equipment  
Expenditure for investments  
–4,267  
272  
–4,313  
39  
–44  
–29  
7
9
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
Proceeds from the disposal of investments  
Investment in leased products  
16  
110  
–13,261  
4,917  
–10,754  
3,719  
80  
0
8
Disposals of leased products  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Additions to receivables from sales financing  
Payments received on receivables from sales financing  
Investment in marketable securities  
–54,573  
49,813  
–2,698  
2,577  
–50,313  
47,848  
–2,654  
2,677  
9
117 – Other Disclosures  
131 – Segment Information  
Proceeds from marketable securities  
Cash outflow from investing activities  
[39]  
–17,248  
–13,670  
Buy-back of treasury shares  
–
–458  
6,038  
–4,152  
–
–253  
–419  
6,876  
–4,491  
–
Payment of dividend for the previous year  
Proceeds from the issue of bonds  
Repayment of bonds  
Internal financing of financial operations  
Change in other financial liabilities  
Change in commercial paper  
3,603  
1,526  
6,557  
1,027  
583  
Cash inflow/outflow from financing activities  
[39]  
[39]  
3,323  
Effect of exchange rate and changes in composition of group on  
cash and cash equivalents  
–46  
82  
Change in cash and cash equivalents  
1,057  
–285  
Cash and cash equivalents as at1 January  
1,336  
1,621  
Cash and cash equivalents as at 31 December  
[39]  
2,393  
1,336  
1
2
3
] unaudited  
] Previous year’s figures adjusted due to changed presentation of taxes.  
] Interest paid and received are presented in Note [39].  
77  
Industrial Operations1  
]
Financial Operations1]  
2007  
20062  
]
20062]  
2007  
2,963  
2,449  
424  
535  
Net profit  
Reconciliation of net profit to cash inflow from operating activities  
Current tax  
9
48  
938  
4
54  
4,324  
24  
55  
3,560  
25  
4
Depreciation of leased products  
3
–
–
,665  
3,315  
–220  
77  
Depreciation and amortisation of tangible, intangible and investment assets  
Change in provisions  
3
98  
472  
46  
180  
11  
–143  
300  
–35  
–1  
–130  
227  
107  
2
Change in deferred taxes  
1
–436  
–70  
25  
Other non-cash income and expense items  
Gain/loss on disposal of non-current assets and marketable securities  
Result from equity accounted investments  
Changes in current assets and current liabilities  
Change in inventories  
–
–
–
–
–
703  
–261  
–493  
658  
3
–112  
745  
–4  
–135  
485  
–
98  
68  
Change in receivables  
3
Change in liabilities  
688  
–613  
5,373  
–129  
5,454  
–120  
4,607  
Income taxes paid  
6
,340  
Cash inflow from operating activities  
–
4,156  
–4,272  
31  
–111  
–41  
8
Investment in intangible assets and property, plant and equipment  
Proceeds from the disposal of intangible assets and property, plant and equipment  
Expenditure for investments  
2
70  
44  
2
–
–24  
–
–
–5  
16  
76  
34  
Proceeds from the disposal of investments  
Investment in leased products  
–
359  
–392  
364  
–12,902  
4,563  
–54,573  
49,813  
–
–10,362  
3,355  
–50,313  
47,848  
–35  
354  
Disposals of leased products  
–
–
Additions to receivables from sales financing  
Payments received on receivables from sales financing  
Investment in marketable securities  
–
–
–
2,698  
,568  
–2,619  
2,419  
–4,417  
2
9
258  
Proceeds from marketable securities  
–
4,049  
–13,199  
–9,253  
Cash outflow from investing activities  
–
–253  
–419  
1
–
–
–
–
Buy-back of treasury shares  
–
458  
–
Payment of dividend for the previous year  
Proceeds from the issue of bonds  
Repayment of bonds  
6,038  
–4,152  
1,634  
3,980  
681  
6,875  
–4,490  
1,040  
1,156  
–61  
–
–1  
–
1,634  
377  
45  
1,624  
–1,040  
–129  
644  
Internal financing of financial operations  
Change in other financial liabilities  
Change in commercial paper  
–
8
–
–1,197  
8,181  
4,520  
Cash inflow/outflow from financing activities  
Effect of exchange rate and changes in composition of group on  
cash and cash equivalents  
–
15  
52  
104  
–31  
405  
–22  
6
–137  
–148  
Change in cash and cash equivalents  
1,235  
1,372  
101  
249  
Cash and cash equivalents as at1 January  
1,887  
1,235  
506  
101  
Cash and cash equivalents as at 31 December  
78  
Group Financial Statements  
BMW Group  
Group Statement of Changes in Equity  
in euro million  
Subscribed  
Capital Revenue  
Accumulated other equity  
Treasury Minority  
shares interest  
Total  
capital reserves reserves  
Translation Securities Derivative  
Pension  
obliga-  
tions  
differences  
financial  
instru-  
ments  
31 December 2005  
674  
1,971 16,351  
–646  
562  
29 –1,462  
–506  
–
16,973  
Acquisition of treasury shares  
Withdrawal of shares from  
circulation  
–
–
–
–
–
–
–
–253  
–
–253  
–20  
–60  
–679  
–
–
–
–
–
–
759  
–
–
–
–
–
–419  
–199  
–172  
Dividends paid  
–
–
–
–
–
–
–419  
–
–191  
–
–
–
–
–
–
Translation differences  
Financial instruments  
Actuarial gains and losses  
on pension obligations  
Deferred tax on transactions  
recognised directly in equity  
Net profit 2006  
–
–
20  
–28  
–
–370  
198  
–
–
–
–
–
–
543  
–
–
543  
–
–
–
–
–
–
2,868  
–
–
22  
–
–69  
–168  
–
–
–
–
–
6
–215  
2,874  
–2  
–
–
–
–
–
–
Other changes  
–
–
–2  
4
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
31 December 2006  
654  
1,911 18,121  
–837  
214  
178 –1,115  
19,130  
7
7
7
7
Dividends paid  
–
–
–
–
–
–
–458  
–
–422  
–
–
–
–
7
–
31  
–
–
–
–
–
–1  
–
–458  
–385  
183  
Translation differences  
Financial instruments  
Actuarial gains and losses  
on pension obligations  
Deferred tax on transactions  
recognised directly in equity  
Net profit 2007  
–
–
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
–183  
366  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
–
–
–
–
–
–
528  
–
–
528  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
–
–
–
–
–
–
–
4
–
–113  
–
–279  
–
–
–
–
–
–388  
3,134  
9
3,126  
8
117 – Other Disclosures  
131 – Segment Information  
31 December 2007  
see also Note [30]  
654  
1,911 20,789  
–1,259  
35  
438  
–835  
11 21,744  
79  
BMW Group  
Statement of Income and Expenses recognised directly in Equity  
in euro million  
2007  
–183  
2006  
–370  
Fair value gains and losses on available-for-sale investments  
recognised directly in equity  
Fair value gains and losses on financial instruments used for  
hedging purposes recognised directly in equity  
Exchange differences arising on the translation of foreign subsidiaries  
Actuarial gains and losses on defined benefit pension  
and similar obligations  
373  
218  
–422  
–191  
559  
–388  
–61  
515  
–215  
–43  
Deferred tax on gains and losses recognised directly in equity  
Gains and losses recognised directly in equity  
Profit after tax attributable to shareholders of BMW AG  
Aggregate amount of net profit for period and gains and losses  
recognised directly in equity  
3,126  
3,065  
2,868  
2,825  
80  
Group Financial Statements  
BMW Group  
Notes to the Group Financial Statements  
Accounting Principles and Policies  
[
1] Basis of preparation  
The main business transactions between Industrial  
The consolidated financial statements of Bayerische and Financial Operations, which are eliminated in  
Motoren Werke Aktiengesellschaft (“BMW Group the Group financial statements, are internal sales of  
financial statements” or “Group financial statements”) products, the provision of funds for Group compa-  
at 31 December 2007 have been drawn up in ac-  
cordance with International Financial Reporting  
Standards (IFRSs) as endorsed by the EU. The des-  
ignation “IFRSs” also includes all valid International  
Accounting Standards (IASs). All interpretations of  
the International Financial Reporting Interpretations  
Committee (IFRIC) mandatory for the financial year  
nies and the related interest. These additional disclo-  
sures allow the assets, liabilities, financial position  
and performance of Industrial and Financial Opera-  
tions to be presented, in accordance with the recog-  
nition and measurement principles stipulated by  
IFRSs, as if they were two separate groups. This in-  
formation, which has not been audited by the Group  
auditors, is provided on a voluntary basis.  
2007 are also applied.  
The Group financial statements comply with  
provision §315a of the German Commercial Code  
HGB). This provision, in conjunction with the  
Regulation (EC) No. 1606/2002 of the European  
Parliament and Council of 19 July 2002, relating to  
the application of International Financial Reporting  
Standards, provides the legal basis for preparing  
In conjunction with the refinancing of financial  
services business, a significant volume of receivables  
arising from retail customer and dealer financing is  
sold. Similarly, rights and obligations relating to leases  
are sold. The sale of receivables is a well established  
instrument used by industrial companies.These  
transactions are usually in the form of asset backed  
(
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
consolidated financial statements in accordance with financing transactions involving the sale of a portfolio  
international standards in Germany and applies to  
financial years beginning on or after1 January 2005.  
The BMW Group and sub-group income state-  
of receivables to a trust which, in turn, issues market-  
able securities to refinance the purchase price. The  
BMW Group continues to “service” the receivables  
7
9
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
ments are presented using the cost of sales method. and receives an appropriate fee for these services. In  
8
8
0
0
The Group balance sheet and sub-group balance  
sheets correspond to the classification provisions  
contained in IAS 1 (Presentation of Financial State-  
ments). In order to improve clarity, various items are  
aggregated in the income statement and balance  
sheet. These items are disclosed and analysed sep-  
arately in the Notes.  
In order to support the sale of its products, the  
BMW Group provides various financial services –  
mainly loan and lease financing – to retail customers  
accordance with IAS 27 (Consolidated and Separate  
Financial Statements) and the interpretation con-  
tained in SIC-12 (Consolidation – Special Purpose  
Entities) such assets remain in the Group financial  
statements although they have been legally sold.  
Gains and losses relating to the sale of such assets  
are not recognised until the assets are removed from  
the Group balance sheet on transfer of the related  
significant risks and rewards.The balance sheet value  
of the assets sold at 31 December 2007 totalled  
8
9
6
9
117 – Other Disclosures  
131 – Segment Information  
and to dealers. The inclusion of the financial services euro 6.3 billion (31 December 2006: euro 4.5 billion).  
activities of the Group therefore has an impact on the For an additional understanding of the asset, liability  
Group financial statements. In order to provide a bet- and financial position of the BMW Group, the Group  
ter insight into the earnings, financial and net assets  
balance sheet contains a supplementary disclosure  
position of the Group, additional information has been of the balance sheet total adjusted for assets which  
presented in the BMW Group financial statements  
on its Industrial and Financial Operations. Financial  
have been sold.  
In addition to credit financing and lease con-  
Operations include financial services and the activities tracts, the Financial Services segment also brokers  
of the Group financing companies. The operating  
interest income and expense of Financial Operations  
are included in revenues and cost of sales respec-  
tively. The holding companies BMW (UK) Holdings  
Ltd., Bracknell, BMW Holding B.V., The Hague, BMW  
insurance business via cooperation arrangements  
entered into with local insurance companies. These  
activities are not material to the BMW Group as a  
whole.  
The Group currency is the euro. All amounts are  
Österreich Holding GmbH, Steyr, BMW (US) Holding disclosed in millions of euros (euro million) unless  
Corp., Wilmington, Del., BMW España Finance S.L.,  
Madrid, and BMW Holding Malaysia Sdn Bhd,  
Kuala Lumpur, are allocated to Industrial Operations.  
stated otherwise.  
All of the consolidated subsidiaries have a cor-  
responding year-end to BMW AG.  
81  
The Group financial statements, drawn up in  
financial statements and the Group management  
accordance with §315a HGB, and the Group manage- report can be downloaded from the BMW Group  
ment report for the financial year 2007 will be sub-  
mitted to the operator of the electronic version of the  
website at www.bmwgroup.com/ir.  
The Board of Management authorised the  
German Federal Gazette and can be obtained via the consolidated financial statements for issue on  
Company Register website. Printed copies will also  
be made available on request. In addition the Group  
19 February 2008.  
[
2] Consolidated companies  
The number of subsidiaries, special purpose  
securities funds and other special purpose trusts  
included in the Group financial statements changed  
in 2007 as follows:  
The BMW Group financial statements include, be-  
sides BMW AG, all material subsidiaries, 17 special  
purpose securities funds and 24 special purpose  
trusts (almost all used for asset backed financing  
transactions) both in Germany and abroad.  
Germany  
Foreign  
Total  
Included at 31.12. 2006  
45  
4
144  
17  
189  
21  
Included for the first time in 2007  
No longer included in 2007  
Included at 31.12. 2007  
–
6
6
49  
155  
204  
6
5 subsidiaries (2006: 68), either dormant or gen-  
BMW Renting (Portugal) Lda., Lisbon, BMW Vertriebs  
GmbH, Salzburg, BMW Acquisitions Ltda., São Paulo,  
BMW Financeira S.A. Credito, Financiamento e In-  
vestimento, São Paulo, BMW Leasing do Brasil, S.A.,  
São Paulo, BMW Asia Pte. Ltd., Singapore, BMW  
Melbourne Pty. Ltd., Melbourne, BMW Sydney Pty.  
Ltd., Sydney, and BMW Financial Services New  
Zealand Ltd., Auckland, were all consolidated for the  
first time in 2007.  
BMW Renting Iberica S.L., Madrid (following its  
merger with Alphabet Fleet Services España S.L.,  
Madrid) and British Motor Holdings Ltd., Bracknell,  
ceased to be consolidated companies during the  
financial year.  
The Group reporting entity also changed by  
comparison to the previous year as a result of the  
first-time consolidation of seven special purpose  
trusts and two special purpose securities funds and  
the deconsolidation of two special purpose trusts  
and two special purpose securities funds.  
In addition, the names of four entities were  
changed during the financial year 2007. softlab  
GmbH für Systementwicklung und EDV-Anwendung,  
Munich, was renamed Cirquent GmbH, Munich;  
softlab Gesellschaft für Systementwicklung und  
EDV-Anwendung Ges.m.b.H., Vienna, was renamed  
erating a negligible volume of business, are not  
included. Their influence on the Group’s earnings,  
financial and net assets position is immaterial. Non-  
inclusion of operating subsidiaries reduces total  
Group revenues by 1.2% (2006: 1.5%).  
One joint venture is consolidated using the  
equity method. The investment in TRITEC Motors  
Ltda., Campo Largo, was sold during the financial  
year 2007. 16 equity investments are not consoli-  
dated using the equity method since they are not  
material to the Group’s earnings, financial and net  
assets position. They are included in the line “Other  
investments”, measured at cost less, where appli-  
cable, accumulated impairment losses.  
A separate “List of Group Investments” pursu-  
ant to §313 (4) HGB will be submitted to the opera-  
tor of the electronic version of the German Federal  
Gazette. This list, along with the “List ofThird Party  
Companies which are not of Minor Importance for  
the Group”, will also be posted on the BMW Group  
website at the address www.bmwgroup.com/ir.  
The subsidiaries BMW Fuhrparkmanagement  
Beteiligungs GmbH, Stuttgart, LHS Leasing- und  
Handelsgesellschaft Deutschland mbH, Stuttgart,  
BMW Financial Services Danmark A/S, Kolding,  
82  
Group Financial Statements  
Cirquent Ges.m.b.H., Vienna, and softlab AG, Zürich, Reinsurance Company Ltd., Dublin, was changed to  
was renamed Cirquent AG, Zürich. The name of BL  
BMW Financial Services (Ireland) Limited, Dublin.  
[
3] Business acquisitions and disposals  
gart. DEKRA SüdLeasing Services GmbH, Stuttgart,  
was renamed BMW Fuhrparkmanagement Beteili-  
gungs GmbH, Stuttgart. This entity and its subsidiary,  
LHS Leasing- und Handelsgesellschaft Deutschland  
mbH, Stuttgart, were consolidated for the first time  
in the second quarter.  
The acquisition cost was euro 121 million (in-  
cluding euro 1 million of transaction costs). Based on  
the definitive purchase price allocation, the following  
carrying amounts and fair values were attributed to  
the assets and liabilities of the acquired companies  
at the acquisition date:  
The acquisition of DEKRA SüdLeasing Services  
GmbH, Stuttgart, and that entity’s subsidiaries,  
LHS Leasing- und Handelsgesellschaft Deutsch-  
land mbH, Stuttgart, DSL Fleetservices GmbH,  
Stuttgart, MOBIDIG GmbH, Stuttgart, and LHS Auto-  
land GmbH, Stuttgart, was completed on 2 April  
2007, thus expanding the scale of the Group’s fleet  
business. All of the above entities became wholly  
owned subsidiaries. During the year, LHS Autoland  
GmbH, Stuttgart, was merged with LHS Leasing-  
und Handelsgesellschaft Deutschland mbH, Stutt-  
in euro million  
Carrying  
amount  
Fair  
value  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
Assets  
7
9
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Intangible assets and property, plant and equipment  
Leased products  
2
515  
3
28  
515  
3
8
8
0
0
Investments in subsidiaries  
Receivables from sales financing  
Other assets  
230  
15  
230  
15  
8
9
6
9
1
17 – Other Disclosures  
Liabilities  
131 – Segment Information  
Provisions  
23  
699  
35  
8
23  
699  
45  
Financial liabilities  
Other liabilities  
Net assets acquired  
Acquisition cost  
Goodwill  
24  
–
121  
97  
–
Allocation by segment:  
Automobiles  
–
–
33  
64  
Financial Services  
The following identifiable assets have been recog-  
The remainder of the surplus (euro 97 million)  
nised and included in intangible assets, measured at of the acquisition cost over the fair value of the iden-  
fair value:  
tifiable net assets acquired is largely attributable to  
potential synergy benefits which will arise from the  
future growth of the Group’s fleet business.  
–
–
–
contract portfolio  
customer relationships  
contract management system  
BMW Fuhrparkmanagement Beteiligungs GmbH,  
These intangible assets are amortised systematically Stuttgart, and LHS Leasing- und Handelsgesell-  
over the following useful lives:  
schaft Deutschland mbH, Stuttgart, recorded a net  
loss of euro 5.7 million in the period since their first-  
time consolidation. Net revenues of the two entities  
since the date of first-time consolidation amounted  
to euro 379 million.  
–
–
–
contract portfolio:  
customer relationships:  
contract management system: 5 years  
4 years  
7 years  
83  
In addition, after obtaining approval from the  
relevant local authorities, BMW Holding B.V.,The  
Hague, acquired SimeLease (Malaysia) Sdn Bhd,  
Kuala Lumpur, and that entity’s subsidiary, SimeCredit  
In addition, 51% of the shares of CEC Finance  
Ltd., Hong Kong, and 100% of the shares of BMW  
Osaka Corp., Osaka, Husqvarna Motorcycles NA,  
LLC, Wilmington, Del., and John Cooper Garages  
(Malaysia) Sdn Bhd, Kuala Lumpur, on 13 April 2007. Ltd., Bracknell, were acquired during the year.  
The names of these entities have been changed to  
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur, and  
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur.  
CEC Finance Ltd., Hong Kong, was renamed BMW  
Financial Services Hong Kong Limited, Hong Kong.  
The entities listed above are not material in terms  
With effect from 1 October 2007, all of the shares of the Group’s earnings performance, financial posi-  
of Boxer S.r.l., Cassinetta di Biandronno, were ac-  
quired by BMW Italia S.p.A., Milan, and BMW España  
Finance S.L., Madrid. The acquired company was  
renamed Husqvarna Motorcycles S.r.l., Cassinetta  
di Biandronno.  
tion and net assets.  
The investment in TRITEC Motors Ltda., Campo  
Largo, was sold to the Chrysler Group on 11 July  
2007 in line with agreements in place between the  
various parties.  
[
4] Consolidation principles  
Financial Services New Zealand Ltd., Auckland, were  
all consolidated for the first time as of1January 2007.  
The equivalent date for BMW Fuhrparkmanagement  
The equity of subsidiaries is consolidated in accord-  
ance with IFRS 3 (Business Combinations). IFRS 3  
requires that all business combinations are accounted Beteiligungs GmbH, Stuttgart, and LHS Leasing-  
for using the purchase method, whereby identifiable  
assets and liabilities acquired are measured initially  
at their fair value. The excess of the Group’s interest  
in the net fair value of the identifiable assets and lia-  
bilities acquired over cost is recognised as goodwill  
and is subjected to a regular review for possible im-  
pairment. Goodwill of euro 91 million which arose  
prior to 1 January 1995 remains netted against re-  
serves. In the event of impairment and deconsolida-  
tion, goodwill that has been deducted from equity  
is dealt with directly in equity. The companies BMW  
Financial Services Danmark A/S, Kolding, BMW  
Renting (Portugal) Lda., Lisbon, BMW Acquisitions  
Ltda., São Paulo, BMW Financeira S.A. Credito,  
Financiamento e Investimento, São Paulo, BMW  
Leasing do Brasil, S. A., São Paulo, BMW Asia Pte.  
Ltd., Singapore, BMW Melbourne Pty. Ltd., Mel-  
bourne, BMW Sydney Pty. Ltd., Sydney, and BMW  
und Handelsgesellschaft Deutschland mbH, Stutt-  
gart, was 30 June 2007, and that for BMW Vertriebs  
GmbH, Salzburg, 31 December 2007.  
Receivables, liabilities, provisions, income and ex-  
penses and profits between consolidated companies  
(intragroup profits) are eliminated on consolidation.  
Under the equity method, investments are  
measured at the Group’s share of equity taking ac-  
count of fair value adjustments on acquisition, based  
on the Group’s shareholding. Any difference be-  
tween the cost of investment and the Group’s share  
of equity is accounted for in accordance with the  
purchase method. Investments in other companies  
are accounted for as a general rule using the equity  
method when significant influence can be exercised  
(IAS 28 Investments in Associates). This is normally  
the case when voting rights of between 20% and  
50% are held (associated companies).  
[
5] Foreign currency translation  
lated at the closing rate. Exchange differences arising  
from the translation of shareholders’ equity are off-  
set directly against accumulated other equity. Ex-  
change differences arising from the use of different  
The financial statements of consolidated compa-  
nies which are drawn up in a foreign currency are  
translated using the functional currency concept  
(IAS 21:The Effects of Changes in Foreign Exchange exchange rates to translate the income statement  
Rates) and the modified closing rate method. The  
functional currency of a subsidiary is determined as  
a general rule on the basis of the primary economic  
environment in which it operates and corresponds  
therefore to the relevant local currency. Income and  
expenses of foreign subsidiaries are translated in the  
Group financial statements at the average exchange  
rate for the year, and assets and liabilities are trans-  
are also offset directly against accumulated other  
equity.  
Foreign currency receivables and payables in  
the single entity accounts of BMW AG and subsidi-  
aries are recorded, at the date of the transaction, at  
cost. Exchange gains and losses computed at the  
balance sheet date are recognised as income or ex-  
pense.  
84  
Group Financial Statements  
The exchange rates of those currencies which have a material impact on the Group financial statements  
were as follows:  
Closing rate  
Average rate  
2006  
3
1.12. 2007  
31.12. 2006  
2007  
US Dollar  
1.46  
0.73  
1.32  
0.67  
1.37  
0.68  
1.26  
0.68  
British Pound  
Chinese renminbi  
Japanese Yen  
Australian Dollar  
10.70  
163.77  
1.67  
10.29  
156.88  
1.67  
10.42  
161.28  
1.64  
10.02  
146.06  
1.67  
[
6] Accounting principles  
ing depreciation/amortisation of property, plant and  
equipment and intangible assets relating to produc-  
tion and write-downs on inventories. Cost of sales  
also includes freight and insurance costs relating to  
deliveries to dealers and agency fees on direct sales.  
Expenses which are directly attributable to the finan-  
cial services business and interest expense from re-  
financing the entire financial services business, in-  
cluding the expense of risk provisions and impairment  
losses, are reported in cost of sales. Cost of sales for  
the Financial Operations sub-group also includes  
the interest expense of Group financing companies.  
Research costs and development costs which  
are not capitalised are recognised as an expense  
when incurred.  
The financial statements of BMW AG and of its sub-  
sidiaries in Germany and elsewhere have been  
prepared for consolidation purposes using uniform  
accounting policies in accordance with IAS 27.  
Revenues from the sale of products are recog-  
nised when the risks and rewards of ownership of  
the goods are transferred to the customer, the sales  
price is agreed or determinable and receipt of pay-  
ment can be assumed. Revenues are stated net of  
discounts, allowances, settlement discount and  
rebates. In the case of long-term construction work,  
revenues are generally recognised in accordance  
with IAS 18 (Revenue) and IAS 11 (Construction  
Contracts) on the basis of the stage of completion  
of work performed using the percentage of com-  
pletion method. Revenues also include lease  
rentals and interest income from financial services.  
Revenues for the Financial Operations sub-group  
also include the interest income earned by Group  
financing companies.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
117 – Other Disclosures  
131 – Segment Information  
In accordance with IAS 20 (Accounting for  
Government Grants and Disclosure of Government  
Assistance), public sector grants are not recognised  
until there is reasonable assurance that the con-  
ditions attaching to them have been complied with  
and the grants will be received. They are recognised  
as income over the periods necessary to match  
them with the related costs which they are intended  
to compensate.  
Basic earnings per share are computed in ac-  
cordance with IAS 33 (Earnings per Share). Undiluted  
earnings per share are calculated for common and  
preferred stock by dividing the net profit after mi-  
nority interests, as attributable to each category of  
stock, by the average number of outstanding shares.  
The net profit is accordingly allocated to the different  
categories of stock. The portion of the Group net  
profit for the year which is not being distributed is  
allocated to each category of stock based on the  
number of outstanding shares. Profits available for  
distribution are determined directly on the basis of  
the dividend resolutions passed for common and  
If the sale of products includes a determinable  
amount for subsequent services (“multiple-com-  
ponent contracts”), the related revenues are deferred  
and recognised as income over the period of the  
contract. Amounts are normally recognised as in-  
come by reference to the expected pattern of related  
expenditure.  
Profits arising on the sale of vehicles for which  
a Group company retains a repurchase commitment  
(buy-back contracts) are not recognised until such  
profits have been realised. The vehicles are included  
in inventories and stated at cost.  
Cost of sales comprises the cost of products  
sold and the acquisition cost of purchased goods  
sold. It includes all directly attributable material and  
production costs and production overheads, includ-  
85  
preferred stock. Diluted earnings per share would  
have to be disclosed separately.  
ment expenditure will generate future economic  
benefits. Capitalised development costs comprise  
all expenditure that can be attributed directly to the  
development process, including development-re-  
lated overheads. Capitalised development costs  
are amortised on a systematic basis, following the  
commencement of production, over the estimated  
product life which is generally seven years.  
All items of property, plant and equipment are  
considered to have finite useful lives. They are rec-  
ognised at acquisition or manufacturing cost less  
scheduled depreciation based on the estimated  
Purchased and internally-generated intangible  
assets are recognised as assets in accordance with  
IAS 38 (Intangible Assets), where it is probable that  
the use of the asset will generate future economic  
benefits and where the costs of the asset can be  
determined reliably. Such assets are measured at  
acquisition and/or manufacturing cost and, to the  
extent that they have a finite useful life, amortised on  
a straight-line basis over their estimated useful lives.  
With the exception of capitalised development costs,  
intangible assets are generally amortised over their  
estimated useful lives of between three and five  
years. Intangible assets with infinite useful lives are  
assessed regularly for recoverability and their carry-  
useful lives of the assets. Depreciation on property,  
plant and equipment reflects the pattern of their  
usage and is generally computed using the straight-  
line method. Components of items of property,  
ing amounts are reduced to the recoverable amount plant and equipment with different useful lives are  
in the event of impairment.  
depreciated separately.  
Development costs for vehicle and engine  
projects are capitalised at manufacturing cost, to the  
extent that costs can be allocated reliably and both  
technical feasibility and successful marketing are  
assured. It must also be probable that the develop-  
Expenditure on low value non-current assets  
is generally written off in full in the year of acquisi-  
tion.  
Systematic depreciation is based on the fol-  
lowing useful lives, applied throughout the Group:  
in years  
Factory and office buildings, distribution facilities and residential buildings  
Plant and machinery  
8 to 50  
5 to 10  
3 to 10  
Other equipment, factory and office equipment  
For machinery used in multiple-shift operations,  
depreciation rates are increased to account for the  
additional utilisation.  
assets are attributed to the lessee and in the case  
of operating leases the assets are attributed to the  
lessor.  
The cost of internally constructed plant and  
equipment comprises all costs which are directly  
attributable to the manufacturing process and an  
appropriate portion of production-related overheads.  
This includes production-related depreciation and  
an appropriate proportion of administrative and social  
costs.  
Financing costs are not included in acquisition  
or manufacturing cost.  
Non-current assets also include assets relating  
to leases. The BMW Group uses property, plant  
In accordance with IAS 17, assets leased under  
finance leases are measured at their fair value at the  
inception of the lease or at the present value of the  
lease payments, if lower. The assets are depreciated  
using the straight-line method over their estimated  
useful lives or over the lease period, if shorter. The  
obligations for future lease instalments are recog-  
nised as financial liabilities.  
Where Group products are recognised by BMW  
Group leasing companies as leased assets under  
operating leases, they are measured at manufacturing  
and equipment as lessee and also leases out assets, cost. All other leased products are measured at ac-  
mainly vehicles produced by the Group, as lessor.  
IAS 17 (Leases) contains rules for determining, on  
the basis of risks and rewards, the economic owner  
of the assets. In the case of finance leases the  
quisition cost. All leased products are depreciated  
using the straight-line method over the period of the  
lease to the lower of their imputed residual value or  
estimated fair value.  
86  
Group Financial Statements  
The recoverability of the carrying amount of  
intangible assets (including capitalised development  
costs and goodwill) and property, plant and equip-  
gory includes all non-derivative financial assets which  
are not classified as “loans and receivables” or “held-  
to-maturity investments” or as items measured “at  
ment is tested regularly for impairment in accordance fair value through profit and loss”.  
with IAS 36 (Impairment of Assets) on the basis of  
cash generating units. This relates primarily to capi-  
talised development costs and property, plant and  
equipment connected with vehicle projects. If there  
is no indication of impairment during the year, an  
Loans and receivables which are not held for  
trading, held-to-maturity financial investments and  
all financial assets for which published price quota-  
tions in an active market are not available and whose  
fair value cannot be determined reliably, are meas-  
annual impairment test is carried out at the year-end. ured, to the extent that they have a fixed term, at  
An impairment loss is recognised when the recover- amortised cost, using the effective interest method.  
able amount (defined as the higher of the asset’s net When the financial assets do not have a fixed term,  
selling price and its value in use) is lower than the  
carrying amount. The value in use is determined on  
the basis of a present value computation. If the rea-  
son for the previously recognised impairment loss  
no longer exists, the impairment loss is reversed up  
to the level of its rolled-forward depreciated or amor-  
tised cost.  
Investments accounted for using the equity  
method are measured at the Group’s share of equity  
taking account of fair value adjustments on acquisi-  
tion unless the investment is impaired.  
Investments in non-consolidated Group com-  
panies reported in other investments are measured  
at cost or, if lower, at their fair value.  
Investments in other companies are measured  
at their quoted market price or fair value. When, in  
individual cases, these values are not available or  
cannot be determined reliably, investments in other  
companies are measured at cost.  
Non-current marketable securities are meas-  
ured according to the category of financial asset to  
which they are classified. No held-for-trading finan-  
cial assets are included under this heading.  
Financial assets are accounted for on the basis  
of the settlement date. On initial recognition, they  
are measured at acquisition cost, including transac-  
tion costs.  
Subsequent to initial recognition, available-for-  
sale and held-for-trading financial assets are  
measured at fair value. When market prices are not  
available, the fair value of available-for-sale financial  
assets is measured using appropriate valuation  
techniques e.g. discounted cash flow analysis based  
on market information available at the balance sheet  
date.  
they are measured at acquisition cost.  
In accordance with IAS 39 (Financial Instruments:  
Recognition and Measurement), assessments are  
made regularly as to whether there is any objective  
evidence that a financial asset or group of assets  
may be impaired. Impairment losses identified after  
carrying out an impairment test are recognised as  
an expense. Gains and losses on available-for-sale  
financial assets are recognised directly in equity until  
the financial asset is disposed of or is determined to  
be impaired, at which time the cumulative loss pre-  
viously recognised in equity is included in net profit  
or loss for the period.  
With the exception of derivative financial instru-  
ments, all receivables and other current assets re-  
late to loans and receivables which are not held for  
trading and are measured at amortised cost. Receiv-  
ables with maturities of over one year which bear  
no or a lower than market interest rate are discounted.  
Appropriate impairment losses are recognised to  
take account of all identifiable risks.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
7
7
7
7
79  
8
8
0
0
8
9
6
9
117 – Other Disclosures  
131 – Segment Information  
Receivables from sales financing comprise  
receivables from retail customer, dealer and lease  
financing.  
Impairment losses on receivables and loans re-  
lating to the financial services business are recognised  
using a uniform methodology that is applied through-  
out the Group and meets the requirements of IAS 39.  
This methodology results in the recognition of im-  
pairment losses on individual assets and groups of  
assets. If there is objective evidence of impairment,  
the BMW Group recognises impairment losses on  
the basis of individual assets. Within the customer  
retail business, the existence of overdue balances  
or the incidence of similar events in the past are ex-  
Available-for-sale assets include financial assets, amples of such objective evidence. In the event of  
securities and shares in securities funds. This cate- overdue receivables, impairment losses are always  
87  
recognised individually based on the length of period item (usually external revenue) is recognised in the  
of the arrears. In the case of dealer financing receiv-  
ables, the allocation of the dealer to a corresponding  
rating category is also deemed to represent objec-  
tive evidence of impairment. If there is no objective  
evidence of impairment, impairment losses are  
recognised on financial assets using a portfolio ap-  
income statement. The portion of the gains or losses  
from fair value measurement not relating to the  
hedged item is recognised immediately in the income  
statement. If, contrary to the normal case within the  
BMW Group, hedge accounting cannot be applied,  
the gains or losses from the fair value measurement  
proach based on similar groups of assets. Company- of derivative financial instruments are recognised im-  
specific loss probabilities and loss ratios, derived  
from historical data, are used to measure impairment  
losses on similar groups of assets.  
mediately in the income statement.  
In accordance with IAS 12 (Income Taxes), de-  
ferred taxes are recognised on all temporary differ-  
The recognition of impairment losses on receiv- ences between the tax and accounting bases of as-  
ables relating to the industrial business is also, as far sets and liabilities and on consolidation procedures.  
as possible, based on the same process applied to  
the financial services business.  
Deferred tax assets also include claims to future  
tax reductions which arise from the expected usage  
Impairment losses (write-downs and allowances) of existing tax losses available for carryforward, where  
on receivables are always recorded on separate usage is probable. Deferred taxes are computed  
accounts and are not written off until the correspond- using enacted or planned tax rates which are ex-  
ing receivables are derecognised.  
pected to apply in the relevant national jurisdictions  
when the amounts are recovered.  
Items are presented as financial assets to the  
extent that they relate to financing transactions.  
Derivative financial instruments are only used  
within the BMW Group for hedging purposes to  
reduce currency, interest rate and market price risks  
from operations and any related financing require-  
ments. All derivative financial instruments (such as  
interest, currency and combined interest/currency  
swaps as well as forward currency contracts) are  
measured in accordance with IAS 39 at their fair  
value, irrespective of their purpose or the intention  
for which they are held. The fair values of derivative  
financial instruments are measured using market  
information and recognised valuation techniques.  
In those cases where hedge accounting is applied,  
changes in fair value are recognised either in income  
or directly in equity under accumulated other equity  
depending on whether the transactions are classi-  
fied as fair value hedges or cash flow hedges. In  
the case of fair value hedges, the results of the fair  
value measurement of the derivative financial instru-  
ments and of the related hedged items are recog-  
nised in the income statement. In the case of fair  
Inventories of raw materials, supplies and goods  
for resale are stated at the lower of average acquisi-  
tion cost and net realisable value.  
Work in progress and finished goods are stated  
at the lower of average acquisition cost and net realis-  
able value. Manufacturing cost comprises all costs  
which are directly attributable to the manufacturing  
process and an appropriate proportion of produc-  
tion-related overheads. This includes production-  
related depreciation and an appropriate proportion  
of administrative and social costs.  
Financing costs are not included in acquisition  
or manufacturing cost.  
Provisions for pensions and similar obligations  
are recognised using the projected unit credit method  
in accordance with IAS 19 (Employee Benefits).  
Under this method, not only obligations relating to  
known vested benefits at the reporting date are  
recognised, but also the effect of future increases in  
pensions and salaries. This involves taking account  
of various input factors which are evaluated on a  
prudent basis. The provision is derived from an inde-  
value changes from cash flow hedges which are used pendent actuarial valuation which takes into account  
to mitigate the future cash flow risk on a recognised  
asset or liability or on forecast transactions, unrealised  
gains and losses on the hedging instrument are  
recognised initially directly in accumulated other  
all relevant biometric factors.  
Actuarial gains and losses are recognised, net  
of deferred tax, directly in equity.  
The expense related to the reversal of discount-  
equity. Any such gains or losses are recognised sub- ing on pension obligations and the income from the  
sequently in the income statement when the hedged expected return on pension plan assets are reported  
88  
Group Financial Statements  
separately as part of the financial result. All other  
ment to make certain assumptions and estimates  
costs relating to allocations to pension provisions are that affect the reported amounts of assets and lia-  
allocated to costs by function in the income state-  
ment.  
bilities, revenues and expenses and contingent lia-  
bilities. The assumptions and estimates relate prin-  
Other provisions are recognised when the Group cipally to the group-wide determination of economic  
has an obligation to a third party, an outflow of re-  
sources is probable and a reliable estimate can be  
made of the amount of the obligation. Measurement  
is computed on the basis of fully attributable costs.  
Non-current provisions with a remaining period of  
more than one year are discounted to the present  
value of the expenditures expected to settle the ob-  
ligation at the balance sheet date.  
useful lives, the recognition and measurement of  
provisions and the recoverability of future tax bene-  
fits. All assumptions and estimates are based on  
factors known at the balance sheet date. They are  
determined on the basis of the most likely outcome  
of future business developments. This includes the  
situation in the automotive sector and the general  
business environment. Actual amounts could in cer-  
tain cases differ from those assumptions and esti-  
Financial liabilities are measured on first-time  
recognition at cost, which is equivalent to the fair value mates, if business conditions develop differently to  
of the consideration given. Transaction costs are in-  
cluded in this initial measurement. Subsequent to  
initial recognition, liabilities are, with the exception of  
derivative financial instruments, measured at amor-  
tised cost. The BMW Group has no liabilities which  
are held for trading. Liabilities from finance leases  
are stated at the present value of the future lease  
payments and disclosed under financial liabilities.  
The preparation of the Group financial state-  
the Group’s expectations at the balance sheet date.  
Where new information comes to light, differences  
are reflected in the income statement and assump-  
tions changed accordingly. There was no indication  
at the balance sheet date that any assumptions and  
estimates were subject to any material risks. For  
that reason, there is no reason to assume that the  
figures will require to be adjusted in the coming  
financial year. No adjustments of this nature were  
recorded during the financial year 2007.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
7
7
7
7
79  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
ments in accordance with IFRSs requires manage-  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
7 New financial reporting rules  
[ ]  
– IFRIC 9 (Reassessment of Embedded Derivatives),  
mandatory for financial years beginning on or after  
1 June 2006  
1
17 – Other Disclosures  
131 – Segment Information  
(a) Financial reporting rules applied for the first time  
in the financial year 2007  
The following Standards and Revised Standards  
were applied for the first time in the financial year  
– IFRIC 10 (Interim Financial Reporting and Impair-  
ment), mandatory for financial years beginning on  
or after1 November 2006  
2007:  
–
Amendments to IAS 1 (Presentation of Financial  
Statements: Capital Disclosures), mandatory for  
financial years beginning on or after 1 January  
IFRS 7 (Financial Instruments: Disclosures) results  
in a greater scope of disclosures about financial in-  
struments in the Notes to the Group financial state-  
ments. Other financial reporting rules applied for  
the first time in 2007 did not have a significant im-  
pact on the BMW Group.  
2007  
–
IFRS 7 (Financial Instruments: Disclosures),  
mandatory for financial years beginning on or after  
1
January 2007  
In addition, the following Interpretations were applied (b) New financial reporting rules issued in 2007  
for the first time:  
The IASB issued a revised version of IAS 23 (Bor-  
rowing Costs) in 2007, which is mandatory for finan-  
–
IFRIC 7 (Applying the Restatement Approach un-  
der IAS 29 Financial Reporting in Hyperinflationary cial years beginning on or after1 January 2009. A  
Economics), mandatory for financial years begin-  
ning on or after1 March 2006  
IFRIC 8 (Scope of IFRS 2), mandatory for financial  
years beginning on or after1 May 2006  
revised version of IAS 1 (Presentation of Financial  
Statements) was also issued. The revised standard  
is mandatory for financial years commencing on or  
after1 January 2009.  
–
89  
BMW Group  
Notes to the Group Financial Statements  
Notes to the Income Statement  
In addition, the following Interpretations were  
also issued:  
ry for financial years commencing on or after 1 Janu-  
ary 2008.  
–
–
IFRIC 13 (Customer Loyalty Programmes)  
IFRIC 14 (IAS 19 – The Limit on a Defined Benefit  
Asset, Minimum Funding Requirements and their  
Interaction)  
These new financial reporting rules are not  
expected to have a significant impact on the BMW  
Group. This also applies to financial reporting rules  
issued in earlier periods and for which application in  
2007 is encouraged but not mandatory.  
IFRIC 13 is mandatory for financial years commenc-  
ing on or after1 July 2008 and IFRIC 14 is mandato-  
[8] Revenues  
Revenues by activity comprise the following:  
in euro million  
2007  
2006  
Sales of products and related goods  
Income from lease instalments  
Sale of products previously leased to customers  
Interest income on loan financing  
Other income  
43,297  
5,069  
38,769  
4,141  
4,185  
3,107  
2,457  
1,925  
1,010  
1,057  
Revenues  
56,018  
48,999  
An analysis of revenues by business segment and geographical region is shown in the segment information  
on pages132 to134.  
[9] Cost of sales  
Cost of sales comprises:  
in euro million  
2007  
2006  
Manufacturing costs  
29,536  
1,309  
8,450  
2,045  
529  
26,449  
1,081  
6,612  
1,308  
501  
Warranty expenditure  
Cost of sales directly attributable to financial services  
Interest expense for financial operations  
Expense for risk provisions and write-downs for financial services business  
Other cost of sales  
1,963  
43,832  
1,709  
37,660  
Cost of sales  
Cost of sales include euro 11,024 million (2006:  
euro 8,421 million) relating to the financial services  
business.  
Manufacturing costs include impairment  
losses on intangible assets and property, plant and  
equipment of euro 17 million (2006: euro 15 million).  
90  
Group Financial Statements  
Cost of sales is reduced by public-sector subsidies  
in the form of reduced taxes on assets and re-  
duced consumption-based taxes amounting to euro  
16 million (2006: euro 11 million).  
[
10] Sales and administrative costs  
Administrative costs amounted to euro 970 mil-  
lion (2006: euro 933 million) and comprised ex-  
penses for administration not attributable to develop-  
ment, production or sales functions.  
Sales costs amounted to euro 4,284 million (2006:  
euro 4,039 million) and comprise mainly marketing,  
advertising and sales personnel costs.  
[
11] Research and development costs  
Research and development costs of euro 2,920 mil-  
lion (2006: euro 2,544 million) comprise all research  
costs and development costs not recognised as  
assets as well as amortisation of capitalised develop-  
ment costs of euro 1,109 million (2006: euro 872  
million).  
Total research and development expenditures  
comprising research costs, development costs not  
recognised as assets and capitalised development  
costs were as follows:  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
in euro million  
2007  
2006  
7
7
7
7
Research and development costs  
2,920  
–1,109  
1,333  
2,544  
–872  
79  
Amortisation  
New expenditure for capitalised development costs  
Total research and development expenditures  
1,536  
3,208  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
3,144  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
1
17 – Other Disclosures  
131 – Segment Information  
[12] Other operating income and expenses  
in euro million  
2007  
2006  
Exchange gains  
204  
90  
245  
141  
24  
Income from the reversal of provisions  
Income from the reversal of write-downs  
Gains on the disposal of assets  
Sundry operating income  
38  
229  
169  
730  
102  
232  
744  
Other operating income  
Exchange losses  
231  
64  
219  
109  
34  
Expense for additions to provisions  
Expenses for impairment losses  
Sundry operating expenses  
Other operating expenses  
25  
210  
530  
155  
517  
Other operating income and expenses  
200  
227  
Sundry operating income includes public-sector grants of euro 36 million (2006: euro 32 million).  
91  
[
13] Result from equity accounted investments  
Automotive Ltd., Shenyang. In the previous year, the  
result of TRITEC Motors Ltda., Campo Largo, was  
also included.  
The profit from equity accounted investments of  
euro 11 million (2006: loss of euro 25 million) in-  
cludes the result of the joint venture, BMW Brilliance  
[14] Other financial result  
in euro million  
2007  
3
2006  
62  
Income from investments  
–
thereof from subsidiaries euro 1 million (2006: euro 58 million)  
Impairment losses on investments in subsidiaries and other companies  
Reversals of impairment losses on investments in subsidiaries and other companies  
Result on investments  
–6  
–
–46  
16  
–3  
32  
Expected return on plan assets  
Other interest and similar income*  
358  
287  
315  
259  
–
thereof from subsidiaries euro 12 million (2006: euro 19 million)  
Interest and similar income  
645  
574  
Expense from reversing the discounting of pension obligations  
Expense from reversing the discounting of other long-term provisions  
Write-downs on marketable securities  
– 537  
–86  
–501  
–35  
–2  
–49  
Sundry interest and similar expenses*  
–225  
–319  
–
thereof to subsidiaries euro 1 million (2006: euro 2 million)  
Interest and similar expenses  
–897  
–252  
–857  
–283  
Net interest result  
Fair value measurement of financial instruments  
–95  
350  
Sundry other financial result  
–95  
350  
Other financial result  
–350  
99  
*
Interest income and expenses relating to stand-alone derivatives are netted within the net interest result. Interest income includes net interest income of euro 70 million (2006:  
euro 83 million) relating to stand-alone derivatives.  
The deterioration in other financial result is due to  
the exceptional gain recorded in 2006 on the partial  
settlement of the exchangeable bond on shares in  
Rolls-Royce plc, London. As well as the impact of  
the exchangeable bond, sundry other financial result  
also includes losses recognised on derivative finan-  
cial instruments, in particular on stand-alone inter-  
est rate derivatives. The decrease in the fair values of  
these financial instruments reflected the changes  
in the interest rate structure.  
[15] Income taxes  
Taxes on income comprise the following:  
in euro million  
2007  
2006  
Current tax expense  
Deferred tax expense  
1,002  
–263  
993  
257  
739  
1,250  
92  
Group Financial Statements  
The deferred tax expense was euro 520 million  
lower than in the previous year, primarily reflecting  
the impact of the Business Tax Reform Act 2008,  
adopted by the German Bundesrat (Federal Council)  
on 6 July 2007.  
of 5.5%, the overall income tax rate for companies  
in Germany is 30.2% (2006: 38.9%). This reduced  
rate has been applied in 2007 to measure deferred  
tax assets and liabilities. As in the previous year, the  
tax rates for companies outside Germany remain in  
a range of between12.5% and 40.7%. A valuation  
Deferred taxes are recognised on temporary dif-  
ferences between the carrying amount of assets and allowance is recognised on deferred tax assets when  
liabilities for IFRS purposes and their tax bases. De-  
ferred taxes are computed using enacted or planned  
tax rates which are expected to apply in the relevant  
recoverability is uncertain. In determining the level  
of the valuation allowance, all positive and negative  
factors concerning the likely existence of sufficient  
national jurisdictions when the amounts are recovered. taxable profit in the future are taken into account.  
A corporation tax rate of 15.0% applies in Germany These estimates can change depending on the ac-  
with effect from 1January 2008 onwards. After taking tual course of events.  
account of the average multiplier rate (Hebesatz) of An analysis of deferred tax assets and liabilities  
10% for municipal trade tax and the solidarity charge by position at 31 December is shown below:  
4
in euro million  
Deferred tax assets  
007 2006  
Deferred tax liabilities  
2
2007  
2006  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
Intangible assets  
Property, plant and equipment  
Leased products  
Investments  
1
–
48  
1,528  
428  
3,205  
1
1,859  
510  
43  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
558  
2
572  
3,368  
–
2
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Other current assets  
Tax loss carryforwards  
Provisions  
1,110  
1,072  
1,145  
3,084  
1,661  
1,058  
849  
3,767  
–
3,696  
–
8
9
6
1,540  
3,653  
1,600  
9,322  
51  
134  
9
Liabilities  
690  
329  
9,999  
827  
117 – Other Disclosures  
Consolidations  
403  
131 – Segment Information  
8,676  
10,797  
Valuation allowance  
Netting  
–671  
–528  
–8,039  
755  
–
–7,285  
2,714  
–
–8,039  
2,758  
–7,285  
720  
Compared to the previous reporting period, the main  
changes to deferred tax assets and liabilities were as  
follows:  
Deferred tax assets on tax losses available for  
carryforward and on capital losses increased margin-  
ally on a net basis. Tax losses available for carryfor-  
ward, which for the most part can be carried forward  
Application of the income tax rate of 30.2%  
(2006: 38.9%), which is valid in Germany from 1 Jan- without restriction, totalled euro 1.8 billion at the  
uary 2008 onwards, significantly affected the meas-  
urement of deferred tax assets and liabilities relating  
to intangible assets, property, plant and equipment,  
leased products, provisions and liabilities.  
The changes in deferred tax assets and liabili-  
year-end (2006: euro 1.7 billion). A valuation allow-  
ance of euro 43 million (2006: euro 65 million) was  
recognised in 2007 on deferred tax assets relating  
to tax losses. Capital losses in the United Kingdom  
increased to euro 2.2 billion at the end of 2007  
ties relating to leased products and other current as- (2006: euro 1.5 billion). In this context, a definitive  
sets are attributable primarily to the financial services agreement was reached with the UK tax authorities  
business.  
in 2007. As in previous years, these tax losses  
93  
amounting to euro 628 million at the end of the year  
2006: euro 463 million) were fully written down  
since they can only be utilised against future capital  
gains. Capital losses are not connected to ongoing  
business operations.  
Deferred taxes recognised directly in equity  
amounted to euro 116 million (2006: euro 512 mil-  
lion). The decrease was due mainly to actuarial gains  
and losses (net) arising in conjunction with pension  
obligations and recognised directly in equity. The  
level of actuarial gains and losses in 2007 was af-  
fected in particular by the increase in the discount  
factors applied.  
The tax returns of BMW Group entities are  
(
checked regularly by German and foreign tax author-  
ities. Taking account of a variety of factors – including  
existing interpretations, commentaries and legal de-  
cisions taken relating to the various tax jurisdictions  
and the BMW Group’s past experience – adequate  
provision has, as far as identifiable, been made for  
potential future tax obligations.  
The actual tax expense for the financial year 2007  
of euro 739 million (2006: euro 1,250 million) is euro  
767 million (2006: euro 354 million) lower than the  
expected tax expense of euro 1,506 million (2006:  
euro 1,604 million) which would theoretically arise if  
the tax rate of 38.9% (unchanged from the previous  
Deferred taxes are not recognised on retained  
profits of euro 13,925 million (2006: euro 13,866 mil- year), applicable for German companies, was applied  
lion) of foreign subsidiaries, as it is intended to invest  
these profits to maintain and expand the business  
volume of the relevant companies. A computation  
was not made of the potential impact of income taxes  
on the grounds of disproportionate expense.  
across the Group. The difference between the ex-  
pected and actual tax expense is attributable to the  
following:  
in euro million  
2007  
2006  
Expected tax expense  
1,506  
1,604  
Variances due to different tax rates  
Tax reductions (–)/tax increases (+) as a result of non-taxable income and  
non-deductible expenses  
–731  
–213  
4
–4  
–68  
–94  
Tax expense (+)/benefits (–) for prior periods  
Other variances  
–36  
739  
21  
Actual tax expense  
1,250  
The sharp decrease in the effective tax rate was  
tive impact for the BMW Group was euro 491 million,  
mainly caused by the significant increase in variances most of which was due to the application of the tax  
due to different tax rates. This includes the one-off  
impact of the remeasurement of deferred tax assets  
and liabilities at 31 December 2007. The total posi-  
rate of 30.2% (valid from 1 January 2008) for German  
entities.  
94  
Group Financial Statements  
[16] Earnings per share  
2007  
2006  
Net profit for the year after minority interest  
euro million  
3,125.9  
2,867.8  
Profit attributable to common stock  
Profit attributable to preferred stock  
euro million  
euro million  
2,878.4  
247.5  
2,641.0  
226.8  
Average number of common stock shares in circulation  
Average number of preferred stock shares in circulation  
number  
number  
601,995,196  
51,535,857  
602,461,673  
51,506,787  
Earnings per share of common stock  
Earnings per share of preferred stock  
euro  
euro  
4.78  
4.80  
4.38  
4.40  
Dividend per share of common stock  
Dividend per share of preferred stock  
euro  
euro  
1.06  
1.08  
0.70  
0.72  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
Earnings per share of preferred stock are computed  
financial years. Diluted earnings per share were not  
on the basis of the number of preferred stock shares applicable in either the current or prior year.  
entitled to receive a dividend in each of the relevant  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
[
17] Other disclosures relating to the income statement  
The income statement includes personnel costs as follows:  
8
9
6
9
1
17 – Other Disclosures  
in euro million  
2007  
2006  
131 – Segment Information  
Personnel costs  
Wages and salaries  
6,268  
1,243  
6,207  
1,241  
Social security, retirement and welfare costs  
–
thereof retirement costs: euro 761 million (2006: euro 767 million)  
7,511  
7,448  
95  
The average number of employees during the year was:  
2007  
2006  
Wage earners  
51,906  
46,016  
52,812  
44,394  
97,206  
Other employees  
97,922  
Apprentices and students gaining work experience  
6,480  
6,521  
104,402  
103,727  
For information regarding the number of employees  
at the year-end, reference is made to pages 26 and  
ments, KPMG Deutsche Treuhand-Gesellschaft,  
Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft,  
pursuant to §314 (1) no. 9 HGB amounted to euro  
27 in the Group management report.  
The fee expense recognised in the financial year 5 million (2006: euro 4 million) and consists of the  
007 for the auditors of the Group financial state- following:  
2
in euro million  
2007  
2006  
Fee expense  
Year-end audits  
Tax advisory services  
2
3
5
2
2
4
The item “Year-end audits” includes fees for the  
audit of annual financial statements of BMW AG, the  
audit of the Group financial statements and the  
audit of the annual financial statements of the Ger-  
man subsidiaries.  
The item “Tax advisory services” relates prin-  
cipally to fees for services provided to employees  
seconded abroad.  
96  
Group Financial Statements  
BMW Group  
Notes to the Group Financial Statements  
Notes to the Balance Sheet  
[18] Analysis of changes in Group tangible, intangible and investment assets 2007  
in euro million  
Acquisition and manufacturing cost  
.1. 20071 Translation  
differences  
]
Additions  
Reclassi-  
fications  
Disposals 31.12. 2007  
1
Development costs  
Other intangible assets  
Intangible assets  
7,684  
813  
–
–11  
–11  
1,333  
250  
–
–
–
538  
43  
8,479  
1,009  
9,488  
8,497  
1,583  
581  
Land, titles to land, buildings, including buildings on  
third party land  
6,425  
19,640  
2,055  
–118  
–315  
–44  
248  
1,444  
184  
231  
264  
6
220  
618  
147  
5
6,566  
20,415  
2,054  
Plant and machinery  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
740  
–23  
808  
–501  
–
1,019  
28,860  
–500  
2,684  
990  
30,054  
Leased products  
17,628  
82  
–1,219  
–
11,038  
18  
–
–
6,587  
37  
20,860  
63  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Investments accounted for using the equity method  
7
7
7
7
Investments in associated companies  
Investments in other companies  
Non-current marketable securities  
Other investments  
272  
195  
14  
–1  
–
54  
–
–
–
–
–
64  
187  
–
261  
8
7
9
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
–1  
–2  
8
21  
481  
62  
251  
290  
8
8
0
0
1
2
3
] including the gross balances brought forward of companies consolidated for the first time during the financial year  
] including impairment losses of euro12 million  
] including impairment losses of euro 5 million  
8
9
6
9
1
17 – Other Disclosures  
131 – Segment Information  
Analysis of changes in Group tangible, intangible and investment assets 2006  
in euro million  
Acquisition and manufacturing cost  
.1. 20061  
]
Translation  
differences  
Additions  
Reclassi-  
fications  
Disposals 31.12. 2006  
1
Development costs  
Other intangible assets  
Intangible assets  
6,593  
739  
–
–5  
–5  
1,536  
121  
–
–
–
445  
56  
7,684  
799  
7,332  
1,657  
501  
8,483  
Land, titles to land, buildings, including buildings on  
third party land  
6,150  
18,977  
2,078  
–70  
–185  
–46  
242  
1,717  
206  
152  
464  
16  
49  
1,333  
211  
6,425  
19,640  
2,043  
Plant and machinery  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
899  
–15  
491  
–632  
–
3
740  
28,104  
–316  
2,656  
1,596  
28,848  
Leased products  
13,983  
94  
–1,182  
–
8,522  
–
–
–
4,578  
12  
16,745  
82  
Investments accounted for using the equity method  
Investments in associated companies  
Investments in other companies  
Non-current marketable securities  
Other investments  
191  
1,002  
32  
–2  
–
152  
–
–
–
–
–
74  
807  
28  
267  
195  
14  
–1  
–3  
11  
1,225  
163  
909  
476  
1
2
3
] including the gross balances brought forward of companies consolidated for the first time during the financial year  
] including impairment losses of euro 8 million  
] including impairment losses of euro 7 million  
97  
Depreciation and amortisation  
Carrying amount  
.1. 20071  
]
Translation  
Current year  
Disposals  
31.12. 2007  
31.12. 2007 31.12. 2006  
1
differences  
2
,874  
10  
,184  
–
–4  
–4  
1,109  
103  
1,2122  
538  
36  
3,445  
373  
5,034  
636  
4,810  
502  
3
]
3
574  
3,818  
5,670  
5,312  
2
,529  
–48  
–200  
–43  
–
201  
2,057  
213  
61  
602  
141  
–
2,621  
14,780  
1,544  
1
3,945  
5,635  
510  
3,896  
6,115  
535  
13,525  
1
,515  
1
–
1,018  
11,108  
739  
2,4713  
]
804  
18,946  
11,285  
1
7,570  
–291  
3
,289  
–247  
–
2,475  
–
1,670  
22  
3,847  
–
17,013  
63  
13,642  
60  
22  
7
0
5
–
–
–
–
–
6
–
–
–
–
–
76  
5
185  
3
197  
190  
14  
–
–
21  
75  
6
81  
209  
401  
Depreciation and amortisation  
Translation Current year Disposals  
Reversals  
Carrying amount  
.1. 20061  
]
31.12. 2006  
31.12. 2006 31.12. 2005  
1
differences  
2
,447  
90  
,737  
–
–4  
–4  
872  
87  
9592  
445  
50  
–
26  
26  
2,874  
297  
4,810  
502  
4,146  
447  
2
]
2
495  
3,171  
5,312  
4,593  
2
,384  
–30  
–128  
–36  
–
207  
1,867  
239  
32  
1,318  
201  
–
–
–
–
–
2,529  
13,525  
1,508  
1
3,896  
6,115  
535  
3,757  
5,871  
562  
13,104  
1
,506  
1
–
–
739  
897  
2,3133  
]
1,551  
17,563  
11,285  
11,087  
1
6,995  
–194  
2
,608  
–222  
–
1,576  
22  
859  
–
–
–
3,103  
22  
13,642  
60  
11,375  
94  
–
4
0
5
–
–
–
–
–
46  
–
–
–
–
–
16  
–
70  
5
197  
190  
14  
149  
997  
–
–
–
32  
45  
46  
16  
75  
401  
1,178  
98  
Group Financial Statements  
[
19] Intangible assets  
of DEKRA SüdLeasing Services GmbH, Stuttgart,  
and that entity’s subsidiaries. This item is not pre-  
sented separately in the BMW Group balance sheet  
since the amount is not significant in relation to  
either the balance sheet total or intangible assets.  
There were no reversals of impairment losses  
on intangible assets (2006: euro 26 million).  
Changes in intangible assets during the year  
are≈shown in the analysis of changes in Group tan-  
gible, intangible and investment assets on pages  
96 and 97.  
Intangible assets mainly comprise capitalised de-  
velopment costs on vehicle and engine projects as  
well as subsidies for tool costs, licences, purchased  
development projects and software. Amortisation  
on intangible assets is presented in cost of sales,  
administrative costs and research and development  
costs.  
In addition, intangible assets include goodwill  
of euro 163 million (2006: euro 66 million). This com-  
prises goodwill arising on earlier business acquisi-  
tions within the Cirquent Group and on the acquisition  
[
20] Property, plant and equipment  
machinery and other equipment at the Oxford pro-  
duction plant, with a carrying amount of euro 19 mil-  
lion (2006: euro 46 million) at 31 December, run for  
periods up to 2011 at the latest. For each of the  
leases, there is a recurring option to extend the leases  
by one year. A purchase option was not agreed. The  
lease for plant and machinery and other facilities,  
A break-down of the different classes of property,  
plant and equipment disclosed in the balance sheet  
and changes during the year are shown in the  
analysis of changes in Group tangible, intangible and  
investment assets on pages 96 and 97.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
Property, plant and equipment include leased  
plant and machinery and other equipment amounting factory and office equipment at the Hams Hall pro-  
7
9
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
to euro 102 million (2006: euro 146 million) and, in  
addition to operational buildings used by BMW AG,  
also includes leased plant and equipment used  
primarily in the Oxford and Hams Hall production  
plants. Due to the nature of the lease arrangements  
duction plant, with a carrying amount of euro 17 mil-  
lion (2006: euro 25 million), runs until 2018 and may  
be extended for one-year periods thereafter. A pur-  
chase option was not agreed.  
Disposal of land, titles to land and buildings,  
including buildings on third-party land, relate primarily  
to a number of properties which were sold and are  
being leased back.  
8
8
0
0
8
9
6
9
(finance leases), economic ownership of these  
117 – Other Disclosures  
131 – Segment Information  
assets is attributable to the Group. The leases for  
buildings, with a carrying amount of euro 60 million  
(
2006: euro 66 million), run for periods up to 2023  
Minimum lease payments of the relevant leases  
are as follows:  
at the latest. Some of the leases contain extension  
and purchase options. The leases for plant and  
in euro million  
31.12. 2007  
31.12. 2006  
Total of future minimum lease payments  
due within one year  
85  
318  
201  
91  
413  
257  
761  
due between one and five years  
due later than five years  
604  
Interest portion of the future minimum lease payments  
due within one year  
16  
48  
73  
37  
16  
59  
due between one and five years  
due later than five years  
111  
186  
1
Present value of future minimum lease payments  
due within one year  
69  
75  
354  
146  
575  
due between one and five years  
due later than five years  
270  
128  
4
67  
99  
[
21] Leased products  
services business. Minimum lease payments of  
euro 7,419 million (2006: euro 6,210 million) from  
non-cancellable operating leases fall due as follows:  
The BMW Group, as lessor, leases out assets (pre-  
dominantly own products) as part of its financial  
in euro million  
31.12. 2007  
31.12. 2006  
within one year  
3,902  
3,516  
1
3,342  
2,867  
1
between one and five years  
later than five years  
7,419  
6,210  
Contingent rents of euro 10 million (2006: euro 4 mil-  
lion), based principally on the distance driven, were  
Changes in leased products during the year are  
shown in the analysis of changes in Group tangible,  
recognised in income. The agreements have, in part, intangible and investment assets on pages 96 and  
extension and purchase options as well as price es-  
calation clauses.  
97.  
[
22] Investments accounted for using the equity  
end of the previous year, the interest in TRITEC  
Motors Ltda., Campo Largo, was also included. The  
interest in BMW Brilliance Automotive Ltd., Shen-  
yang, (with a 50% shareholding) was as follows:  
method and other investments  
Investments accounted for using the equity method  
comprise the Group’s interest in the joint venture  
BMW Brilliance Automotive Ltd., Shenyang. At the  
in euro million  
31.12. 2007  
31.12. 2006  
Disclosures relating to the income statement  
Income  
Losses  
627  
615  
589  
568  
Disclosures relating to the balance sheet  
Non-current assets  
106  
259  
122  
286  
Current assets  
Equity  
80  
41  
110  
34  
Non-current liabilities  
Current liabilities  
244  
264  
Other investments relate primarily to investments in  
non-consolidated subsidiaries and to equity invest-  
ments in other entities.  
Additions to investments in subsidiaries relate to  
share capital increases at BMW Distribution S.A.S.,  
Montigny le Bretonneux, BMW India Pvt. Ltd., New  
Delhi, BMW Sauber Holding AG, Vaduz, and BMW  
Leasing de Argentina S.A., Buenos Aires, as well as  
the acquisitions of BMW Lease (Malaysia) Sdn Bhd,  
Kong, and Husqvarna Motorcycles S.r.l., Cassinetta  
di Biandronno.  
Disposals of investments in subsidiaries relate  
primarily to the first-time consolidation of BMW  
Financial Services Danmark A/S, Kolding, BMW  
Vertriebs GmbH, Salzburg, BMW Renting (Portugal)  
Lda., Lisbon, BMW Acquisitions Ltda., São Paulo,  
BMW Financeira S.A. Credito, Financiamento e  
Investimento, São Paulo, and BMW Financial Services  
Kuala Lumpur, John Cooper Garages Ltd., Bracknell, New Zealand Ltd., Auckland.  
BMW Financial Services Hong Kong Limited, Hong  
1
00 Group Financial Statements  
Impairment losses on investments in subsidiaries changeable bond issued by the BMW Group on  
relate primarily to BMW Distribution S.A.S., Montigny Rolls-Royce shares.  
le Bretonneux.  
In the case of investments in other companies,  
the changes in 2007 related to the disposal of  
shares in Rolls-Royce plc, London, following the  
exercise of the conversion option relating to the ex-  
A break-down of the different classes of other  
investments disclosed in the balance sheet and  
changes during the year are shown in the analysis  
of changes in Group tangible, intangible and invest-  
ment assets on pages 96 and 97.  
[
23] Receivables from sales financing  
loan financing for retail customers and dealers and  
euro 8,063 million (2006: euro 7,330 million) for  
Receivables from sales financing, totalling euro  
34,244 million (2006: euro 30,368 million), comprise finance leases. Finance leases are analysed as fol-  
euro 26,181 million (2006: euro 23,038 million) for  
lows:  
in euro million  
31.12. 2007  
31.12. 2006  
Gross investment in finance leases  
due within one year  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
3,215  
6,013  
1
3,029  
5,192  
6
7
7
7
7
due between one and five years  
due later than five years  
9,229  
8,227  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
Present value of future minimum lease payments  
due within one year  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
2,886  
5,176  
1
2,758  
4,567  
5
due between one and five years  
due later than five years  
8
9
6
9
8,063  
7,330  
117 – Other Disclosures  
131 – Segment Information  
Unrealised interest income  
1,166  
897  
Contingent rents recognised as income, generally  
relating to the distance driven, amounted to euro  
Receivables from sales financing include euro  
20,248 million (2006: euro 17,865 million) with a  
remaining term of more than one year.  
12 million (2006: euro 7 million). Write-downs on  
finance leases amounting to euro 52 million (2006:  
euro 60 million) were measured and recognised on  
the basis of specific credit risks.  
Allowance for impairment and credit risk  
in euro million  
31.12. 2007  
31.12. 2006  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
35,036  
792  
31,100  
732  
34,244  
30,368  
101  
Allowances for impairment on receivables from sales financing developed as following during the year under  
report:  
31 December 2007  
Allowance for impairment recognised on a  
Total  
in euro million  
specific item basis  
group basis  
Balance at1 January*  
Allocated/reversed  
590  
277  
149  
–3  
739  
274  
Utilised  
–184  
–16  
–17  
–4  
–201  
–20  
Exchange rate impact and other changes  
Balance at 31 December  
667  
125  
792  
*
including entities consolidated for the first time during the financial year  
31 December 2006  
Allowance for impairment recognised on a  
Total  
in euro million  
specific item basis  
group basis  
Balance at1 January*  
Allocated/reversed  
572  
173  
–155  
–6  
173  
–
745  
173  
–178  
–8  
Utilised  
–23  
–2  
Exchange rate impact and other changes  
Balance at 31 December  
584  
148  
732  
*
including entities consolidated for the first time during the financial year  
At the year-end, impairment allowances of euro 125  
million (2006: euro 148 million) were recognised on  
a group basis on gross receivables from sales financ-  
ing totalling euro 18,979 million (2006: euro 18,296  
million). Impairment allowances of euro 667 million  
The estimated fair value of collateral received  
for receivables on which impairment allowances  
were recognised totalled euro 14,617 million (2006:  
euro 12,130 million) at the balance sheet date. This  
collateral related primarily to vehicles. The carrying  
amount of assets held as collateral and taken back as  
a result of payment default amounted to euro 36 mil-  
lion (2006: euro 13 million).  
(
2006: euro 584 million) were recognised at 31 De-  
cember 2007 on a specific item basis on gross re-  
ceivables from sales financing totalling euro 5,493  
million (2006: euro 4,223 million).  
As at the end of the previous year, there were no  
receivables from sales financing at the balance sheet  
Receivables from sales financing which were not  
overdue at the balance sheet date amounted to euro date which have been renegotiated and which were  
0,564 million (2006: euro 8,581 million). No impair- otherwise overdue or otherwise required recognition  
1
ment allowances were recognised for these balances. of an impairment allowance.  
[24] Financial assets  
Financial assets comprise:  
in euro million  
31.12. 2007  
31.12. 2006  
Interest and currency derivatives  
Marketable securities and investment funds  
Loans to third parties  
1,980  
1,959  
28  
1,321  
2,034  
67  
Credit card receivables  
Other  
260  
239  
568  
289  
4
,795  
1,173  
3,622  
3,950  
816  
thereof non-current  
thereof current  
3,134  
1
02 Group Financial Statements  
The change in the line item “Interest and  
currency derivatives” relates primarily to changed  
exchange rate parities with the US dollar and the  
British pound as well as to the changed interest rate  
structure.  
Marketable securities and investment funds relate  
to available-for-sale financial assets and comprise:  
in euro million  
31.12. 2007  
31.12. 2006  
Stocks  
452  
415  
579  
487  
Investment funds  
Fixed income securities  
Sundry marketable securities  
1,082  
10  
943  
25  
1,959  
2,034  
The contracted maturities of debt securities are as follows:  
in euro million  
31.12. 2007  
31.12. 2006  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
7
7
7
7
Fixed income securities  
due within 3 months  
–
1
79  
due later than 3 months  
Sundry marketable securities  
due within 3 months  
1,082  
942  
8
8
0
0
1
9
3
22  
due later than 3 months  
8
9
6
1,092  
968  
9
117 – Other Disclosures  
131 – Segment Information  
Investment funds include euro 10 million (2006:  
euro 2 million) assigned as collateral to Deutsche  
Treuinvest Stiftung, Frankfurt am Main, to secure  
obligations relating to pre-retirement part-time work  
arrangements. Fixed income securities include  
euro 77 million (2006: euro 64 million) assigned as  
collateral to Deutsche Treuinvest Stiftung, Frankfurt  
am Main, for the same reason.  
Allowance for impairment and credit risk  
Receivables relating to credit card business comprise  
the following:  
in euro million  
31.12. 2007  
31.12. 2006  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
267  
7
244  
5
260  
239  
103  
Allowances for impairment on receivables relating to credit card business developed as following during the  
year under report:  
31 December 2007  
Allowance for impairment recognised on a  
Total  
in euro million  
specific item basis  
group basis  
Balance at1 January  
1
–
4
12  
–9  
–1  
6
5
12  
–9  
–1  
7
Allocated/reversed  
Utilised  
–
Exchange rate impact and other changes  
Balance at 31 December  
–
1
31 December 2006  
Allowance for impairment recognised on a  
Total  
in euro million  
specific item basis  
group basis  
Balance at1 January  
1
–
3
8
4
8
Allocated/reversed  
Utilised  
–
–6  
–1  
4
–6  
–1  
5
Exchange rate impact and other changes  
Balance at 31 December  
–
1
[25] Income tax assets  
Income tax assets can be analysed as follows:  
3
1 December 2007  
Maturity  
within  
one year  
Maturity  
later than  
one year  
Total  
in euro million  
Deferred tax  
Current tax  
–
720  
119  
839  
720  
237  
957  
118  
1
18  
3
1 December 2006  
Maturity  
within  
one year  
Maturity  
later than  
one year  
Total  
in euro million  
Deferred tax  
Current tax  
–
755  
123  
878  
755  
246  
123  
1
23  
1,001  
1
04 Group Financial Statements  
[
26] Other assets  
Other assets comprise:  
in euro million  
31.12. 2007  
31.12. 2006  
Other taxes  
554  
641  
104  
729  
135  
361  
584  
693  
Receivables from subsidiaries  
Receivables from other companies in which an investment is held  
Prepayments  
202  
683  
Collateral receivables  
120  
Sundry other assets  
368  
2
,524  
2,650  
378  
thereof non-current  
thereof current  
415  
2,109  
2,272  
Receivables from subsidiaries include trade receiv-  
ables of euro 96 million (2006: euro 198 million) and  
financial receivables of euro 545 million (2006: euro  
495 million). A total of euro 25 million (2006: euro 44  
million) has a remaining term of more than one year.  
As in the previous year receivables from other  
companies in which an investment is held are all due  
within one year.  
Prepayments of euro 729 million (2006: euro  
683 million) relate mainly to prepaid interest, de-  
velopment costs not eligible for capitalisation as  
non-current assets, insurance premiums and rent.  
Prepayments of euro 494 million (2006: euro  
522 million) have a maturity of less than one year.  
Collateral receivables comprise mainly custom-  
ary collateral arising on the sale of receivables.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
7
7
7
7
79  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
[
]
27 Inventories  
117 – Other Disclosures  
131 – Segment Information  
Inventories comprise the following:  
in euro million  
31.12. 2007  
31.12. 2006  
Raw materials and supplies  
Work in progress, unbilled contracts  
Finished goods  
632  
871  
689  
911  
4,731  
1,115  
4,280  
914  
Goods for resale  
7,349  
6,794  
At 31 December 2007, inventories measured at their  
net realisable value amounted to euro 473 million  
ing to euro 40 million (2006: euro 12 million) were  
recognised in 2007. Amounts recognised as income  
from the reversal of write-downs on the disposal of in-  
ventories were not significant.  
(2006: euro 316 million) and are included in total  
inventories of euro 7,349 million (2006: euro 6,794  
million). Write-downs to net realisable value amount-  
[
28] Trade receivables  
Trade receivables amounting in total to euro 2,672 million (2006: euro 2,258 million) include euro 3 million due  
later than one year (2006: euro 21 million).  
105  
Allowance for impairment and credit risk  
in euro million  
31.12. 2007  
31.12. 2006  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
2,717  
45  
2,335  
77  
2,672  
2,258  
Allowances for impairment on trade receivables developed as following during the year under report:  
31 December 2007  
Allowance for impairment recognised on a  
Total  
in euro million  
specific item basis  
group basis  
Balance at1 January  
68  
–11  
–18  
–1  
9
2
77  
–9  
Allocated/reversed  
Utilised  
–4  
–
–22  
–1  
Exchange rate impact and other changes  
Balance at 31 December  
38  
7
45  
31 December 2006  
Allowance for impairment recognised on a  
Total  
in euro million  
specific item basis  
group basis  
Balance at1 January  
74  
6
6
3
–
80  
9
Allocated/reversed  
Utilised  
–12  
–
–12  
–
Exchange rate impact and other changes  
Balance at 31 December  
–
68  
9
77  
As at the end of the previous year, there were no  
trade receivables at the balance sheet date which  
have been renegotiated and which were otherwise  
overdue or otherwise required recognition of an  
impairment allowance.  
Some trade receivables were overdue for which  
an impairment allowance was not recognised. Over-  
due balances are catagorised into the following time  
windows:  
in euro million  
31.12. 2007  
31.12. 2006  
1
–30 days overdue  
1–60 days overdue  
1–90 days overdue  
1–120 days overdue  
327  
63  
24  
14  
46  
473  
8
3
6
4
9
3
More than 120 days overdue  
33  
521  
474  
Receivables that are overdue by between 1 and 30  
days do not normally result in bad debt losses since  
the overdue nature of the receivables is primarily at-  
end. In the case of trade receivables, collateral is  
generally held in the form of vehicle documents and  
bank guarantees so that the risk of bad debt loss is  
tributable to the timing of receipts around the month- extremely low.  
1
06 Group Financial Statements  
[
[
29] Cash and cash equivalents  
Cash and cash equivalents of euro 2,393 million  
2006: euro 1,336 million) comprise cash on hand  
and at bank, all with a maturity of under three  
months.  
(
30] Equity  
Capital reserves  
The Group Statement of Changes in Equity is shown Capital reserves include premiums arising from  
on page 78.  
the issue of shares and were unchanged at euro  
,911 million.  
1
Number of shares issued  
At 31 December 2007, common stock issued by  
BMW AG was divided into 601,995,196 shares with  
a par-value of one euro. Preferred stock issued by  
BMW AG was divided into 52,196,162 shares with a  
par-value of one euro, unchanged from the previous  
year. Unlike the common stock, no voting rights are  
attached to the preferred stock. All of the company’s  
stock is issued to bearer. Preferred stock bears an  
additional dividend of euro 0.02 per share. 660,305  
of the shares of preferred stock are only entitled to  
receive dividends with effect from the beginning of  
the financial year 2008.  
During the financial year 2007, BMW AG ac-  
quired 660,305 treasury shares of preferred stock at  
an average price of euro 45.48 per share. These  
shares were issued to employees at a reduced price  
of euro 26.42 per share in conjunction with an em-  
ployee share scheme. As a result of the repurchase  
of shares of preferred stock and their subsequent  
issue, the preferred stock portion of share capital  
remained unchanged at euro 52 million. The effect  
of applying IFRS 2 (Share-Based Payments) to the  
employee share scheme was not material for the  
Group.  
Revenue reserves  
Revenue reserves comprise the post-acquisition  
and non-distributed earnings of consolidated Group  
companies. In addition, revenue reserves include  
both positive and negative goodwill arising on the  
consolidation of Group companies prior to 31 De-  
cember 1994.  
Revenue reserves stood at euro 20,789 million  
at 31 December 2007, 14.7% higher than one year  
earlier. They were increased in 2007 by the amount  
of the net profit attributable to shareholders of  
BMW AG (euro 3,126 million) and were reduced by  
the payment of the dividend for 2006 (euro 458 mil-  
lion).  
The unappropriated profit of BMW AG of euro  
694 million for 2007 will be proposed to the Annual  
General Meeting for distribution. The proposed  
distribution must be authorised by the shareholders  
at the Annual General Meeting of BMW AG. It is  
therefore not recognised as a liability in the Group  
financial statements.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
7
7
7
7
79  
8
8
0
0
8
9
6
9
117 – Other Disclosures  
131 – Segment Information  
Accumulated other equity  
Accumulated other equity consists of all amounts  
recognised directly in equity resulting from the trans-  
lation of the financial statements of foreign sub-  
sidiaries, the effects of recognising changes in the  
fair value of derivative financial instruments and  
securities directly in equity, and actuarial gains and  
losses relating to defined benefit pension plans and  
similar obligations. Accumulated other equity was  
increased by deferred taxes amounting to euro 116  
million (2006: euro 512 million) recognised directly  
in equity.  
At the Annual General Meeting of BMW AG on  
15 May 2007, the shareholders again authorised  
the Board of Management to acquire treasury shares  
via the stock exchange, up to a maximum of 10%  
of the share capital in place at the date of the resolu-  
tion and to withdraw those shares from circulation  
without any further resolution by the Annual General  
Meeting. At the same time, the authorisation from  
16 May 2006 to acquire treasury shares was re-  
scinded. The authorisation from 15 May 2007 is  
valid until 14 November 2008. The authorisation  
was not exercised in 2007. It has not yet been de-  
cided whether or the extent to which the authorisa-  
tion will be used in the future.  
Minority interest  
Equity attributable to minority interests was a posi-  
tive amount of euro 11 million (2006: euro 4 mil-  
107  
lion).This includes a minority interest of euro 8 mil-  
lion (2006: euro 6 million) in the results for the  
period.  
adjust the capital structure, the BMW Group uses  
various instruments including the amount of divi-  
dends paid to shareholders and share buy-backs.  
The BMW Group manages the structure of debt  
capital on the basis of a target debt ratio. An impor-  
tant aspect of the selection of financial instruments  
is the objective to achieve matching maturities for  
Capital management disclosures  
The BMW Group’s objectives when managing capi-  
tal are to safeguard the ability to continue as a going  
concern in the long-term and to provide an adequate the Group’s financing requirements. In order to reduce  
return to shareholders.  
non-systematic risk, the BMW Group uses a variety  
of financial instruments available on the world’s capi-  
tal markets to achieve optimal diversification.  
The capital structure at the balance sheet date  
was as follows:  
The BMW Group manages the capital structure  
and makes adjustments to it in the light of changes  
in economic conditions and the risk characteristics  
of the underlying assets. In order to maintain or  
in euro million  
31.12. 2007  
31.12. 2006  
Equity attributable to shareholders of BMW AG  
Proportion of total capital  
21,733  
33.1%  
19,126  
34.4%  
Non-current financial liabilities  
Current financial liabilities  
Total financial liabilities  
Proportion of total capital  
Total capital  
21,428  
22,493  
43,921  
66.9%  
65,654  
18,800  
17,656  
36,456  
65.6%  
55,582  
Equity attributable to shareholders of BMW AG went  
up during the financial year by 13.6%, mainly due to  
the increase in revenue reserves. The decrease in  
long-term ratings for the BMW Group published by  
Standard & Poor’s and Moody’s in September 2005  
remain valid. Moody’s issued an A1 rating and  
percentage terms (equity attributable to shareholders Standard & Poor’s an A+ rating, both with stable out-  
of BMW AG as a percentage of total capital) was look. As a result of its good credit standing, reflected  
due to the higher funding requirements for the finan- in the long-standing first-class short-term ratings  
cial services business.  
The BMW Group is officially rated by the rating  
agencies, Standard & Poor’s and Moody’s. The  
issued by Moody’s (P-1) and Standard & Poor’s  
(A-1), the BMW Group is able to obtain competitive  
refinancing terms and conditions.  
Moody’s  
Standard & Poor’s  
Non-current financial liabilities  
Current financial liabilities  
Outlook  
A1  
P-1  
A+  
A-1  
stable  
stable  
[
31] Pension provisions  
plans are used, based generally on the length of  
service and salary of employees. Due to similarity of  
nature, the obligations of BMW Group companies  
in the US and of BMW (South Africa) (Pty) Ltd.,  
Pretoria, for post-employment medical care are also  
disclosed as pension provisions. The provision for  
these pension-like obligations amounts to euro 55 mil-  
Pension provisions are recognised as a result of  
commitments to pay future vested pension benefits  
and current pensions to present and former em-  
ployees of the BMW Group and their dependants.  
Depending on the legal, economic and tax circum-  
stances prevailing in each country, various pension  
1
08 Group Financial Statements  
lion (2006: euro 49 million) and is measured, similar  
to pension obligations, in accordance with IAS 19.  
In the case of post-employment medical care, it is  
assumed that the costs will increase on a long-term  
past employees. Defined benefit plans may be  
funded or unfunded, the latter sometimes financed  
by means of accounting provisions. Most of the  
pension commitments of the BMW Group in Ger-  
basis by 6% p.a. (unchanged from the previous year). many relate to BMW AG, whose pension plans, like  
The expense for medical care costs in the financial  
year 2007 amounted to euro 6 million (2006: euro  
all those of the BMW Group’s German subsidiaries,  
are unfunded and financed by means of accounting  
provisions. In addition, a deferred remuneration  
6
million).  
Post-employment benefit plans are classified as retirement scheme is in place which is funded by  
either defined contribution or defined benefit plans. employee contributions. The main funded plans of  
Under defined contribution plans, an enterprise pays the BMW Group are in the United Kingdom, the  
fixed contributions into a separate entity or fund and  
does not assume any other obligations. The total  
pension expense for all defined contribution plans  
of the BMW Group amounted to euro 442 million  
USA, Switzerland, the Netherlands, Belgium and  
Japan.  
Pension obligations are computed on an actu-  
arial basis at the level of the defined benefit obliga-  
(2006: euro 409 million).This includes employer con- tion. This computation requires the use of estimates.  
tributions paid to state pension insurance schemes  
amounting to euro 406 million (2006: euro 388 mil-  
lion).  
Under defined benefit plans, the enterprise is  
required to pay the benefits granted to present and  
The main assumptions, in addition to life expect-  
ancy, depend on the economic situation in each  
particular country.The following disclosures for the  
United Kingdom (UK) and the other countries are  
based on weighted average values:  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
in %  
Germany  
UK  
Other  
2007  
31 December  
2007  
2006  
2007  
2006  
2006  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Discount rate  
5.50  
3.25  
1.75  
4.40  
3.25  
1.75  
5.53  
4.39  
3.38  
5.11  
4.12  
3.09  
5.78  
3.36  
1.90  
5.19  
2.59  
1.79  
9
Salary level trend  
Pension level trend  
117 – Other Disclosures  
131 – Segment Information  
The salary level trend refers to the expected  
Actuarial gains or losses may result from in-  
rate of salary increase which is estimated annually  
depending on inflation and the period of service of  
employees with the Group.  
creases or decreases in either the present value of  
the defined benefit obligation or in the fair value of  
the plan assets. Causes of actuarial gains or losses  
include the effect of changes in the measurement  
parameters, changes in estimates caused by the  
actual development of risks impacting on pension  
obligations and differences between the actual and  
expected return on plan assets. Past service cost  
arises where a BMW Group company introduces a  
defined benefit plan or changes the benefits payable  
under an existing plan.  
In the case of funded plans, the defined benefit  
obligation is offset against plan assets measured at  
their fair value. Where the plan assets exceed the  
pension obligations and the enterprise has a right of  
reimbursement or a right to reduce future contribu-  
tions, the surplus amount is recognised in accord-  
ance with IAS 19 as an asset under other assets. In  
the case of funded pension plans, a liability is recog-  
nised under pension provisions where the benefit  
obligation exceeds fund assets.  
109  
Based on the measurement principles contained in IAS 19, the following funding status applies to the  
Group’s pension plans:  
in euro million  
1 December  
Germany  
UK  
Other  
2007 2006  
Total  
2007 2006  
3
2007  
2006  
2007  
2006  
Present value of pension benefits covered by  
accounting provisions  
3,849  
4,412  
–
–
–
119  
336  
455  
343  
112  
134 3,968 4,546  
316 6,663 6,884  
450 10,631 11,430  
298 6,029 6,432  
152 4,602 4,998  
Present value of funded pension benefits  
Defined benefit obligations  
–
3,849  
–
6,327 6,568  
4,412 6,327 6,568  
5,686 6,134  
Fair value of plan assets  
–
Net obligation  
3,849 4,412  
641  
434  
Income (+) expense (–) from past service cost  
not yet recognised  
–
–
–
–
–
–
–2  
1
–2  
23  
1
Amount not recognised as an asset because of  
the limit in IAS 19.58  
6
647  
651  
–4  
5
439  
440  
–1  
17  
127  
127  
–
11  
16  
Balance sheet amounts at 31 December  
thereof pension provision  
3,849 4,412  
164 4,623 5,015  
3,849  
–
4,412  
–
165 4,627 5,017  
thereof pension assets (–)  
–1  
–4  
–2  
Pension provisions relating to pension plans in other  
countries amounted to euro 127 million (2006: euro  
The changes in the pension provision and  
in pension assets (reimbursement claims or right  
165 million). This includes euro 53 million (2006: euro to reduce future contributions to the funds) as  
80 million) relating to externally funded plans.  
The change in the defined benefit obligations  
disclosed in the balance sheet can be derived as  
follows:  
was attributable mainly to changes in the discount  
rates used in the actuarial computation.  
in euro million  
Germany  
007 2006  
UK  
Other  
2007 2006  
Total  
2007 2006  
2
2007  
2006  
Balance sheet amounts at1 January  
Expense from pension obligations  
Pension payments or transfers to external funds  
Actuarial gains (–) and losses (+)  
4,414* 4,234  
439  
52  
792  
71  
164  
28  
202 5,017 5,228  
239  
–80  
329  
–72  
45  
319  
445  
–47  
–98  
–67  
–55  
–194  
–225  
on defined benefit obligations  
–776  
–
–167  
–
211  
42  
–241  
–98  
8
2
8
–557  
44  
–400  
–117  
Actuarial gains (–) and losses (+) on plan assets  
Employee contributions to the deferred  
remuneration retirement scheme  
–19  
52  
–
87  
1
–
–50  
647  
651  
–4  
–
13  
–
–8  
–
52  
87  
–3  
Translation differences and other changes  
Balance sheet amounts at 31 December  
thereof pension provision  
–17  
–58  
3,849 4,412  
439  
440  
–1  
127  
127  
–
164 4,623 5,015  
3,849  
–
4,412  
–
165 4,627 5,017  
thereof pension assets (–)  
–1  
–4  
–2  
*
including entities consolidated for the first time during the financial year  
1
10 Group Financial Statements  
The defined benefit plans of the BMW Group give financial year 2007 of euro 319 million (2006: euro  
rise to an expense from pension obligations in the 445 million), comprising the following components:  
in euro million  
Germany  
UK  
Other  
2007  
Total  
2007  
2
007  
2006  
2007  
64  
2006  
64  
2006  
2006  
258  
Current service cost  
150  
160  
29  
34  
243  
Expense from reversing the discounting of  
pension obligations  
192  
–103  
–
169  
–
323  
–
307  
–
22  
–
25  
1
537  
–103  
–358  
319  
501  
1
Past service cost  
Expected return on plan assets (–)  
Expense from pension obligations  
–
–335  
52  
–300  
71  
–23  
28  
–15  
45  
–315  
445  
239  
329  
The expense from reversing the discounting of pen-  
sion obligations and the income from the expected  
return on plan assets are reported as part of the  
financial result. All other components of pension  
expense are included in the relevant income state-  
ment under costs by function.  
United Kingdom only provides a basic fixed amount  
benefit, retirement benefits are largely organised in  
the form of company pensions and arrangements  
financed by the individual. The pension benefits in  
the United Kingdom therefore contain contributions  
made by the employee.  
Past service cost included in the expense from  
pension obligations decreased in 2007 by euro 103  
million as a result of the Retirement Age Amendment  
Act passed in 2007 which raised the statutory retire-  
ment age for the state pension scheme in Germany.  
The later retirement age of employees resulted in  
an amendment to the pension plan in place at the  
Group’s German entities. The resulting decrease in  
the pension obligation was recognised in the income  
statement.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
7
7
7
7
Pension plan assets are invested in various  
79  
investment categories, the most predominant one  
being bonds. Other equity instruments and alter-  
native investments such as property are also con-  
sidered. The expected rate of return is derived on  
the basis of the specific investment strategy applied  
to each individual pension fund, either by applying  
percentages based on long-term state bonds or  
using absolute estimates of pension fund income.  
The actual return from external pension funds  
was euro 314 million (2006: euro 432 million).  
The level of the pension obligations differ de-  
pending on the pension system applicable in each  
country. Since the state pension system in the  
8
8
0
0
8
9
6
9
117 – Other Disclosures  
131 – Segment Information  
The net obligation from pension plans in Ger-  
many, the United Kingdom and other countries  
changed as follows:  
in euro million  
Germany  
Defined benefit obligation  
Plan assets  
Net obligation  
2007  
2006  
2007 2006  
2007  
2006  
1
January  
4,414*  
239  
–
4,234  
329  
–
–
–
–
–
–
–
–
–
–
–
4,414  
239  
–
4,234  
329  
–
Expense from pension obligations  
Payments to external funds  
Pension payments  
–80  
–776  
–72  
–167  
–80  
–776  
–72  
–167  
Actuarial gains (–) and losses (+)  
Employee contributions to the deferred remuneration  
retirement scheme  
52  
–
87  
1
–
–
–
–
–
–
52  
–
87  
1
Translation differences and other changes  
31 December  
3,849  
4,412  
3,849  
4,412  
*
including entities consolidated for the first time during the financial year  
111  
in euro million  
United Kingdom  
Defined benefit obligation  
Plan assets  
Net obligation  
2007 2006  
2007  
2006  
2007  
2006  
1
January  
6,568  
387  
6,576  
371  
–6,134  
–335  
–47  
–5,784  
–300  
–98  
434  
52  
792  
71  
Expense from pension obligations  
Payments to external funds  
–
–
–47  
–
–98  
–
Pension payments  
–293  
211  
–278  
–241  
140  
293  
278  
Actuarial gains (–) and losses (+)  
Translation differences and other changes  
42  
–98  
253  
–51  
641  
–339  
8
–546  
6,327  
495  
–132  
31 December  
6,568  
–5,686 –6,134  
434  
in euro million  
Other countries  
Defined benefit obligation  
Plan assets  
Net obligation  
2007 2006  
2007  
2006  
2007  
2006  
1
January  
450  
51  
427  
59  
–298  
–23  
–57  
6
–233  
–14  
–51  
6
152  
28  
194  
45  
Expense from pension obligations  
Payments to external funds  
–
–
–57  
–10  
10  
–51  
–4  
Pension payments  
–16  
8
–10  
8
Actuarial gains (–) and losses (+)  
Translation differences and other changes  
2
–19  
13  
–11  
–21  
152  
–38  
455  
–34  
450  
27  
–11  
112  
31 December  
–343  
–298  
Plan assets in the United Kingdom and other countries comprise the following:  
in euro million  
Components of plan assets  
Other countries  
United Kingdom  
Total  
2007  
2006  
2007  
2006  
2007  
2006  
Equity instruments  
Debt securities  
Real estate  
1,266  
3,135  
487  
1,902  
3,323  
664  
205  
111  
6
172  
106  
5
1,471  
3,246  
493  
2,074  
3,429  
669  
Other  
798  
245  
21  
15  
819  
260  
31 December  
5,686  
6,134  
343  
298  
6,029  
6,432  
Benefit obligations are covered in Germany by  
accounting provisions. In the United Kingdom, a  
substantial portion of plan assets is invested in debt  
securities in order to minimise value fluctuations.  
1
12 Group Financial Statements  
[
32] Other provisions  
Other provisions comprise the following items:  
in euro million  
31.12. 2007  
31.12. 2006  
Total  
thereof  
Total  
thereof  
due within  
one year  
due within  
one year  
Obligations for personnel and social expenses  
Obligations for ongoing operational expenses  
Other obligations  
1,559  
2,818  
1,125  
1,062  
1,129  
635  
1,493  
3,000  
1,043  
5,536  
979  
1,135  
557  
5,502  
2,826  
2,671  
Provisions for obligations for personnel and social  
expenses comprise mainly profit-share schemes  
and bonuses, early retirement part-time working  
arrangements and employee long-service awards.  
Provisions for obligations for ongoing operational  
expenses comprise primarily warranty obligations.  
Provisions for other obligations cover numerous  
specific risks and obligations of uncertain amount.  
They comprise mainly obligations and risks in re-  
spect of the disengagement from the former Rover  
Group, risks from legal disputes and the obligation  
for recovery and recycling of end-of-life vehicles.  
Other provisions changed during the year as  
follows:  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
in euro million  
At Translation  
1.1. 2007 differences  
Additions Reversal of  
discounting  
Utilised  
–794  
Reversed  
At  
*
31.12. 2007  
8
9
6
9
Obligations for personnel and  
social expenses  
117 – Other Disclosures  
131 – Segment Information  
1,497  
–8  
890  
8
–34  
1,559  
Obligations for ongoing  
operational expenses  
Other obligations  
3,011  
1,062  
–36  
–8  
1,218  
369  
61  
17  
86  
–1,362  
–190  
–74  
–125  
–233  
2,818  
1,125  
5,502  
5,570  
–52  
2,477  
–2,346  
*
including entities consolidated for the first time during the financial year  
Of the amount shown as reversed, euro143 million are included in costs by function in the income statement.  
[33] Income tax liabilities  
3
1 December 2007  
Maturity  
within  
one year  
Maturity  
later than  
one year  
Total  
in euro million  
Deferred tax  
Current tax  
–
2,714  
430  
2,714  
808  
378  
378  
3,144  
3,522  
113  
3
1 December 2006  
Maturity  
within  
one year  
Maturity  
later than  
one year  
Total  
in euro million  
Deferred tax  
Current tax  
–
2,758  
361  
2,758  
567  
206  
206  
3,119  
3,325  
Current tax liabilities of euro 808 million (2006: euro  
(2006: euro 479 million) for tax provisions. In 2007  
5
8
67 million) comprises euro 161 million (2006: euro  
8 million) for taxes payable and euro 647 million  
tax provisions of euro 8 million were reversed (2006:  
euro 2 million).  
[34] Financial liabilities  
Financial liabilities include all liabilities of the BMW Group at the relevant balance sheet dates relating to  
financing activities and comprise:  
31 December 2007  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
Bonds  
5,230  
4,548  
5,030  
5,445  
1,638  
105  
8,945  
1,450  
702  
4,208  
18,383  
6,501  
5,732  
5,445  
6,346  
616  
Liabilities to banks  
503  
Liabilities from customer deposits (banking)  
Commercial paper  
–
–
–
–
Asset backed financing transactions  
Interest and currency derivatives  
Bills of exchange payable  
Other  
4,708  
472  
39  
–
–
–
–
497  
273  
128  
4,878  
898  
2
2,493  
16,550  
43,921  
31 December 2006  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
Bonds  
4,442  
2,077  
5,138  
4,154  
1,305  
279  
8,450  
2,205  
643  
3,528  
16,420  
4,288  
5,781  
4,154  
4,501  
596  
Liabilities to banks  
6
Liabilities from customer deposits (banking)  
Commercial paper  
–
–
–
Asset backed financing transactions  
Interest and currency derivatives  
Bills of exchange payable  
Other  
3,196  
317  
–
–
1
–
–
1
260  
235  
220  
3,754  
715  
1
7,656  
15,046  
36,456  
Other financial liabilities of euro 898 million (2006: euro 715 million) comprise mainly finance lease liabilities.  
1
14 Group Financial Statements  
Bonds comprise:  
Issuer  
Interest  
Issue volume  
in relevant currency  
Weighted  
average maturity  
period (in years)  
Weighted  
average effective  
interest rate (in %)  
(
ISO-Code)  
BMW Finance N.V., The Hague  
variable  
variable  
variable  
variable  
fixed  
JPY 17,500 million  
SKK 768 million  
EUR 735 million  
USD 81 million  
1.1  
3.0  
1.9  
2.0  
8.3  
7.6  
4.8  
6.0  
5.0  
1.0  
4.3  
4.7  
5.0  
2.3  
4.4  
5.1  
5.2  
2.0  
JPY 45,000 million  
EUR 5,542 million  
USD 950 million  
GBP 400 million  
CHF 200 million  
fixed  
fixed  
fixed  
fixed  
BMW Coordination Center V.o.F., Bornem  
BMW (UK) Capital plc, Bracknell  
variable  
fixed  
EUR 500 million  
EUR 150 million  
1.2  
1.0  
4.7  
4.5  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
7
7
7
7
variable  
variable  
variable  
fixed  
JPY 33,200 million  
EUR 275 million  
GBP 186 million  
JPY 5,000 million  
GBP 300 million  
2.4  
2.1  
1.0  
1.0  
5.2  
0.9  
4.7  
6.0  
1.1  
6.4  
79  
fixed  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
BMW US Capital, LLC, Wilmington, Del.  
variable  
variable  
variable  
variable  
fixed  
JPY 33,000 million  
USD 1,475 million  
EUR 595 million  
CAD 100 million  
JPY 8,200 million  
EUR 2,500 million  
USD 1,212 million  
MXN 1,000 million  
CHF 450 million  
GBP 150 million  
AUD 100 million  
1.8  
2.5  
2.1  
3.0  
1.9  
7.1  
8.1  
4.0  
3.8  
3.0  
2.0  
1.0  
4.7  
4.8  
4.8  
0.4  
4.0  
5.3  
7.8  
2.3  
4.6  
5.8  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
117 – Other Disclosures  
131 – Segment Information  
fixed  
fixed  
fixed  
fixed  
fixed  
fixed  
Rolls-Royce Motor Cars Limited, Bracknell  
Other  
variable  
GBP 46 million  
–*  
5.9  
variable  
variable  
variable  
variable  
variable  
fixed  
JPY 48,600 million  
EUR 1,275 million  
SEK 800 million  
USD 120 million  
CAD 50 million  
1.6  
2.2  
1.0  
4.8  
4.7  
5.3  
4.9  
2.2  
2.3  
4.6  
2.0  
6.0  
1.0  
JPY 84,000 million  
CHF 500 million  
EUR 75 million  
13.9  
4.5  
fixed  
fixed  
1.0  
*
unlimited  
115  
The following details apply to commercial paper:  
Issuer  
Issue volume  
in relevant currency  
Weighted  
average maturity  
period (in days)  
Weighted  
average nominal  
interest rate (in %)  
(ISO-Code)  
BMW AG, Munich  
EUR 1,630 million  
EUR 1,521 million  
GBP 100 million  
GBP 270 million  
USD 2,665 million  
28.4  
38.6  
49.0  
8.9  
4.8  
4.7  
6.6  
6.7  
4.3  
BMW Finance N.V., The Hague  
BMW (UK) Capital plc, Bracknell  
BMW US Capital, LLC, Wilmington, Del.  
16.2  
[35] Other liabilities  
Other liabilities comprise the following items:  
31 December 2007  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
Other taxes  
537  
46  
–
–
–
–
537  
46  
Social security  
Advance payments from customers  
Deposits received  
Subsidiaries  
367  
56  
15  
–
382  
90  
–
146  
75  
–
–
75  
Deferred income  
Other  
1,002  
2,023  
1,651  
36  
191  
41  
232  
2,844  
2,100  
6,130  
4,106  
1,792  
31 December 2006  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
Other taxes  
553  
41  
–
–
–
–
553  
41  
Social security  
Advance payments from customers  
Deposits received  
Subsidiaries  
267  
48  
11  
–
278  
95  
–
143  
40  
–
–
40  
Deferred income  
Other  
909  
2,066  
1,362  
118  
1,586  
306  
40  
346  
2,577  
2,224  
5,856  
3,924  
1
16 Group Financial Statements  
Deferred income comprises the following items:  
in euro million  
31.12. 2007  
31.12. 2006  
Total  
thereof  
Total  
thereof  
due within  
one year  
due within  
one year  
Deferred income from lease financing  
Deferred income relating to service contracts  
Grants  
977  
1,433  
358  
580  
317  
763  
1,295  
412  
484  
266  
60  
49  
Other deferred income  
76  
56  
107  
99  
2,844  
1,002  
2,577  
909  
Deferred income relating to service contracts relates  
to service and repair work to be provided under  
this has been invested in the construction of the pro-  
duction plant in Leipzig. In accordance with IAS 20,  
commitments given at the time of the sale of a vehicle they are recognised as income over the useful lives  
multi-component arrangements). Grants comprise of the assets to which they relate.  
(
primarily public funds to promote regional structures;  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
[
36] Trade payables  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
31 December 2007  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
1
17 – Other Disclosures  
Trade payables  
3,516  
35  
–
3,551  
Total  
131 – Segment Information  
31 December 2006  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Trade payables  
3,624  
74  
39  
3,737  
The total amount of financial liabilities, other liabilities amounts to euro 5,110 million (2006: euro 4,139 mil-  
and trade payables with a maturity later than five years lion).  
117  
BMW Group  
Notes to the Group Financial Statements  
Other Disclosures  
[37] Contingent liabilities and other financial commitments  
Contingent liabilities  
since an outflow of resources is not considered to be  
No provisions were recognised for the following con- probable:  
tingent liabilities (stated at their nominal amount),  
in euro million  
31.12. 2007  
31.12. 2006  
Guarantees  
132  
13  
2
224  
23  
Performance guarantees  
Bills of exchange  
5
147  
252  
As at the end of the previous year, all contingent liabili- mitments, primarily under lease contracts for land,  
ties relate to non-group entities. buildings, plant and machinery, tools, office and other  
Several liability applies in the case of investments facilities. The leases run for periods of one to 95  
in general partnerships.  
years and in some cases contain extension and/or  
purchase options. Lease payments of euro 61 million  
(2006: euro 77 million) were recognised as expense  
during the year.  
The usual commercial guarantees have been  
given in relation to the sale of Rover Cars and Land  
Rover activities.  
The total of future minimum lease payments  
under non-cancellable leases can be analysed by  
Other financial obligations  
In addition to liabilities, provisions and contingent lia- maturity as follows:  
bilities, the BMW Group also has other financial com-  
in euro million  
31.12. 2007  
31.12. 2006  
Nominal total of future minimum lease payments  
due within one year  
212  
575  
683  
271  
583  
due between one and five years  
due later than five years  
560  
1,470  
1,414  
The above amounts include euro 3 million (2006: euro  
In addition, the BMW Group is the lessee in the  
4
million) in respect of non-consolidated subsidiaries case of operating leases for vehicles which are leased  
and euro 7 million (2006: euro 65 million) for back-  
to-back operating leases.  
to third parties over matching periods. The following  
amounts are payable under these contracts:  
in euro million  
31.12. 2007  
31.12. 2006  
Nominal total of future minimum lease payments  
due within one year  
403  
296  
–
677  
497  
due between one and five years  
due later than five years  
–
699  
1,174  
1
18 Group Financial Statements  
These future obligations are matched, or ex-  
ceeded, by income on sub-leases.  
equipment amount to euro 1,925 million (2006: euro  
1,099 million). Sundry other financial commitments  
amount to euro 239 million (2006: euro 249 million).  
Purchase commitments for property, plant and  
[38] Financial instruments  
The carrying amounts and fair values of financial  
instruments are allocated below to IAS 39 catego-  
ries, cash funds, cash flow hedges and fair value  
hedges:  
3
1 December 2007  
Cash funds  
Loans and  
receivables  
in euro million  
Fair value  
Carrying  
Fair value  
Carrying  
amount  
amount  
Assets  
Other investments  
–
–
–
–
–
–
Receivables from sales financing  
Financial assets  
33,490  
34,244  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
Derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
–
–
–
–
–
–
–
–
–
–
27  
28  
7
9
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
Credit card receivables  
Other financial assets  
–
–
260  
568  
–
260  
568  
–
–
2,393  
–
–
2,393  
–
80  
0
Cash and cash equivalents  
Trade receivables  
8
2,672  
2,672  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Other assets  
9
Receivables from subsidiaries  
Receivables from companies in which an investment is held  
Collateral receivables  
–
–
–
–
641  
104  
–
641  
104  
–
1
17 – Other Disclosures  
131 – Segment Information  
135  
1
135  
1
Other  
78  
78  
Liabilities  
Financial liabilities  
Bonds  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
Asset backed financing transactions  
Derivative instruments  
Bills of exchange payable  
Other financial liabilities  
Trade payables  
Other liabilities  
Liabilities to subsidiaries  
Other  
–
–
–
–
–
–
–
–
*
Carrying amount corresponds to fair value.  
119  
Held-to-  
maturity  
Other  
liabilities  
Available-  
for-sale  
Fair value  
option  
Held for  
trading  
Cash flow  
hedges  
Fair value  
hedges  
investments  
Fair value  
Carrying  
amount  
Fair value  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
*
amount  
Carrying  
amount*  
*
*
*
–
–
–
–
–
–
–
–
209  
–
–
–
–
–
–
–
–
–
–
2
–
–
–
–
–
–
51  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
–
–
–
–
–
195  
–
802  
–
983  
–
5
1,904  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,808  
6,485  
5,702  
5,446  
5,882  
–
18,383  
6,501  
5,732  
5,445  
6,346  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
180  
–
13  
–
423  
–
–
–
910  
898  
–
–
–
3,551  
3,551  
–
–
–
–
–
–
–
75  
75  
–
–
–
–
–
–
–
–
–
–
2,081  
2,081  
1
20 Group Financial Statements  
3
1 December 2006  
Cash funds  
Loans and  
receivables  
in euro million  
Fair value  
Carrying  
Fair value  
Carrying  
amount  
amount  
Assets  
Other investments  
–
–
–
–
–
–
Receivables from sales financing  
Financial assets  
30,183  
30,368  
Derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
–
–
–
–
–
–
–
–
–
–
67  
67  
Credit card receivables  
Other financial assets  
–
–
239  
289  
–
239  
289  
–
–
1,336  
–
–
1,336  
–
Cash and cash equivalents  
Trade receivables  
2,258  
2,258  
Other assets  
Receivables from subsidiaries  
Receivables from companies in which an investment is held  
Collateral receivables  
–
–
–
–
693  
202  
–
693  
202  
–
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
120  
3
120  
3
Other  
106  
106  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
Liabilities  
Financial liabilities  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Bonds  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
Asset backed financing transactions  
Derivative instruments  
Bills of exchange payable  
Other financial liabilities  
Trade payables  
8
9
6
9
117 – Other Disclosures  
131 – Segment Information  
Other liabilities  
Liabilities to subsidiaries  
Other  
–
–
–
–
–
–
–
–
1
] Carrying amount corresponds to fair value.  
2
] Including the negative fair value of the option obligation relating to the Rolls-Royce exchangeable bond.  
121  
Held-to-  
maturity  
Other  
liabilities  
Available-  
for-sale  
Fair value  
option  
Held for  
trading  
Cash flow  
hedges  
Fair value  
hedges  
investments  
Fair value  
Carrying  
amount  
Fair value  
Carrying  
amount  
Carrying  
amount1  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
1]  
amount  
]
1]  
1]  
1]  
–
–
–
–
–
–
–
–
401  
–
–
–
–
–
–
–
–
–
–
2
–
–
–
–
–
–
51  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
–
–
–
–
–
122  
–
511  
–
688  
–
5
1,981  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16,507  
4,231  
5,731  
4,151  
4,299  
–
16,420  
4,288  
5,781  
4,154  
4,501  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1652  
]
115  
–
316  
–
1
1
–
–
–
728  
715  
–
–
3,737  
3,737  
–
–
–
–
–
–
40  
40  
–
–
–
–
–
–
–
–
–
–
2,009  
2,009  
1
22 Group Financial Statements  
Fair value measurement of financial instruments or using appropriate measurement methods, e.g.  
The fair values shown are computed using market  
information available at the balance sheet date, on  
the basis of prices quoted by the counterparties  
discounted cash flow models. In the latter case,  
amounts were discounted at 31 December 2007  
on the basis of the following interest rates:  
ISO-Code  
in %  
EUR  
USD  
GBP  
JPY  
Interest rate for six months  
Interest rate for one year  
Interest rate for five years  
Interest rate for ten years  
4.3  
4.3  
4.6  
4.8  
4.6  
4.2  
4.2  
4.8  
5.9  
5.7  
5.1  
5.1  
1.0  
1.1  
1.2  
1.7  
These interest rates were adjusted, where necessary, to take account of the credit quality and risk of the  
underlying financial instrument.  
Gains and losses on financial instruments  
The following table shows the net gains and losses arising for each of the categories of financial instrument  
defined by IAS 39:  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
7
7
7
7
in euro million  
2007  
–39  
2006  
17  
79  
8
8
0
0
Held for trading  
Gains/losses from the use of derivative instruments  
8
9
6
9
Available-for-sale  
117 – Other Disclosures  
131 – Segment Information  
Gains/losses on sale and fair value gains/losses on available-for-sale securities;  
including equity investments carried at cost  
Income from investments  
49  
3
44  
62  
Accumulated other equity  
Balance at 1 January  
214  
–179  
–168  
35  
562  
–348  
–431  
214  
Total change during the year  
–
of which recognised in the income statement during the period under report  
Balance at 31 December  
Loans and receivables  
Impairment losses/reversals of impairment losses  
Other income/expenses  
–277  
–12  
–190  
–31  
Other liabilities  
Income/expenses  
168  
108  
Gains/losses from the use of derivative instruments  
relate primarily to fair value gains or losses arising on  
stand-alone derivative instruments.  
Write-downs of euro 49 million (2006: euro 2 mil-  
lion) on available-for-sale securities, for which fair  
value changes were previously recognised directly  
in equity, were recognised as expenses in 2007.  
Reversals of write-downs on current marketable se-  
curities of euro 2 million were recognised directly in  
equity (2006: euro 4 million).  
The disclosure of interest income resulting from  
the unwinding of interest on future expected receipts  
would normally only be relevant for the BMW Group  
where assets have been discounted as part of the  
process of determining impairment losses. However,  
as a result of the assumption that most of the income  
that is subsequently recovered is received within one  
year and the fact that the impact is not material, the  
BMW Group does not discount assets forthe purposes  
of determining impairment losses.  
123  
Cash flow hedges  
The effect of cash flow hedges on accumulated other equity was as follows:  
in euro million  
2007  
2006  
Balance at 1 January  
178  
260  
29  
149  
Total changes during the year  
–
of which recognised in the income statement during the period under report  
–260  
438  
–266  
178  
Balance at 31 December  
During the period under report, an expense of euro  
(2006: 120 months) to hedge interest rate risks at-  
4 million (2006: euro 3 million) was recognised in the tached to future transactions. It is expected that euro  
income statement to reflect the ineffective portion of 5 million of net gains, recognised in equity at the  
cash flow hedges.  
balance sheet date, will be recognised in the income  
At 31 December 2007, the BMW Group held  
derivative instruments with terms of up to 41 months  
statement in 2008.  
Cash flow hedges are used to hedge cash flows  
arising in conjunction with the supply of vehicles to  
(2006: 44 months) to hedge currency risks attached  
to future transactions. It is expected that euro 384 mil- subsidiaries.  
lion of net gains, recognised in equity at the balance  
sheet date, will be recognised in the income state-  
ment in 2008.  
Fair value hedges  
The following table shows gains and losses on  
At 31 December 2007, the BMW Group held de- hedging instruments and hedged items which are  
rivative instruments with terms of up to108 months  
deemed to be part of a fair value hedge relationship:  
in euro million  
31.12. 2007  
31.12. 2006  
Gains/losses on hedging instruments designated as part of a fair value hedge relationship  
Profit/loss from hedged items  
272  
–271  
1
159  
–147  
12  
The difference between the gains/losses on hedging  
instruments and the result recognised on hedged  
items represents the ineffective portion of fair value  
hedges.  
Fair value hedges are mainly used to hedge  
bonds and other financial liabilities.  
In the case of performance relationships under-  
lying non-derivative financial instruments, collateral  
will be required, information on the credit standing  
of the counterparty obtained or historical data based  
on the existing business relationship (i.e. payment  
patterns to date) reviewed in order to minimise the  
credit risk, all depending on the nature and amount  
of the exposure that the BMW Group is proposing to  
enter into.  
Credit risk  
Notwithstanding the existence of collateral accepted,  
the carrying amounts of financial assets generally  
take account of the maximum credit risk arising from  
the possibility that counterparties will not be able  
to fulfil their contractual obligations. The maximum  
credit risk for irrevocable credit commitments relat-  
ing to credit card business amounted to euro 2,082  
million (2006: euro 1,395 million). The equivalent  
figure for dealer financing was euro 12,043 million  
Within the financial services business, the  
financed items (e.g. vehicles, equipment and prop-  
erty) in the retail customer and dealer lines of busi-  
ness serve as first-ranking collateral with a recover-  
able value. Security is also put up by customers in the  
form of collateral asset pledges, asset assignment  
and first-ranking mortgages, supplemented where  
appropriate by warranties and guarantees. If an item  
previously accepted as collateral is acquired, it un-  
(2006: euro 9,968 million).  
1
24 Group Financial Statements  
dergoes a multi-stage process of repossession  
and disposal in accordance with the legal situation  
prevailing in each relevant market. The assets in-  
volved are generally vehicles which can be con-  
verted into cash at any time via the dealer organi-  
sation.  
The credit risk relating to derivative financial in-  
struments is minimised by the fact that the Group  
only enters into such contracts with parties of first-  
class credit standing. The general credit risk on de-  
rivative financial instruments utilised by the BMW  
Group is therefore not considered to be significant. A  
concentration of credit risk with particular borrowers  
Impairment losses are recorded as soon as  
credit risks are identified on individual financial assets, or groups of borrowers has not been identified.  
using a methodology specifically designed by the  
BMW Group. More detailed information regarding  
this methodology is provided in the section on ac-  
counting policies.  
Further disclosures relating to credit risk, in par-  
ticular impairment losses recognised, are provided in  
the notes to the relevant category of receivables on  
pages 100 to 105.  
The use of comprehensive rating and scoring  
techniques and credit monitoring procedures  
Liquidity risk  
ensures the recoverability of the value of receivables The following table shows the maturity structure of  
from sales financing which are neither overdue nor  
impaired.  
contractual cash flows (undiscounted) for financial  
liabilities:  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
3
1 December 2007  
7
7
7
7
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
Bonds  
–5,947  
–4,736  
–5,193  
–5,474  
–1,854  
63  
–10,627  
–1,630  
–774  
–
–4,920  
–21,494  
–6,917  
–5,967  
–5,474  
–6,897  
429  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
Liabilities to banks  
–551  
Liabilities from customer deposits (banking)  
Commercial paper  
–
8
9
6
–
9
117 – Other Disclosures  
Asset backed financing transactions  
Interest and currency derivative instruments  
Bills of exchange payable  
Trade payables  
–5,043  
234  
–
132  
131 – Segment Information  
–
–
–
–
–3,516  
–497  
–35  
–
–3,551  
–898  
Other financial liabilities  
–273  
–18,148  
–128  
–5,467  
–
27,154  
–50,769  
31 December 2006  
in euro million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
Bonds  
–5,126  
–2,178  
–5,250  
–4,159  
–1,440  
–127  
–9,789  
–2,385  
–699  
–
–4,007  
–18,922  
–4,570  
–5,949  
–4,159  
–4,805  
287  
Liabilities to banks  
–7  
Liabilities from customer deposits (banking)  
Commercial paper  
–
–
Asset backed financing transactions  
Interest and currency derivative instruments  
Bills of exchange payable  
Trade payables  
–3,365  
287  
–
127  
–
–1  
–
–1  
–3,624  
–260  
–74  
–39  
–220  
–4,146  
–3,737  
–715  
Other financial liabilities  
–235  
–16,260  
–
22,165  
–42,571  
125  
The cash flows shown comprise principal re-  
payments and the related interest. The amounts  
disclosed for interest rate and currency derivative  
instruments include all cash flows relating to deriva-  
tives that have a negative fair value at the balance  
sheet date as well as all cash flows relating to deriva-  
tives that have a positive fair value at the balance  
sheet date but which are part of a hedging relation-  
ship with a financial liability.  
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 secured by a variety of instruments  
placed on the world’s financial markets. The objec-  
tive is to minimise risk by matching maturities for the  
have matching maturities and amounts (netting).  
Derivative financial instruments are used to reduce  
the risk remaining after netting. Derivative financial  
instruments are only used to hedge underlying posi-  
tions or forecast transactions.  
The scope of permitted transactions, responsi-  
bilities, financial reporting procedures and control  
mechanisms used for financial instruments are set  
out in detailed internal guidelines. This includes,  
above all, a clear separation of duties between trading  
and processing. Currency and interest rate risks are  
managed at a corporate level.  
Further disclosures relating to risk management  
are provided in the Group Management Report.  
Group’s financing requirements within the framework Currency risk  
of the target debt ratio. The long-term ratings pub-  
lished by Standard & Poor’s (A+) and Moody’s (A1)  
enable the BMW Group to obtain financing on com-  
petitive terms and conditions.  
As an enterprise with worldwide operations, business  
is conducted in a variety of currencies, from which  
currency risks arise. Since a significant portion of  
Group revenues are generated outside the euro cur-  
rency region and the procurement of production  
Short-term liquidity is managed primarily by is-  
suing money market instruments (commercial paper). material and funding is also organised on a worldwide  
As a result of its good credit standing, reflected in  
the first-class short-term ratings issued by Moody’s  
basis, currency risk is an extremely important factor  
for Group earnings.  
(
P-1) and Standard & Poor’s (A-1), the BMW Group is  
At 31 December 2007, derivative financial instru-  
ments were in place to hedge exchange rate risks, in  
particular for the currencies US dollar, British pound,  
Canadian dollar and Japanese yen. The hedging  
contracts comprise mainly option and forward cur-  
rency contracts.  
also able to obtain competitive terms and conditions  
in this area.  
Also reducing liquidity risk, additional secured  
and unsecured lines of credit are in place with first-  
class international banks. Intragroup cash flow  
fluctuations are evened out by the use of daily cash  
pooling arrangements.  
A description of how currency risk is managed is  
provided in the Group Management Report on page  
63. The BMW Group measures currency risks using  
Market risks  
a cash-flow-at-risk model.  
The principal market risks to which the BMW Group  
is exposed are currency risk and interest rate risk.  
Protection against such risks is provided in the  
first instance through natural hedging which arises  
The starting point for analysing currency risk with  
this model is the identification of forecast foreign  
currency transactions or “exposures”. At the balance  
sheet date, exposures for the coming year were as  
when the values of non-derivative financial instruments follows:  
in euro million  
31.12. 2007  
31.12. 2006  
Euro/US dollar  
6,140  
3,484  
1,263  
5,787  
3,331  
1,552  
Euro/British pound  
Euro/Japanese yen  
1
26 Group Financial Statements  
In the next stage, these exposures are com-  
pared to all hedges that are in place. The net cash  
flow surplus represents an uncovered risk position.  
The cash-flow-at-risk approach involves allocating  
the impact of potential exchange rate fluctuations to  
operating cash flows on the basis of probability dis-  
tributions. Volatilities and correlations serve as input  
factors to assess the relevant probability distribu-  
tions.  
rent market prices and exposures to a confidence  
level of 95% for each currency. Aggregation of these  
results creates a risk reduction effect due to correla-  
tions between the various portfolios.  
The following table shows the potential negative  
impact for the BMW Group – measured on the basis  
of the cash-flow-at-risk approach – attributable to  
unfavourable changes in exchange rates for the three  
principal currencies at the balance sheet date.  
The potential negative impact on earnings for  
the current period is computed on the basis of cur-  
in euro million  
31.12. 2007  
31.12. 2006  
Euro/US dollar  
33  
14  
56  
155  
22  
Euro/British pound  
Euro/Japanese yen  
81  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
The BMW Group’s currency risk relates primarily to  
the three currencies shown.  
These risks arise when funds with differing fixed-  
rate periods or differing terms are borrowed and in-  
vested. All items subject to, or bearing, interest are  
exposed to interest rate risk. Interest rate risks can  
affect either side of the balance sheet.  
The fair values of the Group’s interest rate port-  
folios for the three principal currencies were as fol-  
lows at the balance sheet date:  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
Interest rate risk  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
The BMW Group’s financial management system  
involves the use of standard financial instruments  
such as short-term deposits, investments in variable  
and fixed-income securities as well as securities  
funds. The BMW Group is therefore also exposed to  
risks resulting from changes in interest rates.  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
117 – Other Disclosures  
131 – Segment Information  
in euro million  
31.12. 2007  
31.12. 2006  
Euro  
6,930  
6,012  
2,278  
7,481  
5,759  
3,023  
US dollar  
British pound  
Interest rate risks can be managed by the use of in-  
terest rate derivative instruments. The interest rate  
contracts used for hedging purposes comprise  
mainly swaps which are accounted for on the basis  
of whether they are designated as a fair value hedge  
or as a cash flow hedge. A description of how inter-  
est rate risk is managed is provided in the Group  
management report on page 63.  
and to manage interest rate risks. This is based on  
a state-of-the-art historical simulation, in which the  
potential future fair value losses of the interest rate  
portfolios are compared across the Group with ex-  
pected amounts measured on the basis of a holding  
period of three months and a confidence level of  
99%. Aggregation of these results creates a risk re-  
duction effect due to correlations between the various  
portfolios.  
As stated there, the BMW Group applies a val-  
ue-at-risk approach for internal reporting purposes  
127  
In the following table the potential volume of fair pected value for the interest rate relevant positions  
value fluctuations – measured on the basis of the  
value-at-risk approach – are compared with the ex-  
of the BMW Group for the three principal curren-  
cies:  
in euro million  
31.12. 2007  
31.12. 2006  
Euro  
76  
109  
10  
62  
85  
7
US dollar  
British pound  
Other risks  
the balance sheet date. For this reason, a sensitivity  
analysis for these derivatives is not provided.  
A further exposure relates to the residual value  
risk on vehicles returned to the Group at the end of  
The BMW Group is exposed to raw material price  
risks. A description of how the raw material price risk  
is managed is provided in the Group Management  
Report on page 63. Derivative financial instruments lease contracts. The risks from financial instruments  
are used on a relatively small scale to reduce these  
risks, primarily for the purchase of precious metals.  
The risk from these derivatives was not material to  
the Group in 2007 and 2006 and remains small at  
used in this context were not material to the Group in  
the past or at the balance sheet date. A description  
of how these risks are managed is provided in the  
Group Management Report on pages 64 and 65.  
[
39] Explanatory notes to the cash flow statements  
The cash flow statements show how the cash and  
cash equivalents of the BMW Group, Industrial  
Operations and Financial Operations have changed  
in the course of the year as a result of cash inflows  
and cash outflows. In accordance with IAS 7 (Cash  
Flow Statements), cash flows are classified into cash  
flows from operating, investing and financing activi-  
ties. The cash flow statements of the BMW Group  
are presented on pages 76 and 77.  
and liabilities relating to operating activities are ad-  
justed for currency translation effects and changes  
in the composition of the Group. The changes in  
balance sheet positions shown in the cash flow  
statement do not therefore agree directly with the  
amounts shown in the Group balance sheet.  
If the BMW Group acts as the lessor in a finance  
lease, the relevant cash flows are reported in the  
cash flow statement as part of the cash flow from  
investing activities. If the BMW Group acts as the  
lessee in a finance lease, the cash flows are reported  
as part of the cash flows from operating and invest-  
Cash and cash equivalents included in the cash  
flow statement comprise cash in hand, cheques,  
and cash at bank, to the extent that they are available ing activities.  
within three months from the balance sheet date  
and are subject to an insignificant risk of changes in  
value. The negative impact of changes in cash and  
cash equivalents due to the effect of exchange rate  
fluctuations in 2007 was euro 47 million (2006:  
negative impact of euro 42 million).  
If the BMW Group acts as the lessor in an oper-  
ating lease, cash flows are reported as part of the  
cash flow from investing activities. In the final case,  
where the BMW Group acts as the lessee in an  
operating lease, cash flows are reported as part of  
the cash flow from operating activities.  
The cash flows from investing and financing ac-  
tivities are based on actual payments and receipts.  
The cash flow from operating activities is computed  
The payment for the acquisition of DEKRA  
SüdLeasing Services GmbH, Stuttgart, and that en-  
tity’s subsidiaries (euro 121 million) is included for  
using the indirect method, starting from the net profit the most part in investing activities.  
of the Group. Under this method, changes in assets  
1
28 Group Financial Statements  
The cash inflow from operating activities includes the following cash flows in accordance with IAS 7.31 and  
IAS 7.35:  
in euro million  
2007  
2006  
Interest received  
Interest paid  
386  
389  
3
391  
328  
62  
Dividends received  
[
40] Related party relationships  
Transactions of BMW Group companies with  
joint ventures and other equity investments – mainly  
BMW Brilliance Automotive Ltd., Shenyang (50%) –  
all arise in the normal course of business and are  
conducted on the basis of arm’s length principles.  
Stefan Quandt is a shareholder and Deputy  
Chairman of the Supervisory Board of BMW AG. He  
is also sole shareholder and Chairman of the Super-  
visory Board of DELTON AG, Bad Homburg v.d.H.,  
which, via its subsidiaries, performed logistics services  
for the BMW Group during the financial year 2007.  
In addition, companies of the DELTON Group pur-  
In accordance with IAS 24 (Related Party Disclo-  
sures), related individuals or entities which have the  
ability to control the BMW Group or which are con-  
trolled by the BMW Group, must be disclosed un-  
less such parties are not already included in the  
consolidated financial statements as consolidated  
companies. Control is defined as ownership of more  
than one-half of the voting power of BMW AG or the  
power to direct, by statute or agreement, the finan-  
cial and operating policies of the management of  
the Group.  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
In addition, the disclosure requirements of IAS 24 chased vehicles from the BMW Group. These service  
also cover transactions with associates and with  
parties which have the ability to exercise significant  
influence over the financial and operating policies of  
the BMW Group. This also includes close relatives  
and intermediaries. Significant influence over the  
financial and operating policies of the Group can  
arise when a party holds 20% or more of the shares  
of BMW AG or is a member of the Board of Manage-  
ment or Supervisory Board of BMW AG.  
and sale contracts are not material for the BMW  
Group and are made, without exception, on the basis  
of arm’s length principles.  
Susanne Klatten is a shareholder and member  
of the Supervisory Board of BMW AG, and also a  
shareholder and Deputy Chairman of the Supervisory  
Board of Altana AG, Wesel, which purchased vehicles  
from the BMW Group during the financial year 2007.  
These sale contracts are not material for the BMW  
8
9
6
9
117 – Other Disclosures  
131 – Segment Information  
For the financial year 2007, the disclosure require- Group and are made, without exception, on the basis  
ments contained in IAS 24 only affect the BMW Group of arm’s length principles.  
with regard to business relationships with affiliated,  
non-consolidated entities, joint ventures, other equity  
investments as well as with members of the Board of  
With the exception of these related party trans-  
actions, companies of the BMW Group did not enter  
into any significant transactions with members of  
the Board of Management or the Supervisory Board  
of BMW AG or with companies in whose representa-  
tive bodies those persons are represented. The same  
applies to close members of the families of those  
persons.  
Management and the Supervisory Board of BMW AG  
The BMW Group’s relationships with affiliated,  
non-consolidated entities are based on arm’s length  
principles.Transactions with these entities are small  
in scale and in the normal course of business.  
.
129  
[
41] Declaration with respect to the Corporate  
German Stock Corporation Act, which is included in  
the BMW Group Annual Report 2007 and which  
Governance Code  
The Board of Management and the Supervisory Board is available to shareholders on the BMW Group web-  
of Bayerische Motoren Werke Aktiengesellschaft  
have issued a declaration, required by §161 of the  
site under the address www.bmwgroup.com/ir.  
[
42] Shareholdings of members of the Board of  
Management and Supervisory Board  
Stefan Quandt, Bad Homburg v.d.H., and 11.58%  
to Susanne Klatten, Munich. The shareholding of  
the members of the Board of Management of  
BMW AG is, in total, less than 1% of the issued  
stock shares.  
The members of the Supervisory Board of BMW AG  
hold in total 27.70% of the issued common and  
preferred stock shares, of which 16.12% relates to  
[
43] Compensation of members of the Board of  
Management and Supervisory Board  
remuneration of current members of the Board of  
Management and the Supervisory Board amounts to  
euro 18.7 million (2006: euro 17.8 million). The re-  
muneration consists of the following:  
Subject to the approval of the proposed dividend at  
the Annual General Meeting of Shareholders, the  
in euro million  
2007  
2006  
Short-term employment benefits  
18.0  
0.7  
17.2  
0.6  
Benefits due at end of employment relationship  
18.7  
17.8  
Subject to the approval of the proposed dividend at  
Further details about the remuneration of cur-  
the Annual General Meeting, the salaries of the mem- rent members of the Board of Management and of  
bers of the Board of Management for the financial  
year 2007 amounted to euro 15.2 million (2006:  
euro 14.5 million).This comprises fixed components  
of euro 2.7 million (2006: euro 2.3 million) and vari-  
able components of euro 12.5 million (2006: euro  
the Supervisory Board can be found in the Compen-  
sation Report on pages 142 to 145. The Compensa-  
tion Report is part of the Group Management Report.  
The remuneration of former Board members  
and their dependants amounted to euro 4.3 million  
(2006: euro 3.8 million).  
12.2 million).  
In addition, an amount of euro 0.7 million (2006:  
euro 0.6 million) has been granted to current mem-  
bers of the Board of Management after the end of  
Pension obligations to former members of the  
Board of Management and their dependants are fully  
covered by pension provisions amounting to euro  
their employment relationship. This relates to the ex- 38.3 million (2006: euro 38.8 million), computed in  
pense for allocations to pension provisions.  
accordance with IAS 19.  
Subject to the approval of the proposed dividend  
Members of the Board of Management or the  
at the Annual General Meeting, the compensation of Supervisory Board holding a BMW Bank GmbH,Munich,  
the members of the Supervisory Board for the finan-  
cial year 2007 amounts to euro 2.8 million (2006:  
euro 2.7 million). This comprises fixed components  
of euro 0.1 million (2006: euro 0.1 million) and variable  
components of euro 2.7 million (2006: euro 2.6 mil-  
lion).  
credit card have a credit line of up to euro 25,565.  
At the balance sheet date the balances resulting from  
credit card usage were all within the agreed limits.  
The names of the members of the Supervisory  
Board and of the Board of Management are dis-  
closed on pages 137 to 140.  
1
30 Group Financial Statements  
[
44] Application of §264 (3) and §264b HGB  
– BMW Vertriebs GmbH & Co. oHG, Dingolfing  
– LHS Leasing- und Handelsgesellschaft Deutsch-  
land mbH, Stuttgart  
A number of companies and incorporated partner-  
ships (as defined by § 264a HGB) which are affiliated,  
consolidated entities of BMW AG and for which the  
– Rolls-Royce Motor Cars GmbH, Munich  
consolidated financial statements of BMW AG repre- In addition, the following entities apply the exemption  
sent exempting consolidated financial statements, available in §264 (3) and §264b HGB with regard to  
apply the exemptions available in §264 (3) and §264b publication:  
HGB with regard to the drawing up of a management – Alphabet Fuhrparkmanagement GmbH, Munich  
report. The exemptions have been applied by:  
– Bavaria Wirtschaftsagentur GmbH, Munich  
– BMW Fuhrparkmanagement Beteiligungs GmbH,  
Stuttgart  
– BMW Hams Hall Motoren GmbH, Munich  
– BMW Ingenieur-Zentrum GmbH + Co., Dingolfing  
– BMW INTEC Beteiligungs GmbH, Munich  
– BMW Leasing GmbH, Munich  
–
–
–
–
Alphabet Fuhrparkmanagement GmbH, Munich  
Bavaria Wirtschaftsagentur GmbH, Munich  
BMW Fahrzeugtechnik GmbH, Eisenach  
BMW Fuhrparkmanagement Beteiligungs GmbH,  
Stuttgart  
–
–
–
–
BMW Hams Hall Motoren GmbH, Munich  
BMW Ingenieur-Zentrum GmbH + Co., Dingolfing  
BMW Leasing GmbH, Munich  
BMW M GmbH Gesellschaft für individuelle Auto-  
mobile, Munich  
– BMW Vertriebs GmbH, Munich  
– BMW Vertriebs GmbH & Co. oHG, Dingolfing  
– LHS Leasing- und Handelsgesellschaft Deutsch-  
land mbH, Stuttgart  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
– BMW Vertriebs GmbH, Munich  
– Rolls-Royce Motor Cars GmbH, Munich  
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
117 – Other Disclosures  
131 – Segment Information  
131  
BMW Group  
Notes to the Group Financial Statements  
Segment Information  
[
45] Segment information  
Reconciliations to the Group profit before tax  
for the Group include holding companies, Group  
Description of business segments  
In accordance with the rules contained in IAS 14  
financing companies and income and expenses not  
specifically attributable to the business segments.  
Reconciliations also include certain operating com-  
panies which are not allocated to segments, namely  
BMW Services Ltd., Bracknell, BMW (UK) Investments  
Ltd., Bracknell, and the Cirquent Group.  
(Segment Reporting), the BMW Group presents  
segment information using business segments  
as its primary reporting format and geographical  
segments as its secondary reporting format. This  
distinction is based on internal management and  
financial reporting systems and reflects the risk and  
earnings structure of the Group.  
The activities of the BMW Group are broken  
down into the segments Automobiles, Motorcycles  
and Financial Services.  
Other explanatory comments on segment  
information  
Segment information is generally prepared in con-  
formity with the accounting policies adopted for  
preparing and presenting the Group financial state-  
The Automobiles segment develops, manu-  
factures, assembles and sells cars and off-road vehi- ments. Inter-segment receivables and payables,  
cles under the brands BMW, MINI and Rolls-Royce,  
as well as spare parts and accessories.  
BMW and MINI brand products are sold in Ger-  
many through branches of BMW AG and by inde-  
provisions, income, expenses and profits are elimi-  
nated in Reconciliations. Inter-segment sales take  
place at arm’s length prices.  
Significant non-cash items comprise mainly  
pendent, authorised dealers. Sales outside Germany changes in provisions, impairment losses, reversal  
are handled primarily by subsidiary companies and, of impairment losses and depreciation on leased  
in a number of markets, by independent import com- products.  
panies. Rolls-Royce brand vehicles are sold in the  
USA via a subsidiary company and elsewhere by in-  
dependent, authorised dealers.  
The BMW Motorcycles segment develops,  
manufactures, assembles and sells BMW brand  
motorcycles as well as spare parts and accessories.  
The Financial Services segment focuses pri-  
marily on car leasing, fleet business, retail customer  
and dealer financing, customer deposit business and  
insurance activities. The profit before financial result  
Capital expenditure comprises additions to prop-  
erty, plant and equipment and intangible assets.  
Segment assets and segment liabilities comprise  
all assets and liabilities employed by the relevant busi-  
ness segment to generate the profit before financial  
result.  
The return on sales for each segment is based  
on the profit before tax.  
Internal financing is computed as the profit  
before tax adjusted for depreciation and significant  
of this segment includes net interest income on retail non-cash items and less actual tax payments.  
customer and dealer financing business and the re-  
sult of lease business. Leased products are carried  
In the case of segment information by geograph-  
ical region, external sales are based on the location  
at acquisition cost less straight-line depreciation down of the customer’s registered office. Segment infor-  
to the imputed residual value of the vehicles. Leased  
products are written down to their fair value where  
this is lower. Intra-group profits on own products  
are eliminated on consolidation and included in the  
Reconciliations to the Group profit before tax.  
mation is provided for the regions Germany, rest of  
Europe, the Americas and Africa, Asia and Oceania,  
in line with internal management and reporting pro-  
cedures.  
1
32 Group Financial Statements  
Segment information by business segment  
Automobiles  
in euro million  
2007  
2006  
External revenues  
42,435  
37,948  
Change compared to previous year  
%
%
%
11.8  
1.9  
Inter-segment revenues  
11,383  
9,819  
Change compared to previous year  
15.9  
14.0  
Total revenues  
53,818  
47,767  
Change compared to previous year  
12.7  
4.2  
Gross profit  
10,528  
9,636  
Profit before financial result  
3,450  
3,055  
Change compared to previous year  
%
12.9  
–0.8  
Result from equity method accounting  
Other financial result  
11  
–25  
–18  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
Statement of Income and  
Expenses recognised directly  
in Equity  
Notes  
– Accounting Principles  
and Policies  
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
7
7
7
7
–229  
Profit before tax  
3,232  
3,012  
Change compared to previous year  
%
%
7.3  
1.2  
79  
Return on sales  
6.0  
356  
6.3  
–117  
8
8
0
0
8
9
6
Significant non-cash items  
Internal financing  
9
117 – Other Disclosures  
6,591  
4,103  
3,562  
359  
5,552  
4,185  
3,159  
392  
131 – Segment Information  
Capital expenditure  
Depreciation and amortisation  
Additions to leased products  
Investments accounted for using the equity method  
Assets  
63  
60  
28,515  
19,881  
95,927  
27,227  
20,069  
95,920  
Liabilities  
Average workforce during the year  
*
including impairment loss of euro 17 million due to volume-induced adjustment to forecast  
133  
Motorcycles  
Financial Services  
Reconciliations  
Group  
2007  
2006  
2007  
2006  
2007  
2006  
2007  
2006  
1,223  
1,255  
12,146  
9,603  
214  
193  
56,018  
48,999  
–
2.5  
3.1  
26.5  
19.0  
10.9  
62.2  
14.3  
5.0  
5
10  
1,794  
1,476  
–13,182  
–11,305  
–
–
–
–
–
50.0  
66.7  
21.5  
10.6  
16.6  
13.6  
1,228  
1,265  
13,940  
11,079  
–12,968  
–11,112  
56,018  
48,999  
–
2.9  
3.4  
25.8  
17.8  
16.7  
13.0  
14.3  
5.0  
345  
322  
1,345  
1,215  
–32  
166  
12,186  
11,339  
80  
75  
717  
689  
–35  
231  
4,212  
4,050  
6.7  
11.9  
4.1  
10.8  
–
862.5  
4.0  
6.8  
–
–
–
–
–
–
11  
–25  
99  
–
9
1
–9  
26  
–4  
–138  
130  
–350  
7
66  
743  
685  
–173  
361  
3,873  
4,124  
7.6  
10.0  
8.5  
13.2  
–
–
– 6.1  
25.5  
5
.8  
5.2  
12  
5.3  
4,204  
4,873  
110  
6.2  
3,475  
4,095  
42  
–
387  
77  
–
30  
6.9  
4,958  
8.4  
3,400  
1
1
156  
144  
64  
272  
11,697  
4,267  
10,063  
4,313  
4
5
6*  
–
9
22  
8
77  
24  
24  
11  
12  
3,683  
3,272  
–
12,902  
–
10,362  
–
–2,223  
–
–2,232  
–
11,038  
63  
8,522  
–
–
60  
6
70  
04  
687  
396  
2,816  
59,040  
52,626  
3,848  
50,529  
44,480  
3,315  
772  
–5,658  
1,866  
614  
88,997  
67,253  
104,402  
79,057  
59,927  
103,727  
4
–5,018  
1,676  
2
,761  
1
34 Group Financial Statements  
Segment information by region  
External revenues  
Capital expenditure  
Assets  
in euro million  
2007  
2006  
2007  
2006  
2007  
2006  
Germany  
11,918  
22,395  
13,014  
8,691  
–
10,601  
18,440  
12,336  
7,622  
–
3,364  
475  
378  
50  
3,089  
665  
511  
48  
31,615  
24,356  
23,290  
9,526  
28,903  
19,789  
21,589  
8,705  
Rest of Europe  
The Americas  
Africa, Asia, Oceania  
Reconciliations  
Group  
–
–
210  
71  
56,018  
48,999  
4,267  
4,313  
88,997  
79,057  
Munich, 19 February 2008  
Bayerische Motoren Werke  
Aktiengesellschaft  
The Board of Management  
7
3
3
4
6
8
Group Financial Statements  
Income Statements  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes  
in Equity  
7
7
7
7
79  
Statement of Income and  
Expenses recognised directly  
in Equity  
8
8
0
0
Notes  
– Accounting Principles  
and Policies  
8
9
6
– Notes to the Income  
Statement  
– Notes to the Balance Sheet  
9
117 – Other Disclosures  
131 – Segment Information  
135  
BMW Group  
Responsibility Statement by the Company’s Legal Representatives  
Statement pursuant to §37y No.1 of the  
Securities Trading Act (WpHG) in conjunction  
with §297 (2) sentence 3 and § 315 (1) sen-  
tence 6 of the German Commercial Code (HGB)  
“To the best of our knowledge, and in accordance with  
the applicable reporting principles, the consolidated  
financial statements give a true and fair view of the  
assets, liabilities, financial position and profit of the  
Group, and the Group management report includes  
a fair review of the development and performance of  
the business and the position of the Group, together  
with a description of the principal opportunities and  
risks associated with the expected development of  
the Group.”  
Bayerische Motoren Werke  
Aktiengesellschaft  
The Board of Management  
136  
BMW Group  
Auditors’ Report  
We have audited the consolidated financial state-  
ments prepared by Bayerische Motoren Werke  
Aktiengesellschaft, comprising the income state-  
ment, the balance sheet, statements of changes in  
equity, cash flow statement and the notes to the  
consolidated financial statements and its report on  
the position of the Company and the Group for the  
business year from 1 January to 31 December 2007.  
The preparation of the consolidated financial state-  
nomic and legal environment of the Group and ex-  
pectations as to possible misstatements are taken  
into account in the determination of audit proce-  
dures. The effectiveness of the accounting-related  
internal control system and the evidence supporting  
the disclosures in the consolidated financial state-  
ments and in the Group management report are ex-  
amined primarily on a test basis within the framework  
of the audit. The audit also includes assessing the  
ments and Group management report in accordance annual financial statements of those entities included  
with IFRS, as adopted by the EU, and the additional  
requirements of German commercial law pursuant  
to § 315a (1) HGB are the responsibility of the parent  
company’s management. Our responsibility is to  
express an opinion on the consolidated financial  
statements and on the Group management report  
based on our audit.  
in consolidation, the determination of entities to be  
included in consolidation, the accounting and con-  
solidation principles used and significant estimates  
made by management, as well as evaluating the  
overall presentation of the consolidated financial  
statements and Group management report. We be-  
lieve that our audit provides a reasonable basis for  
our opinion.  
We conducted our audit of the consolidated  
financial statements in accordance with §317 HGB  
and German generally accepted standards for the  
audit of financial statements promulgated by the  
Institut der Wirtschaftsprüfer (IDW). Those standards  
require that we plan and perform the audit such  
that material misstatements materially affecting the  
presentation of the net assets, financial position and  
results of operations in the consolidated financial  
statements in accordance with the applicable finan-  
cial reporting framework and in the Group manage-  
ment report are detected with reasonable assurance.  
Knowledge of the business activities and the eco-  
Our audit has not led to any reservations.  
In our opinion, based on the findings of our audit,  
the consolidated financial statements comply with  
IFRSs, as adopted by the EU, the additional require-  
ments of German commercial law pursuant to §315a  
(1) HGB and give a true and fair view of the net assets,  
financial position and results of operations of the  
Group. The Group management report is consistent  
with the consolidated financial statements and as  
a whole provides a suitable view of the Group’s posi-  
tion and suitably presents the opportunities and risks  
of future development.  
Munich, 3 March 2008  
KPMG Deutsche Treuhand-Gesellschaft  
Aktiengesellschaft  
Wirtschaftsprüfungsgesellschaft  
1
1
1
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
41 Corporate Governance at BMW Group  
42 Compensation Report  
46 Shareholdings of Members of  
the Board of Management and  
Supervisory Board  
Dr. Schindler  
Pastor  
1
47 Declaration of the Board of  
Management and of the Supervisory  
Board pursuant to §161AktG  
Wirtschaftsprüfer  
Wirtschaftsprüfer  
137  
Members of the Supervisory Board  
*
Prof. Dr.-Ing. Dr.h.c. Dr.-Ing. E.h.  
Joachim Milberg  
Chairman  
Konrad Gottinger  
(until 15.02. 2008)  
Deputy Chairman  
Former Chairman of the Board of  
Management of BMW AG  
Member of the Works Council, Dingolfing  
Member of the Presiding Board, Personnel  
Committee, Audit Committee and Mediation  
Committee  
Chairman of the Presiding Board, Personnel  
Committee, Audit Committee and Nomination  
Committee; member of the Mediation Committee  
Mandates  
Bertelsmann AG  
Dr. Hans-Dietrich Winkhaus  
Deputy Chairman  
FESTO AG  
Former Chairman of the Board of  
Henkel KGaA  
MAN AG (Deputy Chairman) (until 10.05.2007)  
SAP AG (from 16.05.2007)  
Member of the Presiding Board, Personnel  
Committee, Audit Committee and Nomination  
Committee  
Deere & Company  
*
Manfred Schoch  
Mandates  
Deputy Chairman  
Chairman of the General Works Council  
Industrial Engineer  
Deutsche Lufthansa AG  
ERGO Versicherungsgruppe AG  
Henkel KGaA  
Member of the Presiding Board, Personnel  
Committee, Audit Committee and Mediation  
Committee  
*
Ulrich Eckelmann  
Head of Division Industry, Technology and  
Environment with the Executive Board of IG Metall  
Stefan Quandt  
Deputy Chairman  
Industrial Engineer  
*
Bertin Eichler  
Executive Member of the  
Member of the Presiding Board, Personnel  
Committee, Audit Committee, Nomination  
Committee and Mediation Committee  
Executive Board of IG Metall  
Mandates  
ThyssenKrupp AG (Deputy Chairman)  
BGAG Beteiligungsgesellschaft der  
Gewerkschaften GmbH (Chairman)  
Mandates  
DELTON AG (Chairman)  
Dresdner Bank AG (until 31.12.2007)  
DataCard Corp.  
*
Employee representative  
Membership of other statutory supervisory boards  
Membership of equivalent national or foreign boards of business enterprises  
1
38 Corporate Governance  
Franz Haniel  
Engineer, MBA  
Prof. Dr. rer. nat. Drs. h.c. mult. Hubert Markl  
Former President of Max-Planck-Gesellschaft  
zur Förderung der Wissenschaften e.V.  
Professor of Biology (retired)  
Mandates  
DELTON AG (Deputy Chairman)  
Franz Haniel & Cie. GmbH (Chairman)  
Heraeus Holding GmbH  
Mandates  
Münchener Rückversicherungs-Gesellschaft AG  
Metro AG (Chairman) (from 04.11.2007)  
secunet Security Networks AG  
Georg von Holtzbrinck GmbH  
Sanofi-Aventis S. A.  
Giesecke & Devrient GmbH  
Wolfgang Mayrhuber  
Arthur L. Kelly  
Managing Partner of  
KEL Enterprises L.P.  
Chairman of the Board of Management of  
Deutsche Lufthansa AG  
Mandates  
Mandates  
BASF SE  
Eurowings Luftverkehrs AG  
Fraport AG  
LSG Lufthansa Service Holding AG  
Lufthansa Cargo AG  
Lufthansa Technik AG  
Münchener Rückversicherungs-Gesellschaft AG  
Thomas Cook AG (Deputy Chairman)  
DataCard Corp.  
Deere & Company  
Northern Trust Corp.  
Robert Bosch Corp.  
Snap-on Inc.  
(until 02.04.2007)  
HEICO Corp.  
SWISS International Air Lines AG  
Susanne Klatten  
BSc., MBA  
Honorary Senator of the  
Technical University of Munich  
Heinz-Joachim Neubürger  
Senior Advisor of Kohlberg Kravis Roberts & Co.  
Managing Director of Kohlberg Kravis Roberts &  
Co. Ltd.  
Mandates  
ALTANA AG (Deputy Chairman)  
UnternehmerTUM GmbH  
Export Merchant, MBA  
*
Mandates  
Willibald Löw  
1
1
1
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
41 Corporate Governance at BMW Group  
42 Compensation Report  
46 Shareholdings of Members of  
Allianz Versicherungs-AG  
ProSiebenSat .1 Media AG (from 17.07.2007)  
Chairman of the Works Council, Landshut  
KKR Guernsey GP Limited (until 15.06.2007)  
the Board of Management and  
Supervisory Board  
Gruppo Banca Leonardo S.p.A. (until 19.07.2007)  
1
47 Declaration of the Board of  
Management and of the Supervisory  
Board pursuant to §161AktG  
139  
*
Werner Neugebauer  
Regional Executive Officer of IG Metall Bavaria  
*
Franz Oberländer  
Member of the Works Council, Munich  
*
Anton Ruf  
Director Product Line L7  
*
Stefan Schmid  
(from 03.01. 2007)  
Chairman of the Works Council, Dingolfing  
Prof. Dr. Jürgen Strube  
Chairman of the Supervisory Board of BASF SE  
Mandates  
Allianz Deutschland AG  
BASF SE (Chairman)  
Bertelsmann AG (Deputy Chairman)  
Commerzbank AG  
Fuchs Petrolub AG (Chairman)  
Hapag-Lloyd AG  
Linde AG  
*
Werner Zierer  
Chairman of the Works Council, Regensburg  
*
Employee representative  
Membership of other statutory supervisory boards  
Membership of equivalent national or foreign boards of business enterprises  
1
40 Corporate Governance  
Members of the Board of Management  
Dr.-Ing. Norbert Reithofer  
Chairman  
Dr. Friedrich Eichiner  
(from 01.10.2007)  
Corporate and Brand Development  
Frank-Peter Arndt  
Mandates  
Production  
BMW Brilliance Automotive Ltd. (Deputy Chairman)  
(
from 01.11.2007)  
Mandates  
BMW Motoren GmbH (Chairman)  
BMW (US) Holding Corp.  
BMW (South Africa) (Pty) Ltd. (Chairman)  
Leipziger Messe GmbH  
Dr. Michael Ganal  
Sales and Marketing (until 30.09.2007)  
Finance (from 01.10.2007)  
Ernst Baumann  
Human Resources, Industrial Relations Director  
Mandates  
BMW Brilliance Automotive Ltd. (Deputy Chairman)  
Mandates  
Krones AG  
(until 31.10.2007)  
Stefan Krause  
Finance (until 30.09.2007)  
Sales and Marketing (from 01.10.2007)  
Dr.-Ing. Herbert Diess  
(from 01.10.2007)  
Purchasing and Supplier Network  
Mandates  
Allianz Deutschland AG  
Dr.-Ing. Klaus Draeger  
Development  
General Counsel:  
Dr. Dieter Löchelt  
1
1
1
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
41 Corporate Governance at BMW Group  
42 Compensation Report  
46 Shareholdings of Members of  
the Board of Management and  
Supervisory Board  
1
47 Declaration of the Board of  
Management and of the Supervisory  
Board pursuant to §161AktG  
Membership of other statutory supervisory boards  
Membership of equivalent national or foreign boards of business enterprises  
141  
Corporate Governance  
Corporate Governance at BMW Group  
the corporate governance practices applied by the  
For the BMW Group, corporate governance is an all-  
embracing issue which affects all areas of the enter-  
BMW Group. The BMW Group’s Corporate Govern-  
ance Code has been revised in conjunction with  
prise. Transparent reporting and a policy of corporate the new version of the GCGC. A copy of it can be ob-  
governance aimed at the interests of stakeholders tained, along with other shareholder information,  
are well-established traditions within the BMW Group. from the BMW Group website. Interested parties can  
Cooperation between the Board of Management  
and the Supervisory Board, in an atmosphere of  
commonly shared trust and responsibility, have long  
been the basis for managing the affairs of the BMW  
also find other general information about the BMW  
Group, up-to-date analysts’ reports and all Group  
financial publications at www.bmwgroup.com/ir.  
A coordinator responsible for all corporate govern-  
Group. The underlying corporate culture at the BMW ance issues reports directly and on a regular basis to  
Group is founded upon the principles of transparency, the Board of Management and Supervisory Board.  
placing trust in others and taking responsibility for  
one’s own actions.  
Compliance at BMW Group  
The corporate culture that has evolved at the BMW  
Declaration of Compliance and the BMW Group Group is characterised by clear lines of responsibility,  
Corporate Governance Code  
Management and supervisory boards of companies  
listed in Germany are required by law (§161 German  
mutual respect and trust. Nevertheless, the risk of  
wrongdoing by individuals can never be entirely ruled  
out. The BMW Group is firmly committed to keeping  
Stock Corporation Act) to report once a year whether such risks to a minimum and to systematically un-  
the officially published and relevant recommenda-  
tions issued by the “German Government Corporate  
Governance Code Commission”, as valid at the date  
of the declaration, have been, and are being, com-  
plied with. Companies affected are also required to  
state which of the recommendations of the Code  
have not been or are not being applied.  
The Board of Management and Supervisory  
Board of Bayerische Motoren Werke Aktiengesell-  
schaft believe that the recommendations and sug-  
covering and following up any cases of corruption  
that might occur. In accordance with the anti-corrup-  
tion principle enshrined in the United Nations Global  
Compact, the BMW Group has a well-established  
internal control system, the effectiveness of which is  
tested regularly using a risk-based approach. In ad-  
dition, employees in relevant divisions and depart-  
ments are sensitised to the risk of corruption. The  
ways in which employees are expected to deal with  
this risk are set out in corporate guidelines and in the  
gestions contained in the German Corporate Govern- BMW Group’s stated set of core principles. Those  
ance Code (GCGC) contribute to an enhancement  
of the financial markets in Germany, in particular for  
international investors. At the joint meeting held on  
requirements are supplemented by organisational  
rules such as the dual control principle and segrega-  
tion of duties between requisitioning and purchas-  
ing. Regular and mandatory job rotation within the  
purchasing function helps to prevent dependencies  
between the parties involved and therefore receives  
the full support of the personnel department. In addi-  
tion, all business units are subjected to audit by the  
Group’s internal audit department within a prede-  
fined time scale in accordance with the Standards  
promulgated by the German Institute of Internal Au-  
4
December 2007, the Board of Management and  
Supervisory Board of BMW AG issued the Declara-  
tion of Compliance with the new version of the Ger-  
man Corporate Governance Code valid from 20 July  
2007. BMW AG continues to comply with the rec-  
ommendations of the GCGC with only one excep-  
tion: namely, that the discussion and regular review  
of the structure of the compensation system of the  
Board of Management is performed by the Personnel diting. Processes and areas of the BMW Group that  
Committee. The Chairman of that committee informs are exposed to a higher degree of risk are audited  
the members of the Supervisory Board at its next more frequently, for example in countries where cor-  
meeting in detail. All other recommendations are com- ruption is more prevalent. The internal audit depart-  
plied with. Moreover, the Board of Management and  
Supervisory Board have, in the past, developed the  
BMW Group’s own corporate governance code on  
the basis of the GCGC taking account of the specific  
circumstances of the BMW Group. The aim is to  
provide shareholders and other stakeholders with a  
ment also provides tools to specialist departments  
to carry out their own risk assessment and controls.  
One example of the effectiveness of the Group’s  
internal control mechanisms is the uncovering of  
various incidences of corruption in BMW AG’s pur-  
chasing department in 2005. Legal proceedings  
comprehensive and stand-alone document covering culminated in the conviction of a number of ex-em-  
1
42 Corporate Governance  
ployees of the BMW Group during the years 2006  
and 2007. In order to reduce the risk of irregularities,  
the applicable rules for receiving payments/benefits  
compensation are also disclosed in absolute figures.  
In accordance with the recommendations of the  
GCGC, the compensation of each member of the  
and attending non-business events have once again Board of Management and the Supervisory Board is  
been communicated to employees working in the  
purchasing department as well as to some 600 sup-  
disclosed by name and analysed into components.  
pliers. In 2007, the BMW Group set up a Compliance 1. Compensation of the Board of Management  
Committee which reports directly to, and advises,  
the Board of Management of BMW AG on compli-  
ance-related matters. The Committee has, amongst  
other functions, the task of identifying and assessing  
Responsibilities  
The determination and monitoring of the compen-  
sation of the Board of Management are the respon-  
sibility of the Personnel Committee of the Super-  
compliance-related risks and other risks which could visory Board. The Personnel Committee comprises  
endanger the good reputation of the BMW Group.  
By analysing the structural, organisational and/or  
process-related context of identified breaches of  
rules, the Compliance Committee is also able to de-  
sign preventative measures and instruct the relevant  
departments to implement those measures. Each  
and every employee of the BMW Group is obliged to  
act responsibly and in compliance with the law.  
In the interest of investor protection and in order  
to ensure that the BMW Group complies with regu-  
lations relating to potential insider information, the  
Board of Management has appointed an Ad-hoc  
Committee which is made up from representatives  
of various specialist departments and whose mem-  
bers examine the relevance of issues for ad-hoc  
disclosure purposes. The procedures and decision-  
taking process applied by this committee, which has  
been in place since 1994, have been brought into  
line with the revised requirements of the Investors’  
Protection Improvement Act. All persons working  
the Chairman of the Supervisory Board and his four  
deputies.  
Overall objectives  
The compensation model used for the Board of  
Management should be attractive in the context of  
the competitive environment for highly qualified ex-  
ecutives. As an incentive to encourage performance,  
the variable component should be linked to a high  
degree to the financial success of the BMW Group.  
The structure of the compensation of the Board  
of Management should also contain parallels to the  
compensation system applied to employees and  
senior management.  
Components of compensation  
The compensation of the Board of Management  
comprises a fixed and a variable component. In addi-  
tion, benefits are also payable at the end of mem-  
bers’ mandates, primarily in the form of pension  
on behalf of the enterprise and with access to insider benefits. For the purposes of determining the overall  
information in accordance with existing rules have  
been, and continue to be, included in an appropriate  
41 Corporate Governance at BMW Group list and informed of the duties arising from insider  
compensation of the Board of Management, the  
Personnel Committee, having considered the overall  
position and forecasts of the BMW Group, decides  
on an overall salary framework, which will include a  
high variable proportion.  
1
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
142 Compensation Report  
rules.  
Compliance matters are also included in the  
146 Shareholdings of Members of  
the Board of Management and  
Supervisory Board  
1
47 Declaration of the Board of  
Management and of the Supervisory  
Board pursuant to §161AktG  
Board of Management’s reports to the Audit Com-  
mittee set up by the Supervisory Board.  
The Personnel Committee reviews the com-  
pensation system at regular intervals, with regard to  
the structure and amount of the remuneration of the  
Board of Management.  
Compensation Report  
The BMW Group supports the endeavours of the  
German Corporate Governance Code to increase  
transparency in the disclosure of the components of  
compensation. The following section therefore de-  
scribes the principles relating to the compensation  
of the Board of Management and the stipulations set  
out in the statutes relating to the compensation of  
the Supervisory Board. As well as discussing the  
structure of remuneration, the components of  
Fixed salaries comprise a base remuneration  
amount, which is paid as monthly salary, and other  
remuneration elements. Other remuneration ele-  
ments comprise mainly the use of company cars  
and the payment of insurance premiums.  
The factors determining the amount of variable  
compensation enable members of the Board of  
Management to earn a competitive level of income  
with a very high bonus element (2007: 82.2%, 2006:  
143  
84.1%) for financial years in which the BMW Group  
appropriate on the basis of an objective evaluation  
performs well. The measures used to determine the  
variable component of compensation are the Group  
net profit and the dividend level for the relevant  
year, subject to specifically defined upper limits. As  
a change from the previous arrangements, upper  
limits were agreed with the members of the Board of  
Management for the financial year 2007 based on  
amounts actually paid in the previous year.  
of all circumstances. Arrangements are in place con-  
cerning the offsetting of other income against pen-  
sions and transitional payments.  
The amounts disclosed below as the annual  
pension provision allocation for each member corre-  
sponds to the pension service cost.  
Members of the Board of Management holding  
a BMW Bank GmbH credit card have a credit line of  
The compensation system does not include any up to euro 25,565. At the balance sheet date the  
stock options, value appreciation rights comparable  
to stock options or any other stock-based compen-  
sation components. No compensation agreements  
have been concluded with members of the Board  
of Management for situations involving a take-over  
offer. Similarly, they did not receive any payments or  
balances resulting from credit card usage were all  
within the agreed limits.  
Compensation of the Board of Management  
for the financial year 2007 (total)  
On the basis of the agreed upper limits, the total re-  
benefits from third parties in 2007 on account of their muneration of the current members of the Board of  
activities as the members of the Board of Manage-  
ment.  
Management of BMW AG for the financial year 2007  
amounted to euro 15.2 million (2006: euro 14.5 mil-  
Pension agreements are in place for the event of lion). This comprises fixed components (including  
the termination of a mandate.  
other remuneration) of euro 2.7 million (2006: euro  
2.3 million) and variable components of euro 12.5 mil-  
lion (2006: euro 12.2 million).  
Pensions are paid to former members of the  
Board of Management who have either reached the  
age of 65, or, if their mandate had terminated earlier  
and had not been extended, to members who have  
either reached the age of 60, or who are unable to  
work due to ill-health or accident, or who have entered  
into early retirement in accordance with a special  
arrangement. The amount of the pension comprises  
a basic monthly amount of euro 10,000 or euro  
]
in euro million  
20071  
2006  
Amount Proportion Amount Proportion  
Fixed remuneration  
Variable remuneration 12.52]  
2.7  
17.8%  
82.2%  
2.3  
12.2  
14.5  
15.9%  
84.1%  
15,000 (Chairman of the Board of Management)  
Total remuneration 15.2  
100.0%  
100.0%  
plus a fixed amount. The fixed amount is made up of  
approximately euro 75 for each year of service in the  
company before becoming a member of the Board  
of Management plus between euro 154 and euro  
1] The Board of Management of BMW AG was increased in 2007 by two additional  
members.  
2] Calculation based on an agreed upper limit.  
4
00, or between euro 153 and euro 600 (Chairman  
In addition, an amount of euro 0.7 million (2006: euro  
0.6 million) was incurred for current members of the  
Board of Management after termination of their em-  
ployment relationship. This relates to the expense for  
allocations to pension provisions (service cost).  
The amount paid to former members of the  
of the Board of Management), for each full year of  
service on the board (up to a maximum of 15 years).  
Pension payments are adjusted by analogy to the  
rules applicable for the adjustment of civil servants’  
pensions: the pensions of members of the Board  
of Management are adjusted accordingly when the  
Board of Management and their dependants was  
civil servants’ remuneration level B6 (excluding allow- euro 4.3 million (2006: euro 3.8 million). Pension ob-  
ances) is increased by more than 5%.  
ligations to former members of the Board of Manage-  
ment and their dependants are fully covered by  
pension provisions amounting to euro 38.3 million  
(2006: euro 38.8 million), computed in accordance  
If a mandate is ended early before the member  
of the Board of Management reaches the age of 60,  
a transitional payment amounting to two-thirds of  
the pension theoretically earned up to the date when with IAS 19.  
a full pension can be drawn, may become payable if,  
after a minimum of three years of service as a mem-  
ber of the Board of Management, this is considered  
1
44 Corporate Governance  
Compensation of the individual members of the Board of Management for the financial year 2007  
in euro  
Fixed remuneration  
Other  
Salary remuneration  
Variable  
remuneration  
Remuneration  
Total  
Allocation for  
year to pension  
provision  
Fixed remune-  
ration Total  
Norbert Reithofer  
Frank-Peter Arndt  
Ernst Baumann  
Herbert Diess1]  
Klaus Draeger  
Friedrich Eichiner1]  
Michael Ganal  
Stefan Krause  
Total2]  
600,000  
15,222  
98,199  
15,737  
9,662  
615,222  
398,199  
375,737  
84,662  
3,139,200  
1,569,600  
1,818,300  
392,400  
3,754,422  
1,967,799  
2,194,037  
477,062  
161,124  
84,851  
95,394  
28,909  
85,602  
25,157  
122,013  
72,557  
675,607  
300,000  
360,000  
75,000  
300,000  
75,000  
55,900  
11,068  
14,220  
16,222  
236,230  
355,900  
86,068  
1,569,600  
392,400  
1,925,500  
478,468  
360,000  
360,000  
2,430,000  
374,220  
376,222  
2,666,230  
1,818,300  
1,818,300  
12,518,100  
2,192,520  
2,194,522  
15,184,330  
1
] Member of the Board of Management from 1 October 2007.  
] Group perspective.  
2
2
. Compensation of the Supervisory Board  
sation amount, it is planned that the fixed proportion  
should be raised and the variable proportion reduced.  
Under the new rule, the variable compensation will –  
subject to a predefined upper limit – be based in the  
future on earnings per share (EPS) if EPS is above a  
predefined minimum amount. In this way, compen-  
sation will be based to a greater extent on the actual  
success of the business.  
Responsibilities, regulation pursuant to  
Articles of Incorporation  
The compensation of the Supervisory Board is de-  
termined by shareholders’ resolution at the Annual  
General Meeting. Compensation is currently based  
on shareholders’ resolutions taken at the Annual  
General Meeting on 18 May 1999 and §15 of the  
Articles of Incorporation of BMW AG. The Articles of  
Incorporation of BMW AG can be accessed via the  
Internet.  
Compensation of the Supervisory Board for  
the financial year 2007 (total)  
Against the background of the proposed dividend  
increase and in anticipation of the new rule that will  
be put forward at the Annual General Meeting, all  
members of the Supervisory Board have agreed to  
an upper limit for their compensation for the financial  
year 2007 (see below).  
Components of compensation  
Each member of the Supervisory Board receives, in  
addition to the reimbursement of expenses, a fixed  
amount of euro 6,000 (payable at the end of the  
year), a variable amount of euro 1,500 for each per-  
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
1
41 Corporate Governance at BMW Group cent of the dividend resolved by the shareholders at  
On this basis, the compensation of the Super-  
visory Board for activities during the financial year  
142 Compensation Report  
the Annual General Meeting in excess of 4% of the  
146 Shareholdings of Members of  
the Board of Management and  
Supervisory Board  
company’s share capital (common stock).The Chair- 2007 amounted to euro 2.8 million (2006: euro 2.7  
man of the Supervisory Board receives three times million). This comprised a fixed component of euro  
this amount and each deputy receives two times this 0.1 million (2006: euro 0.1 million) and a variable com-  
1
47 Declaration of the Board of  
Management and of the Supervisory  
Board pursuant to §161AktG  
amount. The company also reimburses to each  
member of the Supervisory Board any value added  
tax arising on their remuneration.  
ponent of euro 2.7 million (2006: euro 2.6 million).  
The Board of Management and the Supervisory  
Board have decided to put forward a resolution at the  
Annual General Meeting to be held on 8 May 2008  
regarding a new rule for the compensation of the  
Supervisory Board. In order to reflect the control and  
advisory functions exercised by the Supervisory  
Board in a more balanced way in the total compen-  
in euro million  
2007  
Amount Proportion  
2006  
Amount Proportion  
Fixed compensation 0.1  
Variable compensation 2.7  
3.6%  
0.1  
2.6  
3.7%  
96.4%  
96.3%  
Total compensation  
2.8 100.0%  
2.7 100.0%  
145  
Compensation of the individual members of the Supervisory Board for the financial year 2007  
in euro  
Fixed  
Variable  
2]  
compensation  
Total  
compensation1  
]
Joachim Milberg (Chairman)  
Manfred Schoch (Deputy Chairman)  
Stefan Quandt (Deputy Chairman)  
Konrad Gottinger (Deputy Chairman)  
Hans-Dietrich Winkhaus (Deputy Chairman)  
Ulrich Eckelmann  
18,000  
12,000  
12,000  
12,000  
12,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
6,000  
5,967  
6,000  
6,000  
155,967  
310,680  
207,120  
207,120  
207,120  
207,120  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
103,560  
102,993  
103,560  
103,560  
2,691,993  
328,680  
219,120  
219,120  
219,120  
219,120  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
109,560  
108,960  
109,560  
109,560  
2,847,960  
Bertin Eichler  
Franz Haniel  
Arthur L. Kelly  
Susanne Klatten  
Willibald Löw  
Hubert Markl  
Wolfgang Mayrhuber  
Heinz-Joachim Neubürger  
Werner Neugebauer  
Franz Oberländer  
Anton Ruf  
Stefan Schmid3]  
Jürgen Strube  
Werner Zierer  
Total  
1
] In accordance with §15 of the Articles of Incorporation, the fixed compensation is paid after the end of the financial year.  
] Calculation based on the dividend proposal of the Board of Management and Supervisory Board and the compensation upper limit agreed with the members of the Super-  
2
visory Board. The variable remuneration for the financial year 2007 will not be paid until after the shareholders have passed a resolution at the Annual General Meeting 2008  
regarding the appropriation of the unappropriated profit available for distribution.  
3
] Member of the Supervisory Board from 3 January 2007.  
Members of the Supervisory Board holding a BMW  
Bank GmbH credit card have a credit line of up to  
consequence, no additional compensation was paid.  
It is BMW Group’s policy and practice not to enter  
euro 25,565. At the balance sheet date the balances into contractual relationships with members of the  
resulting from credit card usage were all within the  
agreed limits.  
None of the members of the Supervisory Board  
performed advisory, agency or other services for  
the BMW Group in a personal capacity in 2007. In  
Supervisory Board requiring them to provide personal  
services, in particular advisory and agency services,  
in return for compensation (cf. Section 4.4 of the  
BMW Group Corporate Governance Code).  
1
46 Corporate Governance  
Shareholdings of Members of the Board of  
Management and the Supervisory Board  
The members of the Supervisory Board of BMW AG  
hold in total 27.70% of the issued common and  
preferred stock shares, of which 16.12% relates to  
Stefan Quandt, Bad Homburg v.d.H. and 11.58% to  
Susanne Klatten, Munich. The shareholding of the  
members of the Board of Management is, in total,  
less than 1% of the issued stock shares.  
1
1
1
1
1
1
37 Corporate Governance  
37 Members of the Supervisory Board  
40 Members of the Board of Management  
41 Corporate Governance at BMW Group  
42 Compensation Report  
46 Shareholdings of Members of  
the Board of Management and  
Supervisory Board  
1
47 Declaration of the Board of  
Management and of the Supervisory  
Board pursuant to §161AktG  
147  
Declaration of the Board of Management and of the Supervisory Board  
of Bayerische Motoren Werke Aktiengesellschaft with respect to the  
recommendations of the “Government Commission of the German Corporate  
Governance Code” pursuant to §161 German Stock Corporation Act  
The Board of Management and Supervisory Board  
of Bayerische Motoren Werke Aktiengesellschaft  
(“BMW AG”) declare the following with respect to the  
recommendations of the “Government Commission  
on the German Corporate Governance Code”:  
BMW AG will comply with all recommendations  
published in the official section of the electronic  
Federal Gazette (Code version dated 14 June 2007)  
except for one divergence: the discussion and  
regular review of the structure of the compensation  
system of the Board of Management is performed  
by the Personnel Committee and not, additionally, by  
the Supervisory Board (section 4.2.2 paragraph 1  
GCGC).  
During the period since filing the most recent  
declaration on 5 December 2006, BMW AG has, ex-  
cept for the one divergence stated above, complied  
with all recommendations published in the elec-  
tronic version of the Federal Gazette on 24 July 2006  
(Code version dated 12 June 2006).  
Munich, 4 December 2007  
Bayerische Motoren Werke  
Aktiengesellschaft  
Supervisory Board  
Board of Management  
Reason for divergence  
Section 4.2.2 paragraph 1 GCGC:  
The Supervisory Board has transferred discussion  
and regular review of the structure of the compen-  
sation system of the Board of Management to the  
Personnel Committee. The Supervisory Board is  
informed on a regular basis and in detail of the work  
of the Personnel Committee.  
1
48 Other Information  
BMW AG  
Principal Subsidiaries  
Principal subsidiaries of BMW AG  
at 31 December 2007  
Equity  
in euro million  
Net result Capital investment  
in euro million  
in %  
1
]
Domestic  
2
]
268  
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
BMW Bank GmbH, Munich  
BMW Finanz Verwaltungs GmbH, Munich  
130  
113  
71  
–46  
–
2
]
BMW INTEC Beteiligungs GmbH, Munich  
3
]
Cirquent GmbH, Munich  
–
BMW Ingenieur-Zentrum GmbH + Co., Dingolfing  
47  
4
BMW Maschinenfabrik Spandau GmbH, Berlin  
41  
1
2
]
BMW Leasing GmbH, Munich  
16  
–
4
]
BMW Hams Hall Motoren GmbH, Munich  
15  
–
2
]
BMW Fahrzeugtechnik GmbH, Eisenach  
BMW M GmbH Gesellschaft für individuelle Automobile, Munich  
11  
5]  
–
2
]
–
1
2
3
] In the case of German subsidiaries, based on financial statements drawn up in accordance with HGB.  
] profit and loss transfer agreement with BMW AG  
] Consolidated with the operating subsidiaries of Cirquent GmbH, Munich.  
The sub-group financial statements have been drawn up in accordance with IFRS.  
] profit and loss transfer agreement with a subsidiary of BMW AG  
] below euro 0.5 million  
4
5
6
] In the case of foreign subsidiaries, based on financial statements drawn up in accordance with uniform IFRSs accounting policies.  
Equity and net result are translated at the closing rate.  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
149  
Principal subsidiaries of BMW AG  
at 31 December 2007  
Equity  
in euro million  
Net result Capital investment  
in euro million  
in %  
6
]
Foreign  
BMW Österreich Holding GmbH, Steyr  
BMW Motoren GmbH, Steyr  
1,545  
286  
173  
47  
100  
100  
100  
100  
100  
851  
157  
138  
64  
BMW Russland Trading OOO, Moscow  
BMW China Automotive Trading Ltd., Beijing  
BMW Austria Gesellschaft m.b.H., Salzburg  
91  
14  
BMW Holding B.V., The Hague  
6,191  
444  
407  
62  
402  
41  
–4  
2
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
BMW Australia Finance Ltd., Melbourne, Victoria  
BMW Finance N.V., The Hague  
BMW Overseas Enterprises N.V., Willemstad  
BMW (South Africa) (Pty) Ltd., Pretoria  
BMW Italia S.p.A., Milan  
386  
373  
335  
303  
251  
211  
191  
174  
101  
58  
28  
119  
30  
37  
20  
54  
42  
64  
32  
22  
12  
17  
25  
16  
14  
–4  
BMW (Schweiz) AG, Dielsdorf  
BMW Japan Corp., Tokyo  
BMW Japan Finance Corp., Tokyo  
BMW Canada Inc., Whitby  
BMW Belgium Luxembourg S.A./N.V., Bornem  
BMW France S.A., Montigny le Bretonneux  
BMW Australia Ltd., Melbourne, Victoria  
BMW Portugal Lda., Lisbon  
BMW Hellas Trade of Cars SA, Athens  
BMW Sverige AB, Stockholm  
42  
38  
BMW Nederland B.V., The Hague  
BMW Automotive (Ireland) Ltd., Dublin  
BMW New Zealand Ltd., Auckland  
BMW Korea Co., Ltd., Seoul  
37  
30  
25  
22  
BMW (UK) Holdings Ltd., Bracknell  
BMW (UK) Ltd., Bracknell  
1,263  
1,125  
929  
–6  
264  
104  
34  
100  
100  
100  
100  
100  
BMW (UK) Manufacturing Ltd., Bracknell  
BMW Financial Services (GB) Ltd., Hook  
BMW (UK) Capital plc, Bracknell  
345  
161  
1
BMW Malta Ltd., St. Julians  
865  
729  
594  
89  
62  
4
100  
100  
100  
BMW Malta Finance Ltd., St. Julians  
BMW Coordination Center V.o.F., Bornem  
BMW España Finance S.L., Madrid  
BMW Ibérica S.A., Madrid  
339  
266  
16  
44  
99  
–4  
100  
100  
100  
BMW de Mexico, S.A. de C.V., Mexico City  
BMW (US) Holding Corp., Wilmington, Del.  
BMW Financial Services NA, LLC, Wilmington, Del.  
BMW Manufacturing, LLC, Wilmington, Del.  
BMW of North America, LLC, Wilmington, Del.  
BMW US Capital, LLC, Wilmington, Del.  
1,147  
656  
564  
397  
203  
14  
149  
113  
–41  
–50  
100  
100  
100  
100  
100  
1
50 Other Information  
BMW Group 10-year Comparison  
2007  
2006  
IASs/IFRSs  
IASs/IFRSs  
Deliveries to customers  
Automobiles3  
]
units  
units  
1,500,678  
102,467  
1,373,970  
100,064  
Motorcycles4  
]
Production  
Automobiles3  
Motorcycles5  
]
units  
units  
1,541,503  
104,396  
1,366,838  
103,759  
]
Financial Services  
Contract portfolio  
contracts  
2,629,949  
51,257  
2,270,528  
44,010  
Business volume (based on balance sheet carrying amounts)  
euro million  
Income Statement  
Revenues  
euro million  
56,018  
21.8  
48,999  
23.1  
Gross profit percentage Group  
Gross profit percentage Industrial Operations  
Gross profit percentage Financial Operations  
Profit before financial result  
Profit before tax  
%
%
19.8  
20.3  
%
10.3  
11.4  
euro million  
euro million  
%
4,212  
3,873  
6.9  
4,050  
4,124  
8.4  
Return on sales (earnings before tax/revenues)  
Income taxes  
euro million  
%
739  
1,250  
30.3  
Effective tax rate  
19.1  
Net profit/ – loss for the year  
euro million  
3,134  
2,874  
Balance Sheet  
Non-current assets  
Current assets  
euro million  
euro million  
euro million  
%
56,619  
32,378  
21,744  
24.4  
50,514  
28,543  
19,130  
24.2  
Equity  
Equity ratio Group  
Industrial Operations  
Financial Operations  
Non-current provisions and liabilities  
Current provisions and liabilities  
Balance sheet total  
%
43.8  
40.6  
%
9.2  
10.4  
euro million  
euro million  
euro million  
33,469  
33,784  
88,997  
31,372  
28,555  
79,057  
Cash Flow Statement  
Cash and cash equivalents at balance sheet date  
Operating cash flow8  
euro million  
euro million  
euro million  
%
2,393  
6,340  
4,267  
7.6  
1,336  
5,373  
4,313  
8.8  
]
Capital expenditure  
Capital expenditure ratio (capital expenditure/revenues)  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
Personnel  
Workforce at the end of year7]  
107,539  
76,704  
106,575  
76,621  
Personnel cost per employee  
euro  
Dividend  
Dividend total  
euro million  
euro  
694  
458  
Dividend per share of common stock/preferred stock  
1.06/1.08  
0.70/0.72  
1
] adjusted for new accounting treatment of pension obligations  
excluding C1 production by Bertone, production volume C1 up to 2002: 33,489 units  
of treasury shares  
2] reclassified after harmonisation of internal and external reporting systems  
3] including Rover Cars up to 9 May 2000  
6] the net profit before exceptional items amounted to euro 663 million 7] figures since 1998  
151  
2
005  
2004  
2003  
2002  
2001  
2000  
2000  
HGB  
1999  
HGB  
1998  
HGB  
IASs/IFRSs  
IASs/IFRSs  
adjusted  
IASs/IFRSs  
IASs/IFRSs  
2]  
adjusted  
IASs/IFRSs  
IASs/IFRSs  
1]  
1
,327,992  
1,208,732  
92,266  
1,104,916  
92,962  
1,057,344  
92,599  
905,657  
84,713  
1,011,874  
74,614  
1,011,874  
74,614  
1,180,429  
65,168  
1,187,115  
60,308  
97,474  
1
,323,119  
2,012  
1,250,345  
93,836  
1,118,940  
89,745  
1,090,258  
93,010  
946,730  
90,478  
1,026,775  
74,397  
1,026,775  
74,397  
1,147,420  
69,157  
1,204,000  
60,152  
9
2
,087,368  
1,843,399  
32,556  
1,623,425  
28,647  
1,443,236  
26,505  
1,297,702  
25,306  
1,317,150  
24,958  
970,747  
17,578  
1,010,839  
16,859  
855,250  
12,564  
40,428  
4
6,656  
44,335  
23.2  
41,525  
22.7  
42,411  
22.8  
38,463  
25.3  
37,226  
22.8  
35,356  
18.1  
–
34,402  
16.4  
–
32,280  
16.0  
–
22.9  
20.9  
12.0  
21.9  
22.1  
22.7  
24.0  
23.5  
12.5  
12.3  
10.5  
16.0  
12.0  
–
–
–
3
,793  
,287  
3,774  
3,583  
8.1  
3,353  
3,205  
7.7  
3,505  
3,297  
7.8  
3,356  
3,242  
8.4  
2,065  
2,032  
5.5  
1,578  
1,663  
4.7  
931  
1,111  
3.2  
1,232  
1,061  
3.3  
3
7
.0  
,048  
1.9  
,239  
1
2
1,341  
37.4  
1,258  
39.3  
1,277  
38.7  
1,376  
42.4  
823  
637  
38.3  
1,026  
448  
40.3  
–2,4876]  
537  
50.6  
462  
3
40.5  
2,242  
1,947  
2,020  
1,866  
1,209  
4
2
1
7,556  
7,010  
6,973  
40,822  
26,812  
16,534  
24.4  
36,921  
24,554  
16,150  
26.3  
34,667  
20,844  
13,871  
25.0  
31,282  
19,977  
10,770  
21.0  
30,079  
19,261  
9,432  
19.1  
20,056  
15,819  
4,896  
13.6  
19,857  
17,650  
3,932  
10.5  
18,586  
12,053  
6,445  
21.0  
22.8  
39.1  
10.4  
41.6  
45.4  
43.1  
37.0  
35.9  
19.1  
11.9  
28.7  
9.7  
9.8  
9.4  
8.4  
8.1  
8.0  
8.7  
10.0  
29,509  
28,084  
74,566  
26,517  
24,583  
67,634  
22,090  
23,235  
61,475  
20,028  
21,612  
55,511  
19,223  
21,266  
51,259  
17,386  
22,522  
49,340  
13,457  
17,522  
35,875  
14,785  
18,790  
37,507  
9,331  
14,863  
30,639  
1
6
3
,621  
,184  
,993  
2,128  
6,157  
4,347  
9.8  
1,659  
4,970  
4,245  
10.2  
2,333  
4,553  
4,042  
9.5  
2,437  
4,304  
3,516  
9.1  
2,927  
3,966  
2,781  
7.5  
2,879  
–
2,055  
–
1,935  
–
2,138  
6.0  
2,155  
6.3  
2,179  
6.8  
8.6  
1
05,798  
105,972  
73,241  
104,342  
73,499  
101,395  
69,560  
97,275  
66,711  
93,624  
63,548  
93,624  
62,307  
114,952  
55,710  
118,489  
51,703  
75,238  
4
199]  
.64/0.66  
419  
392  
351  
350  
310  
310  
269  
234  
0
0.62/0.64  
0.58/0.60  
0.52/0.54  
0.52/0.54  
0.46/0.48  
0.46/0.48  
0.40/0.42  
10.23/10.74  
and Land Rover up to 30 June 2000  
exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners  
4] excluding C1, sales volume to 2003: 32,859 units  
5] up to 1999 including BMW F 650 assembly by Aprilia S.p.A., from 2006 including BMW G 650 X assemply by Piaggio S.p.A./  
8] figures available since 2000 9] adjustment to dividend due to acquisition  
1
52 Other Information  
BMW Group Locations. The BMW Group is present in the world markets  
with 23 production and assembly plants, 41 sales subsidiaries and a  
research and development network.  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
153  
Headquarters  
Research and Development  
BMW Group Research and Innovation  
Centre (FIZ), Munich  
BMW Group Forschung undTechnik, Munich  
BMW Group Car IT, Munich  
BMW Innovations- und Technologiezentrum  
für Leichtbau, Landshut  
BMW Entwicklungszentrum für Dieselmotoren,  
Steyr, Austria  
BMW Group Designworks, Newbury Park, USA  
BMW GroupTechnology Office, Palo Alto, USA  
BMW Group Engineering and Emission Test  
Center, Oxnard, USA  
BMW GroupTechnology Office,Tokyo, Japan  
BMW Group Entwicklungsbüro, Beijing, China  
Production  
Berlin plant  
Dingolfing plant  
Eisenach plant  
Goodwood plant, GB (headquarters of  
Rolls-Royce Motor Cars Limited)  
Hams Hall plant, GB  
Landshut plant  
Leipzig plant  
Munich plant  
Oxford plant, GB  
Regensburg plant  
Rosslyn plant, South Africa  
BMW Brilliance Automotive Ltd.,  
Shenyang, China (joint venture with  
Brilliance China Automotive Holdings)  
Spartanburg plant, USA  
Steyr plant, Austria  
Swindon plant, GB  
Wackersdorf plant  
Contract production  
Magna Steyr Fahrzeugtechnik, Austria  
Assembly plants  
CKD production Cairo, Egypt  
CKD production Chennai, India  
CKD production Jakarta, Indonesia  
CKD production Kaliningrad, Russia  
CKD production Kuala Lumpur, Malaysia  
CKD production Rayong,Thailand  
Sales subsidiary markets  
Argentina  
Australia  
Austria  
Malaysia  
Malta  
Mexico  
Belgium  
Brazil  
Bulgaria  
China  
Netherlands  
New Zealand  
Norway  
Philippines  
Poland  
Portugal  
Romania  
Russia  
Slovakia  
Slovenia  
South Africa  
South Korea  
Spain  
Canada  
Czech Republic  
Denmark  
Finland  
France  
Germany  
Great Britain  
Greece  
Hungary  
India  
Sweden  
Switzerland  
Thailand  
USA  
Indonesia  
Ireland  
Italy  
Japan  
1
54 Other Information  
Glossary  
[ACEA]  
[EBIT]  
Abbreviation for “Association des Constructeurs  
Européens d’Automobiles” (European Automobile  
Manufacturers Association).  
Abbreviation for “Earnings Before Interest and Taxes”.  
The profit before income taxes, minority interest and  
financial result.  
[Common stock]  
[EBITDA]  
Stock with voting rights (cf. preferred stock).  
Abbreviation for “Earnings Before Interest, Taxes,  
Depreciation and Amortisation”. The profit before in-  
come taxes, minority interest, financial result and  
depreciation/amortisation.  
[Cost of materials]  
Comprises all expenditure to purchase raw materials  
and supplies.  
[Effectiveness]  
[
DAX]  
The degree to which offsetting changes in fair value  
or cash flows attributable to a hedged risk are  
Abbreviation for “Deutscher Aktien Index”, the Ger-  
man Stock Index. The index is based on the weighted achieved by the hedging instrument.  
market prices of the 30 largest German stock cor-  
porations (by stock market capitalisation).  
[EfficientDynamics]  
The aim of EfficientDynamics is to reduce con-  
sumption and emissions whilst simultaneously  
increasing dynamics and performance. This involves  
a holistic approach to achieving optimum automo-  
bile potential, ranging from efficient engine tech-  
nologies, lightweight construction and comprehen-  
sive energy and heat management inside the  
vehicle.  
[
Deferred taxes]  
Accounting for deferred taxes is a method of  
allocating tax expense/benefit to the appropriate  
accounting period.  
[
Derivatives]  
Financial products, whose measurement is derived  
principally from market price, market price fluctua-  
tions and expected market price changes of the  
underlying instrument (e.g. indices, stocks or bonds).  
[Equity ratio]  
The proportion of equity (= subscribed capital,  
reserves, accumulated other equity and minority  
interest) to the balance sheet total.  
[DJSI]  
Abbreviation for “Dow Jones Sustainability Index  
World”. A family of indexes created by Dow Jones  
and the Swiss investment agency SAM Sustain-  
ability Group for companies with strategies based  
on a sustainability concept. The BMW Group has  
been one of the leading companies in the DJSI  
since 1999.  
[ERA]  
Remuneration Framework Agreement.  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
155  
[
Free cash flow]  
[Principal subsidiaries]  
Free cash flow corresponds to the cash inflow from  
operating activities of Industrial Operations less  
the cash outflow for investing activities of Industrial  
Operations.  
Subsidiaries are those enterprises which, either  
directly or indirectly, are under the uniform control of  
the management of BMW AG or in which BMW AG,  
either directly or indirectly  
–
holds the majority of the voting rights  
[
Gross margin]  
– has the right to appoint or remove the majority of  
the members of the Board of Management or  
equivalent governing body, and in which BMW AG  
is at the same time (directly or indirectly) a share-  
holder  
Gross profit as a percentage of revenues.  
[
IASs]  
International Accounting Standards.  
–
has control (directly or indirectly) over another  
enterprise on the basis of a control agreement or  
a provision in the statutes of that enterprise.  
[
IFRSs]  
International Financial Reporting Standards, intended  
to ensure global comparability of financial reporting  
and consistent presentation of financial statements.  
[Production network]  
The IFRSs are issued by the International Accounting The BMW Group production network consists  
Standards Board and include the International  
Accounting Standards (IASs), which are still valid.  
worldwide of 16 plants, six assembly plants and one  
contract production plant. Within this network, the  
plants supply one another with systems and com-  
ponents and are all characterised by a high level of  
productivity, agility and flexibility.  
[
Internal financing]  
Internal financing is calculated as the profit before  
tax, adjusted for depreciation and amortisation and  
significant non-cash items, less income tax paid.  
[Production Triangle MINI]  
The three British plants (Hams Hall, Oxford and  
Swindon) are jointly manufacturing the MINI – with  
greater capacity levels, flexibility and efficiency.  
The Hams Hall plant produces the new MINI petrol  
engines; the Oxford plant remains responsible for  
chassis construction, painting and assembly. The  
Swindon plant produces the pressed panels and  
chassis components.  
[
ISO 14001]  
An internationally recognised standard for environ-  
mental management systems.  
[
Operating cash flow]  
Cash inflow from Industrial Operations.  
[
Preferred stock]  
Stock which receives a higher dividend than com-  
mon stock, but without voting rights.  
[Rating]  
Standardised evaluation of a company’s credit  
standing which is widely accepted on the global  
capital markets. Ratings are published by inde-  
pendent rating agencies, e.g. Standard&Poor’s or  
Moody’s, based on their analysis of a company.  
1
56 Other Information  
[
Return on Assets BMW Group]  
continued existence of the company. This applies  
in particular to transactions involving risk, errors in  
accounting or financial reporting and violations of  
legal requirements. The Board of Management is  
required to set up an appropriate system, to docu-  
ment that system and monitor it regularly with the  
aid of the internal audit department.  
Profit before interest expense (expense from revers-  
ing the discounting of pension obligations and of  
other long-term provisions, sundry interest and simi-  
lar expenses) and tax as a percentage of the balance  
sheet total.  
[Return on Assets Financial Services]  
Profit before tax as a percentage of operating assets.  
[Sports Activity Vehicle]  
The BMW X5 is the first-ever Sports Activity Vehicle –  
a combination of a typical BMW sedan featuring  
sporting and comfortable driving features on the  
one hand, with far-reaching driving abilities in terrain  
on the other. This creates a new market segment. In  
2004, the BMW Group added another SAV, the  
BMW X3, to its model range.  
[
Return on Capital Employed]  
Profit before financial result as a percentage of  
capital employed. Capital employed is defined as  
operating assets less non-interest bearing liabilities.  
For this purpose, non-interest bearing liabilities  
exclude non-interest bearing provisions and liabili-  
ties.  
[
Subscribed capital]  
[
Return on sales]  
The share capital of a company is computed by  
multiplying the nominal value of the shares by the  
number of shares.  
Pre-tax: Profit before tax as a percentage of  
revenues.  
Post-tax: Profit as a percentage of revenues.  
[
Supplier relationship management]  
Supplier relationship management (SRM) uses  
focused procurement strategies to organise net-  
[Risk management]  
An integral component of all business processes.  
Following enactment of the Law on Control and  
Transparency within Businesses (KonTraG), all  
companies listed on a stock exchange in Germany  
are required to set up a risk management system.  
The purpose of this system is to identify risks at an  
early stage which could have a significant adverse  
effect on the assets, liabilities, financial position and  
results of operations, and which could endanger the  
worked supplier relationships, optimise processes  
for supplier qualification and selection, ensure  
the application of uniform standards throughout  
the Group and create efficient sourcing and  
procurement processes along the whole value  
added chain.  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
157  
[Sustainability]  
Sustainability or sustainable development. The  
United Nations Conference on the Environment  
and Development, held in Rio de Janeiro in 1992, re-  
solved a global action plan for combating poverty,  
ensuring a suitable population policy, promoting  
urban development, human rights, trade, agriculture,  
environmental protection, research and technology.  
Referred to as Agenda 21, this action plan serves  
to ensure sustainable development, preserving the  
world’s natural resources and limiting the emission  
of pollutants to a volume the environment can ab-  
sorb or degrade.  
[xDrive]  
The xDrive all-wheel drive system distributes engine  
power fully variably to all four wheels. The system  
recognises at a very early stage when power has to  
be shifted and reacts in fractions of a second. This in-  
creases driving dynamics, ensures maximum traction  
and can maintain the vehicle’s directional stability in  
critical situations.  
1
58 Other Information  
Index  
[
A]  
Environment 13, 16, 21, 28, 30–31, 47, 50, 53, 83,  
88, 136–137, 142, 155, 157  
Accounting principles 58, 84  
Analysis of changes in Group tangible, intangible and  
investment assets 96, 98–99  
Annual General Meeting 07, 26, 106, 129, 144–145,  
Equity 43, 46–47, 53–54, 57–59, 73–75, 77–79,  
81, 83, 86–87, 91, 93, 97, 99, 106–107, 110–111,  
122–123, 128, 133, 136, 148–149, 151, 154  
Exchange rates 14, 49, 52–53, 70, 83–84, 126  
Explanatory notes to the cash flow statements 127  
1
61  
Application of §264 (3) and §264b of the German  
Commercial Code (HGB) 130  
[
F]  
Financial assets 52–53, 57–58,74, 86–87, 101–102,  
19, 121, 123 –124  
Apprentices 20, 26, 95  
Attributable to minority interest 73  
1
[B]  
Financial instruments 10, 46, 50–51, 53, 63, 91,  
78–79, 86–88, 91, 106–107, 118, 122–127  
Financial liabilities 52–53, 55, 75, 77, 82, 85, 88, 107,  
113, 116, 119, 121, 123 –124  
Balance sheet structure 54  
Board of Management 05–10,12, 41–42, 45, 55,  
6
2, 66, 81, 106, 128–129, 134–135, 138, 140–147,  
155–156  
Financial result 47–48, 50, 73, 88, 91, 110, 131, 133,  
Bonds 41–42, 51–52, 55, 66, 77, 110, 113–114, 119, 151, 154, 156  
121, 123–124, 154  
Financial Services 03, 07, 09–10, 23, 35, 42, 58, 61,  
3, 80–83, 99,131, 133, 149, 151, 156  
Financial statements 11, 23, 80–81, 83–84, 88, 95,  
06, 128, 130–131, 135 –136, 148, 155  
6
[
C]  
Capital expenditure 02–03, 11–12, 20–21, 51–53,  
8, 69, 131, 133 –134, 151  
Cash and cash equivalents 51–54, 59, 74, 77, 106,  
19, 121, 127, 151  
1
5
Fleet consumption 34  
Foreign currency translation 83  
1
Cash flow statement 03, 11, 51–52, 127, 136  
[G]  
CO emissions 05, 21, 31–32, 34–35, 64  
Group Management Report 09, 10–71, 81, 95,  
125–127, 129, 135–136  
2
Commercial Code 58, 80, 135  
Compensation of members of the Board of Manage-  
ment and Supervisory Board 129  
Compensation Report 07, 55, 66, 129, 142  
Compliance 07–08, 42, 65, 69, 141–142  
Consolidated companies 81, 83, 128  
Consolidation principles 83, 136  
Contingent liabilities and other financial commit-  
ments 117  
Corporate Governance 55, 129, 141–142, 145–147  
Cost of materials 55–56, 154  
[
I]  
Income statement 49–50, 60–61, 73, 80, 83, 87–89,  
4, 99, 110, 112, 122–123, 136, 151  
9
Income tax assets 103  
Income taxes 87, 93, 154  
Intangible assets 11, 53, 58–59, 74, 77, 82, 84–86,  
8
9, 92, 97–98, 131  
Internal financing 55, 77, 131, 133, 155  
Inventories 24, 53, 74, 77, 84, 87, 104  
Investments accounted for using the equity method  
and other investments 99  
Cost of sales 49, 73, 80, 84, 89–90, 98  
Current assets 51, 59, 74, 77, 85–86, 92, 99–100,  
1
04, 151  
[K]  
Current tax 74–75, 77, 91, 103, 112–113  
Key data per share 43  
[
D]  
[L]  
DAX 41, 43, 08, 154  
Leased products 52–53, 74, 77, 82, 85, 92, 97, 99,  
Dealer organisation 24–25, 40, 124  
Debt 13, 47, 65, 102, 105, 107, 111, 125  
Deferred income 55, 59, 115–116  
Deferred taxes 53, 77, 87, 92–93, 106, 154  
Development 06–07, 11–13, 34, 41–43, 52–53,  
131, 133  
Locations 152  
[M]  
Mandates of members of the Board of Manage-  
ment 140  
Mandates of members of the Supervisory Board 137  
Marketable securities 52–54, 59, 77, 80, 86, 91, 97,  
101–102, 122  
Market price changes 154  
Minority interest 56, 73, 75, 94, 106–107, 154  
Motorcycles 10, 15, 22–23, 83, 99, 131, 133  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
4
1
5, 73, 84–86, 90, 97–98, 104, 108, 135–136, 140,  
52–153, 157  
Dividend 10–11, 43–44, 77, 84, 94, 106, 129,  
43–145, 151, 155  
Dow Jones Sustainability Index World 154  
1
[E]  
Earnings per share 49, 43, 73, 84–85, 94, 144  
EfficientDynamics 21, 28–29, 32–35, 154  
Employees 26–29, 56, 67, 95, 106–108, 110,  
[
N]  
New accounting treatment 02–03, 11, 43, 48, 151  
New financial reporting rules 88–89  
Non-current assets 54, 74, 77, 85, 99–100, 104, 151  
1
41–142, 151  
End-of-life Vehicles 30,112  
159  
Index of graphs  
[O]  
[Finances]  
Other disclosures relating to the income statement 94 BMW Group Capital expenditure 02  
Other investments 53,74, 81, 86, 97, 99–100,119,121 BMW Group Profit before tax 02  
Other liabilities 55, 59,75, 82,115–116,119,121–122 BMW Group Revenues 02  
Other operating income and expenses 50, 60, 90  
Other provisions 55, 68, 75, 88, 112  
Outlook 63, 69, 107  
BMW Group Revenues by region 11  
BMW Group Capital expenditure and  
operating cash flow 11  
Exchange rates compared to the Euro 14  
Steel price trend 14  
Oil price 15  
Precious metals price trend 15  
Contract portfolio of BMW Group Financial Services 24  
Contract portfolio retail customer financing of  
BMW Group Financial Services 2007 24  
Regional mix of BMW Group purchase  
volumes 2007 37  
Change in cash and cash equivalents 52  
Balance sheet structure Group 54  
[
P]  
Pension provisions 53, 58, 59, 75, 88, 107–109, 129,  
43  
1
Personnel costs 90, 94  
Prepayments 59, 104  
Principal subsidiaries 148–149, 155  
Production network 03, 19, 50, 53, 155  
Profit before tax 10, 37, 48–49, 63, 73, 131, 133, 151,  
1
55–156  
Property, plant and equipment 11, 59, 74, 77, 82,  
4–86, 89, 92, 97–98, 118, 131  
Purchases 37  
8
Balance sheet structure Industrial Operations 54  
BMW Group value added 2007 56  
[
R]  
[
Production and sales volume]  
Rating 63, 65, 87, 107, 124, 155  
Receivables 42, 53, 59, 74, 77, 80, 82–83, 86–87,  
BMW Group Deliveries of automobiles 02  
BMW Group Deliveries of automobiles by region  
and market 17  
BMW Group – key automobile markets 2007 17  
BMW brand cars in 2007– analysis by series 18  
Deliveries of BMW diesel automobiles 18  
MINI brand cars in 2007– analysis by model variant 19  
MINI brand cars in 2007– analysis by engine variant 19  
Automobile production of the BMW Group by  
plant in 2007 20  
1
00 –105, 119, 121–122, 124, 131  
Receivables from sales financing 52–53, 74, 77, 82,  
6, 100–101, 119, 121, 124  
8
Reconciliations 10, 51, 131, 133 –134  
Related party relationships 128  
Research 31, 35, 49–50, 57, 60, 71, 73, 84, 90, 98,  
1
52–153, 157  
Return on sales 48–49, 131, 133, 151, 156  
Revenue reserves 59–60, 75, 106–107  
BMW Group – key motorcycle markets 2007 22  
BMW motorcycles delivered 22  
BMW motorcycles in 2007 – analysis by series 23  
Revenues 05, 07, 10–11, 49, 62, 65, 73, 80–82, 84,  
8
8–89, 125, 133, 151, 155 –156  
Risk management 62, 125, 156  
[Workforce]  
[S]  
BMW Group apprentices at 31 December 26  
Employee fluctuation ratio BMW AG 27  
Sales and administrative costs 49–50, 73, 90  
Sales volume 03, 10, 17–19, 22–23, 38, 49–50, 66,  
6
9, 151  
[Environment]  
Segment information 89, 131, 133 –134  
Process waste water per unit produced 30  
Volatile organic compounds (VOC) per unit  
produced 30  
Shareholdings of members of the Board of Manage-  
ment and Supervisory Board 129  
Stock 11, 23, 41, 43–44, 46, 53, 58–59, 73, 84–85,  
CO emissions per unit produced 31  
2
9
4, 106, 129, 141, 143 –144, 146–147, 151, 154 –156  
Energy consumed per unit produced 31  
Subscribed capital 59, 75, 154, 156  
Roadmap of the BMW Group for sustainable mobility 33  
Subsidiaries 12, 37, 79–84, 91, 93, 95, 98–100, 104,  
Development of CO emissions of BMW Group cars in  
2
1
06–108, 115, 117, 119, 121, 123, 127–128, 148–149,  
52, 155  
Suppliers 37, 142  
Europe (EU-15) 34  
The BMW EfficientDynamics measures –  
an overview 34  
1
[
T]  
Trade payables 48, 55, 59, 75, 116, 119, 121, 124  
W]  
Workforce 03, 26, 26–29, 58, 66, 133, 151  
[
Stock]  
Development of BMW stock compared to stock  
exchange indices 41  
Development in the value of a BMW stock invest-  
ment 42  
[
This version of the Annual Report is a translation  
from the German version. Only the original German  
version is binding.  
1
60 Other Information  
Contacts  
Business Press  
The BMW Group on the Internet  
Telephone +49 89 382-2 33 62  
Further information about the BMW Group is  
available online at www.bmwgroup.com.  
Investor Relations information is available directly  
at www.bmwgroup.com/ir.  
+49 89 382-2 41 18  
Fax  
+49 89 382-1 08 81  
E-mail  
presse@bmwgroup.com  
Information about the various BMW Group brands  
is available at www.bmw.com, www.mini.com and  
www.rolls-roycemotorcars.com  
Investor Relations  
Telephone +49 89 382-2 42 72  
+49 89 382-2 53 87  
Fax  
E-mail  
+49 89 382-1 46 61  
ir@bmwgroup.com  
1
1
1
1
1
1
1
1
48 Other Information  
48 BMW AG Principal Subsidiaries  
50 BMW Group 10-year Comparison  
52 BMW Group Locations  
54 Glossary  
58 Index  
60 Contacts  
61 Financial Calendar  
161  
Financial Calendar  
Interim Report to 31 March 2008  
Annual General Meeting  
29 April 2008  
8 May 2008  
Interim Report to 30 June 2008  
Interim Report to 30 September 2008  
5 August 2008  
4 November 2008  
Number ONE  
Opportunities < New > Efficiency  
The art of  
engineering  
our own future.  
BMW Group.  
The art of engineering our own future.  
03  
0
0
01 The art of engineering  
our own future.  
02 The BMW Group’s  
strategic realignment.  
To stay in the lead, we need to meet tomorrow’s  
challenges today. We need to take responsibility  
for finding answers to the key questions the world  
is facing – from climate change to the depletion  
of fossil fuel reserves, from the effects of demo-  
graphic developments to those of globalisation.  
These challenges affect all of us. And so we all  
have to find ways of dealing with them.  
04  
Foresight  
The foresight to  
detect potential  
in the challenges  
of the future.  
The art of engineering our own future.  
05  
Freedom  
The freedom  
to be able  
to question  
old habits.  
Melting glaciers make water levels of the oceans rise by 0.8 millimetres each year (World Climate Report of the United Nations 2007).  
Natural phenomenon or call for action?  
Accept demographic structures or tap their hidden potential?  
The population of the industrialised nations is ageing. For example: in Germany, one out of three people will be older than 60 in 2030.  
Today’s global export volume of goods and services amounts to over 10,000 billion euros each year.  
Export globally or explore local opportunities?  
The end of an era or a driving force for innovation?  
Fossil fuels are running out, global crude oil reserves will have been exploited a few decades from now.  
Millions of people travel the streets of megacities like Los Angeles every day.Traffic congestion is a common occurrence.  
Collective stalemate or impulse for new concepts of individual mobility?  
16  
Agility  
The agility to see  
change as a new  
opportunity time  
and again.  
The art of engineering our own future.  
17  
Knowledge  
The knowledge  
to have defined  
the framework for  
future activities.  
18  
Objective  
The objective  
to reinvent  
completely  
the concept  
of individual  
mobility.  
The art of engineering our own future.  
19  
Willpower  
The willpower  
to stay in the  
lead in the future.  
BMW Group.  
20  
002  
The BMW Group’s  
strategic  
realignment.  
Profitability and Growth  
Value enhance-  
ment as the  
main objective.  
Profitability  
and growth to  
safeguard  
independence.  
Scope to engineer  
our future.  
23  
0
02  
The BMW Group’s strategic realignment.  
2
2
3
4 Mission  
6 House of Strategy  
8 Vision  
24  
Mission  
st  
At the beginning of the 21 century, the world is facing a number  
of challenges too great and too complex to be tackled successfully  
with short-term solutions.  
The BMW Group has seriously looked into these matters, well  
aware of the fact that each challenge also presents an opportunity.  
We know: those who best master their future tasks get the chance  
to maintain a lasting lead over competitors in the industry.  
Following more than a century in automotive engineering, we want  
to break new ground in individual mobility. In the long term, our idea  
is to strive for the optimum by making sustainability the guideline  
behind all our activities.  
Only the claim to achieve the best can result in premium quality.  
This belief has always made the BMW Group cut its own path.  
EfficientDynamics is only one example which demonstrates that  
this approach has brought us to a new level time and again. We are  
going to continue along this path – for the benefit of our customers,  
our employees and our shareholders.  
The BMW Group’s strategic realignment.  
25  
Based on this belief, we analysed more than 200 trends. Above all,  
we asked ourselves: How can we align what we do even better with  
our customers’ demands and requirements in the future? What  
more can we do to counter climate change? Which effect does the  
demographic development have on society – and our company?  
How do we make best use of the opportunities arising from the  
value change in our society? How can individual mobility in a world  
of megacities be guaranteed in the long term?  
Obviously, we were not able to find conclusive answers to all these  
questions. But this was not our goal in the first place. The main point  
was that – by looking at our environment – we were able to set the  
direction the BMW Group will be taking by 2020 and to develop our  
corporate strategy Number ONE. ONE stands for “New Opportuni-  
ties” and “New Efficiency”. In a nutshell: we will make best use of  
new opportunities and reach a new efficiency level so as to guarantee  
the BMW Group’s lead over competitors as well as the power and  
independence to shape the company’s future actively.  
26  
House of Strategy. The drawing up of “Number ONE” resulted in the  
House of Strategy adopted by BMW AG’s Board of Management. The  
vision to be realised by 2020 is the strategy’s roof. It consists of specific  
targets concerning retail, return on capital employed and return on sales.  
The cross beam is the strategic competitive advantage, resulting from  
the BMW Group’s particular strengths and distinctive features. The differ-  
ent options for further activities form the strategy’s four pillars: “Growth”,  
“
Shaping the Future”, “Profitability” and “Access to Technologies and  
Customers”.  
Before we come to the four pillars, a few remarks about what makes the  
BMW Group unique and provides a clear competitive advantage. All prod-  
ucts are characterised by high emotional appeal and trendsetting design.  
The product substance delivers on the premium promise of the three  
brands BMW, MINI and Rolls-Royce. BMW Group services also promote  
the individual brand experience. We claim to have developed a unique  
understanding of our customers and their requirements. This leads to a  
high level of customisation in our products as well as great innovative  
power. Plus: a unique corporate culture.  
The BMW Group’s strategic realignment.  
27  
The BMW Group has always been different from other companies, thanks  
to our unique corporate culture. This culture is based on values imple-  
mented by all employees. Day by day. We scrutinised this value system in  
the face of the challenges lying ahead and modified it to a certain extent.  
Those who want to take a company to a new level must bear in mind that  
this endeavour requires a climate that allows employees to align their  
thoughts and actions with the new requirements. That offers them individual  
scope to be creative and act as an entrepreneur. That provides clear guide-  
lines outlining the roadmap.  
This is how our twelve basic principles were developed. They will in future  
define everybody’s performance. This includes, for example, that we focus  
more strongly on customer benefit in all decisions. That each employee  
feels personally responsible for our success – for both accomplishments  
achieved and ahead. That we are committed to sustainability as the guide-  
line for our further business development, including ecological, social and  
corporate responsibility.  
This corporate culture provides the foundation of our strategy.  
Vision  
Competitive Advantage  
Growth  
Shaping  
the Future  
Access to  
Technologies  
and  
Profitability  
Customers  
Basic Principles  
BMW Group House of Strategy: four strategic directions are pursued to  
realise our vision for the year 2020.  
28  
«
Growth. How will we continue to grow with our existing brands and  
products? How can we reach new customer groups and open up new  
markets?  
Growth means dynamics. Only profitable growth guarantees that our shareholders’ invest-  
ment will bear fruit, that employees will receive a profit-sharing contribution, and that we will  
be able to invest in new technologies at the same time. Growth is also crucial in determining  
a company’s position among competitors.  
As a premium provider, the BMW Group operates in a segment that grows faster than the  
total automotive market. Today, one out of ten vehicles sold is a premium product.  
We have identified three future growth areas: our existing core business as well as new  
potential along the vehicle life-cycle and in our industry’s value chain.  
Initially, the priority is to strengthen the BMW Group’s lead in today’s core business. Organic  
growth with the existing brands will provide a retail volume of 1.8 million cars and 150,000  
motorcycles by 2012.  
Structured by region, absolute growth in the next decade will be highest in Europe and the  
United States. This is why the BMW Group will continue to strive for market leadership  
among premium manufacturers in the mature markets. The highest growth rates, however,  
will be achieved in Asia, with China and India as well as in Latin America, Eastern Europe and  
Russia. So, following the expansion of our production network to include China and India, we  
will also be expanding our sales structures by implementing new market strategies.  
The BMW Group’s strategic realignment.  
29  
In 2007, BMW was the world’s best-selling premium brand for the third consecutive year.  
The importance of the premium segment can be explained by a particular social phenomenon:  
the desire for individual products which help people distinguish themselves from others.  
Premium customers request premium product substance and quality. And they are willing  
to pay an adequate price. We are also aware that demand for traditional vehicle concepts in  
the premium segment will diminish.These variants will be replaced by new concepts, such  
as the Sports Activity Vehicle – a segment first opened up by the BMW Group. Concepts  
such as coupé, convertible and roadster will remain popular as well. Apart from those, there  
is a trend towards crossovers.In other words, the intelligent combination of characteristics of  
various vehicle concepts.  
We have therefore decided to include some crucial expansions of the product portfolio in our  
corporate long-range planning:  
–
–
a BMW Gran Turismo, to be developed by BMW M based on the concept study CS,  
a Rolls-Royce Coupé as the third Phantom model alongside the Sedan and the Drophead  
Coupé,  
–
–
an additional Rolls-Royce model to be positioned below the Phantom regarding price  
and size,  
a BMW Progressive Activity Sedan – a new interpretation of the sedan concept, combining  
its characteristic flair with new intelligent functions,  
–
–
the X1 following the X6 as the fourth member of the X family  
and finally, a Sports Activity Vehicle of the MINI brand.  
The BMW Concept CS is the starting point for the development of a BMW Gran Turismo – only one of many new models  
announced in the context of the BMW Group’s strategic realignment.  
30  
No matter whether we are talking about new or existing markets, new or well-proven con-  
cepts – we will not lose sight of one thing: to always develop brand-specific premium  
offers that fully meet our customers’ requirements and make best use of the respective  
brand’s strength. If this cannot be done with existing brands, we might consider expanding  
our brand portfolio in the future. As a result of our strategic review, we have acquired  
Husqvarna Motorcycles to complement our motorcycle division. Together with BMW  
Motorrad, the new brand will help increase sales in the motorcycle business by as much  
as 50 percent by 2012.  
But we will not stop at that: only 25 percent of total revenues to be achieved during the  
vehicle life-cycle is created in the new car business, while service, parts and accessories,  
and the used car business account for the other 75 percent. We intend to exploit the  
greater potential along the vehicle life-cycle, with new sales channels in the accessory  
business and a broader range of services. As far as marketing of pre-owned cars is con-  
cerned, the BMW Group benefits from the fact that the company’s cars retain their value  
better than most. In this field, our best option is high-end remarketing such as BMW  
Premium Selection and MINI next. Accessory sales and resale are only two examples of  
many opportunities in this business area.  
The BMW Group’s strategic realignment.  
31  
Just like the remarkable potential along the vehicle life-cycle, the value chain offers consider-  
able potential. One of our company’s strengths is our expertise in engine manufacturing –  
we have built premium engines for airplanes, motorcycles and automobiles for over 90 years.  
Engines from Munich, Steyr and Hams Hall are world famous.This is why it seems a logical  
choice to provide drive systems to other manufacturers in certain growth areas.  
Approximately one-fifth of our operating profit is presently achieved with financial services.  
Once again, this is a field in which we see chances for substantial growth. Going beyond the  
present core business of Financial Services, we are currently addressing additional fields,  
including vehicle financing for foreign-brand vehicles, vehicle-related insurances and direct  
banking as well as further geographical expansion. A further addition to our service range will  
be new offers concerning individual mobility and modules making everyday life even more  
convenient for our customers.  
Taking advantage of all these options, the BMW Group will generate growth as the driving  
force for further progress.  
Growth  
Value Chain  
«
Product Initiative  
Growth  
Vehicle Life-cycle  
Core Business  
Market Initiative  
Sights set on future growth. In addition to the core business, there is considerable potential along both the  
vehicle life-cycle and the value chain. The two areas we have identified are highly profitable and expected  
to generate a substantial result contribution.  
32  
«
Shaping the future. How can we take advantage of the changing con-  
ditions as an opportunity for growth? How can we align our product portfolio  
accordingly? How can we create new concepts for individual mobility?  
th  
When the automobile was invented at the end of the 19 century, nobody would have  
guessed the changes in society and the business world this invention would bring about.  
Today, individual mobility has become an inherent part of our private and professional life.  
But conditions have changed dramatically. Experts warn us of the effects of global warming  
caused by carbon emissions from industrial production, power plants, households and road  
traffic. Add to that the depletion of fossil fuel resources. The traditional combustion engine  
powered by petrol or diesel will no longer be able to provide a satisfying answer to this  
problem. Mobility in so-called megacities, large metropolitan and urban areas, is reaching its  
limits.  
This is why we are taking on the challenge to help guarantee future individual mobility. It is a  
basic need we intend to meet by developing contemporary solutions. We will be developing  
completely new vehicle concepts. To create something entirely different you have to be  
willing to break new ground. There cannot be any taboos. Nothing can continue as it used  
to be. As an automotive manufacturer with a more than 90-year history, we consider it our  
social and corporate responsibility to make these challenges our top priority. For we want  
to add new chapters to our company’s success story in the future.  
Which drive system is sustainable, efficient and high-performance enough? Does every car  
need to have four wheels? Which interior concepts really correspond to the demographic  
change? Which vehicle concepts suit megacity traffic? How can we customise our vehicles  
even better? What else will customers demand in the third millennium? And can we pursue  
the idea of sustainable automotive engineering even more consistently? Do new business  
models make sense? These are some of the questions that have led to a trendsetting future  
project launched as an element of our new strategy Number ONE.  
We know that we are facing the critical task for the automotive industry in the third millennium.  
Tackling this challenge is essential for survival in our industry. And the company to come up  
with the best solution will have a competitive advantage for many years to come.  
The BMW Group’s strategic realignment.  
33  
== 1  
== 2  
==1–2  
With the energy and drive strategy EfficientDynamics, the BMW Group has indicated the course towards future individual mobility.  
Today’s accomplishments include an intelligent energy management for Brake Energy Regeneration and battery charging. But  
there is more to electrifying the drivetrain: in 2009, BMW will launch a dynamic and efficient hybrid car. With the new strategy,  
the BMW Group has furthermore announced to invest into the development of entirely new vehicle concepts equipped with new  
drive systems.  
34  
«
Access to technologies and customers. How does our cooperation  
with development partners and suppliers look like? How can we make best  
use of the initiative of independent dealers and fleet service providers and  
still stay in close touch with our customers?  
Future competitive advantages will result from collaborations and networks established within  
the automotive industry as well as from distinguishing oneself from others in the industry  
through brand-specific strengths – something the BMW Group has always done well. This is  
how we have developed a number of innovations offering added value to our customers over  
the course of the past few years.  
The premium segment comes up with most innovations in the automotive industry: progress  
for more environmental compatibility, technologies to improve active and passive safety,  
solutions for more convenience and entertainment. Ideas that have given us the reputation to  
be the innovation leader.  
For a company such as the BMW Group, it is crucial to derive key technologies from the strate-  
gically important issues.The right balance between in-house production, supplier management  
and collaborations gives us access to these technologies.  
Future cooperations are also relevant to the sales organisation: in our industry, the dealers  
and fleet service providers are the main points of contact with the customer. But it will be  
important in the future to guarantee direct customer contact for the BMW Group when  
cooperating with these partners. This is essential if we truly want to satisfy our customers’  
demands over their vehicles’ entire life-cycle. And first and foremost, it helps us learn for the  
future from customers’ present demands.  
Despite increasingly fierce competition, strategic cooperations will define the automotive  
industry and its environment. In this endeavour, we guarantee one thing: a BMW will always  
be a BMW, a MINI always a MINI, and a Rolls-Royce always a Rolls-Royce.  
The BMW Group’s strategic realignment.  
35  
== 1  
== 2  
== 1  
This radar-based system is an example from the innovation network set up by the BMW Group and suppliers. Active cruise control  
with stop and go function supports the driver when starting the car and when braking in slow traffic, while always maintaining  
the required safety distance. It is designed for speeds up to 180 kilometres an hour and can automatically brake the car down to a  
standstill.  
== 2  
BMW ConnectedDrive acts as a virtual co-pilot. The system connects the vehicle with its environment and with general traffic. In  
future, it is supposed to be complemented by intelligent vehicle-to-vehicle communication via Wireless LAN. Providing information  
collected by other vehicles, the system informs the driver about potentially dangerous braking manoeuvres and traffic holdups  
nearby.  
36  
«
Profitability. How can we reduce cost per vehicle produced? How can  
we reach economies of scale? How can we minimise the effect of exchange  
rates? How can we create added value for our customers and achieve an  
adequate price for our products?  
Profitability and earnings quality are the decisive factors in everything we do; our goal is inde-  
pendence. We consider it vital to apply the capital provided in such a way as to make investing  
an attractive option for our shareholders by generating positive results in our operating activi-  
ties. People investing in a premium manufacturer expect a premium return. Therefore, we  
have to concentrate on those business areas promising a return on investment that matches  
our premium aspirations. At the same time, we never lose sight of guaranteeing our company’s  
lasting independence.  
More output from less input. That is the philosophy behind EfficientDynamics.This idea is not  
only applied to our products, but also to the entire company. As far as costs are concerned,  
we understand less input as: re-evaluating all cost structures and achieving an increase in  
efficiency of at least five percent a year. We have set up a far-reaching programme that will  
help us tap into an efficiency potential of approximately six billion euros by 2012. We will  
invest in future technologies while reducing costs, investment and therefore reduce capital  
applied per unit. So growth will remain the driving force behind our success.  
Exceeding this growth, we intend to achieve economies of scale by establishing collabora-  
tions in the areas of components, drive systems and modules. It has always been one of  
the BMW Group’s key strengths to make best use of project-based cooperation and cost-  
efficient networks. In 2007, we concentrated strongly on collaborations in the areas of engine  
development and hybrid technology.  
A factor that is highly relevant to our profitability targets is that our cars and motorcycles are  
popular all over the world. For our automobiles the United States have been the most important  
individual market for years. This is why we depend to a large extent on the development of  
currency exchange rates, mainly between the US dollar and the euro. In order to minimise the  
effect, we will in future increase our purchasing volume in the US dollar area as well as the  
number of units produced in the United States. This is why we will stock up production  
capacities of our US plant in Spartanburg to 240,000 units to be applied, among other things,  
to the production of the successor of the current BMW X3. Our supplier network and our glo-  
bal purchasing structures will also have a share in strengthening our natural hedging activities.  
As far as performance is concerned, we understand more output as continuing to position  
our vehicles consistently in the premium segment. Premium is what we do best. This is  
our key strength, and this is where we achieve our best results. Our customers, employees  
and shareholders stand to benefit from our accomplishments in this segment. Additional  
earnings potential will arise from expanding present operations and launching new activities.  
The BMW Group’s strategic realignment.  
37  
== 1  
== 2  
== 3  
==1–3  
The BMW Group’s brands – BMW, MINI and Rolls-Royce – are among the world’s most valuable automotive brands, thanks to the  
company’s strong premium position.  
38  
Vision  
Our strategy Number ONE will guide us to the year 2020. To see us  
through the first five years we have set ourselves an initial interim  
goal. By 2012, we will increase automobile retail to 1.8 million units  
and motorcycle sales by 50 percent to stand at150,000 bikes per  
year. From 2012 onwards, we intend to achieve a return on capital  
employed of 26 percent and consequently a return on sales of  
between eight and ten percent.  
Our strategic objective is to ensure that: The BMW Group is the  
leading provider of premium products and premium services for  
individual mobility.  
The BMW Group’s strategic realignment.  
39  
This means that we no longer refer to ourselves as a producer, but  
rather as a provider, and are making customer orientation and our  
understanding of service the focus of the BMW Group. At the same  
time, we continue to operate in the premium segment, not only in  
terms of our cars and motorcycles, but also in terms of our services.  
We are thus building on our strengths and concentrating on our core  
competence in a clearly defined segment.  
We consider potential future fields of action all types services  
relating to individual mobility.  
40  
Strategic Objective  
The objective  
is to be the  
leading provider  
of premium  
products and  
premium services  
for individual  
mobility.  
Bayerische Motoren Werke  
Aktiengesellschaft  
80788 Munich, Germany  
Telephone +49 89 382-0  
Fax +49 89 382-108 81  
The year 2007.  
Seize the future.  
03  
The year 2007.  
Seize the future.  
0
4 Preface by the Chairman of the  
Board of Management.  
08 Report: A matter of consistency.  
6 The year 2007.  
2
04  
Norbert Reithofer  
Chairman of the Board  
of Management  
Preface by the Chairman of the Board of Management.  
05  
Ladies and Gentlemen,  
2007 was a successful year for the BMW Group and an eventful one, too. We accom-  
plished what we set out to do at the start of the year and delivered what we had  
promised you, our shareholders. In addition to that, more than 1.5 million customers  
around the world bought an automobile from the BMW Group in 2007 and a further  
102,000 people bought a BMW motorcycle. Our revenues also reached a new  
record of 56 billion euros. We also proved our strength in terms of earnings – under  
2007 targets fulfilled  
very difficult circumstances marked by the weak US dollar, rising raw material prices,  
and intense competition. We were only able to achieve all of this because every per-  
son in the company showed utmost personal dedication to achieving our ambitious  
goals. On behalf of the Board of Management and myself, I would like to express my  
sincere thanks to all our employees.  
My thanks also go out to our dealer network and our business partners who last year  
once again made a major contribution to the success of our company. But above all  
I would like to thank the customers who placed their trust in us over the past year:  
a trust which we will not disappoint – and which we need to earn over and over again  
in the future. We made this a core requirement and obligation when we developed  
our new strategy Number ONE.  
Earning customer trust  
06  
Number ONE is our path to the future. This strategy will allow us to address the  
challenges we all face as a company and as part of society. The most important task  
for an automobile supplier is surely that of reducing vehicle emissions. That is abso-  
lutely essential to ensure individual mobility in the future.  
Strategy Number ONE  
developed  
In 2007 our EfficientDynamics package proved that we are on the right path and  
can already deliver solutions today. This approach has also been endorsed by inde-  
pendent sources. The “Grünes Lenkrad” environmental award we received for  
EfficientDynamics is just one of many examples. EfficientDynamics can be summed  
up as better performance with lower consumption. This principle is already having  
a definite effect today: in Europe, around 40 percent of the BMW Group’s 2008 new  
vehicle models generate only140 g CO /km or less. That translates into fuel consump-  
2
Competitive edge through  
EfficientDynamics  
tion of less than 5.1 l/100 km diesel or 5.8 l/100 km petrol. With EfficientDynamics  
we have a package of measures which is unique in the industry – and thus gives us a  
competitive edge.  
We bring the same consistent approach that we use to tackle the reduction of CO2  
emissions to other challenges. Whether climate change, globalisation, or the impact  
of demographic developments in different parts of the world – we aim to find solutions  
to the questions we must all ask ourselves, because we know that whoever is best  
at meeting these challenges will have a competitive advantage in the future.  
Preface by the Chairman of the Board of Management.  
07  
To be more specific: those who have the right products to deal with climate change  
will have the best chances in the marketplace. Those who face up to the challenges  
of globalisation and exploit them as opportunities will be less dependent on currency  
effects and will be able to open up new markets. And those who do not take demo-  
graphic structures for granted, but respond flexibly to them instead, will continue to  
have highly qualified, efficient employees in the future. That is what turns challenges  
into opportunities for competitive advantage. We will exploit these opportunities.  
Turning challenges  
into opportunities  
Rest assured that the BMW Group will continue to stand its ground against its com-  
petitors and further expand its leading position in the premium segments of the  
international automobile and motorcycle markets. To be precise: we will maintain our  
leading position. Our new strategy Number ONE will help us – and the dedication  
and motivation of all our employees will guarantee our success.  
Yours,  
Norbert Reithofer  
Chairman of the Board of Management  
08  
001  
A matter  
of consistency.  
Report  
Leader in Innovation  
Fresh thinking:  
better perform-  
ance and safety  
combined with  
less consumption  
and lower  
emissions.  
Leadership begins  
in the mind.  
11  
001  
A matter of consistency.  
Report  
To enable individual mobility in the future, we have  
to completely rethink things today. BMW Group  
engineers reveal what sustainable mobility could  
look like through a mixture of unconventional  
ideas which are already taking effect today and  
will have a broad impact reaching far into the  
future. Their most important tools are curiosity,  
expertise, and plenty of questions.  
12  
== 1  
== 2  
Report: A matter of consistency.  
13  
It weighs all of two kilos and measures just18 centimetres. Its sole purpose is to provide the engine  
with a steady supply of coolant. It is hardly surprising that most car owners are completely unaware of  
its existence during the vehicle’s lifetime. And yet it represents a minor revolution. The electric water  
pump is part of a comprehensive energy strategy with which the BMW Group is completely redefining  
the relationship between efficiency and performance. This strategy includes technical innovations  
which immediately reduce the fuel consumption of the new vehicle fleet, as well as innovative hybrid  
solutions and the use of hydrogen from regenerative sources – measures which stretch far into the  
future of individual mobility. This strategy goes by the name of EfficientDynamics. Its philosophy is  
better performance, less consumption. That is how the BMW Group translates its responsibility for  
protecting the climate and resources into highly-effective innovations.  
Hundreds of engineers, programmers, mechanics and other specialists within the BMW Group’s global  
development and production network are currently working on this silent revolution in efficiency.  
At Forschungs- und Technik GmbH, researchers are refining technologies which will one day use the  
energy from vehicle exhaust emissions. In Troy, Michigan, the Global Hybrid Cooperation is developing  
electric drive assemblies which exceed the efficiency of all known hybrid drives. At the Research and  
Innovation Centre (FIZ) in Munich – with more than 8,500 developers the Group’s biggest think-tank –  
engineers conceptually take apart every new vehicle and scrutinise it for energy-saving potential. This  
is how efficiency boosters like Auto Start Stop Function, Brake Energy Regeneration, or active aero-  
dynamics are born. All these EfficientDynamics features have quite an effect on their own – but together  
they make a huge difference.  
=
= 1  
Optical 3D data capture using  
a wind tunnel model designed to  
improve vehicle aerodynamics.  
=
= 2  
Examining the vehicle’s aero-  
dynamic features.  
=
= 3  
The active air flap control auto-  
matically manages the air supply  
according to the engine’s cooling  
requirements.  
== 3  
14  
Many of these technologies represent completely new solutions – but developing concepts for eco-  
nomical high-performance vehicles is a success story that goes back a long way.  
In 1975 the BMW Group was the world’s first manufacturer to introduce electronic petrol injection:  
“
L-Jetronic” made it possible for the first time to precisely control fuel supply. Together with the revo-  
lutionary Valvetronic engine management system, innovative lightweight bodies, series implementation  
of the Common Rail Technology, the fuel-efficient diesel turbocharger, and other BMW innovations,  
these measures are today considered technological milestones on the road to less consumption in auto-  
mobile design. Many key technologies which were discovered and readied for series production by the  
BMW Group later found their way into the mass market. For instance, the integrated overrun fuel cut-  
off, which made its debut in 1976 in the BMW 3.0si, is taken for granted these days, just like ABS or the  
catalytic converter. “Engineers at the BMW Group,” says Dr. Johannes Liebl, “always were the ones to  
break new ground for more efficient automobile design.”  
Liebl is a mechanical engineer who has worked as an engine designer at the BMW Group for 23 years.  
The 57-year-old currently coordinates the group-wide EfficientDynamics development work, including  
a whole troop of highly effective “groundbreakers”. “At a time of climate change,” says the engineer,  
“
EfficientDynamics provides us with a comprehensive answer to questions about saving resources,  
climate protection, and securing individual mobility. And we are not just developing solutions for the  
medium and long term. Customers and the climate are already benefiting from our solutions from the  
very first kilometre they drive.” The result is that where a BMW 320i back in 1983 still guzzled 9.6 litres of  
petrol over 100 km, the current BMW 320i needs only 6.1 litres and still offers substantially better  
performance, greater comfort and improved vehicle safety.  
However, these responses are only possible because developers at the BMW Group consistently ask  
questions in a new way.  
Report: A matter of consistency.  
15  
=
= 1 –3  
BMW Group employees prepare  
:2 vehicle models for wind tunnel  
tests.  
1
== 1  
== 2  
== 3  
16  
== 1  
== 2  
== 3  
Report: A matter of consistency.  
17  
How can we use the momentum of thrust phases? How can the fuel injected into engines be used  
even more efficiently? Or how does switching on the headlamps or air conditioning affect a vehicle’s  
energy consumption? Where do further potential energy savings lie hidden within the vehicle? And  
how do you measure all of this?  
The last question in particular has tremendous ramifications, because even though design engineers  
can now simulate all manner of designs and functions on the computer, until recently there was no  
software capable of calculating a vehicle’s overall utilisation of energy resources. But that is exactly what  
the “energy optimisers” at the BMW Group were interested in. “Traditionally,” explains Dr. Liebl, “when  
you design an automobile all the vehicle’s functions and the energy they use are added together. The  
total represents the performance required from the engine. It is then up to the engine developers to  
provide this performance with the least possible consumption.” In the industry this design approach is  
referred to as “end of pipe” – where engineers try to correct at the end what was neglected at the start.  
However, in automotive design “end of pipe” thinking is rapidly reaching its limits. Air conditioning,  
driving dynamics systems, and every extra comfort and safety feature increase the demand for power  
output – and ultimately raise fuel consumption and carbon dioxide emissions. This is where physics  
sets natural limits: engine efficiency cannot be enhanced indefinitely.  
=
= 1  
The engineers of the BMW Group  
are continually developing features  
to enhance vehicle efficiency.  
With the EfficientDynamics strategy developers at the BMW Group take a more comprehensive approach  
that starts at an earlier stage. Like the designers of a regatta yacht who trim every fibre, every square  
inch of their boat for top performance, they now analyse the consumption and potential for improvement  
of every single component at the beginning of each vehicle’s development. They optimise what can be  
optimised and ultimately combine many substantially improved elements to make far more efficient  
vehicles. They are supported by simulation software refined five years ago by the BMW Group together  
with the Technical Universities of Dresden and Munich. “Dymola” fulfilled the requirements which  
made it possible to completely rethink efficient vehicle design. This simulation software maps all energy  
fluxes in the vehicle. Dymola now allows considerable energy potential to be utilised – even in seem-  
ingly insignificant components such as the water pump.  
=
= 2 –3  
The BMW Group presents its  
first fully hybrid vehicle: the  
BMW Concept X6 ActiveHybrid.  
Specifically, regular mechanical water pumps typically lose up to 2,000 watts of energy – enough to  
drive a small moped. Since virtually all motor vehicles around the world are fitted with a mechanical  
water pump, you could say that today’s millions of automobiles are driving millions of small mopeds, too.  
18  
== 1  
== 2  
== 3  
Report: A matter of consistency.  
19  
This is where the BMW Group’s engineers come in: their electric water pump only switches on when it  
is actually needed – and for that it only needs the energy of two bright light bulbs. This technology,  
which was driven largely by the BMW Group (and still the only auto manufacturer in the world to use it)  
currently saves two percent of fuel in the automobile.  
In this way – segment by segment, component by component – the engineers scour all models for  
potential economies: engineering minor revolutions such as highly-efficient Brake Energy Regeneration  
and the jet-guided direct fuel injection system that result in consumption figures which only used to be  
possible for diesel engines; optimising small things such as air flaps which open or close on their own  
depending on the engine’s cooling requirements; designing a detachable air conditioning compressor  
which only springs into action when it really needs to cool; drastically reducing the roll resistance of  
tyres and replacing conventional hydraulic steering with much more economical electric steering. In  
the meantime, all of these features are standard in almost all models of the BMW and MINI brands.  
Many of them seem so obvious that one has to wonder why they were not implemented long ago.The  
reason is that these apparently simple solutions often conceal extremely complex technologies. Just  
how complex can be seen from the example of the ASSF.  
=
= 1  
ASSF stands for Auto Start Stop Function and is the most radical approach to throttling engine con-  
sumption since it cuts off the engine immediately once it is no longer needed. A small number  
of automobile manufacturers tried automatic engine stop functions years ago, but they were quickly  
withdrawn from the market because they were too cumbersome, too unreliable, and, as a result,  
ineffective. However, engineers at the BMW Group knew from simulations and trial runs that switching  
off and restarting the drive train for state-of-the-art injection engines pays off after just a few seconds’  
standing time. A red traffic light lasts on average about 20 seconds. “That made us realise that there  
were huge potential savings to be discovered here,” one developer remembers. “What we didn’t  
realise at the outset was how much work would be involved in successfully harnessing that potential.”  
Tyres with less roll resistance  
are especially fuel-efficient, owing  
to reduced strain on tread and  
sidewalls.  
=
= 2 –3  
Preparations for flow and circu-  
lation testing of the engine com-  
partment in the wind tunnel.  
20  
== 1  
== 2  
Report: A matter of consistency.  
21  
As a core vehicle function, switching the engine on and off must be coordinated with the window  
regulator, air conditioning, electronic immobiliser system, and a total of17 other control units on board.  
The engineers had to ensure that the engine does not switch off if it is too cold or too hot outside or  
simply because the battery gets too low to easily restart the engine after a stop, for instance. Clustered  
around the ASSF is a small orchestra of sensors which synchronise how the system is used.  
What at first glance appears to be a simple engine function actually comprises a highly-intelligent sys-  
tem which affects the vehicle’s whole organism. Today, this function is considered a particularly effec-  
tive energy feature of the EfficientDynamics package, offering customers a major benefit without being  
at all conspicuous. In the standardised European Driving Cycle it saves around three percent of fuel.  
Developers at the BMW Group are currently pulling out all the stops to implement the system in the  
Group’s automatic models as soon as possible – up until now it has only been available for manual  
transmissions.  
And yet their imagination and their pioneering spirit are still far from being exhausted. Among other things  
the EfficientDynamics engineers are researching technologies which will tap into an energy source  
that has so far been completely ignored: heat. For technical reasons little more than a third of the fuel in  
the engine block is converted into operating power; almost two-thirds are lost in the form of waste  
heat in the engine compartment and through the exhaust pipe.  
=
= 1 –2  
Setting up the technology to  
measure and analyse all energy  
flows in the vehicle.  
=
= 3  
“But what if we could harness that energy?” automotive engineers wondered. What if we could obtain  
energy from the heat? The technology to do this is already doing the rounds of test benches at the  
Munich Research Centre. In simple terms, the principle of the steam engine is transferred to the auto-  
mobile: liquid is heated in two loops to generate the steam to drive a motor – the so-called “turbo  
steamer”. The energy from the exhaust gas produced can be used on the one hand to support the  
drive train; on the other hand there is also sufficient energy in the exhaust gas to easily supply the air  
conditioning, vehicle computer and navigation system as well as all the electronic consumer loads on  
board.  
The Auto Start Stop Function  
helps to reduce fuel consumption  
substantially by switching off the  
engine when standing.  
== 3  
22  
In just the same way that their engineers now analyse every vehicle down to the last detail, the com-  
pany’s energy strategy also takes a holistic approach. It covers all three of the Group’s brands: BMW,  
MINI and Rolls-Royce; reaches far into the future of sustainable mobility with hybrid and hydrogen  
drives – and yet still delivers drastically improved consumption data today. For instance, the High  
Precision Injection introduced in the 2007 models is the world’s first jet-guided direct fuel injection  
system in large-series production to facilitate fuel-efficient lean operation across a particularly wide  
range of speeds. This also results in quite noticeable and measurable fuel savings even in every-  
day traffic. Combined with “traditional” vehicle optimisations such as sophisticated aerodynamics,  
intelligent lightweight construction concepts, and energy management features, this means that since  
autumn 2007 around 40 percent of the BMW Group vehicles sold in Europe have CO emissions of only  
2
140 g/km or less. This corresponds to a consumption of 5.8 litres petrol or 5.1 litres diesel over100 km.  
As part of an unusual development cooperation, BMW Group engineers are currently exploring how  
the hybrid technology – so often discussed in public – can be used much more effectively. Classic  
hybrids, like the ones on the roads today, realise their true potential for savings primarily in city traffic.  
However, at constant and higher speeds those efficiency gains are largely cancelled out by a sharp  
increase in fuel consumption. That is quite different with the two-mode hybrid technology that is an  
important component of the second, medium-term phase of the EfficientDynamics strategy: “Two-  
mode hybrids support the combustion engine not just at low speeds, but also at average and higher  
speeds,” explains Rainer Rump. As head of the development cooperation he is one of about 100 de-  
velopment engineers at the BMW Group who have been working at the Hybrid Development Center in  
Troy for just over two years. In this Detroit suburb in the US state of Michigan the BMW Group has  
joined forces with Daimler, Chrysler and General Motors to form the Global Hybrid Cooperation. This is  
the first time the automotive industry has seen a cooperation of this kind between four major manufac-  
turers working together to advance technology. The two-mode drive train also promises impressive  
efficiency gains: when the first BMW model with two-mode hybrid drive hits the market in late 2009 it  
will consume up to 20 percent less fuel than a comparable model fitted with just a combustion engine.  
=
= 1  
Using High Precision Injection  
petrol engines can produce con-  
sumption figures which only used  
to be possible for diesel engines.  
=
= 2 –3  
The BMW Hydrogen 7 is the  
world’s first premium sedan with  
hydrogen combustion engine.  
“
In this instance we made a very deliberate decision to cooperate on development so that we could  
== 1  
Report: A matter of consistency.  
23  
bring the potential of the two-mode hybrid technology to the market as fast and as cost-efficiently  
as possible,” explains Rump. “Of course, at the beginning everyone was a little sceptical whether  
such close collaboration between competitors could even work. But the results exceeded all our  
expectations.” While engineers from all four manufacturers are developing the components for the  
hybrid system together in the core area of the Hybrid Development Center, developers from the  
BMW Group are working on the brand-specific application of the hybrid drives in a separate secu-  
rity zone.This guarantees that a BMW with hybrid drive will still be distinctive as a BMW. The de-  
velopers’ aim is to create a comprehensive modular system from which the BMW Group can offer  
its customers the best hybrid solution tailored to each model.  
Nevertheless, the declared aim of the BMW Group is to cut carbon dioxide emissions by  
100 percent over the long term. That sounds visionary, but is already reality on roads in Europe  
and the United States. One hundred models of the world’s first series-produced, hydrogen-driven  
luxury sedan, the BMW Hydrogen 7, have been on the roads since spring of 2007. Their drivers  
have meanwhile clocked up more than 2.7 million kilometres with the Hydrogen 7 fleet and pro-  
vided researchers like Wolfgang Strobl with valuable insights. “In many respects hydrogen is  
the ideal fuel,” says the EfficientDynamics manager at the BMW Group Forschung und Technik  
GmbH. “It combusts without leaving any residue, is highly effective and can be produced cost-  
effectively in large quantities in a way that is CO -neutral.” The necessary technology already  
2
exists – for instance in the form of solar power stations that have been generating electricity in  
California for the megacity of Los Angeles for 20 years – and has been successfully proved and  
tested.The go-ahead for the development of the necessary capacities and infrastructure is still  
pending.  
Strobl and his research colleagues are using the intervening period to work, among other things,  
on improving tank technology. Because although hydrogen is extremely environmental-friendly,  
it is also a very volatile energy source. The hydrogen is stored at minus 250 degrees Celsius in  
refrigerated liquid form in a tank similar to a thermos flask. 70 layers of wafer-thin aluminium foil and  
== 2  
== 3  
24  
an ultra-high vacuum in the tank of the BMW Hydrogen 7 ensure absolutely minimal cooling losses – it  
would take a snowball 13 years to melt completely in this marvel of insulation. Other fields of research  
include innovative on-board power supply concepts and further consolidation of the hydrogen engine’s  
performance. “Even after 100 years of development diesel and petrol engines have only achieved an  
efficiency of around 40 percent,” explains Wolfgang Strobl. “But with hydrogen as fuel higher energy  
efficiency is already possible today.” The 191 kW drive of the Hydrogen 7 – with the option of using  
hydrogen or regular petrol – already accelerates from zero to100 km/h in just 9.5 seconds. That goes to  
show how powerful sustainable mobility can be.  
The EfficientDynamics strategy represents a real paradigm shift in automotive design. Up until now the  
energy-efficient models on the market were generally associated with pricey options and lower stand-  
ards of comfort, performance and safety – and, as a result, were not very successful. The philosophy of  
the BMW Group is completely different: The EfficientDynamics innovations come as standard in new  
models and make an impact with every vehicle sold. Drivers who want to be responsible about their  
mobility no longer need to forego dynamic performance. For the most part BMW Group customers are  
happily unaware of the energy innovations in their vehicles.There are only two factors which make  
them perceptible: better driving dynamics and lower consumption.  
In this way the EfficientDynamics strategy has an impact that is both deep in terms of vehicle technology  
and broad in terms of market. In 2007 alone the BMW Group already sold more than 450,000 vehicles  
equipped with EfficientDynamics. In the European Federation for Transport and Environment’s (T& E)  
comparison of the 14 highest-volume premium suppliers the BMW Group already occupies the top  
spot for cutting CO emissions.  
2
The authors of the independent US “Environmental Defense Report” were even more explicit: no other  
manufacturer did more over recent years for the reduction of fuel consumption and CO emissions than  
2
the BMW Group. In their performance class the vehicles of the BMW Group are already by far the most  
efficient with regard to consumption and emissions.  
And let us not forget that EfficientDynamics is only just gathering momentum: according to engineer  
Liebl, “The best ideas probably haven’t even occurred to us yet.”  
Report: A matter of consistency.  
25  
=
= 1 –2  
Thanks to its EfficientDynamics  
package the BMW Group has  
significantly reduced the fuel con-  
sumption and CO emissions of  
its vehicles.  
2
== 1  
== 2  
26  
002  
The year 2007.  
Profitable Growth  
Operate more  
effectively.  
Substantially  
increase effi-  
ciency. Continue  
to improve and  
respond faster.  
Achieve greater  
autonomy.  
29  
002  
The year 2007.  
January  
February  
March  
30 World premieres in Detroit  
31 Research Centre for Artificial Intelligence  
32 International Motor Show Geneva  
3
3
3 Ten years Intercultural Learning  
3 BMW goes India  
April  
May  
34 Acquisition of DEKRA SüdLeasing completed  
3
3
3
4 One-millionth MINI  
4 Number one in corporate sustainability  
4 World debut for BMW Concept CS in Shanghai  
34 International Engine of the Year Award  
3
3
5 Mille Miglia 2007  
5 State Opera for All  
June  
July  
35 Design Team of the Year  
6 MINI United Festival in Zandvoort  
3
37 BMW Group acquires Husqvarna Motorcycles  
7 90 years of BMW  
3
August  
37 MINI wins top marks in frontal crash test  
38 IAA Motor Show Frankfurt  
September  
4
4
4
0 BMW Group sets course for the future  
0 World debut of BMW HP2 Sport  
0 Rolls-Royce announces a new Coupé  
October  
41 BMW Welt opens  
4
2 World premiere at the Tokyo Motor Show  
2 Rolls-Royce production expands  
4
November  
December  
43 New BMW motorcycles at the EICMA 2007  
43 “Grünes Lenkrad” environmental award for  
BMW EfficientDynamics  
43 Scientific Award 2007 presented  
30  
January  
07/01  
World premieres in Detroit. The BMW 3 Series Convertible is presented to the public  
for the first time at the North American International Auto Show in Detroit. With its  
classic lines and the convenience of a new retractable hardtop, this fourth-generation  
model heralds a new chapter in the four-seater convertible’s success story. In Detroit  
the BMW Group also unveiled the new BMW X5 as well as the BMW Hydrogen 7,  
the first hydrogen-powered sedan for everyday traffic.  
07/01  
The MINI brand also has a world premiere to offer the public in Detroit  
with its MINI Sidewalk Convertible. It is also the first time that the  
second, completely new generation of MINI was on display on the  
North American continent.  
The year 2007.  
31  
07/01  
At the unveiling ceremony for the Phantom Drophead Coupé Ian Robertson, Chairman and  
Chief Executive of Rolls-Royce Motor Cars, was also able to announce a new record in sales  
volume. For the third time in a row the Phantom was able to confirm its leading position in the  
super-luxury class. The Drophead Coupé broadens the Rolls-Royce brand’s range of models.  
Like the Phantom, it is manufactured at the Goodwood facility.  
February  
22/02  
BMW Group Research and Technology participates in the German Research Centre for  
Artificial Intelligence. Collaboration focuses on issues such as the future of the internet and its  
importance to mobile usage and in supporting mobility in an ageing society. This long-term  
cooperation further expands the BMW Group’s research subsidiary’s global technology and  
partner network.  
32  
March  
06/03  
International Motor Show in Geneva – world premieres and visions. Alongside the new BMW 1 Series,  
the new BMW 5 Series and the M5 Touring are also presented to the public for the first time. The  
BMW M3 concept study is also unveiled. The company also introduces a wealth of technical innova-  
tions. The EfficientDynamics package is particularly well received.  
The year 2007.  
33  
06/03  
The MINI brand brings more world debuts to the Geneva Motor Show:  
the new MINI One and the new MINI Cooper D, the most economical  
MINI ever built.  
26/03  
Ten years BMW Group Award for Intercultural Learning. In front of more than 300 guests the Board Member  
for Human Resources, Ernst Baumann, presents the winners of the 2006 competition with their awards.  
The tenth anniversary of the internationally recognised event showcases more than 40 award-winning pro-  
jects and academic papers as well as several hundred more, equally prize-worthy, efforts.  
2
9/03  
BMW goes India. The opening of the BMW plant in Chennai, India, is the company’s second move  
st  
into India’s growth market. The first step was taken on January 1 2007 when the BMW Group set  
up a subsidiary in Delhi. The new plant will produce vehicles of the BMW 3 Series and 5 Series for  
the Indian market.  
34  
April  
02/04  
Acquisition of DEKRA SüdLeasing completed. In early April the acquisition of Dekra  
SüdLeasing Services GmbH (renamed to: BMW Fuhrparkmanagement Beteiligungs  
GmbH) and its subsidiaries by the BMW Group is finalised. It was approved by the EU  
Commission in late March.  
05/04  
One-millionth MINI. The one-millionth MINI rolls off the production line  
six years after series production started in Oxford. The MINI Cooper S  
is manufactured to individual customer specifications. The “customer”  
is BMW Group Mobile Tradition, for whom the designers created a  
special roof graphic composed of one million tiny MINI cars.  
12 / 04  
Number one in corporate sustainability. According to a survey of 28 German companies the BMW Group is num-  
ber one in the efficient use of financial, ecological and social resources. The BMW Group is five times better at  
managing corporate sustainability than the German economy as a whole. The study was conducted by the Berlin  
Institute for Future Studies and Technology Assessment (IZT). Evaluations were based on economic, ecological  
and social indicators such as capital expenditure, water consumption, amount of waste produced and the num-  
ber of occupational accidents.  
20/04  
World debut of the BMW Concept CS at the Auto Shanghai 2007. Here the BMW Group  
turns its attention to a new vehicle segment. The BMW Concept CS concept study com-  
bines the exclusivity of a luxury-segment Gran Turismo with the fascination of a high-per-  
formance sports car.  
May  
0
9/05  
“
International Engine of the Year Award” goes to BMW. The BMW 3.0 litreTwin  
Turbo in-line 6-cylinder petrol engine is voted “International Engine of the Year”  
in the world’s leading engine contest. This engine is used in all BMW 3 Series  
model variants. Overall the BMW Group wins seven of the twelve competition  
categories.  
The year 2007.  
35  
1
6 / 05  
BMW at the Mille Miglia 2007. The first Mille Miglia was held 80 years ago. For the past  
th  
2
5 years it has been held as an endurance race. For the 25 anniversary BMW Group  
MobileTradition sends nine of its most striking classic cars to Northern Italy. A total of  
9 teams take to the start in a BMW. Together with 300 other classic racing cars they make  
the legendary drive over1,000 miles from Brescia through Ferrara to Rome and back again.  
1
19 / 05  
State Opera for All. Jules Massenet’s opera “Manon” is broadcast live  
from the sold-out “Staatsoper unter den Linden” opera house on a big  
screen on Bebelplatz square. This is made possible by cooperation  
between the State Opera and the BMW Group. Over the next few years  
the Berlin public will again have the opportunity to enjoy free open-air  
opera – a new highlight for Berlin’s cultural calendar.  
June  
25/06  
BMW Group Design is “Design Team of the Year”. The 2007 red dot award for “Design Team of  
the Year” goes to the BMW Group. Chief Designer Chris Bangle accepts the award in Essen on  
behalf of all his staff. The BMW Group also picks up eight further awards for outstanding product  
design: two automobiles and three motorcycles from the BMW Group as well as three other  
products designed by BMW Group DesignworksUSA also receive a red dot.  
36  
22/06  
MINI United Festival in Zandvoort. More than 8,000 people from 50 countries flock to the MINI United  
Festival in the Dutch resort of Zandvoort on the North Sea coast. Under the motto “Friends. Festival.  
Challenge.” the MINI fan community enjoys three days of a unique mix of racing atmosphere, party and  
lifestyle. Many visitors had come a long way to be a part of MINI United 2007. Probably the longest  
journey, at 4,200 kilometres, was that of Yuliya Tkachenk. She set off from Krasnodar in Russia some  
seven days before the start of the festival to be in Zandvoort with her MINI.  
The year 2007.  
37  
July  
19 / 07  
The BMW Group acquires Husqvarna Motorcycles. The acquisition of Husqvarna Motorcycles  
is a logical move to continue BMW’s activities in the field of lightweight sports motorcycles.  
Like BMW Motorrad, Husqvarna is one of the world’s oldest, most established motorcycle  
companies.  
2
1/07  
9
0 years of BMW – trademark for innovation. On this exact day 90 years  
ago the Bayerische Motoren Werke was recorded in the register of  
companies. Two days later the letters BMW were being used on the  
company’s products.  
August  
01 / 08  
MINI wins top marks in frontal crash test. The new MINI emerges from the Euro NCAP Crash  
Test with a top rating of five stars. This verdict is also confirmed by the ADAC (Allgemeiner  
Deutscher Automobilclub). The foundation for the top rating in this rigorous testing procedure  
is the new MINI’s design with its focus on a high degree of passive safety available in all MINI  
versions.  
38  
September  
13 / 09  
New models at the IAA Motor Show Frankfurt. The new BMW 1 Series Coupé has its world premiere at the  
IAA Motor Show in Frankfurt. It combines driving pleasure with exemplary efficiency. Also unveiled for the first  
time are the new models of the BMW 6 Series, boasting drive innovations and specific design modifications.  
The newly designed BMW M3 Coupé also makes its world debut. For the first time the BMW Group introduces  
a coupé for the Sports Activity Vehicles segment in the shape of the BMW Concept X6.The BMW Group’s  
first automobile with hybrid drive is the BMW Concept X6 ActiveHybrid.  
The year 2007.  
39  
13 / 09  
The MINI Clubman debuts as the brand’s third model variant in Frankfurt. The  
MINI Clubman offers greater functionality and has a hatch with two doors that  
open to the side as well as an extra “Clubdoor” which opens to the rear on the  
vehicle’s right-hand side. The new MINI John Cooper Works CHALLENGE was  
developed primarily for the Clubsport Series’ MINI Challenge.  
40  
27/09  
BMW Group sets course for the future. With its strategic realignment the BMW Group is  
consistently aligning itself to achieve profitability and increase value over the long term. The  
strategic objective is clearly defined: the BMW Group as the world’s leading provider of  
premium products and premium services for individual mobility. As part of the realignment  
st  
the BMW Group also creates two new divisions as of October 1 : “Corporate and Brand  
Development” and “Purchasing and Supplier Network”.  
28/09  
BMW HP2 Sport makes its world debut in Paris. At the “Mondial du Deux Roues” the new BMW HP2 Sport cele-  
brates its world premiere.The sportiest, strongest, yet lightest series-produced Boxer of the HP model series so  
far is designed with the ambitious sports rider in mind. Its fascination lies in a wealth of exclusive details which were  
previously used only in racing – some of them are now finding their way into series production for the first time.  
28/09  
Rolls-Royce announces a new Coupé. Rolls-Royce Motor Cars confirms that a  
coupé version of the Phantom will be launched in 2008. This model will be  
an elegant two-door coupé derived from the Phantom Drophead Coupé and  
will offer exceptional handling performance.  
41  
The year 2007.  
October  
17 / 10  
BMW Welt opens. Right next door to the BMW Group headquarters, the BMW Museum, and the company’s  
first plant, the BMW Welt opens its doors to the public. The architecturally striking building, for which the  
architect pushed the limits of what is technically possible, is the new home of the BMW brand. At the core is  
the individual, personalised BMW Automobile Delivery in which up to 45,000 BMW automobiles a year can  
be handed over to their new owners. Visitors can look forward to an extensive programme which allows  
them to experience the BMW brand and the company in its entirety. BMW Welt is also the venue for a wide  
range of different cultural, social and corporate events.  
42  
2
2/10  
World premiere at the Tokyo Motor Show. The BMW M3 Sedan is revealed to the world public for the first time at  
th  
the 40 Tokyo Motor Show. Following on from the Coupé, it is the second BMW M3 body variant.  
23/10  
Rolls-Royce production expands. Rolls-Royce Motor Cars announces that it  
will expand production capacity at its Goodwood facility. The company is thus  
responding to the strong demand for Rolls-Royce automobiles and preparing  
for the planned extension of its model range.  
The year 2007.  
43  
November  
0
6/11  
New BMW motorcycles at the EICMA 2007. The revised models of the BMW Group’s most successful motorcycles –  
th  
the BMW R1200 GS and the BMW R1200 GS Adventure – are just two of the world premieres at the 65 EICMA  
International Motorcycle Show. The new BMW F 800 GS with its excellent off-road characteristics and long-distance  
qualities is also showcased. Another newcomer is the BMW F 650 GS: an all-round version suitable for beginners.  
The fifth world debut belongs to the BMW G 450 X which was developed exclusively for Enduro Sport.  
0
8/11  
“
“
“
Grünes Lenkrad” environmental award for BMW EfficientDynamics. The BMW Group receives the  
Grünes Lenkrad” award, presented for the first time in 2007 by the German Sunday newspaper  
Bild am Sonntag”. The award recognises the EfficientDynamics package which comes as standard  
in the BMW 1 Series through to the BMW X5, and is also found in many MINI models.  
December  
06/12  
Scientific Award 2007 presented. The BMW Group’s Scientific Award is presented at an award  
ceremony held at the Deutsches Museum in Munich. The award, which focused on “Passion for  
Innovation”, is one of the most renowned and lucrative awards for up-and-coming scientists. The  
award honours outstanding graduate and doctoral theses from 24 disciplines. Through its Scientific  
Award, which has been presented every two years since 1991, the BMW Group underlines the  
tremendous importance of innovation and supports young people whose pioneering research will  
further society.  
44  
The year 2007.  
At the end of 2007 the BMW Group’s product range includes 26 models that produce  
only 140 kilograms of CO per kilometre or less. If the Hydrogen 7 is included, that  
2
number increases to 27.  
In 2008 the company aims to roll out more than 800,000 automobiles equipped with EfficientDynamics features  
across Europe. At the same time the BMW Group will continue to forge ahead with its work on innovative drive  
solutions. That is how innovations turn into valuable competitive advantages – and how challenges become  
opportunities.  
Consumption data  
Values measured in accordance with the New European Drive Cycle (EU Directive: 80/1268/EEC in the relevant  
applicable version). Valid for vehicles with a European country specification.  
Model  
Urban  
l/100 km)  
Extraurban  
(l/100 km)  
Combined CO  
(l/100 km)  
2
-emission  
[g/km]  
s
Model  
Urban  
(l/100 km)  
Extraurban  
(l/100 km)  
Combined CO  
(l/100 km)  
2
-emissions  
[g/km]  
(
BMW  
BMW  
1
16i 3-door  
18i 3-door  
20i 3-door  
30i 3-door  
18d 3-door  
20d 3-door  
23d 3-door  
16i 5-door  
18i 5-door  
20i 5-door  
30i 5-door  
18d 5-door  
20d 5-door  
23d 5-door  
25i Coupé  
35i Coupé  
20d Coupé  
23d Coupé  
18i Convertible  
20i Convertible  
25i Convertible  
35i Convertible  
20d Convertible  
7.5 (8.3)  
7.9 (8.2)  
8.7 (8.4)  
12.2 (12.3)  
5.4 (6.9)  
6.1 (7.2)  
6.5 (7.3)  
7.5 (8.3)  
7.9 (8.2)  
8.7 (8.4)  
12.2 (12.3)  
5.4 (6.9)  
6.1 (7.2)  
6.5 (7.3)  
11.4 (11.4)  
13.0 (13.2)  
6.1 (7.2)  
6.5 (7.3)  
8.5 (8.7)  
8.9 (9.1)  
11.7 (11.6)  
13.3 (13.5)  
6.4 (7.4)  
4.8 (5.3)  
4.7 (5.0)  
5.1 (5.1)  
6.0 (6.0)  
4.0 (4.5)  
4.1 (4.4)  
4.4 (4.6)  
4.8 (5.3)  
4.7 (5.0)  
5.1 (5.1)  
6.0 (6.0)  
4.0 (4.5)  
4.1 (4.4)  
4.4 (4.6)  
5.9 (5.9)  
7.0 (6.9)  
4.1 (4.4)  
4.4 (4.6)  
5.0 (5.4)  
5.2 (5.5)  
6.0 (6.1)  
7.1 (7.0)  
4.3 (4.5)  
5.8 (6.4) 139 (152)  
5.9 (6.2) 140 (148)  
6.4 (6.3) 152 (150)  
8.3 (8.3) 197 (198)  
4.5 (5.4) 119 (144)  
4.8 (5.4) 128 (144)  
5.2 (5.6) 138 (148)  
5.8 (6.4) 139 (152)  
5.9 (6.2) 140 (148)  
6.4 (6.3) 152 (150)  
8.3 (8.3) 197 (198)  
4.5 (5.4) 119 (144)  
4.8 (5.4) 128 (144)  
5.2 (5.6) 138 (148)  
7.9 (7.9) 190 (190)  
9.2 (9.2) 220 (221)  
4.8 (5.4) 128 (144)  
5.2 (5.6) 138 (148)  
6.3 (6.6) 149 (158)  
6.6 (6.8) 158 (163)  
8.1 (8.1) 195 (195)  
9.4 (9.4) 224 (225)  
5.1 (5.6) 134 (148)  
330d Touring  
330xd Touring  
335d Touring ]  
8.3 (9.1)  
9.2 (9.8)  
9.2  
5.0 (5.3)  
5.6 (5.8)  
5.4  
6.2 (6.7) 163 (176)  
6.9 (7.3) 181 (193)  
1
2
1
6.8  
178  
1
1
320i Coupé  
325i Coupé  
325xi Coupé  
330i Coupé  
330xi Coupé  
335i Coupé  
335xi Coupé  
320d Coupé  
325d Coupé  
330d Coupé  
330xd Coupé  
335d Coupé ]  
M3 Coupé ]  
8.7 (8.9)  
9.8 (9.7)  
10.9 (10.8)  
9.9 (9.9)  
11.0 (11.0)  
13.2 (13.1)  
14.1 (13.8)  
6.0 (7.2)  
7.8 (8.3)  
8.2 (9.0)  
9.1 (9.7)  
9.1  
4.9 (5.1)  
5.5 (5.6)  
6.1 (6.2)  
5.6 (5.6)  
6.2 (6.2)  
6.7 (6.9)  
7.1 (7.3)  
4.1 (4.5)  
4.8 (5.3)  
4.9 (5.2)  
5.5 (5.7)  
5.3  
6.3 (6.5) 151 (156)  
7.1 (7.1) 170 (170)  
7.9 (7.9) 189 (189)  
7.2 (7.2) 173 (173)  
8.0 (8.0) 193 (193)  
9.1 (9.2) 218 (221)  
9.7 (9.7) 232 (232)  
4.8 (5.5) 128 (145)  
5.9 (6.4) 155 (169)  
6.1 (6.6) 160 (175)  
6.8 (7.2) 178 (190)  
1
1
1
1
1
1
1
1
1
1
2
1
6.7  
177  
295  
3
1
17.9  
9.2  
12.4  
1
1
320i Convertible  
325i Convertible  
330i Convertible  
335i Convertible  
320d Convertible  
9.0 (9.4)  
10.4 (10.6)  
10.5 (10.6)  
13.6 (13.4)  
6.9 (7.5)  
5.2 (5.4)  
5.9 (6.1)  
6.0 (6.1)  
7.1 (7.2)  
4.3 (4.8)  
5.1 (5.6)  
5.3 (5.5)  
6.6 (6.9) 157 (165)  
7.6 (7.8) 181 (187)  
7.7 (7.8) 185 (187)  
9.5 (9.5) 226 (226)  
5.3 (5.8) 140 (153)  
6.2 (6.7) 164 (176)  
6.5 (6.9) 170 (181)  
1
1
1
1
325d Convertible  
8.1 (8.6)  
318i Sedan  
7.9 (8.5)  
8.4 (8.9)  
9.8 (9.7)  
10.9 (10.8)  
9.9 (9.9)  
11.0 (11.0)  
13.2 (13.1)  
14.1 (13.8)  
5.7  
4.8 (5.2)  
4.8 (5.1)  
5.5 (5.6)  
6.1 (6.2)  
5.6 (5.6)  
6.2 (6.2)  
6.7 (6.9)  
7.1 (7.3)  
4.1  
5.9 (6.4) 142 (152)  
6.1 (6.5) 146 (156)  
7.1 (7.1) 170 (170)  
7.9 (7.9) 189 (189)  
7.2 (7.2) 173 (173)  
8.0 (8.0) 193 (193)  
9.1 (9.2) 218 (221)  
9.7 (9.7) 232 (232)  
330d Convertible  
M3 Convertible ]  
8.6 (9.3)  
3
320i Sedan  
325i Sedan  
325xi Sedan  
330i Sedan  
330xi Sedan  
335i Sedan  
335xi Sedan  
18.7 (17.3)  
9.6 (9.4) 12.9 (12.3) 309 (293)  
520i Sedan  
523i Sedan  
525i Sedan  
525xi Sedan  
530i Sedan  
530xi Sedan  
540i Sedan  
550i Sedan  
520d Sedan  
525d Sedan  
525xd Sedan  
530d Sedan  
9.2 (9.4)  
10.1 (10.3)  
10.3 (10.4)  
11.3 (11.2)  
10.9 (10.8)  
11.5 (11.6)  
15.8 (14.4)  
16.6 (15.5)  
6.5 (7.5)  
5.4 (5.4)  
5.7 (5.9)  
5.7 (5.8)  
6.2 (6.3)  
5.8 (5.6)  
6.2 (6.0)  
7.4 (6.9)  
6.7 (6.9) 162 (164)  
7.3 (7.5) 174 (178)  
7.4 (7.5) 176 (178)  
8.1 (8.1) 193 (193)  
7.7 (7.5) 182 (178)  
8.2 (8.1) 194 (193)  
10.5 (9.7) 250 (232)  
18d Sedan1  
]
4.7  
123  
3
3
3
3
3
3
20d Sedan  
25d Sedan  
30d Sedan  
6.0 (7.1)  
7.8 (8.3)  
8.2 (9.0)  
9.1 (9.7)  
9.1  
4.1 (4.4)  
4.8 (5.3)  
4.9 (5.2)  
5.5 (5.7)  
5.3  
4.8 (5.4) 128 (144)  
5.9 (6.4) 155 (169)  
6.1 (6.6) 160 (175)  
6.8 (7.2) 178 (190)  
7.6 (7.2) 10.9 (10.3) 260 (246)  
4.3 (4.6)  
5.0 (5.3)  
5.4 (5.6)  
5.1 (5.2)  
5.5 (5.5)  
5.4  
5.1 (5.6) 136 (149)  
6.2 (6.5) 165 (172)  
6.7 (6.9) 179 (183)  
6.4 (6.6) 170 (176)  
6.9 (7.0) 183 (186)  
30xd Sedan  
35d Sedan2  
8.2 (8.5)  
]
6.7  
177  
8.8 (9.1)  
M3 Sedan3  
]
17.9 (17.0)  
9.2 (9.0) 12.4 (11.9) 295 (285)  
8.6 (9.1)  
530xd Sedan  
9.2 (9.6)  
535d Sedan ]  
M5 ]  
2
9.0  
6.7  
178  
357  
318i Touring  
8.0 (8.6)  
8.5 (9.1)  
4.9 (5.3)  
4.9 (5.3)  
5.6 (5.7)  
6.2 (6.3)  
5.7 (5.8)  
6.3 (6.3)  
6.9 (7.0)  
7.2 (7.4)  
4.2  
6.0 (6.5) 144 (156)  
6.2 (6.7) 148 (160)  
7.2 (7.2) 173 (173)  
8.0 (8.0) 193 (191)  
7.3 (7.4) 175 (178)  
8.1 (8.1) 194 (194)  
9.3 (9.3) 222 (223)  
9.8 (9.8) 235 (235)  
1
320i Touring  
325i Touring  
325xi Touring  
330i Touring  
330xi Touring  
335i Touring  
335xi Touring  
22.7  
10.2  
14.8  
9.9 (9.8)  
11.0 (10.9)  
10.0 (10.1)  
11.1 (11.1)  
13.4 (13.2)  
14.2 (13.9)  
5.8  
520i Touring  
523i Touring  
525i Touring  
525xi Touring  
530i Touring  
530xi Touring  
550i Touring  
520d Touring  
9.4 (9.5)  
10.6 (10.6)  
10.8 (10.7)  
11.8 (11.7)  
11.1 (11.0)  
12.0 (12.1)  
17.0 (16.1)  
6.7 (7.7)  
5.6 (5.5)  
6.0 (6.0)  
5.9 (6.0)  
6.4 (6.5)  
6.0 (5.8)  
6.4 (6.3)  
6.9 (7.0) 166 (167)  
7.7 (7.7) 183 (184)  
7.7 (7.7) 183 (184)  
8.4 (8.4) 201 (201)  
7.9 (7.7) 187 (184)  
8.5 (8.4) 203 (201)  
18d Touring1  
]
4.8  
125  
3
3
20d Touring  
25d Touring  
6.1 (7.3)  
4.2 (4.6)  
4.9 (5.4)  
4.9 (5.6) 131 (146)  
6.0 (6.5) 158 (172)  
7.8 (7.5) 11.2 (10.7) 267 (254)  
4.5 (4.7) 5.3 (5.8) 140 (154)  
3
7.9 (8.4)  
Model  
Urban  
l/100 km)  
Extraurban  
(l/100 km)  
Combined CO  
(l/100 km)  
2
-emission  
[g/km]  
s
Model  
Urban  
(l/100 km)  
Extraurban  
(l/100 km)  
Combined CO  
(l/100 km)  
2
-emissions  
[g/km]  
(
BMW  
MINI  
5
5
5
5
5
25d Touring  
25xd Touring  
30d Touring  
30xd Touring  
8.4 (8.6)  
9.1 (9.2)  
8.8 (9.3)  
9.6 (9.9)  
9.2  
5.2 (5.4)  
5.6 (5.7)  
5.3 (5.3)  
5.8 (5.6)  
5.6  
6.4 (6.6) 171 (176)  
6.9 (7.0) 184 (187)  
6.6 (6.8) 176 (180)  
7.2 (7.2) 192 (192)  
MINI One  
MINI One Convertible ]  
6.8 (9.0)  
9.8  
4.4 (5.0)  
5.4  
5.3 (6.5) 128 (155)  
7.0 168  
1
MINI Cooper  
6.9 (9.1)  
4.5 (5.0)  
5.7 (5.8)  
3.5 (4.2)  
5.2 (5.3)  
6.6 (6.4)  
4.5 (5.1)  
3.6 (4.2)  
5.3 (5.4)  
5.4 (6.5) 129 (156)  
7.3 (7.6) 174 (182)  
3.9 (5.0) 104 (134)  
6.2 (6.9) 149 (165)  
8.3 (8.7) 199 (208)  
5.5 (6.6) 132 (159)  
4.1 (5.1) 109 (136)  
6.3 (7.0) 150 (168)  
MINI Cooper Convertible 10.0 (10.7)  
35d Touring2]  
6.9  
182  
361  
MINI Cooper D  
MINI Cooper S  
4.7 (6.5)  
7.9 (9.7)  
M5 Touring1  
]
22.4  
10.6  
15.0  
MINI Cooper S Convertible 11.3 (12.7)  
6
6
6
6
6
6
30i Coupé  
50i Coupé  
35d Coupé2  
11.2 (11.0)  
17.8 (15.9)  
9.2  
6.0 (5.8)  
7.9 (7.7) 188 (184)  
MINI Cooper Clubman  
MINI Cooper D Clubman  
MINI Cooper S Clubman  
7.1 (9.2)  
4.9 (6.6)  
8.0 (9.8)  
8.1 (7.4) 11.7 (10.5) 279 (249)  
]
5.6  
6.9 183  
8.3 (8.1) 198 (192)  
30i Convertible  
50i Convertible  
35d Convertible2]  
11.8 (11.6)  
19.2 (16.5)  
9.6  
6.3 (6.0)  
8.8 (7.7) 12.6 (10.9) 299 (258)  
Rolls-Royce  
5.8  
10.2  
10.6  
7.2  
14.3  
14.7  
190  
342  
352  
Rolls-Royce Phantom2]  
Rolls-Royce Phantom  
Long wheelbase2]  
Rolls-Royce Phantom  
Drophead Coupé2]  
23.2  
23.3  
23.2  
11.3  
11.4  
11.3  
15.7  
15.8  
15.7  
377  
380  
377  
M6 Coupé1  
M6 Convertible1  
]
21.4  
]
22.0  
30i2  
30Li2  
40i2  
40Li2  
50i2  
50Li2  
60i2  
]
14.6  
14.6  
16.3  
16.3  
16.9  
16.9  
20.7  
20.7  
10.9  
11.0  
12.8  
7.5  
7.5  
8.2  
8.2  
8.3  
8.3  
9.5  
9.5  
6.2  
6.3  
6.8  
10.1  
10.1  
11.2  
11.2  
11.4  
11.4  
13.6  
13.6  
7.9  
241  
242  
267  
268  
271  
272  
327  
327  
210  
212  
239  
7
7
7
7
7
7
7
7
7
7
7
]
]
]
]
]
]
]
60Li2  
30d2  
]
30Ld2  
45d2  
]
8.0  
]
9.0  
X3 2.0i1  
]
12.6  
12.8 (13.1)  
13.4 (13.3)  
8.2 (8.3)  
9.7 (9.9)  
9.7  
6.9  
7.3 (7.4)  
7.3 (7.6)  
5.5 (5.8)  
6.0 (6.4)  
6.7  
9.0  
215  
X3 2.5si  
X3 3.0si  
X3 2.0d  
X3 3.0d  
X3 3.0sd2  
9.3 (9.5) 224 (228)  
9.5 (9.7) 229 (233)  
6.5 (6.7) 172 (178)  
7.4 (7.7) 196 (206)  
]
7.8  
208  
X5 3.0si2  
X5 4.8i2  
]
13.7  
16.9  
10.2  
10.3  
8.2  
9.2  
6.9  
7.0  
10.2  
12.0  
8.1  
244  
286  
214  
216  
]
X5 3.0d2  
X5 3.0sd2  
]
]
8.2  
X6 xDrive35i2  
]
14.9  
10.4  
10.5  
17.6  
8.6  
7.0  
7.1  
9.5  
10.9  
8.2  
262  
217  
220  
299  
X6 xDrive30d2  
X6 xDrive35d2  
] (from 05/08)  
]
8.3  
X6 xDrive50i2  
] (from 05/08)  
12.5  
Figures in brackets only valid for automatic transmissions  
1] only available with manual transmission.  
Z4 2.0i1  
]
10.6  
11.8 (12.0)  
11.9 (12.4)  
12.4 (12.7)  
12.8 (12.7)  
18.2  
5.5  
6.1 (6.3)  
6.2 (6.6)  
6.2 (6.5)  
6.3 (6.5)  
8.6  
7.4  
176  
2
3
] only available with automatic transmission.  
] Values in brackets are valid for 7-gear M dual clutch transmission with Drivelogic  
Z4 2.5i  
8.2 (8.4) 197 (202)  
8.3 (8.7) 199 (207)  
8.5 (8.8) 204 (211)  
8.7 (8.8) 207 (209)  
Z4 2.5si  
Z4 3.0si  
Further information and constantly updated data for the vehicles  
is available on the Internet at www.bmw.com, www.mini.com and  
www.rolls-roycemotorcars.com.  
Z4 3.0si Coupé  
Z4 M Roadster1]  
Z4 M Coupé1  
12.1  
12.1  
292  
292  
]
18.2  
8.6  
As of March 2008  
The manufacture of, and the paper used for, the BMW Group’s Annual Report 2007, have been certified in accordance  
with the criteria of the Forest Stewardship Council (FSC). The FSC prescribes stringent standards for forest manage-  
ment, thus helping to avoid uncontrolled deforestation, human rights infringements and damage to the environment.  
Since products bearing the FSC label are handled by various enterprises along the processing and trading chain, the  
FSC chain of custody certification rules are also applied to enterprises which process paper e.g. printing companies.  
Published by  
Bayerische Motoren Werke  
Aktiengesellschaft  
80788 Munich  
Germany  
Telephone +49 89 382-0  


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