Automotive   |   BMW AG
ANNUAL REPORT  
2
014  
innovative  
successful  
sustainable  
profitable  
forward-looking  
3
6
BMW GROUP IN FIGURES  
REPORT OF THE SUPERVISORY BOARD  
14  
STATEMENT OF THE CHAIRMAN OF THE  
BOARD OF MANAGEMENT  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
26  
26  
29  
49  
General and Sector-specific Environment  
Overall Assessment by Management  
Financial and Non-financial Performance Indicators  
Review of Operations  
Results of Operations, Financial Position and  
Net Assets  
6
6
1
4
Comments on Financial Statements of BMW AG  
Events after the End of the Reporting Period  
6
5
2
Report on Outlook, Risks and Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk Management System  
Relevant for the Consolidated Financial Reporting  
Process  
8
8
3
7
Disclosures Relevant forTakeovers  
BMW Stock and Capital Markets in 2014  
90  
90  
90  
92  
94  
96  
98  
GROUP FINANCIAL STATEMENTS  
Income Statements for Group and Segments  
Statement of Comprehensive Income for Group  
Balance Sheets for Group and Segments  
Cash Flow Statements for Group and Segments  
Group Statement of Changes in Equity  
Notes to the Group Financial Statements  
98  
Accounting Principles and Policies  
116 Notes to the Income Statement  
123 Notes to the Statement of  
Comprehensive Income  
1
1
1
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
70 STATEMENT ON CORPORATE GOVERNANCE (§289a HGB)  
Part of the Combined Management Report)  
70 Information on the Company’s Governing Constitution  
71 Declaration of the Board of Management  
and of the Supervisory Board pursuant to §161 AktG  
72 Members of the Board of Management  
73 Members of the Supervisory Board  
(
1
1
1
1
176 Composition and Work Procedures of the Board of  
Management of BMWAG and its Committees  
178 Composition and Work Procedures of the Supervisory Board  
of BMWAG and its Committees  
183 Information on Corporate Governance Practices  
Applied beyond Mandatory Requirements  
184 Compliance in the BMW Group  
189 Compensation Report  
198 Responsibility Statement by the  
Company’s Legal Representatives  
199 Auditor’s Report  
2
00 OTHER INFORMATION  
00 BMW Group Ten-year Comparison  
02 BMW Group Locations  
04 Glossary  
2
2
2
2
2
2
06 Index  
08 Financial Calendar  
09 Contacts  
3
BMW Group in figures  
2010  
2011  
2012  
2013  
2014  
Change in %  
Principal non-financial performance indicators  
BMW Group  
1
Workforce at end of year  
95,453  
100,306  
105,876  
110,351  
116,324  
5.4  
Automotive segment  
2
Sales volume  
1,461,166  
148  
1,668,982  
145  
1,845,186  
143  
1,963,798  
133  
2,117,965  
130  
7.9  
3
Fleet emissions in g CO /km  
–2.3  
2
Motorcycles segment  
4
Sales volume  
98,047  
104,286  
106,358  
115,215  
123,495  
7.2  
Further non-financial key performance figures  
Automotive segment  
Sales volume  
2
BMW  
1,224,280  
234,175  
2,711  
1,380,384  
285,060  
3,538  
1,540,085  
301,526  
3,575  
1,655,138  
305,030  
3,630  
1,811,719  
302,183  
4,063  
9.5  
–0.9  
11.9  
7.9  
MINI  
Rolls-Royce  
2
Total  
1,461,166  
1,668,982  
1,845,186  
1,963,798  
2,117,965  
Production volume  
5
BMW  
1,236,989  
241,043  
3,221  
1,440,315  
294,120  
3,725  
1,547,057  
311,490  
3,279  
1,699,835  
303,177  
3,354  
1,838,268  
322,803  
4,495  
8.1  
6.5  
MINI  
Rolls-Royce  
34.0  
7.9  
5
Total  
1,481,253  
1,738,160  
1,861,826  
2,006,366  
2,165,566  
Motorcycles segment  
6
Production volume  
BMW  
99,236  
110,360  
113,811  
110,127  
133,615  
21.3  
2.6  
Financial Services segment  
New contracts with retail customers  
1,083,154  
1,196,610  
1,341,296  
1,471,385  
1,509,113  
1
Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.  
2
3
4
5
6
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units).  
EU-28.  
Excluding Husqvarna, sales volume up to 2013: 59,776 units.  
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 55,588 units, 2011: 98,241 units, 2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units).  
Excluding Husqvarna, production up to 2013: 59,426 units.  
4
BMW Group in figures  
2010  
2011  
2012  
2013  
2014  
Change in %  
Principal financial performance indicators  
BMW Group  
1
Profit before tax  
€ million  
4,853  
7,383  
7,803  
7,893  
8,707  
10.3  
Automotive segment  
Revenues  
1
1
€ million  
% (change in %pts)  
% (change in %pts)  
54,137  
8.0  
63,229  
11.8  
70,208  
10.8  
70,630  
9.4  
75,173  
9.6  
6.4  
0.2  
EBIT margin  
RoCE  
40.2  
77.3  
73.7  
63.0  
61.7  
–1.3  
Motorcycles segment  
RoCE  
% (change in %pts)  
18.0  
26.1  
10.2  
29.4  
1.8  
16.4  
20.0  
21.8  
19.4  
5.4  
Financial Services segment  
1
RoE  
% (change in %pts)  
21.2  
–0.6  
Further financial key performance figures  
in € million  
1
1
1
Capital expenditure  
3,263  
3,682  
8,149  
3,692  
3,646  
8,110  
5,240  
3,541  
9,167  
6,711  
3,741  
9,964  
6,100  
4,170  
9,423  
–9.1  
11.5  
–5.4  
Depreciation and amortisation  
Operating cash flow Automotive segment  
1
1
Revenues  
60,477  
54,137  
1,304  
16,617  
4
68,821  
63,229  
1,436  
17,510  
5
76,848  
70,208  
1,490  
19,550  
5
76,059  
70,630  
1,504  
19,874  
6
80,401  
75,173  
1,679  
20,599  
7
5.7  
6.4  
Automotive  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
11.6  
3.6  
16.7  
6.9  
–11,585  
–13,359  
–14,405  
–15,955  
–17,057  
1
1
Profit before financial result (EBIT)  
Automotive  
5,111  
4,355  
71  
8,018  
7,477  
45  
8,275  
7,599  
9
7,978  
6,649  
79  
9,118  
7,244  
112  
14.3  
8.9  
Motorcycles  
41.8  
6.9  
Financial Services  
Other Entities  
1,201  
–41  
1,763  
–19  
1,558  
58  
1,643  
44  
1,756  
71  
61.4  
85.1  
1
1
Eliminations  
–475  
–1,248  
–949  
–437  
–65  
Profit before tax  
Automotive  
4,853  
3,887  
65  
7,383  
6,823  
41  
7,803  
7,170  
6
7,893  
6,561  
76  
8,707  
6,886  
107  
10.3  
5.0  
Motorcycles  
40.8  
6.4  
1
Financial Services  
Other Entities  
Eliminations  
1,214  
45  
1,790  
–168  
–1,103  
1,561  
3
1,619  
164  
1,723  
154  
–6.1  
69.1  
–358  
–937  
–527  
–163  
1
1
1
Income taxes  
Net profit  
–1,610  
3,243  
–2,476  
4,907  
–2,692  
5,111  
–2,564  
5,329  
–2,890  
5,817  
–12.7  
9.2  
2
1
Earnings per share in €  
4.93/4.95  
7.45/7.47  
7.75/7.77  
8.08 /8.10  
8.83/8.85  
9.3/9.3  
1
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
2
Common/preferred stock. In computing earnings per share of preferred stock, earnings to cover the additional dividend of €0.02 per share of preferred stock are spread over the  
quarters of the corresponding financial year.  
5
BMW Group in figures  
*
Sales volume of automobiles  
Revenues  
in thousand units  
in € billion  
2
1
1
1
,100  
,800  
,500  
,200  
84  
72  
60  
48  
36  
24  
12  
900  
600  
300  
10  
11  
12  
13  
14  
10  
11  
12  
13  
14  
*
1,461.2 1,669.0 1,845.2 1,963.8 2,118.0  
60.5  
68.8  
76.8  
76.1  
80.4  
*
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010:  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
5
2
3,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014:  
75,891 units).  
Profit before financial result  
Profit before tax  
in € million  
in € million  
8,400  
7,200  
6,000  
4,800  
3,600  
2,400  
1,200  
8,400  
7,200  
6,000  
4,800  
3,600  
2,400  
1,200  
10  
11  
12  
13  
14  
10  
11  
12  
13  
14  
*
*
5,111  
8,018  
8,275  
7,978  
9,118  
4,853  
7,383  
7,803  
7,893  
8,707  
*
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
6
Joachim Milberg  
Chairman of the Supervisory Board  
7
REPORT OF THE SUPERVISORY BOARD  
Dear Shareholders and Shareholder Representatives,  
Back in 2007, the BMW Group set a new strategic course with the adoption of its strategy “Number ONE”.  
Today, we can look back on the fifth successive year in which we have achieved record figures. Responsible  
management involves anticipating new developments and initiating the next moves in good time to ensure  
the future success of the business. This forward-looking approach applies equally to the Supervisory Board.  
By taking the step of announcing Harald Krüger’s future appointment to the position of Chairman of the  
Board of Management at an early stage and implementing other decisions with respect to the board’s com-  
position, the resolutions adopted by the Supervisory Board in 2014 have set a clear-cut course for the future  
leadership of the BMW Group. At the same stage, we also announced our plan to ring in a change at the  
head of the Supervisory Board in 2015 by declaring our unanimous support in favour of the appointment of  
Dr Norbert Reithofer as its new Chairman. With the backing of major shareholders, we intend to propose  
his election to the Supervisory Board at the Annual General Meeting. These proposed changes in leadership  
have been initiated in order to strengthen the position of the BMW Group by ensuring a long-term manage-  
ment perspective.  
Main emphases of the Supervisory Board’s monitoring and advisory activities The Supervisory Board  
again advised the Board of Management during the past financial year and carefully monitored its governance  
of the business. Our work, both within the Supervisory Board and together with the Board of Management,  
was constructive and characterised by open, trustful interaction.  
In a total of five Supervisory Board meetings, we deliberated on the current situation of the BMW Group  
as well as on macroeconomic developments in its most important sales markets. Additional key points of  
debate at our meetings were Group corporate strategy and planning. Furthermore, we developed concepts  
for a generational change at the chair level of both the Board of Management and the Supervisory Board, took  
decisions regarding the composition and compensation of the Board of Management and passed resolutions  
with respect to corporate governance.  
We carefully monitored the performance of the BMW Group, both at scheduled meetings and at other times  
as the need arose. In particular, the Board of Management kept us well informed of all key sales and workforce  
figures. The Chairman of the Board of Management, Dr Norbert Reithofer, informed me promptly and di-  
rectly about major business transactions and projects. In addition to scheduled meetings, Dr Karl-Ludwig Kley,  
the Chairman of the Supervisory Board’s Audit Committee, and Dr Friedrich Eichiner, member of the Board  
of Management responsible for Finance, consulted with each other directly at other times as the need arose.  
At the beginning of the year, the Board of Management presented us with a summary of new and revised  
models scheduled for market launch over the course of 2014.  
In its regular reports on the financial condition of the Group, the Board of Management informed us of  
sales volume developments and market competition issues relevant for the Automotive and Motorcycles  
segments and highlighted fluctuations in the size of the workforce. Equally, we were kept up to date with  
respect to the market developments and economic prospects of the world’s key regions. On the Financial  
Services side of the business, the Board of Management provided us with regular updates on new business  
with retail customers, changes in the portfolio of contracts with dealerships and retail customers as well as  
the total volume of business.  
The Board of Management also reported to us on its intention to increase the size of the Group’s produc-  
tion network, with particular regard to the planned expansion of the Spartanburg plant in South Carolina,  
USA, and the search for a new plant location in the NAFTA region, which is now due to be built in San Luis  
Potosí, Mexico. As part of this process, we also discussed with the Board of Management the general sig-  
nificance and scope of the “production follows the market” principle in the context of the global distribution  
of value added along the production chain.  
8
Furthermore, both in business status reports and subsequent discussions with the Board of Management,  
numerous important current events and projects were addressed, such as the extension of the cooperation  
agreement with the Chinese joint venture partner Brilliance, the cooperation with Toyota and the current  
state of plans for the long-term development of production facilities in Russia. Other topics reported on and  
discussed at Supervisory Board meetings included the start-up of the new MINI at the Oxford plant, the  
current situation with recalls and the economic impact of the Ukraine conflict.  
One Supervisory Board meeting was held in Shenyang, one of the locations operated by the BMW Brilliance  
Automotive Ltd. (BBA) joint venture in China. Representatives of the managements of BBA and the BMW  
sales company reported to us on sales volume trends and the car market in China in general as well as plans  
for additionally increasing production capacity in the plants located at Tiexi and Dadong in Shenyang. We  
also visited the production facilities of the Tiexi plant. Moreover, in the course of our on-site visits we gathered  
useful facts regarding cooperation with suppliers and dealerships in China. Reports from, and discussions  
with, local management representatives provided us with a useful overview of local developments in China  
and individual development projects, and helped provide a good insight into the specific needs of Chinese  
customers.  
One two-day meeting of the Supervisory Board dealt with the BMW Group’s corporate and product  
strategies as well as the Long-term Business Forecast. The format of the two-day meeting was designed to  
provide the opportunity for an in-depth discussion with the Board of Management on forward-looking  
topics and technical innovations.  
In the first part of the meeting, together with the Board of Management we discussed the results of the  
corporate strategy Number ONE review, which is performed by the Board of Management once a year. Our  
discussions primarily focused on challenges involving further reductions in carbon emissions and also the  
electrification, digitisation and, in particular, the increasing connectedness of vehicle data. As part of its strategy  
review report, the Board of Management also looked at the importance of the “Future Retail” programme,  
which is designed to improve sales and after-sales services by consistently seeing things from the point of view  
of customers and intensifying their product and brand experience.  
In the course of various vehicle presentations, we were given the opportunity to test selected BMW, MINI  
and Rolls-Royce brand cars on a test track. In addition, the current state of progress of selected vehicle de-  
velopment projects was presented and explained to us.  
In the second part of the meeting we deliberated at length on the Long-term Business Forecast pre-  
sented by the Board of Management for the years 2015ꢀ–ꢀ2020. After diligent examination, we approved  
the forecast.  
We also gave in-depth consideration to the business development, strategic direction and role of the Finan-  
cial Services segment going into the future. The Board of Management also reported on the latest develop-  
ments on used car markets and explained individual measures designed to further improve the stability of  
the segment in times of crisis.  
The two boards jointly discussed the annual budget put forward by the Board of Management towards the  
end of the year under report for the financial year 2015, and considered pertinent external factors.  
The structure and amount of compensation of Board of Management members was examined once again in  
2014 by both the Personnel Committee and the full Supervisory Board. In addition to comparing performance  
trends and board compensation on a multi-year basis, we also reviewed he development of the remuneration  
of senior management and employees of BMWAG within Germany over the course of time. An external  
9
REPORT OF THE SUPERVISORY BOARD  
compensation consultant, independent of both the Board of Management and BMWAG, was called upon to  
provide expert advice and assist us in evaluating DAX compensation studies. After a careful review, we con-  
cluded that the compensation of board members is appropriate and that the current compensation system  
is functioning well. Further information on the compensation of Board of Management members is provided  
in the Compensation Report (see chapter Statement on Corporate Governance).  
Corporate governance The Supervisory Board and the Board of Management again jointly addressed the  
topic of corporate governance within the BMW Group in 2014. In the most recent Declaration of Compliance,  
issued in December 2014, the Board of Management and the Supervisory Board declared that the BMW  
Group has and will continue to comply with all of the recommendations of the German Government Cor-  
porate Governance Code Commission published on 30 September 2014 (Code version; 24 June 2014), with  
one exception, which relates to the presentation of information concerning Board of Management compensa-  
tion using stipulated model tables. We remain committed to providing information on board compensation  
that is both as comprehensive and comprehensible as possible, taking into account all relevant financial  
reporting requirements. After careful consideration, we came to the conclusion that the additional use of the  
tables recommended in the Code would not improve the desired level of transparency and readability of  
the Compensation Report.  
As part of the joint examination of corporate governance within the BMW Group, the Board of Manage-  
ment informed both the Personnel Committee and the full Supervisory Board on the status of implementa-  
tion of the BMW Group’s diversity concept. This programme does not only focus on gender, it is also aimed  
at promoting diversity in other areas, particularly in terms of cultural diversity and age mix within the work-  
force. We were also informed with respect to the proportion and number of women occupying positions  
at various levels of management and deliberated with the Board of Management on the planned measures to  
continue the process of raising that proportion, specifically at a senior level. Consideration was also given to  
draft legislation relating to equal participation of women and men in management positions in Germany and  
the potential impact of this legislation on the BMW Group.  
With regard to its own composition, based on a detailed composition profile, the Supervisory Board has  
decided upon specific appointment targets, which are discussed in detail in the Corporate Governance Report.  
Based on a self-assessment, the Supervisory Board concluded that its composition at 31 December 2014  
meets the targets set.  
BMWAG has entered into contracts for personnel-related services with an external entity, in which mem-  
bers of the Supervisory Board have an indirect participation. During the year under report, the Personnel  
Committee approved an amendment to these contracts as a precautionary measure. None of the members of  
the Supervisory Board with an interest in the relevant entity participated in this vote. Apart from this one  
matter, there were no indications of potential conflicts of interest involving Supervisory Board members during  
the financial year 2014.  
Supervisory Board members are required to provide information on a quarterly basis of any significant  
transactions they or other related parties (as defined by IAS 24), including close relatives and intermediary  
entities, have with BMW Group entities.  
We are fully committed to assessing and continuously improving the efficiency of the work of the Super-  
visory Board and its committees. The Chairman of the Audit Committee and myself are therefore always  
glad to receive comments and suggestions for improvement from Supervisory Board members. The formal  
examination of the Supervisory Board’s efficiency is also treated each year as a separate agenda point  
for discussion, without the members of the Board of Management being present. The efficiency examination  
1
0
in 2014, again prepared with the aid of a questionnaire, resulted in a number of suggestions being accepted  
for additional consideration.  
Each of the five Supervisory Board meetings in 2014 was attended, on average, by over 95% of its mem-  
bers, a fact that can be tied in to the analysis of attendance fees for individual members, as disclosed in the  
Compensation Report. No member of the Supervisory Board was absent at more than two meetings during  
the period under report. Presiding Board and committee meetings were fully attended in the vast majority of  
cases (see chapter Statement on Corporate Governance).  
Description of Presiding Board activities and committee work In order to work more efficiently and  
prepare complex issues and decisions with greater thoroughness, the Supervisory Board has established  
a Presiding Board and several committees. A description of the duties, composition and work procedures of  
these committees is provided in the Corporate Governance Report.  
The relevant chairmen reported in depth on the status of Presiding Board and committee work at the  
subsequent Supervisory Board meeting.  
In a total of four meetings, the Presiding Board focused mainly on preparing topics for the meetings of  
the full Supervisory Board, unless this responsibility fell under the remit of one of the committees. Complex  
issues, such as the Long-term Business Forecast and the Annual Strategic Review, were dealt with on the  
basis of written and oral reports provided by Board of Management members and senior department heads.  
The Presiding Board selected further topics of discussion for Supervisory Board meetings and made sugges-  
tions to the Board of Management regarding items to be included in its reports to the full Supervisory Board.  
The Audit Committee held four meetings and three telephone conference calls during 2014. Prior to their  
publication, the Interim Financial Reports were discussed with the Board of Management in those telephone  
conference calls. Representatives of the external auditors took part in the telephone conference call held to  
present the Interim Financial Report for the six-month period ended 30 June 2014. The report had been sub-  
jected to review by the external auditors.  
The Audit Committee meeting held in spring 2014 was primarily dedicated to preparing the Supervisory  
Board meeting at which the financial statements were examined. Prior to proposing KPMG AG Wirtschafts-  
prüfungsgesellschaft for election as Company and Group auditor at the 2014 Audit Committee Meeting, we  
obtained a Declaration of Independence from KPMG. The Audit Committee also considered the scope and  
composition of non-audit-related services, including tax advisory services provided by KPMG entities to the  
BMW Group. There were no indications of conflicts of interest, grounds for exclusion or lack of independence  
on the part of the auditor.  
The fee proposals for the audit of the year-end Company and Group Financial Statements 2014 and  
the review of the six-month Interim Financial Report were deemed appropriate by the Audit Committee.  
Subsequent to the Annual General Meeting 2014, the Audit Committee therefore appointed KPMG AG  
Wirtschaftsprüfungsgesellschaft for the relevant engagements and, with due consideration to the sugges-  
tions made by the full Supervisory Board, specified a number of audit focus areas.  
The Head of Group Controlling reported to the Audit Committee on risk management processes within  
the BMW Group, provided information with respect to new developments and elucidated a number of risks  
which are required to be reported on in accordance with internal rules.  
The Head of Group Financial Reporting provided the Audit Committee with an up-to-date overview of  
developments concerning the internal control system (ICS), which serves as the basis for financial reporting.  
1
1 REPORT OF THE SUPERVISORY BOARD  
Testing performed during the year under report did not highlight any material ICS weaknesses which could  
jeopardise the system’s effectiveness.  
The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the con-  
cept that has been developed to strengthen local compliance functions as well as on the current compliance  
situation, which, as in the previous year, was deemed satisfactory overall. None of the information received  
relating to potential non-compliance or actual incidences of non-compliance identified in specific cases gave  
any indication of serious or systemic non-compliance with applicable requirements.  
The Head of Group Internal Audit reported to us in the Audit Committee on the organisation of the Group  
Internal Audit as the BMW Group’s “Third Line of Defence”, informed us of the significant findings of audits  
conducted by Group Internal Audit, on both the industrial and financial services sides of the business, and  
explained the main points of emphasis for planned audits.  
We concurred in the Audit Committee with the decision of the Board of Management to raise the Com-  
pany’s share capital in accordance with §4 (5) of the Articles of Incorporation (Authorised Capital 2014) by  
€
ꢀ239,757 and to issue a corresponding number of new non-voting bearer shares of preferred stock, each with  
a par value of €ꢀ1, at favourable conditions to employees.  
The Personnel Committee convened six times during the financial year 2014. One major area of deliberation  
was the future composition of the Board of Management, with particular regard to preparing for successor  
decisions, including consideration of possible scenarios for the future change in the chair of the Board of  
Management.  
In preparation for the full Supervisory Board’s meetings, the Personnel Committee reviewed the structure  
and appropriateness of Board of Management compensation and prepared the Supervisory Board’s decision  
with respect to board members’ bonuses. In two cases we also gave our approval for one member of the  
Board of Management to accept the mandate for membership of the supervisory board of a non-BMW Group  
entity.  
The Nomination Committee convened twice during the financial year 2014. At these meetings, we deliber-  
ated on successor planning for mandates of the shareholders’ representatives on the Supervisory Board and  
considered proposals for candidates for the Supervisory Board elections at the Annual General Meeting 2015,  
taking the composition objectives stipulated for the Supervisory Board into due account.  
The statutory Mediation Committee was not required to convene during the financial year 2014  
.
Generational change at head of Board of Management and Supervisory Board initiated The Supervisory  
Board worked through a number of scenarios with respect to succession planning at the head of the Super-  
visory Board and – together with the Chairman of the Board of Management, Dr Norbert Reithofer – assessed  
the range of options available for selecting a new Chairman of the Board of Management. Various constella-  
tions were examined, including the important issue of timing. We wanted to bring about a farsighted, timely  
change in leadership in order to strengthen the position of the BMW Group with a long-term perspective  
for management. We shared the opinion of major shareholders that Dr Reithofer’s wealth of knowledge and  
experience should be retained within the BMW Group and that the Supervisory Board would benefit greatly  
from his playing a key role in its work.  
The Supervisory Board therefore supports the proposal that Dr Norbert Reithofer be appointed to the  
position of Chairman of the Supervisory Board – subject to his election to that board. After carefully con­  
sidering various scenarios, the conclusion was reached that a direct move by Dr Reithofer to the position of  
1
2
Chairman of the Supervisory Board – without an interim phase – will strengthen the role of the Supervisory  
Board and is thus in the best interests of the BMW Group.  
In order to ensure that this generational change can also take place in good time at the head of the Super-  
visory Board, in agreement with its other members, I have resigned my mandate as Supervisory Board  
member with effect from the end of the Annual General Meeting 2015.  
In due consideration of these developments, the Supervisory Board has reached agreement with  
Dr Reithofer concerning the early termination of his Board of Management mandate and his service con-  
tract with effect from the end of the Annual General Meeting 2015.  
Harald Krüger has been appointed Chairman of the Board of Management with effect from the end of the  
Annual General Meeting 2015, to coincide with Dr Reithofer’s planned exit from the Board of Management.  
Harald Krüger brings a great deal of experience to this position from his previous board responsibilities. Since  
2013, he has been in charge of Production, before which, from 2008 to 2012, he was first responsible for Human  
Resources and then for the MINI, BMW Motorrad, Rolls-Royce and BMW Group Aftersales division.  
Other changes in the composition and organisational structure of the Board of Management Klaus  
Fröhlich, previously Head of Small and Mid-size Series BMW Group, was appointed as member of the Board  
of Management with effect from 9 December 2014, with responsibility for Development. His predecessor,  
Dr Herbert Diess, resigned from the Board of Management on 9 December 2014.  
With effect from the end of the Annual General Meeting 2015, the Supervisory Board appointed  
Oliver Zipse, most recently Head of Corporate Planning and Product Strategy, as a member of the Board of  
Management. Heꢀ will take over responsibility for Production from Harald Krüger.  
The Supervisory Board also renewed the appointment of three Board of Management members in 2014.  
Other personnel changes in the Supervisory Board In accordance with the regulations of the Co-Deter-  
mination Act, the ten employee representatives were re-elected with effect from the end of the Annual  
General Meeting on 15 May 2014.  
After 10 years of valuable and highly appreciated work in the Supervisory Board, Bertin Eichler did not  
stand for re-election. In his place, Christiane Benner (Executive Board member of IG Metall) was newly  
elected to the Supervisory Board as union representative. As a result, the Supervisory Board now has five  
female members (25%). Ulrich Kranz, Head of the BMW i product line, was newly elected to the Supervisory  
Board to succeed Dr Markus Schramm as executive staff representative. The Supervisory Board thanked  
the members leaving office for their constructive work and trusting cooperation within the Supervisory  
Board. The composition of the Presiding Board and the committees remained unchanged in 2014, with all  
previous members confirmed in their respective functions. The Corporate Governance Report includes an  
overview of the composition of the Supervisory Board and its committees (see chapter Statement on Corpo-  
rate Governance).  
Wolfgang Mayrhuber has resigned his mandate as member of the Supervisory Board with effect from  
the end of the Annual General Meeting 2015. We also wish to extend our thanks to him for more than  
ten years of valuable and highly appreciated service in the Supervisory Board, always working in the best  
interest of the Group.  
Examination of financial statements and the profit distribution proposal KPMG AG Wirtschafts-  
prüfungsgesellschaft conducted a review of the abridged Interim Group Financial Statements and Interim  
Group Management Report for the six-month period ended 30 June 2014. The results of the review were  
presented to the Audit Committee by KPMG representatives. No issues were identified that might indicate  
1
3 REPORT OF THE SUPERVISORY BOARD  
that the abridged Interim Group Financial Statements and Interim Group Management Report had not been  
prepared, in all material respects, in accordance with the applicable provisions.  
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the  
year ended 31 December 2014 and the Combined Management Report – as authorised for issue by the Board  
of Management on 19 February 2015 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft and  
given an unqualified audit opinion.  
The Financial Statements and the Combined Management Report, the long-form audit reports of the  
external auditors and the Board of Management’s profit distribution proposal were made available to all  
members of the Supervisory Board in a timely manner.  
These documents were examined and discussed thoroughly by the Audit Committee at the meeting held  
on 5 March 2015. The Supervisory Board subsequently examined these documents at its meeting on 12 March  
2
015, after receiving the committee chairman’s report on the meeting of the Audit Committee. In both  
meetings, the Board of Management gave a detailed explanation of the financial reports it had prepared.  
Representatives of the external auditors attended both meetings, reported on significant findings and an-  
swered any additional questions raised by the members of the Supervisory Board. They also confirmed that  
the risk management system put in place by the Board of Management is capable of identifying any events  
or developments that might impair the going-concern status of the Company and that no material weak-  
nesses in either the internal control system or the risk management system were found with regard to the  
financial reporting process. Similarly, they confirmed that they had not identified any facts in the course of  
their audit work that were inconsistent with the contents of the Declaration of Compliance issued jointly by  
the two boards.  
Based on thorough examination by the Audit Committee and the full Supervisory Board, we concurred  
with the results of the external audit. In accordance with the conclusion reached after the examination by  
the Audit Committee and Supervisory Board, no objections were raised. The Group and Company Financial  
Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2014 prepared by the Board  
of Management were approved at the Supervisory Board meeting held on 12 March 2015. The separate finan-  
cial statements have therefore been adopted.  
The Supervisory Board also examined the proposal of the Board of Management to use the unappropriat-  
ed profit to pay an increased dividend of €ꢀ2.90 per share of common stock and €ꢀ2.92 per share of non-voting  
preferred stock. We consider the proposal appropriate and therefore concur with it.  
Expression of appreciation by the Supervisory Board We wish to express our appreciation to the mem-  
bers of the Board of Management and the entire workforce of the BMW Group worldwide for their concerted  
efforts and outstanding contribution to the record result we are able to post for the financial year 2014.  
Munich, 12 March 2015  
On behalf of the Supervisory Board  
Joachim Milberg  
Chairman of the Supervisory Board  
1
4
Norbert Reithofer  
Chairman of the Board of Management  
1
5
STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT  
Dear Shareholders,  
The successes a company has achieved in the past belong to its history. All that matters today is a com-  
pany’s future. Forward-looking companies renew themselves of their own initiative. It is crucial for a company  
to question its own actions, explore new directions and consistently implement innovations to benefit its  
customers. Financial strength allows companies to invest in the future – thereby securing long­term success  
and fulfilling responsibilities towards shareholders, associates and other stakeholders.  
BMW will reach its 100th year in 2016. We naturally plan to celebrate this important milestone in our  
history. It is a testament to our value-based corporate philosophy, geared towards the long term and shaped  
by independent-minded decisions. But above all else, this centenary compels us to look to the future.  
Investors in the BMW Group can look forward to long-term value enhancement, on the basis of healthy,  
organic growth. Our shareholders can rely on us to sustain our profitability. Strong competition, market  
volatility, political uncertainty, new trends in our environment – all of this is part of our daily business.  
We firmly believe that mobility will remain a fundamental human need and a cornerstone of dynamic  
economies. We aim to lead the industry with our ideas in all areas of individual mobility, transporting sheer  
driving pleasure to a new age of sustainable mobility. This is an exciting direction for us – and a profitable  
one for our shareholders who accompany us along this path.  
2
014 financial year – fifth successive record year for the BMW Group In the 2014 financial year, the  
company’s successful development since the global financial and economic crisis of 2008ꢀ/ꢀ2009 continued.  
We had set ourselves ambitious goals in a difficult environment: record sales of over two million vehicles;  
our highest-ever Group profit before tax, with a significant increase year-on-year; and an EBIT margin in our  
target range of eight to ten per cent for the Automotive Segment.  
Today, we can say: we delivered on our promises. Group profit before tax climbed 10  
.3 per cent to  
8
.7 billion euros. Net profit increased by 9.2 per cent to more than 5.8 billion euros. The EBIT margin in the  
Automotive Segment stands at 9.6 per cent and therefore at the upper end of our target range.  
Strong demand for our premium vehicles is the main factor contributing to record revenues of 80.4 billion  
euros. For the first time, we sold more than two million vehicles worldwide in a single year – 2.118 million  
BMW, MINI and Rolls­Royce vehicles, to be exact – fulfilling a wish for many customers. This represents an  
increase of 7.9 per cent over the previous year and a new sales high for the BMW Group.  
With regard to our individual brands, there were new records for BMW, Rolls-Royce and BMW Motorrad.  
More than 1.8 million customers purchased a BMW in 2014. Our MINI brand maintained roughly the same  
high level as the previous year, with a total of 302,000 vehicles sold, despite the model changeover. Our  
MINI plant in Oxford in the UK produced its three-millionth MINI last year. With exactly 4,063 vehicles sold,  
Rolls-Royce remains in strong demand and continues to set the standard for the ultra-luxury class. BMW  
Motorrad also reported growth, with more than 123,000 deliveries, and once again outperformed the overall  
market. The anniversary model BMW R nineT and the fully electric C evolution proved popular with both  
customers and the automotive press.  
The Financial Services segment once again made a solid contribution to the success of the BMW Group.  
Impact of Strategy Number ONE reflected in key performance indicators We laid the foundation for  
this successful development back in 2007 with our Strategy Number ONE. This strategy guides all our busi-  
ness activities into 2020 and has already taken the company to a new dimension. We operate at an entirely  
different level of performance today than in 2007.  
1
6
Customer deliveries climbed more than 40 per cent between the end of 2007 and the end of 2014. Group  
revenues increased by 44 per cent over the same period while pre-tax earnings more than doubled. During  
this time, BMW common shares performed much better than the DAX. Our associates, as well as our share-  
holders, benefit from this positive development through our preferred shares programme.  
We owe our achievements to our associates worldwide Our successful business development is driven  
by our 116,324 associates worldwide. Their skills, their performance and their dedication – each in his or her  
own area of responsibility – contribute to the overall success of the company.  
Our associates at all 30 BMW Group production sites in 14 countries are our most important success factor.  
We are investing extensively in vocational and professional training to qualify them for new demands and  
technologies, such as digitalisation. Between 2007 and the end of 2014 alone, we channelled around 1.8 billion  
euros into vocational and professional training – more than in our Efficient Dynamics technology package.  
People and technology have the same importance for us.  
The younger generation ensures our future success: more than 1,500 apprentices worldwide embarked  
on a career with us in September 2014; 1,200 of them in Germany. A total of 4,595 young people are currently  
in vocational training with the BMW Group. This represents an increase of 150 over the previous year.  
I would therefore like to thank all our associates on behalf of the Board of Management. I would also like  
to thank all our business partners, and especially our suppliers, who play such a key part in our success.  
And, of course, our thanks also extend to our entire retail organisation and the dealers who are our link to  
the customer.  
Customers have the choice: sheer driving pleasure also available with electric and hybrid drivetrains  
The new BMW i family has further strengthened our image as the industry’s leading innovator. 2014 was the  
first year of availability for the pure electric BMW i3. More than 16,000 customers chose this model, which  
was specially designed for urban areas. The BMW i8 has been available to customers since summer. Orders for  
the BMW i8 plug-in hybrid continue to well exceed the planned number of units for production. A total of  
1,741 BMW i8 vehicles were delivered to customers from June to December.  
We also use our know-how and experience with BMW i in series production of our other models. In autumn  
015, we will release our first plug-in hybrid BMW X model, the BMW X5 xDrive40e, which incorporates the  
2
technological expertise gained from BMW i. The new BMW 7 Series is also set to become the benchmark for  
lightweight design in its segment through the use of carbon fibre. Over time, all model series will be available  
with electric drive technology. Climate protection policies worldwide will remain challenging and growing  
urbanisation demands new mobility solutions.  
We will continue to chart our own course with Efficient Dynamics, hybridisation and electromobility.  
There is no way back. Average emissions for our European fleet currently stand at 130 grams of CO2 per  
kilometre. At the same time, we are focusing on sustainable production and efficient use of resources. Since  
2
006, we have reduced average resource consumption per vehicle produced by 45 per cent. Sustainability  
pays dividends – in every respect.  
Targeted expansion of our global production network We continue to aim for a balanced distribution  
of sales between the three main economic regions of the world. This allows us to offset fluctuations in indi-  
vidual markets and avoid overdependence on any single region. In 2014, Europe accounted for around 43 per  
cent of sales, Asia 31 per cent and the Americas just under 23 per cent.  
The global automobile market continues to expand: from around 62 million new vehicle registrations in  
2
007 to more than 80 million in 2014. We see no contradiction between participating in this growth and  
maintaining the desirability of our premium brands. In 2014, we continued to create the conditions necessary  
for strategic expansion of our global production network. In October, the first car rolled off the assembly  
line at our new plant in Araquari, Brazil. This gives us a permanent presence in an important growth region.  
1
7 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT  
In Mexico, preparations are underway for the opening of a new plant with a capacity of up to 150,000 units  
in 2019. During celebrations to mark the 20th anniversary of our Spartanburg plant, we announced an in-  
crease in capacity there to 450,000 units. We are also stepping up local production at our facility in Shenyang,  
China, which is set to build six BMW models specifically for the Chinese market. We have already extended  
our joint venture with Brilliance to 2028, thereby paving the way for further growth in China.  
The innovation of our engineers and developers ensures the company’s continued success. In 2014, we  
invested more than 4.5 billion euros in research and development. Between now and 2018, we will expand  
and modify our FIZ Research and Innovation Centre in Munich. Once the final stage of expansion is com-  
plete, the investment will be equivalent to building a completely new plant.  
Connectivity defines our times and will dominate the future The digital, connected world is a particularly  
important area for premium manufacturers when it comes to differentiation and growth. It affects both the  
vehicle itself and the way that vehicle is produced. Last year, at our Spartanburg and Dingolfing plants, we  
took a major step towards intensive human-robot collaboration. We use this form of cooperation selectively in  
areas where it adds value and relieves associates of heavy physical work, enabling them to stay healthy for a  
long time.  
The car as a part of the Internet will change our industry even more than the shift to alternative drivetrains.  
As in-car connectivity increases, new competitors will seek access to customers in their vehicles. We are  
committed to shaping the age of in-car connectivity responsibly, in the interests of our customers. We already  
offer advanced driver assistance systems in our vehicles today. Moreover, we also have the capacity for highly  
autonomous driving.  
Mobility services mainly used by young people We are selectively expanding our range of mobility  
services: car-sharing is one option that is particularly appealing to young people. London and Vienna are  
two further European cities outside of Germany that have now been added to our DriveNow offering. By the  
end of 2014, around 390,000 customers had already registered with DriveNow. Additional cities in Europe  
and in the US will follow in 2015.  
The course is set for the future To mark our centenary on 7 March 2016, we deliberately choose to look  
to the future. Every age has its challenges and must find its own solutions. That is why we give younger  
generations the chance to shape the further development of the company according to their own ideas.  
In December 2014, the Supervisory Board decided to make a change at the head of the company’s Board  
of Management. Our Board of Management Member for Production Harald Krüger will take over as Chairman  
of the Board of Management after the 2015 Annual General Meeting. This generational change will enable  
the company to move forward with new ideas and impulses.  
As you can see, much still remains to be done. New trends and challenges also bring new business opportu-  
nities and possibilities. I strongly believe that the BMW Group will grow dynamically, by innovatively shaping  
the individual mobility of the future in all its forms and continuing to be a responsible partner for society.  
The course is set for the future.  
Norbert Reithofer  
Chairman of the Board of Management  
1
8
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Business Model  
This Combined Management Report combines the  
management reports of BMWAG and the BMW Group.  
Long-term thinking and responsible action have always  
been the cornerstones of our success. Striving for eco-  
logical and social sustainability along the entire value-  
added chain, taking full responsibility for our products  
General information on the BMW Group  
1
1
8
8
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group General information on the BMW Group is provided be- and giving an unequivocal commitment to preserving  
18  
Business Model  
low. There have been no significant changes compared  
to the previous year.  
resources are prime objectives firmly embedded in our  
corporate strategy. As a result of these endeavours, we  
have ranked among the most sustainable companies in  
the automobile industry for many years.  
20  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management Business model  
Financial and Non-financial  
Bayerische Motoren Werke Aktiengesellschaft (BMWAG),  
which is based in Munich, Germany, is the parent com-  
pany of the BMW Group. The primary business objective sented in more than 140 countries worldwide. Its re-  
of the BMW Group is the development, manufacture and  
sale of engines as well as of all vehicles equipped with  
those engines. The BMW Group is subdivided into the  
Automotive, Motorcycles, Financial Services and Other  
Entities segments (the latter primarily comprising hold-  
ing companies and Group financing companies).  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
2
4
9
9
The BMW Group operates on a global scale and is repre-  
6
1
4
search and innovation network is spread over twelve  
locations in five countries. At 31 December 2014 the  
Group’s production network comprised a total of 30 lo-  
cations in 14 countries.  
6
Events after the End of the  
Reporting Period  
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
BMW 3 Series and 4 Series models as well as petrol and  
diesel engines are manufactured at the BMW Group  
plant in Munich, next to the BMW Group’s headquarters.  
Models of the BMW 1, 3 and 4 Series as well as the Z4  
Roadster roll off the production lines at the Regensburg  
plant. The currently largest BMW Group plant is located  
in Dingolfing, where we build the BMW 3 Series Gran  
Turismo, the BMW 4 Series Gran Coupé, models of  
the BMW 5, 6 and 7 Series as well as hybrid BMW 5 and  
7 Series vehicles. Chassis and drive components are also  
manufactured at this plant. The BMW Group Leipzig  
plant’s production range covers models of the BMW 1  
and 2 Series, the BMW X1 and the electrically powered  
BMW i3 as well as the BMW i8 hybrid sports car. The  
BMW 3 Series Sedan is assembled at the plant in  
Rosslyn (South Africa). The BMW Group plant in  
Spartanburg (USA) is responsible for producing the  
BMW X3, X4, X5 and X6 models. BMW X1 and models  
8
3
7
Bayerische Motoren Werke G.m.b.H. came into  
being in 1917. Having been originally founded in  
8
BMW Stock and Capital Markets  
1
916 as Bayerische Flugzeugwerke AG (BFW), it be-  
came Bayerische Motoren Werke Aktiengesellschaft  
BMWAG) in 1918. The BMW Group comprises  
(
BMWAG and all subsidiaries, which BMWAG – either  
directly or indirectly – has the power to control.  
BMWAG is also responsible for managing the BMW  
Group. General conditions on the world’s automobile  
and motorcycle markets (such as the competitive situa-  
tion, government policies, statutory regulations),  
underlying trends within society as well as changes  
in raw materials prices, exchange rates and interest  
rates are some of the major external factors that exert  
an influence over our business.  
The BMW Group is one of the most successful makers  
of cars and motorcycles worldwide and among the  
largest industrial companies in Germany. With BMW,  
MINI and Rolls-Royce, the BMW Group owns three of  
the strongest premium brands in the automotive in-  
dustry. The vehicles it manufactures set the highest  
standards in terms of aesthetics, dynamics, technology  
and quality, a fact borne out by the BMW Group’s  
of the BMW 3 and 5 Series are built exclusively for  
the Chinese market at the two plants operated by  
the BMW Brilliance Automotive Ltd. joint venture in  
Shenyang (China).  
Components for the worldwide production network are  
manufactured at the BMW Group plants in Landshut  
and Wackersdorf. The Eisenach plant is responsible for  
leading position in engineering and innovation. In addi- toolmaking. The two production sites in Moses Lake  
tion to its strong position in the motorcycles market,  
the BMW Group also offers its customers a successful  
range of financial services. In recent years, the Group  
has also established itself as a leading provider of pre-  
mium services for individual mobility. At the end of the  
reporting period, the BMW Group had a workforce of  
(USA) and Wackersdorf are operated by the SGL Auto-  
motive Carbon Fibers (ACF) joint venture and supply  
carbon fibre and carbon fibre fabrics for the production  
of BMW i models. The BMW Group’s largest engine  
manufacturing plant in Steyr (Austria) makes petrol and  
diesel engines for the various BMW plants and diesel  
engines for the MINI. In 2012 the BMW Brilliance Auto-  
1
16,324 employees worldwide.  
1
9 COMBINED MANAGEMENT REPORT  
motive Ltd. joint venture opened an engine plant in  
Shenyang (China), which supplies petrol engines to its  
neighbouring plants.  
Our premium brands – BMW, MINI and Rolls­Royce –  
are well known and highly admired around the globe  
for their innovative technologies and state-of-the-art  
design. The BMW Group provides the full spectrum of  
individual mobility, ranging from premium-segment  
small vehicles through to ultra-luxurious and powerful  
vehicles. Our entire product range is linked by one  
characteristic: efficiency. The MINI brand is a veritable  
icon in the premium small car segment, offering unri-  
valled driving pleasure in its class. Rolls-Royce has a  
long and distinguished tradition in the ultra-luxury seg-  
ment stretching back over more than 100 years. Our  
core BMW brand satisfies a broad spectrum of customer  
wishes, ranging from fuel-efficient, innovative models  
equipped with Efficient Dynamics through to high-per-  
formance, extremely efficient BMW M sub-brand vehi-  
cles, which bring the flair of motor sport onto the roads.  
The primary function of the BMW Group’s assembly  
plants is to serve nearby regional markets. BMW cars are  
currently being assembled in Chennai (India), Jakarta  
(
(
Indonesia), Cairo (Egypt), Kaliningrad (Russia), Kulim  
Malaysia) and Rayong (Thailand). Production at the  
BMW Group’s newest plant in Araquari (Brazil) cur-  
rently covers the BMW 3 Series and the X1, and will be  
extended to include the BMW 1 Series, the X3 and the  
MINI Countryman over the course of 2015.  
The MINI models – Hatch (3- and 5-door), Convertible,  
Coupé and Roadster – are manufactured at the Oxford  
plant (United Kingdom). The UK production triangle  
also includes the components plant in Swindon as well All BMW vehicles share one thing in common: their im-  
as the engine plant at Hams Hall, where petrol engines  
are manufactured for MINI and BMW. In Graz (Austria),  
Magna Steyr Fahrzeugtechnik manufactures the MINI  
Countryman and, since 2012, the MINI Paceman for  
the BMW Group. In 2014 the Dutch car manufacturer,  
VDL Nedcar bv (Born) began producing the MINI Hatch  
on behalf of the BMW Group.  
pressive driving dynamics.  
Our understanding of the term “premium” is now being  
taken to a new level with the BMW i brand. Inspired  
through and through by the desire for even greater sus-  
tainability, the BMW i epitomises the vehicle of the  
future – with its electric drivetrain, revolutionary light-  
weight construction, exceptional design and an entirely  
newly designed range of mobility services.  
The Rolls-Royce Phantom, Ghost and Wraith models  
are manufactured exclusively at the Goodwood plant  
(
United Kingdom).  
BMW Motorrad also focuses on the premium segment  
and offers a range of motorcycles for the Tourer, Enduro,  
Sport and Roadster segments as well as Maxi-Scooter  
for urban mobility. A wide range of accessories and  
equipment is also available, providing additional safety  
and comfort to customers.  
BMW motorcycle models roll off the production lines at  
the BMW Group plant in Berlin. Car brake discs are  
also produced at this location. Two further motorcycle  
assembly plants are located in Manaus (Brazil) and  
Rayong (Thailand).  
The Financial Services segment, which works in tandem  
with the sales organisation, is represented in more than  
50 countries around the world. Credit financing and  
the lease of BMW Group brand cars and motorcycles to  
retail customers is its largest line of business. The BMW  
Group’s international multi-brand fleet business, oper-  
ating under the brand name “Alphabet”, provides fleet  
financing products and comprehensive management  
services for corporate car fleets in 19 countries. Within  
the multi-brand financing line of business, credit financ-  
The worldwide distribution network currently consists  
of around 3,250 BMW, 1,550 MINI and 130 Rolls-Royce  
dealerships. In China alone, more than 40 BMW dealer-  
ships and 30 MINI dealerships were opened in 2014.  
Products and services are sold in Germany through  
BMW Group branches and by independent authorised  
dealers. Sales outside Germany are handled primarily  
by subsidiary companies and, in a number of markets,  
by independent import companies. The dealership  
and agency network for BMW i currently covers some ing, leasing and other services are marketed to retail  
50 locations. The sales network for BMW motorcycles customers under the brand name “Alphera”. The seg-  
6
is organised in a similar way to the automobile business. ment’s range of products is rounded off by providing  
Currently, there are around 1,000 BMW Motorrad dealer- support to the dealer organisation and offering insurance  
ships worldwide.  
and banking services.  
2
0
General Information on the BMW Group  
Management System  
The business management system applied by the BMW  
term performance and assess strategic issues, additional  
Group follows a value-based approach, with a clear focus key performance figures are measured at Group level for  
on achieving profitable growth, increasing the value of  
the business for capital providers and safeguarding jobs.  
General Information on the BMW Group Corporate autonomy can only be ensured in the long  
controlling purposes. The contribution made to busi-  
ness value growth during the financial year is measured  
in terms of “value added”. This approach is translated  
for operational purposes at both Group and segment  
1
1
8
8
COMBINED MANAGEMENT REPORT  
18  
Business Model  
term if the profit generated by the business sustainably  
exceeds the cost of equity and debt capital available to it, level by identifying the main financial and non-financial  
thus reflecting the profitable employment of capital.  
20  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
factors (“value drivers”) which affect the value of the  
business. The link between value added and the relevant  
value drivers is shown in simplified form in the following  
diagram.  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
The BMW Group’s internal management system is  
multilayered. Operating performance is managed first  
and foremost at segment level. In order to manage long-  
2
4
9
9
Expenses  
6
1
4
6
Events after the End of the  
Reporting Period  
Profit  
–
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Return on sales  
÷
÷
×
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Return on capital  
RoCE / RoE)  
Value added  
−
×
Revenues  
(
8
3
7
8
BMW Stock and Capital Markets  
Capital turnover  
Capital employed  
Cost of capital  
Average weighted cost  
of capital rate  
Due to the high aggregate impact of various factors, it is of total return or the return on equity capital. The per-  
difficult to manage a business proactively simply by  
focusing on value added. This key figure therefore only  
serves for intermediate reporting purposes.  
formance of the Automotive and Motorcycles segments  
is measured on the basis of the return on capital em-  
ployed (RoCE) and that of the Financial Services seg-  
ment using the return on equity (RoE). Profitability (re-  
turn on sales) and capital efficiency (capital turnover)  
are aggregated in the capital rate of return, together with  
Value drivers which could have a significant impact on  
profitability and the value of the business are defined  
for each controlling level. The financial and non-finan- a whole host of business-relevant information that has  
cial value drivers referred to above are reflected in the an impact on segment performance and changes in the  
principal key performance indicators used to manage the value of the business.  
business.  
Automotive segment  
In the case of project decisions, the system is supple-  
mented by the application of project-relevant control  
logic, also utilising value-based and return-based per-  
formance indicators.  
The principal key performance indicator for the Auto-  
motive segment is return on capital employed (RoCE),  
measured on the basis of segment profit before financial  
result and the average level of capital employed in oper-  
ations. The strategic target for the Automotive segment’s  
Management of operating performance at segment level RoCE is 26%.  
Operating performance is managed at segment level on  
the basis of capital rates of return. Depending on the  
business model, the segments are managed on the basis  
Profit before financial result  
Capital employed  
RoCE Automotive  
=
2
1 COMBINED MANAGEMENT REPORT  
Capital employed corresponds to the sum of all current  
and non-current operational assets, less liabilities that  
do not incur interest (e.ꢀg. trade payables).  
Financial Services segment is defined as segment profit  
before taxes, divided by the average amount of equity  
capital attributable to the segment. The target is a sus-  
tainable return on equity of at least 18%.  
Due to the key importance of the Automotive segment  
for the Group as a whole, consideration is also given to  
additional key value drivers which have a significant  
impact on RoCE and hence on segment performance.  
The most important of these additional value drivers are  
deliveries to customers, segment revenues and – as the  
Profit before tax  
Equity capital  
RoE Financial  
Services  
=
Strategic management at Group level  
Strategic management of the Group is performed pri-  
key performance indicator for profitability – the operat- marily at Group level, including quantification of the  
ing return on sales (i.e. EBIT margin). Average carbon  
emissions for the fleet are also taken into account, re-  
flecting their potential impact on earnings in the short  
term in the form of ongoing development expenses –  
and in the long term due to regulatory requirements.  
For these purposes “carbon emissions for the fleet” cor-  
financial impact of strategic issues on long-term fore-  
casting. The most significant performance indicators at  
Group level are Group profit before tax and the size  
of the Group’s workforce at the year end. Group profit  
before tax is a good overall measure of the Group’s per-  
formance after consolidation procedures, and provides  
a transparent basis for comparing performance, par-  
ticularly over time. The size of the Group’s workforce is  
monitored as an additional key non-financial perfor-  
mance indicator.  
responds to average emissions of CO for new car sales  
2
in the EU-28 countries.  
The use of additional key value drivers makes it easier  
to identify the reasons for changes in the RoCE and  
to define measures capable of influencing its develop-  
ment.  
The two key performance indicators – Group profit be-  
fore tax and size of the workforce – are supplemented  
by a measurement of value added. This highly aggregated  
performance indicator provides an insight into capital  
efficiency and the (opportunity) cost of capital required  
to generate Group profit. Value added corresponds to  
the amount of earnings over and above the cost of  
capital and gives an indication of whether the Group is  
meeting the minimum requirements for the rate of  
return expected by capital providers. A positive value  
added means that a company is creating more additional  
value than the cost of capital.  
Motorcycles segment  
As with the Automotive segment, operating perfor-  
mance for the Motorcycles segment is managed on the  
basis of RoCE. Capital employed is measured using  
the same procedures as in the Automotive segment.  
The strategic target for the Motorcycles segment’s  
RoCE is 26%.  
Profit before financial result  
RoCE Motorcycles  
=
Capital employed  
Value added Group = earnings amount – cost of capital  
= earnings amount – (cost of capital rate ×  
capital employed)  
The number of vehicles delivered to customers is also  
taken into account as a non-financial value driver.  
Financial Services segment  
As is common practice in the banking sector, the per-  
Capital employed comprises the average amount of  
Group equity employed during the year as a whole, the  
formance of the Financial Services segment is measured financial liabilities of the Automotive and Motorcycles  
on the basis of return on equity (RoE). RoE for the segments and pension provisions. “Earnings amount”  
*
*
*
Value added Group  
in € million  
Earnings amount  
Cost of capital (EC + DC)  
2014  
2013  
2014  
2013  
2014  
2013  
BMW Group  
9,051  
8,300  
5,212  
4,661  
3,839  
3,639  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
2
2
for these purposes corresponds to Group profit before  
tax and adjusted for interest expense incurred in con-  
junction with the pension provision and on the finan-  
cial liabilities of the Automotive and Motorcycles  
Group forecast. This system enables an analysis of the  
periodic reporting impact of project decisions on earn-  
ings and rates of return over the term of each project.  
The overall result is a self-contained controlling model.  
1
1
8
8
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group segments (earnings before interest expense and taxes).  
18  
Business Model  
20  
Management System  
23  
Report on Economic Position  
The cost of capital is the minimum rate of return ex-  
pected by capital providers in return for the capital em-  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management ployed by the Group. Since capital employed comprises  
Financial and Non-financial  
an equity capital element (e.ꢀg. share capital) and a debt  
capital element (e.ꢀg. bonds), the overall cost of capital  
Performance Indicators  
2
4
9
9
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
rate is determined on the basis of the weighted average  
rates for equity and debt capital, measured using stand-  
ard market procedures. The pre-tax average weighted  
cost of capital for the BMW Group in 2014 was 12%, un-  
changed from the previous year.  
6
1
4
6
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Value management used to control projects  
Operations in the Automotive and Motorcycles segments  
are influenced, to a large extent, by project work. Pro-  
jects have a substantial impact on future performance.  
Project decisions are therefore a crucial component of  
financial management for the BMW Group.  
8
3
7
8
BMW Stock and Capital Markets  
Decisions are taken on the basis of project calculations  
measured in terms of the cash flows a project is expected  
to generate. Calculations are made for the full term of  
a project, i.e. for all future years in which the project  
generates cash flows. Project decisions are taken on the  
basis of the capital value and internal rate of return cal-  
culated for the project.  
The capital value of a project indicates the extent to  
which a project will be able to generate a positive con-  
tribution to earnings over and above the cost of capital.  
A project with a positive capital value enhances value  
added and therefore results in an increase in the value  
of the business. The internal rate of return of the project  
corresponds to the average return on capital employed  
in the project and, in terms of scope, is equivalent to the  
multi-year average RoCE for an individual project. It is  
therefore entirely consistent with the principal key per-  
formance indicator used for the Automotive and Motor-  
cycles segments.  
The criteria used for taking decisions as well as the long-  
term impact on periodic earnings is documented for  
all project decisions and incorporated in the long-term  
2
3 COMBINED MANAGEMENT REPORT  
Report on Economic Position  
General and Sector-specific Environment  
General economic environment in 2014  
only the impact of the severe winter that prevented an  
Overall, the global economy grew by 3.3% in 2014, with even better performance for the year as a whole. The  
significant differences in growth rates recorded from upturn was driven once again primarily by the private  
region to region. After a weak start, the USA performed sector, with the strongest stimulus coming from the  
strongly over the year as a whole. The growth rate in  
China remained at a relatively high level, despite a  
employment and property markets. At the same time,  
the downward pressure on public-sector budgets and  
moderate slowdown in economic momentum. As a result the gradual scaling back of expansionary monetary  
of the value added tax hike, Japan recorded a steeper  
drop in growth than had been expected. Even though  
recession was overcome in Europe as a whole, the re-  
policies held down growth in the US economy slightly.  
The Japanese economy was influenced by a mixture of  
covery could hardly be described as dynamic, especially positive and negative factors in 2014, including a con-  
in the major economies. The ongoing weak performance  
of some major emerging markets, in particular Brazil  
and Russia, also held down the global growth rate. Al-  
tinuation of highly expansionary monetary policies on  
the one hand, and a hike in the value added tax rate in  
April on the other. The overall outcome was that growth  
though the Indian economy regained some momentum, slipped to 0.3% in Japan in 2014.  
the growth rate was still lower than in recent years.  
With a slightly reduced growth rate of 7.4%, China re-  
In line with its previous announcements, the US Reserve  
Bank brought its bond-buying programme to an end  
during the year under report, resulting – in spring 2014  
mained by far the most dynamic of the world’s major  
economies. By contrast, the performance of other major  
emerging economies was generally disappointing. India,  
for instance, managed a slightly improved growth rate  
–
in considerable turmoil for the currencies of some of  
the world’s emerging market countries. However, so far, of 5.4% in 2014, still trailing against growth rates re-  
this first step to scale back its highly expansionary  
monetary policy has not had a major adverse impact,  
either in the USA or in other countries.  
ported in previous years. Brazil and Russia grew by 0.2%  
and 0.6% respectively, not far short of recession.  
Currency markets  
After a two-year lull, the eurozone returned to growth  
The US dollar averaged an exchange rate of 1.33 to the  
euro in 2014, similar to the previous year’s level. How-  
ever, the range of fluctuation was much greater, with  
the US dollar initially losing value only then to surge  
during the second half of the year to finish at US dollar  
in 2014, albeit at a modest rate of  
0.8%. The German  
economy grew overall by %. France was once again  
1.5  
only able to report a very low growth rate of 0.4%. Italy’s  
economy contracted for the third year in succession,  
this time at a less pronounced rate than in previous years 1.21 to the euro. The British pound also appreciated in  
(
–0.4%). By contrast, most of the other southern Euro-  
value, which is reflected in an annual average exchange  
rate of 0.81 to the euro. These exchange rates were af-  
fected by the expectation of reference interest rate in-  
creases in these two currency blocks in 2015, a develop-  
ment exacerbated by the European Central Bank’s  
decision to reduce interest rates again in 2014 and its  
announcement to loosen its monetary policies further.  
With its value coupled to that of the US dollar, the an-  
nual average exchange rate of the Chinese renminbi  
(8.19 to the euro) remained at a similar level to the pre-  
vious year. With fluctuations in exchange rates following  
the same pattern as the US dollar, the Chinese renminbi  
also gained noticeably in value towards the end of the  
year. In sharp contrast, the Japanese yen fell to an annual  
pean economies recovered well and recorded positive  
growth again after years of recession.  
As the largest European economy outside the eurozone,  
the United Kingdom saw a continuation of its run of  
good quarterly figures and recorded a growth rate of  
2.6% for the year as a whole. Although bolstered by  
monetary and fiscal policies implemented on a massive  
scale, it appears that the UK economy has now found  
a stronger footing to enable it to grow at a decent pace  
over a sustained period of time.  
The cyclical upturn in the USA gained further momen-  
tum in 2014. Although the reported growth rate of 2.4% average rate of 140 yen to the euro in the wake of Japan’s  
was similarly high compared to the previous year, it was monetary policy. Despite showing some signs of stabilising  
2
4
Exchange rates compared to the euro  
(Index: December 2009 =100)  
1
60  
50  
Russian Rouble  
Japanese Yen  
1
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
140  
1
2
8
0
Business Model  
Management System  
130  
120  
110  
100  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
90  
British Pound  
US Dollar  
2
4
9
9
80  
Chinese  
Renminbi  
6
1
4
10  
11  
12  
13  
14  
6
Events after the End of the  
Reporting Period  
Russian Rouble  
Source: Reuters.  
Japanese Yen  
British Pound  
US Dollar  
Chinese Renminbi  
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
over the course of the year, many emerging market  
currencies – such as those of India, Brazil and South  
Africa – lost further ground in 2014. The depreciation  
of the Russian rouble was particularly pronounced at  
the beginning of the Ukraine crisis and then again  
towards the end of the year, when it fell to a value of  
Automobile markets  
8
3
7
The worldwide market for passenger cars and light com-  
mercial vehicles grew once again in 2014, surpassing  
the threshold of 80 million vehicles for the first time  
8
BMW Stock and Capital Markets  
Steel price trend  
7
0.98 roubles to the euro.  
(Index: January 2010 = 100)  
1
1
1
1
1
1
1
1
70  
60  
50  
40  
30  
20  
10  
00  
Energy and commodity prices  
Oil prices plummeted during the second half of 2014  
Although the average price of Brent Crude oil during  
the twelve-month period was only slightly down at  
US dollar 100 per barrel, its price tumbled from over  
US dollar 110 to around US dollar 55 per barrel within  
a period of six months. The story was similar for WTI  
Crude oil with an annual average price of approxi-  
mately US dollar 93 per barrel. Generally speaking,  
metal prices fell slightly during the course of the year.  
.
10  
11  
12  
13  
14  
Source: Working Group for the Iron and Metal Processing Industry.  
Oil price trend  
Price per barrel of Brent Crude  
120  
110  
100  
9
0
0
0
0
0
8
7
6
5
Price in US Dollar  
Price in €  
10  
11  
12  
13  
14  
Source: Reuters.  
2
5 COMBINED MANAGEMENT REPORT  
Precious metals price trend  
(Index: December 2009 =100)  
250  
225  
200  
175  
150  
125  
100  
Palladium  
Gold  
Platinum  
75  
10  
11  
12  
13  
14  
Source: Reuters.  
(
+
4
.
1
%). The two largest automobile markets, the  
while France and Italy both saw increases of 2.7%. The  
US market also developed positively (+1.8%).  
USA and China, again contributed strongly to this  
growth. New registrations in China were up by 13.0%  
to 18.4 million units, while the US market saw an in-  
crease of 6.0% to 16.5 million units.  
Financial Services  
The global economy continued to recover in 2014, despite  
the existence of uncertainties which held down growth,  
particularly in the first half of the year. A strong eco-  
nomic rally in the USA in the second half of the year  
heralded a further tightening of monetary policies. The  
US Reserve Bank’s bond-buying programme, which  
had already been reduced in scale over the course of the  
year, was temporarily brought to a halt in October. The  
Registration figures in Germany showed a 2.9% increase  
to 3.0 million units. The European car market (exclud-  
ing Germany) grew by 6.6% to a total of 10.0 million  
registrations in 2014, the first increase posted since the  
financial crisis. France (1.8 million units; +0.5%) and  
Italy (1.4 million units; +4.6%) both returned to robust  
growth after a number of years of contraction. However, Bank of Japan purchased government bonds in 2014,  
among the major European markets, it was Spain that  
recorded the fastest growth rate ( 86 million units;  
with the aim of keeping inflation above 2% and stimu-  
lating the domestic economy. Within the eurozone, the  
0
.
+
18.4%). The UK market also saw above-average growth European Central Bank (ECB) also endeavoured to  
(
+9.3%) in 2014 with a total of 2.5 million new vehicles  
combat the risk of deflation by loosening its monetary  
policies further and reducing its reference interest rate  
yet again. At the end of the year, the ECB’s reference  
interest rate stood at a historical low of 0.05%.  
registered.  
Despite the value added tax hike in April, the Japanese  
car market expanded by 3.2% to 5.4 million units.  
Bad debt levels either remained stable or improved  
slightly. The negative impact of some slight increases in  
Car markets in the world’s major emerging economies  
also suffered from the effects of generally weak economic risk, such as in Ukraine, have so far remained localised.  
performance in these regions in 2014. The Russian mar-  
ket contracted by 10.2% to 2.3 million units, while the  
number of registrations in Brazil fell by 7.1% to 3.3 mil-  
lion units.  
Price levels on the world’s used car markets in 2014  
remained more or less stable across all regions, with  
selling prices fluctuating within normal ranges.  
Motorcycle markets  
The worldwide market for 500 cc plus class motorcycles  
grew in 2014 for the first time in several years (+4.9%).  
Despite ongoing economic uncertainties, motorcycle  
registrations in Europe rose by 8.0%. The motorcycles  
market in Germany was 9.0% up on the previous year,  
2
6
Report on Economic Position  
Overall Assessment by Management  
Financial and Non-financial Performance Indicators  
Overall assessment by management  
The 2014 financial year was a pleasing one for the BMW  
As forecast for the financial year 2014, there was a solid  
increase in the Group’s workforce, which was therefore  
Group in overall terms and in line with our expectations. in line with our expectations.  
The picture was also extremely positive in terms of  
18  
COMBINED MANAGEMENT REPORT  
1
8
General Information on the BMW Group  
results of operations, financial position and net assets.  
This statement also takes into account events after the  
end of the reporting period.  
Automotive segment  
1
2
8
0
Business Model  
Management System  
Sales volume  
2
3
Report on Economic Position  
The BMW Group sold more cars in the year under report  
than ever before. Despite a certain degree of volatility  
on various markets, sales of BMW, MINI and Rolls-Royce  
23  
General and Sector-specific  
Environment  
2
2
6
6
FO i vn ea r na cl l iAa sl as en sd s Nm oe nn -t f bi ny a Mn ca ni a al gement Financial and non-financial performance indicators  
2
In the following section, we report on the principal finan- brand cars as a whole rose by a solid 7.9% to 2,117,965  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
2
units (2013: 1,963,798 units). This growth was achieved  
2
4
9
9
cial and non-financial performance indicators used as  
the basis for managing the BMW Group and its segments. on the back of numerous new model launches on  
As part of the review of operations and the financial international markets in 2014, thus ensuring that the  
condition of the BMW Group, forecasts made in the pre- BMW Group remained the world’s market leader in the  
6
1
4
6
Events after the End of the  
Reporting Period  
vious year are compared with actual outcomes.  
premium segment.  
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
BMW Group  
All three car brands made an important contribution to  
this record sales volume performance. Sales of BMW  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Profit before tax  
2
The BMW Group continued to perform extremely well  
in 2014 and achieved a new record Group profit before  
and Rolls-Royce brand cars increased to 1,811,719 units  
2
8
3
7
(2013: 1,655,138 units; +9.5%) and 4,063 units (2013:  
1
tax of €ꢀ8,707 million (2013: €ꢀ7,893 million; +10.3%).  
3,630 units; +11.9%) respectively, in both cases setting  
new records. With a sales volume of 302,183 units, the  
MINI brand was in line with previous year’s high level  
(2013: 305,030 units; –0.9%) despite the model change  
in 2014.  
8
BMW Stock and Capital Markets  
This result reflects the steep rise in the number of vehi-  
cles sold. New models (such as the BMW X4) and new  
series (such as the BMW 2 and 4 Series), combined with  
a high-value model mix, ensured that the pre-tax profit  
continued to develop positively despite ongoing intense  
competition on international car markets and consider-  
able levels of investment in new technologies.  
In line with the forecast provided for the full year in the  
quarterly report to 30 September 2014, the total number  
of vehicles sold by the BMW Group rose by a solid  
As forecast for the financial year 2014, the Group’s profit  
before tax rose significantly and was therefore in line  
with our expectations.  
7.9%. In the Annual Report 2013 a “significant rise” in  
deliveries to customers was predicted. The main reasons  
for the difference were ongoing difficult political and  
business conditions prevailing on some markets (such  
as Russia) and shifts in the timing of production starts.  
Moreover, market developments in China did not quite  
Workforce at year-end  
The BMW Group’s workforce increased to 116,324 em-  
ployees during the year under report (2013: 110,351 em- live up to expectations.  
ployees; + %). This solid increase mainly reflects  
5.4  
strong demand for the Group’s cars and motorcycles, the  
greater range of mobility services now offered and the  
need for additional qualified staff in conjunction with  
the development of electromobility.  
1
2
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013:  
198,542 units, 2014: 275,891 units).  
2
7
COMBINED MANAGEMENT REPORT  
1
Fleet carbon emissions  
The return on capital employed (RoCE) amounted to  
61.7% (2013: 63.0 %). Contrary to our original ex-  
2
The BMW Group is continually reducing the carbon  
emissions of its fleet of vehicles by equipping them with pectations, the RoCE decreased only slightly due to  
highly efficient engines and electrified drivetrain sys-  
tems. Thanks to the rigorous deployment of Efficient  
improved management of capital employed and the  
increase in service contract volumes. In the Annual  
Dynamics technologies, our vehicles also set standards Report 2013 a “significant drop” in RoCE was pre-  
in terms of dynamism and driving pleasure.  
dicted. The rate achieved was well above the minimum  
target of 26% referred to in the forecast for 2014.  
In 2014, the volume of carbon emissions produced by  
1
our vehicle fleet sold in Europe decreased slightly to  
Motorcycles segment  
1
30 grams CO /ꢀkm (2013: 133 grams CO /ꢀkm; –2.3%).  
Sales volume  
2
2
The scale of the decrease in fleet emissions in 2014  
was therefore not as pronounced as originally forecast,  
mainly reflecting the impact of a higher-value model  
mix on the one hand and the later-than-planned avail-  
ability of the new MINI on the other. In the Annual  
Report 2013, we had forecast a “moderate decrease” for  
the financial year 2014.  
In a friendlier-than-expected market environment, BMW  
Motorrad achieved a solid increase of 7.2% with a sales  
volume of 123,495 units (2013: 115,215 units). This per-  
formance was therefore better than the “slight increase”  
forecast in the Annual Report 2013. The forecast was  
raised to “solid” in the quarterly report to 30 September  
2014.  
3
Revenues  
Return on capital employed  
Revenues from the sale of BMW, MINI and Rolls-Royce  
The return on capital employed (RoCE) in the Motor-  
cycles segment stood at 21.8% (2013: 16.4%). The solid  
increase in RoCE from motorcycles business reflects  
higher-than-expected sales volume, the high-value  
model mix and the first fruits of the segment’s strategic  
realignment. In the Annual Report 2013, it was pre-  
dicted that the RoCE would be on par with the previous  
year.  
brand cars grew by  
6
.
4
% to €ꢀ75  
,173 million (2013:  
2
€
ꢀ70,630 million) in line with the solid sales volume  
rise. The increase was primarily attributable to the nu-  
merous new models launched and the positive con-  
sumer climate in major markets.  
As forecast for the full year in the Quarterly Report to  
3
0 June 2014, automobile business revenues had a solid  
increase despite the dampening effect of exchange  
rates which had been mentioned in the previous year’s  
annual outlook as a potentially negative factor. In the  
Financial Services segment  
Return on equity  
The Financial Services segment generated a return on  
2
Annual Report 2013 a “significant increase” in revenues equity (RoE) of 19.4% in 2014 (2013: 20.0 %), reflecting  
was predicted.  
continued favourable business conditions. The RoE was  
therefore at a similar level to the previous year and re-  
mained above the target level of 18%, in line with our  
forecast for 2014. In the Annual Report 2013, a “slight  
decrease” in RoE was predicted. The main reason for  
EBIT margin and return on capital employed  
The EBIT margin for the Automotive segment (profit  
before financial result divided by revenues) came in at  
9.6% (2013: 9.4%) as a result of the high-value model  
mix. As forecast for the financial year 2014, the EBIT  
margin from automobile business was within the target  
range of between 8 and 10% and thus in line with our  
expectations.  
1
EU-28.  
2
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Plus an additional 1,110 Husqvarna motorcycles (until 5 March 2013).  
3
2
8
the better-than-expected RoE performance was the  
stable risk situation, particularly in the area of residual  
values.  
The following overall picture arises for the principal  
performance indicators utilised by the BMW Group and  
its segments:  
18  
18  
23  
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
Comparison of 2014 forecasts with actual outcomes 2014  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Forecast for 2014  
in 2013 Annual Report  
Forecast revision  
during the year  
Actual outcome  
in 2014  
2
9
2
3
3
3
4
4
4
4
9
5
6
8
0
1
4
5
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
BMW Group  
Profit before tax  
significant increase  
solid increase  
€ million  
units  
8,707 (+10.3%)  
116,324 (+5.4%)  
Workforce at year end  
Automotive segment  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
1
Sales volume  
significant increase  
moderate decrease  
Q3: solid increase  
Q3: slight decrease  
Q2: solid increase  
2,117,965 (+7.9%)  
130 (–2.3%)  
2
Fleet emissions  
g CO /km  
2
Revenues  
significant increase  
€ million  
75,173 (+6.4%)  
9.6 (+0.2%pts)  
61.7 (–1.3%pts)  
EBIT margin  
target range between 8 and 10%  
significant decrease  
%
%
6
5
2
Report on Outlook, Risks and  
Opportunities  
Return on capital employed  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Motorcycles segment  
Sales volume  
8
3
7
slight increase  
Q3: solid increase  
units  
%
123,495 (+7.2%)  
21.8 (+5.4%pts)  
Return on capital employed  
in line with last year’s level  
8
BMW Stock and Capital Markets  
Financial Services segment  
Return on equity  
slight decrease  
%
19.4 (–0.6%pts)  
1
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).  
EU-28.  
2
2
9 COMBINED MANAGEMENT REPORT  
Report on Economic Position  
Review of Operations  
AUTOMOTIVE SEGMENT  
More than 2 million vehicles sold for the first time  
The BMW Group sold a total of 2,117,965 BMW, MINI  
BMW Group – key automobile markets 2014  
*
as a percentage of sales volume  
and Rolls-Royce brand vehicles in 2014, thus surpassing  
the two-million mark for the first time in its history  
*
*
(
2013: 1,963,798 units; +7.9%). All three brands con-  
Other  
China  
tributed to these excellent figures and helped the BMW  
Group to retain its pole position in the premium seg-  
ment worldwide. Sales of BMW brand cars were 9.5%  
*
up on the previous year (2014: 1,811,719 units; 2013:  
USA  
Japan  
Italy  
France  
*
1,655,138 units). Despite the model change of its  
best-selling model, the MINI Hatch, the MINI brand  
achieved a sales volume of 302,183 units, almost match-  
ing the previous year’s high level (2013: 305,030 units;  
Great Britain  
Germany  
–
0.9%). Rolls-Royce Motor Cars sold 4,063 ultra-luxury  
*
sedans, surpassing the previous year’s strong sales per-  
formance by 11.9% (2013: 3,630 units).  
China  
USA  
21.6  
France  
Italy  
3.2  
3.0  
18.7  
12.9  
9.7  
Germany  
Japan  
Other  
3.0  
Double-digit sales volume growth in Asia  
Great Britain  
27.9  
Markets in Asia continued to develop dynamically in  
2
014. Sales of BMW  
,
MINI and Rolls-Royce brand  
%) to  
678 units). China again  
vehicles in this region rose significantly (+13  
6
.
8
*
*
58  
,
384 units (2013  
:
578  
,
which the USA accounted for 396,961 units, 5.4% up on  
the previous year (2013: 376,636 units). Thanks to the  
more stable market environment in Europe, sales of the  
Group’s three brands grew by 6.4% to 914,587 units (2013:  
859,546 units). The number of vehicles sold in Germany  
accounted for the lion’s share with a sales volume of  
*
*
4
56,732 units (2013: 391,713 units; +16.6%). The  
number of vehicles sold in the Americas region climbed  
by % to 482 257 units (2013 463 822 units), of  
4
.
0
,
:
,
BMW Group sales volume of vehicles by region and market  
in 1,000 units  
2,200  
2,000  
1,800  
1,600  
1,400  
1,200  
1,000  
Europe  
thereof Germany  
*
Asia  
*
thereof China  
800  
600  
400  
200  
Americas  
thereof USA  
Other markets  
10  
11  
12  
13  
14  
Europe  
thereof Germany  
791.2  
267.2  
286.3  
169.6  
329.7  
266.6  
54.0  
858.4  
285.3  
375.5  
233.6  
380.3  
306.3  
54.8  
865.4  
287.4  
493.4  
327.3  
425.3  
348.5  
61.1  
859.5  
259.2  
578.7  
391.7  
463.8  
376.6  
61.8  
914.6  
272.3  
658.4  
456.7  
482.3  
397.0  
62.7  
*
Asia  
thereof China  
Americas  
*
thereof USA  
Other markets  
Total  
1,461.2  
1,669.0  
1,845.2  
1,963.8  
2,118.0  
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units).  
3
0
rose by 5.1% to 272,345 units (2013: 259,219 units). The  
BMW Group also performed extremely well in Great  
part of the BMW 4 Series since the end of 2013. For this  
reason, reported sales of the 3 Series in 2014 went  
Britain, with sales rising to a total of 205,071 units (2013: down by 4.0% to 480,214 units (2013: 500,332 units).  
1
89,121 units; +8.4%).  
The BMW 4 Series has been highly successful since its  
launch, with 119,580 units sold in the year under re-  
port (2013: 14,763 units). A total of 373,053 customers  
opted for the BMW 5 Series (2013: 366,992 units; +1.7%).  
1
1
2
8
8
3
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
*
BMW retains pole position in the premium segment  
The BMW brand maintained its pole position in the  
premium segment during the year under report. Signifi-  
cant contributions to this achievement were made by  
the highly successful BMW X5 as well as the BMW 3, 4  
and 5 Series, each of which was market leader in its  
relevant segment.  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
The BMW X family also continued to perform well in  
2014. Following the launch of the third generation in  
November 2013, sales of the BMW X5 rose by more than  
a third to 147,381 units (2013: 107,231 units; +37.4%).  
The BMW X3 recorded a sales volume of 150,915 units,  
therefore not quite matching the previous year’s high  
2
9
29  
35  
36  
38  
40  
41  
44  
45  
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
At 190,033 units, sales of the BMW 1 Series were down  
on the previous year’s level (2013: 213,611 units; –11.0%), level (2013: 157,303 units; –4.1%). Similarly, the BMW X1  
reflecting the fact that the Coupé and Convertible  
body variants are now reported as part of the 2 Series.  
Similarly, the Convertible and Coupé models previously new X4 became available in July 2014 and achieved a  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
sales volume figure of 156,471 units was slightly lower  
than one year earlier (2013: 161,353 units; –3.0%). The  
included in the BMW 3 Series have been reported as  
sales volume of 21,688 units by the end of the year.  
6
5
2
Report on Outlook, Risks and  
Opportunities  
Internal Control System and Risk  
Management System Relevant for the  
8
*
Consolidated Financial Reporting Process Sales volume of BMW vehicles by model variant  
8
3
7
Disclosures Relevant forTakeovers  
and Explanatory Comments  
BMW Stock and Capital Markets  
in units  
8
2014  
2013  
Change  
in %  
Proportion of  
BMW sales volume  
2014 in %  
BMW 1Series  
BMW 2 Series  
BMW 3 Series  
BMW 4 Series  
BMW 5 Series  
BMW 6 Series  
BMW 7 Series  
BMW X1  
190,033  
41,038  
213,611  
–
–11.0  
–
10.5  
2.3  
480,214  
119,580  
373,053  
23,988  
500,332  
14,763  
366,992  
27,687  
56,001  
161,353  
157,303  
–
–4.0  
–
26.5  
6.6  
1.7  
20.6  
1.3  
–13.4  
–13.4  
–3.0  
–4.1  
–
48,519  
2.7  
156,471  
150,915  
21,688  
8.6  
BMW X3  
8.3  
BMW X4  
1.2  
BMW X5  
147,381  
30,244  
107,231  
36,688  
12,866  
311  
37.4  
–17.6  
–16.0  
–
8.1  
BMW X6  
1.7  
BMW Z4  
10,802  
0.6  
BMW i  
17,793  
1.0  
BMW total  
1,811,719  
1,655,138  
9.5  
100.0  
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units).  
MINI at previous year’s level  
The sales performance of the MINI brand in 2014 was  
influenced by the market launch of the third-genera-  
tion Hatch. The BMW Group delivered 302,183 MINI  
brand cars to customers worldwide in the period under  
report (2013  
new MINI Hatch up by  
128,498 units) and sales of the MINI Countryman up by  
5.0% at 106,995 units (2013: 101,897 units).  
:
305  
,
030 units; –  
0
.
9
%), with sales of the  
051 units (2013  
9
.
0
% at 140  
,
:
3
1 COMBINED MANAGEMENT REPORT  
Sales volume of MINI vehicles by model variant  
in units  
2014  
2013  
Change  
in %  
Proportion of  
MINI sales volume  
2014 in %  
MINI Hatch  
140,051  
17,327  
13,326  
106,995  
3,816  
128,498  
21,167  
21,030  
101,897  
8,436  
9.0  
–18.1  
–36.6  
5.0  
46.3  
5.7  
MINI Convertible  
MINI Clubman  
MINI Countryman  
MINI Coupé  
4.4  
35.4  
1.3  
–54.8  
–45.2  
6.0  
MINI Roadster  
MINI Paceman  
MINI total  
5,101  
9,315  
1.7  
15,567  
302,183  
14,687  
305,030  
5.2  
–0.9  
100.0  
More than 4,000 Rolls-Royce sold for the first time  
Rolls-Royce Motor Cars remained market leader in the  
ultra-luxury segment in 2014. With 4,063 units sold,  
the brand surpassed the 4,000-unit sales volume thresh- 492 units). 1,  
old for the first time (2013: 3,630 units; +11.9%). The  
Rolls-Royce Wraith, which became available in autumn  
2013, achieved sales volume of 906 units (2013  
555 units of the Rolls-Royce Ghost were  
sold worldwide (2013: 2,284 units; –31.9%).  
1
,
:
Sales volume of Rolls-Royce vehicles by model variant  
in units  
2014  
2013  
Change in %  
Phantom  
602  
1,555  
1,906  
4,063  
854  
2,284  
492  
–29.5  
–31.9  
–
Ghost  
Wraith  
Rolls-Royce total  
3,630  
11.9  
Production network running at full pace  
More than one million vehicles produced in Germany  
for fourth consecutive year  
The most important events in the BMW Group’s pro-  
duction network during the year under report were the  
numerous model start-ups, the beginning of series pro-  
duction for the BMW i8 and the further expansion of  
our international manufacturing network, which grew  
to a total of 30 sites in 14 countries and set new records  
in terms of production volumes.  
For the fourth year in a row, the BMW Group manu-  
factured over one million vehicles at its German plants.  
Around 950 vehicles rolled off production lines per  
working day at the Group’s main plant in Munich, in-  
cluding the BMW 3 Series Sedan, the BMW 3 Series  
Touring, the BMW 4 Series Coupé and, since February,  
the BMW M4 Coupé.  
Due to the brisk demand on international car markets,  
*
in 2014 production volume rose to 2,165,566 units (2013: In Dingolfing, production reached all-time high levels,  
*
*
2
(
+
,006,366 units; +7.9%), comprising 1,838,268 BMW  
with an average of around 1,600 units manufactured per  
*
2013: 1,699,835 ; +8.1%), 322,803 MINI (2013: 303,177;  
6.5%) and 4,495 Rolls-Royce (2013: 3,354; +34.0%)  
brand cars.  
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang  
(2013: 214,920 units, 2014: 287,466 units).  
3
2
Vehicle production of the BMW Group by plant  
in units  
2014  
2013  
Change  
in %  
Proportion of  
production in %  
1
1
2
8
8
3
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
Munich  
228,126  
369,027  
272,015  
211,434  
68,771  
247,330  
342,629  
295,417  
186,695  
65,646  
–7.8  
7.7  
10.5  
17.0  
12.6  
9.8  
23  
General and Sector-specific  
Environment  
Dingolfing  
Regensburg  
Leipzig  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
–7.9  
13.3  
4.8  
2
9
Rosslyn  
3.2  
29  
35  
36  
38  
40  
41  
44  
45  
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
Spartanburg  
349,949  
143,390  
144,076  
179,318  
113,401  
29,196  
297,326  
126,888  
88,032  
17.7  
13.0  
63.7  
1.9  
16.2  
6.6  
1
Dadong  
1
Tiexi  
6.7  
Oxford  
175,986  
125,559  
–
8.3  
2
Graz (Magna Steyr)  
–9.7  
–
5.2  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
2
Born (VDL Nedcar)  
1.3  
Goodwood  
4,495  
3,354  
34.0  
1.7  
0.2  
Assembly plants  
BMW Group  
52,368  
51,504  
2.4  
2,165,566  
2,006,366  
7.9  
100.0  
6
5
2
Report on Outlook, Risks and  
Opportunities  
1
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Joint venture BMW Brilliance Automotive Ltd., Shenyang.  
Contract production.  
2
8
3
7
8
BMW Stock and Capital Markets  
day and almost 370,000 over the full year under report.  
Production of the BMW 4 Series Gran Coupé began in  
February. Assembly lines at the Dingolfing plant are  
therefore now making a total of 17 models, belonging to  
five different BMW series. In February the plant cele-  
brated a production record following construction of  
the nine-millionth BMW car at that location. As part of  
the plant’s modernisation, measures in 2014 included  
further work on new bodymaking facilities at the site. A  
new supply centre for vehicle assembly, a high-speed  
servo press and a production facility for axle brackets  
were all put into operation. Two new production lines  
were added in October to manufacture high-voltage  
power storage systems and electric motors for the BMW  
Group’s future plug-in hybrids.  
At the Regensburg plant, production of the BMW M3  
Sedan began in February and the first BMW M4  
Convertible models were manufactured there in July.  
The enlargement of the pressing plant was completed  
and the bodymaking facility expanded to include a  
second production line. At the same time, a new supply  
centre went into operation.  
The BMW Group plant in Wackersdorf celebrated its  
25th anniversary in 2014. In July, a new building and a  
new production facility for processing CFRP matting  
was taken into service.  
Expansion work at the Eisenach plant also began in  
July. The existing buildings and production floor space  
are due to be enlarged to accommodate future vehicle  
projects and new technologies. Moreover, a state-of-the-  
art servo press is being installed.  
The Leipzig plant continued to recruit new personnel  
in order to keep pace with the increased expertise and  
manpower capacity needed, both for BMW i models  
and for conventional production. In July, the four-thou-  
sandth employee was welcomed to the plant. In May,  
series production of the BMW i8 commenced, followed  
by the BMW 2 Series Active Tourer in July. In October,  
the 1.5-millionth BMW was manufactured at the plant  
since production first began in 2005. Production of the  
BMW 2 Series Convertible began in November.  
The components plant in Landshut is making the electric  
motor, the complete plastic outer skin, CFRP structural  
body parts and lightweight metal die-cast parts for the  
BMW i8 hybrid sports car. The plant’s lightweight die-  
cast metal facilities celebrated their 25th anniversary in  
2014 and remain the only unit within the BMW Group  
producing such parts. The components plant has adopted  
3
3 COMBINED MANAGEMENT REPORT  
a new, energy-saving strategy to optimise energy manage- third production building. It should be ready to begin  
ment. Since 2014, the waste heat from the melting operations by the beginning of 2015 and offers additional  
plant has been fed into the site’s own in-house hot water capacity for two production lines capable of handling a  
system, which means it can be used for heating in win-  
ter and cooling in summer.  
total volume of 3,000 tonnes per year.  
In a parallel development, the BMW Group has built an  
assembly plant in Araquari, Brazil. The first vehicles  
Global presence strengthened  
During the year under report, 48.5% of the BMW Group’s were produced at the location in October 2014. The new  
vehicles were manufactured abroad. The BMW 5 Series  
long-wheelbase Sedan is manufactured at the Dadong  
plant in China. The 500,000th vehicle was produced at  
the plant in March 2014, while at the engine manufac-  
production facility will be fully completed in the course  
of 2015. The manufacturing infrastructure will then  
comprise bodymaking, painting and assembly. Manu-  
facturing capacity is scheduled to reach up to 30,000 vehi-  
1
turing plant in Shenyang, the 400,000th 4-cylinder petrol cles per year. The production portfolio currently com-  
engine was being produced for the Chinese market. At1  
prises the BMW 3 Series and the X1. The BMW 1 Series,  
the X3 and the MINI Countryman are scheduled to fol-  
the same time, preparations were initiated at the Tiexi  
plant for a new engine manufacturing facility, including low in the course of 2015.  
a foundry, to supply local production capacities. It is  
due to begin production in 2016. The first BMW 316Li  
was manufactured at the Tiexi plant in October.  
At the Group’s various assembly plants, which mostly  
serve their regional markets, 52 368 vehicles were  
1
,
produced overall during the period under report. The  
plants are located in Araquari (Brazil), Rayong (Thailand),  
Chennai (India), Kaliningrad (Russia), Cairo (Egypt),  
Jakarta (Indonesia) and Kulim (Malaysia).  
At the Rosslyn manufacturing plant in South Africa,  
the BMW Group concluded a contract with the energy  
company Bio2Watt (Pty) Ltd. Under its terms, from  
2
015 onwards some 25 to 30% of the plant’s electricity  
requirements will be generated by a combined heat and  
power plant that runs on landfill gas. The biogas used  
Thirteen years after the relaunching of the MINI brand in  
2001, the three-millionth vehicle has meanwhile rolled  
off the assembly lines at the Oxford plant. During this  
period, two million of the MINI brand cars manufac-  
tured in the UK have been exported to over 110 coun-  
tries around the world. The British production triangle  
comprising the MINI plant in Oxford, the components  
plant in Swindon and the engine production facility  
in Hams Hall is a key part of the BMW Group’s produc-  
tion network. More than 900 units of the MINI are pro-  
duced at the Oxford plant per day during peak times.  
will be recovered from the treatment of waste  
.
Almost 350 000 vehicles were manufactured at the  
,
US plant in Spartanburg in 2014 – a new record for the  
location. To coincide with the production plant’s 20th  
anniversary, in March the BMW Group announced ex-  
pansion plans. Its manufacturing capacity is scheduled  
to be raised to 450,000 vehicles per year. To date, the  
BMW X3, X5, X5 M, X6 and X6 M models have been  
manufactured at the competence centre for X vehicles.  
Furthermore, production of the BMW X4 commenced  
at the site in April. In October, a second painting facility  
was also commissioned at the plant.  
In order to secure greater capacity for planned growth,  
since July the MINI Hatch is also being produced at  
the Dutch carmaker VDL Nedcar bv in Born, the  
Netherlands, under the terms of a contract with the  
BMW Group. These new arrangements enable even  
greater flexibility for the BMW Group’s production net-  
work worldwide. The MINI models Countryman and  
Paceman are already being produced under contract by  
Magna Steyr Fahrzeugtechnik (MSF) in Graz, Austria. In  
In July 2014 the construction of a new plant in San Luis  
Potosí, Mexico, was announced. The scheduled annual  
capacity of this plant is approximately 150,000 units.  
This move underpins the BMW Group’s strategic com-  
mitment to maintaining a well-balanced global value-  
added chain.  
2
At Moses Lake , Washington (USA), the carbon fibre  
1
Joint venture BMW Brilliance Automotive Ltd., Shenyang.  
Joint operation SGL Automotive Carbon Fibers.  
2
manufacturing facility has been enlarged to include a  
3
4
May 2014, MSF manufactured its one-millionth vehicle  
for the BMW Group.  
upstream preparation staff with the best possible  
support. One good example is the innovative coopera-  
tion between staff and robots in the Spartanburg and  
Dingolfing plants, by which people and robots work  
together effectively side by side.  
The pressing plant in Swindon produces bodywork  
components and assemblies for the Oxford plant. Since  
July the plant has also supplied the MINI contract pro-  
duction facilities at VDL Nedcar with body parts and  
the Leipzig plant with pressed parts for the BMW 2 Se-  
ries Active Tourer.  
18  
18  
23  
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
2
9
2
3
3
3
4
4
4
4
9
5
6
8
0
1
4
5
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
During the third quarter, series production of the  
Rolls-Royce Ghost Series II commenced at the Rolls-Royce  
plant in Goodwood (UK). Construction of a technology  
and logistics centre for the plant was also announced.  
The Goodwood plant meanwhile provides jobs for more  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
than 1,500 people, 100 of whom took up their posts  
during the period under report.  
Events after the End of the  
Reporting Period  
The engine plants in Munich, Hams Hall (UK) and Steyr  
(Austria) have continued to introduce a highly flexible,  
demand-oriented production system. In June, the engine  
production plant in Munich officially gave the green  
light for a production line for modular engines. In future,  
the Group’s main plant will therefore act internationally  
as the leading plant for the production of the 3- and  
6
5
2
Report on Outlook, Risks and  
Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
8
3
7
8
BMW Stock and Capital Markets  
4
-cylinder petrol engines that form part of the Efficient  
Dynamics family. The Munich plant produces up to  
200 engines each day, 1,000 of which are modular. The  
range comprises BMW 3-, 4-, 8- and 12-cylinder petrol  
engines, BMW 6-cylinder diesel engines, and -cylinder  
3
,
8
high-performance engines for the BMW M models. In  
October, the engine plant in Steyr also launched a pro-  
duction line for low-fuel-consumption 3- and 4-cylinder  
modular engines. In what is currently the largest engine  
plant operated by the BMW Group, up to 4,700 engines  
are completed each day. The diesel engine development  
centre, which is connected to the plant, is currently being  
enlarged. The Hams Hall engine plant makes  
3- and  
4-cylinder petrol engines for BMW and MINI and is also  
the exclusive manufacturer of 3-cylinder petrol engines  
for the BMW i8.  
Pilot projects for “Industrie 4.0” launched  
During the year under report, the BMW Group initiated  
new projects within its production network which will  
ultimately pave the way towards the first intelligent plant.  
The objective is to deploy new technologies as sensibly  
as possible with the aim of providing production and  
3
5 COMBINED MANAGEMENT REPORT  
MOTORCYCLES SEGMENT  
Solid sales volume growth for BMW Motorrad  
BMW Group – key motorcycle markets 2014  
The Motorcycles segment profited from a positive market  
environment during the period under report. In total,  
as a percentage of sales volume  
we sold 123  
,
495 BMW motorcycles worldwide (2013  
15,215 ; +7.2%) and therefore outperformed the market  
as a whole.  
:
Germany  
1
1
Other  
USA  
Motorcycle sales up in all markets  
The number of motorcycles sold in Europe rose to 73,611  
units (2013: 68,961 units), a solid growth rate of 6.7%.  
With a sales volume of 21,714 units, business in Germany  
edged up slightly on the previous year (2013: 21,473 units;  
France  
Spain  
Great Britain  
Italy  
Brazil  
+
1.1%). Motorcycle sales were also slightly higher (+2.5%)  
in Italy, with 10,487 units handed over to customers  
2013: 10,230 units). Significant growth was achieved in  
France, however, where we recorded a sales volume of  
1,600 units (2013: 10,400 units; +11.5%). Motorcycle  
Germany  
USA  
17.6  
Brazil  
6.1  
5.5  
(
12.4  
9.4  
Great Britain  
Spain  
France  
Italy  
5.0  
1
8.5  
Other  
35.5  
sales in the USA, at 15,301 units, grew solidly compared  
to the previous year (2013: 14,100 units; +8.5%).  
The new R1200 RS succeeds in combining the qualities  
of a touring bike with the dynamic performance of a  
sports machine. The new R1200 R continues in the tra-  
dition of a “purist” BMW roadster combined with a tried-  
and-tested boxer engine. The new models will become  
available in spring 2015, in good time for the start of the  
BMW Motorrad enters world of electromobility  
In May 2014, the arrival of the new C evolution marked  
the beginning of a new chapter in the urban mobility  
segment for BMW Motorrad. The new electrically pow-  
ered scooter fuses riding fun and dynamism with the  
benefits of zero-emissions performance to create a whole motorcycle season. BMW Motorrad also presented two  
new experience on two wheels.  
more new models at the EICMA Motorcycles Exhibition  
in Milan – the S1000 XR and the F 800 R. The S1000 XR  
The new R nineT, S1000 R, R1200 RT, R1200 GS Adven- unites dynamic touring qualities, sporty performance  
ture and K 1600 GTL Exclusive models presented in au-  
tumn 2013 were all launched in time for the start of  
the season in March 2014. Important contributions to  
BMW Motorrad’s success were made in particular by the  
and high levels of comfort with outstanding everyday  
usability. The new F 800 R Roadster offers sporty perfor-  
mance, agile handling and even greater versatility.  
R
1200 GS Adventure and R1200 RT models. The new  
BMW Motorrad’s new brand strategy  
R nineT generated a highly positive response among cus- The BMWGroup launched its new brand strategy for BMW  
tomers and media alike.  
Motorrad at the INTERMOT international motorcycle  
show. The brand’s new motto – MAKE LIFE A RIDE –  
Three BMW motorcycles celebrated their world premieres equates motorcycle riding with the joy of living. People  
at the INTERMOT in Cologne: the S1000 RR, the R1200 R tell their (life) stories in a documentary style and, by air-  
and the R1200 RS. The latest version of the S1000 RR  
ing their emotions regarding all aspects of the motor-  
Supersports bike has an even better weight-to-power ra- cycle, raise enthusiasm worldwide for motorcycle riding.  
tio and a whole host of integrated technical innovations.  
Motorcycle production volume significantly up  
on previous year  
In total, 133,615 BMW motorcycles were manufactured  
during the period under report (2013: 110,127 units;  
2
BMW sales volume of motorcycles  
in 1,000 units  
3
1
20  
00  
+
21.3%), with the sharp increase primarily reflecting  
the production starts of a number of new models. Up to  
00 motorcycles (from various series) and maxi-scooters  
1
8
0
0
0
0
6
6
4
2
are manufactured each day at the motorcycles plant in  
Berlin. BMW Motorrad also continued to expand the in-  
ternational reach of its production activities. Local motor-  
cycle assembly facilities, such as those in Brazil and  
Thailand, are becoming increasingly important.  
10  
11  
12  
13  
14  
1
Plus an additional1,110 Husqvarna motorcycles (until 5 March 2013).  
Excluding Husqvarna, sales volume up to 2013: 59,776 units.  
98.0  
104.3  
106.4  
115.2 123.5  
2
3
Plus an additional1,569 Husqvarna motorcycles (until 5 March 2013).  
3
6
FINANCIAL SERVICES SEGMENT  
Financial Services segment remains on growth course  
In the used car financing line of business, 334,289 new  
The Financial Services segment achieved its best figures contracts for BMW and MINI brand cars were signed  
to date in 2014, despite a difficult market environment. in 2014 % more than in the previous year (2013:  
,359,572 lease and credit financing contracts were in 315,919 contracts).  
,
5
.
8
4
18  
18  
23  
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
place with dealers and retail customers at the end of the  
reporting period (2013: 4,130,002 contracts; +5.6%).  
Business volume in balance sheet terms grew by 14.3%  
to stand at €ꢀ96,390 million (2013: €ꢀ84,347 million).  
The total volume of all new credit and leasing contracts  
concluded with retail customers during the twelve-  
month period under report amounted to €ꢀ41,318 mil-  
lion, an increase of 5.3% (2013: €ꢀ39,241 million).  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
2
9
The Financial Services segment is represented in more  
than 50 countries, serving the dealer organisation as a  
strong and reliable partner. Credit financing and the  
lease of cars and motorcycles to retail and business cus-  
tomers is the segment’s largest line of business. Multi-  
brand business, operated under the brand name  
“Alphera”, also covers the financing of vehicles of other  
manufacturers. The Financial Services segment offers  
2
3
3
3
4
4
4
4
9
5
6
8
0
1
4
5
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
The increase in new retail customer business is reflected  
in the overall contract portfolio. In total, 4,005,428 con-  
tracts were in place with retail customers at 31 December  
2014 (2013: 3,793,768 contracts; +5.6%). As in previous  
years, growth was recorded across all regions, with in-  
creases in the Europeꢀ/ꢀMiddle Eastꢀ/ꢀAfrica region (+6.5%),  
the Americas region (+4.0%) and for the EU Bank (+0.4%).  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
fleet business services under the brand name “Alphabet”. The most significant rise was again recorded in the  
It also supports the Group’s dealer organisation by  
providing financing for dealership vehicle inventories,  
real estate and equipment. Supplementing its lease  
and credit financing business, the segment also offers  
its customers selected insurance and banking services.  
Asiaꢀ/ꢀPacific region, where the contract portfolio grew  
by 20.1%.  
6
5
2
Report on Outlook, Risks and  
Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Further growth of fleet business  
8
3
7
Alphabet, with its wide range of multi-brand products,  
is one of the top four fleet service providers in Europe.  
Alongside fleet management and financing, the broad  
product range also includes full service leasing. In total,  
a portfolio of 555,349 fleet vehicle contracts was being  
managed at the end of the reporting period, up slightly by  
3.7% compared to one year earlier (2013: 535,528 con-  
tracts).  
8
BMW Stock and Capital Markets  
New business up again on previous year  
Credit financing and leasing business with retail cus-  
tomers once again made a significant contribution  
to the segment’s success in 2014. In total, 1,509,113  
new contracts were signed during the reporting period,  
slightly more (+2.6%) than one year earlier (2013:  
,471,385 contracts).  
1
Decrease in multi-brand financing  
Leasing business grew year-on-year by 5.2%, credit  
financing by %. As a proportion of new business,  
leasing accounted for 34.7% and credit financing for  
5.3%. The proportion of new BMW Group cars leased  
or financed by the Financial Services segment was  
%, percentage points lower than in the pre-  
The volume of multi-brand financing decreased mod-  
erately in 2014. Against the background of continued  
profitable portfolio growth and greater competition,  
the number of new contracts fell by 8.7% to stand at  
165,776 contracts (2013: 181,605 contracts). A portfolio  
of 465,702 contracts (2013: 452,009 contracts; +3.0%)  
was in place at 31 December 2014.  
1.2  
6
4
1
.
7
2.3  
vious year (2013: 44.0%).  
Contract portfolio of Financial Services segment  
BMW Group new vehicles financed by  
in 1,000 units  
Financial Services segment  
4,400  
4,200  
4,000  
3,800  
3,600  
3,400  
3,200  
in %  
50  
40  
30  
20  
10  
10  
11  
12  
13  
14  
10  
11  
12  
13  
14  
Financing  
Leasing  
24.1  
24.1  
20.0  
21.1  
20.7  
19.7  
22.5  
21.5  
20.8  
20.9  
3,190  
3,592  
3,846  
4,130 4,360  
3
7 COMBINED MANAGEMENT REPORT  
period under report (2013: 1,041,530 contracts; +4.2%).  
Overall, the portfolio increased to 2,874,158 contracts  
Contract portfolio retail customer financing of  
Financial Services segment 2014  
as a percentage by region  
(2013: 2,567,168 contracts; +12.0%).  
Risk profile  
Asia/Pacific  
The positive trend in the global economy and a some-  
what quieter period in the euro crisis enabled the risk  
profile relevant for the Financial Services segment’s  
total portfolio to improve again in 2014. Moreover, the  
segment’s well-established procedures for managing  
credit risks continued to prove their worth. At 0.50%, the  
overall credit loss ratio remained at a stable, low level  
Americas  
Europe/Middle  
East/Africa  
(
2013: 0.46%). Reflecting the generally stable conditions  
EU Bank  
prevailing on international used car markets, sales prices  
for our pre-owned cars developed robustly. Average re-  
25.1 sidual value losses incurred on the resale of our vehicles  
14.7 remained stable at the previous year’s level.  
Americas  
EU Bank  
30.4  
29.8  
Europe/Middle East/Africa  
Asia/Pacific  
Further information with respect to risks and opportu-  
nities related to Financial Services can be found in the  
section “Report on risks and opportunities”.  
Dealer financing significantly up on previous year  
The total volume of dealer financing amounted to  
€ꢀ14,710 million at the end of the reporting period, 12.2%  
higher than one year earlier (2013: €ꢀ13,110 million).  
Deposit business volume at previous year’s level  
Deposit-taking represents an important element in the  
BMW Group’s refinancing strategy. The volume of cus-  
tomer deposits worldwide at the end of the reporting  
period stood at €ꢀ12,466 million and thus on par with  
the previous year (2013: €ꢀ12,457 million; +0.1%).  
Insurance business continues to grow  
The Financial Services segment also operates an insur-  
ance line of business. In addition to its financing and  
leasing products, we also offer a wide range of insurance  
coverage, addressing all aspects of individual mobility.  
Demand for our insurance products remained high in  
2
014, with 1,085,781 new contracts signed during the  
Development of credit loss ratio  
in %  
0.7  
0.6  
0.5  
0.4  
0.3  
0.2  
0.1  
10  
11  
12  
13  
14  
0.67  
0.49  
0.48  
0.46  
0.50  
3
8
RESEARCH AND DEVELOPMENT  
Research and development play a vital role for the BMW the new engine family during the first half of 2014. Due  
Group, given its broad range of products and the high  
number of new models. Our vehicles and services also  
set standards in terms of connecting car occupants  
with the outside world. During 2014, a total of 11,779  
employees were engaged throughout the BMW Group’s  
global research and innovation network at twelve loca-  
tions spread over five countries, to deliver the best  
product quality possible and develop innovative tech-  
nologies for customers.  
to commonalities in the design of our petrol and diesel  
engines, the percentage of identical parts used can be as  
high as 60%, while the structural similarities between  
petrol and diesel engines are around 40%.  
1
1
2
8
8
3
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
The BMW i8 combines the driving performance of a  
sports car with the fuel consumption of a compact-class  
model. The plug-in hybrid system developed for the  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
2
9
BMW i8 meets the very highest specifications in terms  
29  
35  
36  
38  
40  
41  
44  
45  
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
of driving dynamics, efficiency, practical usefulness  
and quality, thus underlining the BMW Group’s techno-  
logical leadership in the field of drive system develop-  
ment. In the long term, the BMW Group also plans to  
transfer eDrive technology to other core brand models.  
Research and development expenditure for the year de-  
*
creased by 4.7% to €ꢀ4,566 million (2013: €ꢀ4,793 mil-  
lion). The research and development ratio was 5.7%,  
.6 percentage points lower than in the previous year  
0
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
(2013: 6.3%). The ratio of capitalised development costs  
to total research and development costs for the period  
(capitalisation ratio) was 32.8% (2013: 36.4%). Amortisa- 2014 provides a preview of how extreme efficiency can  
The BMW 3 Series plug-in hybrid prototype unveiled in  
tion of capitalised development costs totalled €ꢀ1,068 mil- be combined with ultimate driving pleasure in the world’s  
6
5
2
Report on Outlook, Risks and  
Opportunities  
lion (2013: €ꢀ1,069 million). Further information on re-  
search and development expenditure is provided in the  
section “Results of Operations, Financial Position and  
Net Assets” and in note 11 to the Group Financial State- combined with an electric drive system. The outcome is  
ments.  
most successful premium-class sedan. The prototype  
features a 4-cylinder petrol engine from the new Efficient  
Dynamics family with TwinPower turbo technology  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
8
3
7
8
BMW Stock and Capital Markets  
a car that delivers sporty driving dynamics similar to  
being behind the wheel of a conventionally powered  
6-cylinder BMW 3 Series model, but with far lower fuel  
consumption. The possible integration of a plug-in  
hybrid system is already a firm part of our thinking when  
Drive concepts: setting the course for the future  
In line with our commitment to Efficient Dynamics, we  
are working continuously to optimise both our range  
of combustion engines featuring TwinPower turbo tech- new BMW and MINI models are being developed, thus  
nology on the one hand and the various electric motors, ensuring, among other things, that future model variants  
energy storage and energy management systems for  
electric and plug-in hybrid vehicles developed for BMW  
eDrive on the other. In the long term, the BMW Group  
equipped with hybrid drive technology will be just as  
suitable for everyday use as their standard counterparts.  
is also promoting the development of hydrogen-powered The BMW Group took a further step forward in the field  
fuel cell technology as a source of energy.  
of powertrain electrification with its presentation in  
014 of the newly developed range of hybrid drive sys-  
2
The new Efficient Dynamics family of engines, com-  
prising 3-, 4- and 6-cylinder power units, reflects the  
output of a rigorous and consistently applied develop-  
ment process. Higher aluminium content plus the use  
of magnesium (which is even lighter) has enabled the  
BMW Group to significantly reduce the average weight  
of its latest range of engines. The first of this new gen-  
tems intended for high-performance electric drives  
based on Power eDrive technology. In future-generation  
plug-in hybrid vehicles, around two-thirds of the drive  
system’s output should come from the Power eDrive  
electric system and around one-third from the TwinPower  
turbo technology combustion engine. The BMW Group  
is pressing ahead with the development of battery-  
eration of engines is a 1.5-litre, 3-cylinder petrol engine, powered drive systems (as in the BMW i3) and plug-in  
which has found its first home in the BMW i8. The BMW hybrids, as well as in other areas such as fuel-cell electric  
Group also presented the first  
4
-cylinder versions of  
technology and high-voltage electrified systems (Power  
eDrive). With its wide range of drive systems, the BMW  
Group can and will continue to be able to react flexibly  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
3
9 COMBINED MANAGEMENT REPORT  
to the needs of customers and new regulations stipulated the utmost safety at the vehicle’s dynamic limit, thanks  
by legislators.  
to perfected control technology. On a closed-off race-  
track, the BMW test vehicle additionally underlined the  
efficiency of a new generation of control systems, which  
can actively intervene in key driving decisions and  
at the same time coordinate the electrically controlled  
steering with the brake and accelerator. The system  
therefore goes one decisive step further than any of its  
predecessors. With BMW ActiveAssist, the BMW Group  
Intelligently designed lightweight construction  
Lightweight construction is an essential component of  
the BMW Group’s Efficient Dynamics strategy and  
firmly embedded in its basic understanding of modern  
manufacturing. The consistent use of lightweight mate-  
rials in vehicle design is particularly important with  
electrically powered cars, as not only the battery capacity, is playing a pioneering role in implementing safety-re-  
but also the total weight of the vehicle restrict their  
range. In order to compensate for the added weight of  
the electrical components, the BMW Group has devel-  
oped its LifeDrive concept for BMW i series vehicles,  
which is firmly committed to the use of lightweight de-  
sign. In this context, the BMW Group has, for the first  
time, achieved an innovative combination comprising  
an aluminium chassis and a CFRP passenger compart-  
ment. Specifically deployed, the material used helps re-  
duce total vehicle weight, optimises its point of gravity  
and increases the stability of the car’s body. The BMW  
Group is currently working on further possible applica-  
tions, such as hybrid wheel rims comprising a mixture  
of aluminium and CFRP. In the case of the BMW M3  
lated, highly automated systems. Back in October 2009,  
in conjunction with the predecessor research project,  
BMW Track Trainer, the BMW Group drove a highly au-  
tomated vehicle through the racing line of the “Nord-  
schleife” at the Nürburgring racetrack, one of the most  
demanding circuits in the world. The BMW emergency  
stop assistant research project has delivered further  
valuable findings. If the driver fails to react, for example  
due to a medical emergency such as a heart attack,  
this feature can switch to the highly automated mode,  
steer the vehicle safely to the roadside and automatically  
send an emergency call. Back in 2011, the first BMW  
test vehicle was already driven on a multi-lane motor-  
way using the highly automated mode. Meanwhile, with  
and M4 models, the high rigidity and low weight of CFRP some 20  
allows the cardan shaft to be manufactured as a single development engineers have gathered valuable insights  
piece, without a centre bearing. In addition to achieving into the behaviour and handling strategies of their highly  
,000 kilometres of testing behind them, the  
a 40% weight-saving compared to the previous model,  
a further benefit is that the rotating mass is reduced,  
thus resulting in a further improvement in response be-  
automated vehicles.  
Research project “Virtual marketplace of the future”  
haviour. After more than ten years of intensive research Location Based Services enable users to receive infor-  
work and the continual optimisation of the processes,  
materials, systems and tools involved, the BMW Group  
is currently the only automotive manufacturer with  
the required know-how to utilise CFRP on a large-scale  
production basis.  
mation on places of interest, services and events in the  
surrounding area – anytime and anywhere. Even while  
driving, location-based services and other information  
can be a useful supplement, either en route or at your  
destination. For that reason, BMW ConnectedDrive al-  
ready offers users a whole range of location-based infor-  
mation. In future, the vehicle will be able to present the  
customer with information and items of interest along  
Highly automated driving at the limit  
Precise, reliable control of a vehicle when driven at its  
dynamic limit is a key aspect of highly automated driving. the route, tailored to suit the situation and the user’s  
Only a system that can safely master all dynamic situa-  
tions, including those encountered when a vehicle is  
individual preferences. The premiere of the latest gen-  
eration of the optional navigation system “Professional”  
driven at its technical limit, will be able to instil trust and in the BMW 2 Series Convertible achieved an even  
provide sustained and secure relief for the driver in tiring higher level of convenience and reliability in terms of  
situations.  
route guidance. The system, which was first presented  
in 2014, updates its navigation data on a regular basis,  
several times per year, assuming a new version of map  
data is available. The user is required to pay neither  
The BMW Group has built an innovative, highly auto-  
mated research prototype, which in 2014 demonstrated  
4
0
PURCHASING AND SUPPLIER NETWORK  
licensing fees nor transmission costs. Via the SIM card  
built into the car, the new map data are sent to the  
vehicle via the mobile network (LTE), without having  
to take the longer route via an external data carrier and  
manual installation.  
The primary focus of the BMW Group’s purchasing and  
logistics activities is to achieve an optimal balance of  
quality, innovation, flexible supply structures and com-  
petitive cost. In this context, we therefore go to great  
lengths to design the supply chain with our business  
partners, thus ensuring that we can react rapidly and  
flexibly at all times to fluctuations in order volumes, even  
within a volatile environment.  
1
1
2
8
8
3
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
Outstanding technology and design  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
In the most recent competition for the prestigious “In-  
ternational Engine of the Year Award”, the BMW Group  
was awarded prizes in two different categories. For the  
2
9
Numerous model start-ups  
2014 saw the start-up of 13 new BMW and MINI brand  
29  
35  
36  
38  
40  
41  
44  
45  
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
fourth time now, the  
3
.
0
-litre in-line  
6
-cylinder petrol  
engine featuring BMW TwinPower turbo technology was models. Most of the BMW start-ups were concentrated  
among the main prizewinners. The engine powers on Europe and the NAFTA region. The production start  
numerous current BMW models. The 1.6-litre 4-cylinder of the new X4 at the Spartanburg plant resulted in a  
turbo engine, which is fitted in models such as the MINI broader supplier base within the NAFTA region. Close  
Cooper S Countryman and the MINI Cooper S Paceman, collaboration with external business partners and the  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
was winner in its class for the eighth consecutive time.  
BMW Group’s own in-house component production  
team resulted in the introduction of numerous innova-  
tions, many of them relating to the BMW i8.  
The BMW Group won as many as eight prizes at last  
year’s “Red Dot Award for Product Design”. The “Red  
Dot” went to seven BMW models. Apart from the  
BMW i3, which took the “Red Dot: Best of the Best”  
award and thus the highest accolade for trendsetting  
design, the BMW i8, the 2 Series Coupé, the 3 Series  
Gran Turismo, the 4 Series Coupé and Convertible and  
the BMW R nineT all received prizes. Furthermore,  
6
5
2
Report on Outlook, Risks and  
Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Increasing importance of NAFTA region  
During the year under report, the construction of a new  
plant in San Luis Potosí (Mexico) with a planned annual  
manufacturing capacity of 150,000 units was announced.  
This move is in line with the strategy of ensuring glob-  
ally balanced growth. For the BMW Group, it will also  
8
3
7
8
BMW Stock and Capital Markets  
the new MINI received an “Honourable Mention”. With entail a further increase in NAFTA-based purchases in  
the “iF product design award”, the BMW i8 was pre-  
sented with a prize by Industrie Forum Design e.ꢀV. for  
its innovative design. The greatest appreciation, how-  
the coming years, whilst at the same time contributing  
to currency hedging. In view of these developments,  
the BMW Group’s decentralised organisational struc-  
tures in the NAFTA region have been strengthened and  
newly aligned.  
ever, was accorded to the BMW i3, which won the “iF  
product design award Gold”. Further awards went to  
the X5, the 2 Series Coupé, the 4 Series Coupé, the 3 Se-  
ries Gran Turismo and the BMW R nineT in the cate-  
gory “Product, transportation designꢀ/ꢀspecial vehicles”.  
Regional mix of BMW Group purchase volumes 2014  
in %, basis: production material  
Africa  
Asia/Australia  
NAFTA  
Germany  
Rest of  
Western Europe  
Eastern Europe  
Germany  
47.2  
17.2  
15.9  
NAFTA  
14.5  
3.7  
Eastern Europe  
Rest of Western Europe  
Asia/Australia  
Africa  
1.5  
4
1 COMBINED MANAGEMENT REPORT  
SALES AND MARKETING  
High level of investment safeguards productivity  
and technology lead  
The worldwide sales network currently consists of some  
3,250 BMW, 1,550 MINI and 130 Rolls-Royce dealer-  
The Purchasing and Supplier Network is also responsible ships. In China alone, more than 40 BMW and 30 MINI  
for component production throughout the BMW Group.  
The importance of the Landshut plant as a competence  
centre for lightweight construction was underlined by  
the expansion of CFRP production facilities at the site.  
The Landshut plant also serves as a centre for electro-  
mobility-related components, including, for instance,  
dealerships were opened in 2014. The BMW i dealership  
and agency network currently covers some 650 loca-  
tions.  
BMW extends its model range  
For the BMW Group, the year 2014 was dominated by  
production of the electric motors and engine transmission the introduction of a number of new models and model  
units for the BMW  
drive components for the BMW i models are produced  
at the Dingolfing plant.  
i
3
and i  
8
. Important chassis and  
updates. The new BMW 4 Series Convertible and the  
model revision of the BMW X1 were both launched in  
March. The BMW 4 Series Convertible excels with its  
enhanced sports performance and quintessential ele-  
gance. Since March 2014 customers have also been able  
to enjoy the impressive driving dynamics of the new  
BMW 2 Series Coupé. The BMW M3 Sedan and the  
BMW M4 Coupé were first seen in the showrooms in  
June. Our M models are a unique blend of genuine  
sporting performance and perfect suitability for every-  
day use. The BMW 4 Series Gran Coupé, the third body  
variant of this series, came onto the market the same  
month. It combines the attractive design of a two-door  
coupé with the functionality of four doors and space  
to spare. A particularly important event for the BMW  
Group took place in June, namely the market launch of  
the BMW i8 plug-in hybrid sports car, which offers the  
dynamics of a high-performance sports model with low  
fuel consumption and emissions levels.  
July saw the sales launch of the new BMW X4, a vehicle  
that possesses the sporty elegance of a classic coupé,  
superbly crossed with the typical characteristics of the  
BMW X series. The model update of the BMW X3 fol-  
lowed the same month. The new BMW 2 Series Active  
Tourer and the BMW M4 Convertible have been on  
display in dealership showrooms since September. The  
new BMW 2 Series Active Tourer opens up completely  
new customer groups, meeting their needs for versa-  
tility, functionality and ample spaciousness in the com-  
pact segment. The BMW M4 Convertible’s design lan-  
guage conveys an unmistakeably stylish and at the same  
time muscular profile. The second-generation BMW X6,  
which boasts a luxurious interior design and new fea-  
tures with a wider range of standard equipment, has been  
in the showrooms since December 2014.  
New MINI also available in five-door version  
The third generation of the three-door MINI entered the  
showrooms in March. The new MINI has been received  
enthusiastically, with its new possibilities for connectivity  
4
2
and efficient 3- and 4-cylinder TwinPower turbo engines. worldwide. In the meantime, 95% of all new vehicles in  
For the first time in its 55-year history, a five-door ver-  
sion of the MINI has been available since October. The  
two MINI models have received the highest acclaim  
both in the media and from customers. The model up-  
dates of the MINI Countryman and MINI Paceman were which already offers a broader range of functions than  
both launched in July. In December, the BMW Group the E-call required by EU legislation as from 2016, the  
announced the new John Cooper Works MINI, which will customer can benefit from a large number of innova-  
the BMW fleet are equipped with an integrated SIM  
card.  
1
1
2
8
8
3
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
In addition to its intelligent emergency call feature,  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
be available on markets worldwide from spring 2015.  
tive services. These include the Concierge Call, which  
is available around the clock and – if required – looks  
up addresses and feeds them directly into the naviga-  
tion system or makes reservations directly. In addi-  
tion, the real-time traffic information (RTTI) or the re-  
mote functions, for example, offer useful support for  
the driver.  
2
9
29  
35  
36  
38  
40  
41  
44  
45  
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
Start-up of Rolls-Royce Ghost Series II  
The Rolls-Royce Ghost Series II has been in the show-  
rooms since the autumn with a moderately revised  
design and continues to combine smooth, understated  
performance with contemporary luxury.  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
In 2014, Rolls-Royce Motor Cars added ten dealerships  
to its sales network, an important step in its aspiration  
to strengthen its position in the ultra-luxury segment.  
In addition, further distribution channels have been  
established for mobility services. During the year under  
report, the ConnectedDrive Store opened not only in  
the pilot markets of Belgium and Luxembourg, but also  
in Germany. For the first time in the premium segment,  
services can therefore be ordered quickly and easily via  
a PC or even directly from the vehicle, and used straight  
away. The ConnectedDrive Store therefore grants ac-  
cess not only to new vehicles but also to used vehicles  
equipped with ConnectedDrive.  
6
5
2
Report on Outlook, Risks and  
Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
New approach to communications with #BMWstories  
BMW is breaking new ground in communications  
with #BMWstories. The online platform www.bmw.  
comꢀ/ꢀBMWstories offers a broad spectrum of commu-  
nication channels. These include films and photo gal-  
leries depicting the special features of BMW models.  
Since #BMWstories started in May 2014, the online  
platform has received more than 3.5 million hits. Over  
8
3
7
8
BMW Stock and Capital Markets  
BMW i sales model  
2
00 million interactions have already taken place in  
To coincide with the market launch of the BMW i3 in  
social media. The published videos have been viewed  
over 36 million times.  
Europe and Japan, a direct sales model was successfully  
introduced in these markets. Over 200 selected BMW i  
partners offer BMW i brand vehicles. In addition, the  
BMW i models are available in selected direct sales mar-  
kets via new distribution channels – including via the  
Customer Interaction Centre (CIC), which has been suc-  
cessfully introduced in nine markets. In four markets  
to start with, the Mobile Sales Advisor (MSA) has also  
become a fixed component of the BMW i sales model.  
The integrated BMW i online sales platform enables cus-  
tomers to order their BMW i3 via the Internet, too. The  
new sales channels provide customer-friendly access to  
the BMW i range of products and services. In the show-  
Successful launch of BMW i 360°ELECTRIC  
With BMW i 360°ELECTRIC, BMW currently offers a  
comprehensive package of products and services for  
purely battery-powered and plug-in hybrid vehicles in  
38 countries worldwide. The package is based on four  
features: comfortable, rapid, emissions-free charging at  
home; simple comprehensive access to public charging  
stations; flexible mobility for long-distance journeys  
and an Assistance Service for maintenance and repairs.  
BMW offers two types of product for charging at home:  
in addition to the Wallbox Pure for simple, safe charging, rooms, the Product Genius in operation at all BMW  
i
the Wallbox Pro has been available since 2014 for more  
rapid availability.  
partners also contributes to comprehensive product  
advice.  
Development of connected mobility  
Premium services for individual mobility  
The BMW Group further extended its connected mobil- Beyond its innovative electric and hybrid cars, BMW i  
ity services in 2014. In total, BMW ConnectedDrive ser- also stands for sustainable mobility concepts. The aim  
vices were introduced in a further eleven markets, as a  
result of which they are now available in 36 countries  
of the mobility services is to promote urban mobility,  
irrespective of the means of transport used.  
4
3 COMBINED MANAGEMENT REPORT  
DriveNow, the car-sharing service offered by BMW i,  
MINI and Sixt, enables users to rent BMW and MINI  
vehicles according to their needs. Via an app, the web-  
site or directly on the road, it is a simple matter for users  
to find, book and park the cars again in another part  
Future Retail comprises:  
– new and additional opportunities to make contact  
with our brands (for example, the BMW and MINI  
Driving Center in South Korea and BMW Brandstore  
Brussels),  
of the city. The DriveNow service is currently available – comprehensively improved dealerships, which offer  
in Munich, Berlin, Düsseldorf, Hamburg, Cologne, San  
Francisco, Vienna and, since December 2014, in London,  
too. The fleet currently consists of about 2,800 cars. At  
the end of 2014, over 390,000 customers had benefited  
a premium experience, and  
– targeted support for dealerships, enabling customer  
needs to be met even more effectively.  
from the premium car-sharing service. Under the brand The use of some 1,900 Product Geniuses worldwide in  
name AlphaCity, we also offer a car-sharing scheme  
for businesses. Up to November 2014, 10,000 registered  
employees had used the AlphaCity service.  
more than 1,000 dealerships has proved to be particu-  
larly successful.  
ParkNow is an app- and Web-based service, which helps  
resolve parking problems for users. On the one hand,  
parking spaces are available to customers in partner car  
parks which can be booked online. On the other hand,  
the service makes it easier to find roadside parking spots.  
ChargeNow is the BMW i mobility service that sim-  
plifies finding and using public charging stations run by  
various suppliers belonging to an international net-  
work. In 2014, a large proportion of BMW i customers  
opted for this service. ChargeNow currently has over  
2
4,000 charging points at its disposal in 19 markets.  
BMW i Ventures was founded back in 2011 to ensure  
optimum conditions for the use and promotion of inno-  
vative mobility services. Based in New York, BMW  
i
Ventures facilitates access to new technologies and opens  
up new customer groups, thereby reinforcing the strate-  
gic approach adopted by BMW i. Life360, MyCityWay,  
JustPark, ChargePoint and ChargeMaster are examples  
of some of BMW i Ventures’ strategic investments.  
Customer services remain on track in 2014  
In 2014, sales of BMW and MINI spare parts, accessories  
and services were well up on the previous year’s level,  
with the major markets in the USA, Germany and China  
making a decisive contribution to this performance.  
Growth was also registered in many other markets, such  
as Russia, Korea and South Africa. The dynamic growth  
in business goes hand in hand with investments in the  
future logistics network and with many other measures  
aimed at boosting customer satisfaction.  
New premium experience in showrooms  
By 2017, the Future Retail programme will be imple-  
mented worldwide with a view to enhancing the pre-  
mium experience of our brands and products.  
4
4
WORKFORCE  
Workforce further increased  
BMW Group apprentices at 31December  
The BMW Group’s worldwide workforce had grown to a  
total of 116,324 employees at 31 December 2014 (2013:  
4,500  
3,750  
3,000  
2,250  
1
10,351 employees; +5.4%). The increase was attribut-  
18  
18  
23  
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
able mainly to the expansion of our international produc-  
tion network and the increased scale of development  
activities to generate innovations and new technologies  
for the future. Engineers and skilled staff were recruited  
specifically for this purpose.  
23  
General and Sector-specific  
Environment  
1,500  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
750  
2
9
2
3
3
3
4
4
4
4
9
5
6
8
0
1
4
5
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
10  
11  
12  
13  
14  
More apprentices worldwide  
Some 1,500 young people, including 1,200 in Germany,  
began their vocational training with the BMW Group in  
2014, representing a significant expansion in worldwide  
training activities (2013: 1,363 apprentices). At the end  
of the reporting period, 4,595 young people worldwide  
3,798  
3,899  
4,266  
4,445 4,595  
4
6
6
9
1
4
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Trendence “Graduate Barometer Germany”, with first  
were in vocational training and training programmes for place in the Business category, second place in Engineer-  
Events after the End of the  
Reporting Period  
young talent with the BMW Group.  
ing and third place in IT students, the BMW Group  
achieved its best results since 2007.  
6
5
2
Report on Outlook, Risks and  
Opportunities  
Steep rise in investment in employee training  
Expenditure on basic and further training rose signifi-  
cantly during the period under review to €335 million  
(2013: €288 million; +16.3%), with the main focus of  
training on electromobility, modern production tech-  
niques and healthcare programmes.  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Diversity ensures competitiveness  
Diversity in our workforce makes a major contribution  
to improving our competitiveness, by equipping us to  
respond even better to our customers’ specific needs  
and requirements worldwide. We focus on three criteria  
in this respect: gender, cultural background and ageꢀ/  
experience.  
8
3
7
8
BMW Stock and Capital Markets  
Further progress made as attractive employer  
In 2014, the BMW Group further strengthened its posi-  
tion as one of the most attractive employers in the world. A number of steps were taken to promote diversity in  
In “The World’s Most Attractive Employers”, published  
by the agency “Universum”, the BMW Group was once  
again ranked as the best German employer across all  
sectors and the most attractive automotive company in  
the BMW Group during 2014. The proportion of women  
in the workforce as a whole, in management positions  
and in training programmes for young talent, again rose  
during the year under report. The proportion of women  
the world. It is now classified in the top 3 in the engineer- in the BMW Group’s workforce, which stood at 17.8%  
ing category worldwide. BMWAG 14 %) currently exceeds the target range of  
5 to 17%. The proportion of women in BMW Group  
(
:
.8  
1
In Trendence’s “European Graduate Barometer”, too, the management positions rose to 14.2% (BMWAG: 11.4%).  
BMW Group’s ranking improved. In Trendence’s “Young In the young talent groups, too, the proportion of women  
Professional Barometer”, the BMW Group occupied first rose in 2014. Female representation in trainee pro-  
place for the third year in a row and even managed to  
grammes is already above 50%, and over 27% of partici-  
increase the gap to its competitors. Furthermore, in the pants in student training programmes are women.  
BMW Group employees  
31.12.2014  
31.12.2013  
Change  
in %  
Automotive  
Motorcycles  
Financial Services  
Other  
106,064  
2,894  
100,682  
2,726  
5.3  
6.2  
6.2  
0.8  
5.4  
7,245  
6,823  
121  
120  
BMW Group  
116,324  
110,351  
4
5 COMBINED MANAGEMENT REPORT  
SUSTAINABILITY  
Sustainable management  
Proportion of non-tariff female employees at  
Sustainability for the BMW Group means making a  
lasting positive contribution to economic success, thus  
creating added value for the business. Manufacturing  
with efficient and resource-friendly production pro-  
cesses and offering customers state-of-the-art solutions  
for sustainable individual mobility gives the BMW  
Group a competitive advantage. Our employees play a  
vital role in this context with their personal commit-  
ment and ideas, a fact borne out, for example, by the  
€ꢀ31 million saved in 2014 alone in conjunction with  
the ideas management system in place throughout the  
BMW Group. Our commitment to sustainable manage-  
ment and our aspiration for social responsibility along  
the entire value chain are firmly embedded within the  
BMW Group.  
BMW AG/BMW Group  
in %  
14  
13  
12  
11  
10  
9
1
0
11  
12  
13  
14  
BMW AG  
8.8  
9.1  
10.0  
12.7  
10.9  
13.8  
11.4  
14.2  
*
BMW Group  
11.1  
11.8  
*
Figure adjusted.  
As well as requiring social and ecological aspects to be  
taken into account in internal decision-making pro-  
cesses, the BMW Group’s sustainability management  
system involves the systematic analysis of external fac-  
tors and a continual dialogue with our stakeholders.  
At the same time, the workforce in Germany is also  
becoming more international. In Munich alone, em-  
ployees from 98 different countries work together  
successfully. We also attach importance to a balanced  
age structure in the workforce, with a view to promot-  
ing exchanges between the generations and mitigating  
the loss of know-how when older employees retire.  
Materiality process  
Global megatrends such as urbanisation or climate  
change have an impact on both regulatory conditions  
and customer requirements, causing new fields of  
business to arise. In order to recognise any such  
changes in good time, we regularly perform a review  
using our materiality process. In this context, we ana-  
lyse the importance of challenges on society, both from  
the point of view of different stakeholder groups and  
from an internal BMW Group perspective. The results  
of the materiality analysis – shown in the materiality  
matrix – form the basis for our regular verification of  
the direction our sustainability strategy is taking.  
*
Employee attrition rate at BMWAG  
as a percentage of workforce  
7.0  
6.0  
5.0  
4.0  
3.0  
2.0  
1.0  
10  
11  
12  
13  
14  
Sustainability ratings  
In 2014 the BMW Group was able to maintain its posi-  
tion as most sustainable premium manufacturer in the  
automotive industry and again secured excellent plac-  
ings in widely regarded ratings. In the Dow Jones Sus-  
tainability Indices (DJSI), for instance, the BMW Group  
took first place in the Automobiles sector. The BMW  
Group is therefore the only enterprise in this sector to  
have been listed in the index without interruption since  
its inception. In the Global 500 rating of the Carbon  
Disclosure Project (CDP), we again achieved 100 out of  
a possible 100 points for transparent reporting and the  
best mark for climate protection measures, thus retaining  
our leading position again in 2014. Based on this result,  
the BMW Group is listed with the highest performance  
score “A” in the global Climate Performance Leadership  
2
.74  
2.16  
3.87  
3.47  
1.41  
*
Number of employees on unlimited employment contracts leaving the Company.  
4
6
Materiality matrix  
Importance for stakeholders  
Efficient use  
of resources  
and recycling  
CO2 emissions  
Product  
and climate change  
safety  
18  
18  
23  
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
management  
Environmental and social standards in the supply chain  
Anti-corruption/compliance  
Alternative drivetrain  
technologies  
Energy supply  
23  
General and Sector-specific  
Environment  
Future mobility/mobility services  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Water  
Human rights/Occupational health and safety  
Further education and training  
Corporate Citizenship  
Demographic change  
2
9
2
3
3
3
4
4
4
4
9
5
6
8
0
1
4
5
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
Biodiversity  
Diversity  
Work-life balance  
Donations/sponsoring  
49  
61  
64  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Corporate volunteering  
Events after the End of the  
Reporting Period  
6
5
2
Report on Outlook, Risks and  
Opportunities  
Importance for BMW Group  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Index (CPLI) – as the only automotive producer for five  
The BMW Group again reduced the energy consump-  
8
3
7
consecutive years. The BMW Group was also included in tion per vehicle produced by 4.7% to 2.25 MWh during  
8
BMW Stock and Capital Markets  
the British FTSE4Good Index again in 2014.  
the period under report. One of the measures that con-  
tributed towards the efficiency improvement was the  
utilisation of intelligent energy data management. It is a  
Clean production  
The BMW Group improves resource efficiency by inte-  
grating environmental management in all of its produc-  
tion processes. Since 2006 we have reduced both the  
volume of resources utilised and the emissions per vehi-  
component of the BMW Group’s “Industrie 4.0” pro-  
duction concept and based on intelligent electricity me-  
ters that continually measure the energy consumption  
levels of production facilities and robots and compare  
them with a centralised corporate network for the pur-  
pose of detecting and avoiding, at the earliest possible  
stage, any deviations that lead to excessive electricity  
consumption.  
*
cle produced by an average of 45.0%.  
The individual figures are as follows:  
The utilisation of highly efficient, ecologically sustain-  
able combined heat and power plants (CHPs) and the  
use of electricity generated from renewable sources at  
our production sites, as well as improved energy effi-  
Energy consumption  
Water consumption  
Process wastewater  
Non-recyclable waste  
Solvent emissions  
CO2 emissions  
–34.2%  
–33.1%  
–42.7%  
–74.0%  
–48.6%  
–37.1%  
ciency measures, enabled us to reduce CO emissions  
2
per vehicle produced by a further 2.9% year-on-year to  
0.66 tonnes during the period under report.  
At  
2.18 m³ per vehicle produced, water consumption  
In 2014 we reduced both the volume of resources utilised was maintained at a stable low level. At 0.47 m³ the same  
and the emissions per vehicle produced by an average  
of 6.7% compared with the previous year, giving rise to  
savings of €ꢀ15.8 million.  
applies to the volume of process wastewater generated  
per vehicle produced.  
The volume of non-recyclable production waste was  
further reduced to 4.93 kg per vehicle produced in 2014,  
an improvement of 14.0%. A number of measures con-  
tributed towards this development, one of which was  
an additional improvement in the treatment of washing  
*
Including joint venture BMW Brilliance Automotive Ltd., Shenyang, excluding  
contract production.  
4
7
COMBINED MANAGEMENT REPORT  
*
*
Energy consumed per vehicle produced  
Water consumption per vehicle produced  
3
in MWh/vehicle  
in m /vehicle  
3.00  
2.80  
2.60  
2.40  
2.20  
2.00  
2.80  
2.60  
2.40  
2.20  
2.00  
1.80  
10  
11  
12  
13  
14  
10  
11  
12  
13  
14  
2.72  
2.43  
2.41  
2.36  
2.25  
2.40  
2.25  
2.22  
2.18  
2.18  
*
*
Excluding contract production.  
Excluding contract production, adjusted for CHP losses.  
water used in the production of passenger car brake  
discs at the Berlin plant.  
The amount of energy needed for transportation world-  
wide has risen considerably in recent years. In order to  
keep CO emissions to an absolute minimum, we adhere  
2
Solvent emissions were sharply curtailed by 18  
.
9
%
to the principle “production follows the market”. More-  
over, we are continually increasing the percentage of  
low-carbon modes of transport we use. In total, 63.3%  
of all new vehicles left our plants by rail during the twelve-  
month period under report (2013: 60.7%).  
to 1.29 kg per vehicle produced during 2014, which is  
mainly due to the fact that in the Chinese plant in  
*
Dadong the retrofitting of the paint shop with an ex-  
haust air cleaning system was reflected in full-year  
statistics for the first time.  
*
Joint venture BMW Brilliance Automotive Ltd., Shenyang.  
Fleet CO emissions again reduced  
2
For many years now, the use of our Efficient Dynamics  
technologies in series production has enabled us to  
Sustainability along the entire value chain  
Sustainability criteria also play a major role in the selec-  
tion and assessment of our suppliers as well as in the  
field of transport logistics. The active management of  
continually reduce the CO emissions generated by our  
vehicles. Again in 2014, further progress was made in  
the electrification of our fleet with the introduction of  
2
sustainability risks along the supplier chain reduces com- the BMW i8 plug-in hybrid sports car and the launching  
pliance and image risks. With this in mind, the BMW of the BMW i3 in additional key markets. These meas-  
Group has integrated a comprehensive system of sustain- ures form the basis for complying with legally stipulated  
ability management in its purchasing processes.  
CO and fuel consumption limits going into the future.  
2
*
*
CO emissions per vehicle produced  
Process wastewater per vehicle produced  
2
3
in t/vehicle  
in m /vehicle  
0.90  
0.85  
0.80  
0.75  
0.70  
0.65  
0.70  
0.60  
0.50  
0.40  
0.30  
0.20  
10  
11  
12  
13  
14  
10  
11  
12  
13  
14  
0.89  
0.75  
0.72  
0.68  
0.66  
0.60  
0.57  
0.51  
0.47  
0.47  
*
*
Excluding contract production.  
Excluding contract production, adjusted for CHP losses.  
4
8
*
*
Waste for disposal per vehicle produced  
Volatile organic compounds (VOC)  
in kg /vehicle  
per vehicle produced  
1
5.0  
2.5  
in kg/vehicle  
1
2.00  
18  
18  
23  
COMBINED MANAGEMENT REPORT  
General Information on the BMW Group  
Report on Economic Position  
10.0  
1.75  
7.5  
5.0  
2.5  
1.50  
23  
General and Sector-specific  
Environment  
1.25  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
1.00  
2
9
29  
35  
36  
38  
40  
41  
44  
45  
Automotive Segment  
Motorcycles Segment  
Financial Services Segment  
Research and Development  
Purchasing  
Sales and Marketing  
Workforce  
Sustainability  
10  
11  
12  
13  
14  
10  
11  
12  
13  
14  
10.49  
8.49  
6.47  
5.73  
4.93  
1.66  
1.75  
1.78  
1.59  
1.29  
*
*
Excluding contract production.  
Excluding contract production.  
4
6
6
9
1
4
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
Between 1995 and 2014, the average CO emissions of  
the vehicles we sold in Europe fell by 38%. In 2014,  
the BMW Group’s fleet of new vehicles sold in Europe  
(EU-28) consumed an average of 4.9 litres of diesel per  
2
6
5
2
Report on Outlook, Risks and  
Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
1
00 km and 6.0 litres of petrol respectively. CO emis-  
2
sions averaged 130 grams per km. In Germany, too,  
we led the field among premium-segment manufac-  
turers with average CO2 emissions of 136 grams per  
km. In 2014 the BMW Group’s fleet included as many  
as 53 models emitting less than 120 grams of CO2 per  
km. Our efficient technologies have given us a com-  
8
3
7
8
BMW Stock and Capital Markets  
petitive edge, particularly in markets where a CO2  
based vehicle tax is levied.  
-
Further information on the subject of sustainability in  
the BMW Group is available in our online sustainability  
report at: www.bmwgroup.comꢀ/ꢀsustainability. The  
Sustainable Value Report 2014 was prepared in accord-  
ance with the Global Reporting Initiative (GRI G3.1)  
guideline and, at Level A+ (GRI-tested), fulfils the  
highest application level of the GRI guideline. It will be  
published in conjunction with the Annual Report 2014.  
4
9 COMBINED MANAGEMENT REPORT  
Report on Economic Position  
Results of Operations, Financial Position and Net Assets  
1
Earnings performance  
of a number of currencies, including the Japanese yen,  
Russian rouble and South African rand. Adjusted for  
exchange rate factors, revenues increased by 6.8%.  
The BMW Group is again able to report on an exceed-  
ingly successful financial year. Business performance  
remained on track, with sales volume, revenues and  
earnings all coming in at record levels. The number of  
BMW, MINI and Rolls-Royce brand vehicles sold rose  
by 7.9% to 2,117,965 units. The BMW brand was again  
able to maintain its pole position at the head of the  
premium segment.  
Revenues comprise mainly the sale of vehicles and related  
products (2014: €ꢀ60,280 million; 2013: €ꢀ56,812 million),  
lease instalments (2014: €ꢀ7,748 million; 2013: €ꢀ7,296 mil-  
lion), the sale of vehicles previously leased to customers  
(2014: €ꢀ6,716 million; 2013: €ꢀ6,412 million) and interest  
2
income on loan financing (2014: €ꢀ2,881 million; 2013:  
€ꢀ2,868 million).  
The BMW Group recorded a net profit of €ꢀ  
5,817 mil-  
lion (2013: €ꢀ5,329 million) for the financial year ended  
3
7
1 December 2014. The post-tax return on sales was  
.2% (2013: 7.0%). Earnings per share of common and  
All segments contributed to the increase in revenues.  
External revenues from the sale of BMW MINI and  
% on the back of  
higher sales volumes. Adjusted for exchange rate fac-  
tors, revenues went up by %. Compared to the  
previous year, the BMW Group recorded a significant  
rise 11 %) in external revenues from its Motorcycles  
business. External revenues generated with Financial  
Services business was % up on the previous year.  
,
preferred stock were €ꢀ8.83 and €ꢀ8.85 respectively (2013: Rolls-Royce brand cars grew by 6.0  
ꢀ8.08 and €ꢀ8.10 respectively).  
€
7.3  
Revenues of the BMW Group increased year-on-year by  
5
€
ward trend in sales volume. The scale of the increase  
was held down partly by higher inter-segment revenue  
eliminations due to the growth of new lease business  
and partly by the change in the average exchange rates  
.7% to a new record figure of €ꢀ80,401 million (2013:  
ꢀ76,059 million), driven primarily by the continued up-  
(
.8  
4.4  
Adjusted for exchange rate factors, revenues of the Motor-  
cycles and Financial Services segments increased by  
14.1% and 4.5% respectively.  
Group Income Statement  
in € million  
1
2014  
2013  
Revenues  
80,401  
–63,396  
17,005  
76,059  
–60,791  
15,268  
Cost of sales  
Gross profit  
Selling and administrative expenses  
Other operating income  
–7,892  
877  
–7,257  
842  
Other operating expenses  
–872  
9,118  
–875  
7,978  
Profit before financial result  
Result from equity accounted investments  
Interest and similar income  
Interest and similar expenses  
Other financial result  
655  
200  
407  
183  
–519  
–747  
–411  
8,707  
–469  
–206  
–85  
Financial result  
Profit before tax  
7,893  
Income taxes  
–2,890  
5,817  
–2,564  
Net profit  
5,329  
1
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units).  
2
5
0
As in the previous year, Group revenues are spread  
across all regions, with the Europe region (including  
Germany) accounting for 46.8% (2013: 45.2%), the  
Americas region for 20.7% (2013: 20.7%) and the Africa,  
Asia and Oceania region for 32.5% (2013: 34.1%) of  
business.  
amortisation). The research and development expend-  
iture ratio was therefore % (2013 %). The pro-  
portion of development costs recognised as assets was  
32 % (2013 36 %).  
5
.
7
: 6.3  
.
8
:
.4  
1
8
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
Compared to the previous year, selling and administra-  
tive expenses increased by €ꢀ635 million to €ꢀ7,892 mil-  
lion. Overall, selling and administrative expenses were  
equivalent to 9.8% (2013: 9.5%) of revenues. Adminis-  
trative expenses increased due to a number of factors,  
including the higher workforce size and higher expenses  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
Revenues in the Africa, Asia and Oceania region to-  
Overall Assessment by Management talled €ꢀ26,147 million (2013: €ꢀ25,916 million), roughly  
2
2
6
6
Financial and Non-financial  
at the previous year’s level (+  
0.9%). In China, the  
Performance Indicators  
Review of Operations  
29  
higher proportion of sales generated by the joint ven-  
ture, BMW Brilliance Ltd., Shenyang, resulted in a slight for centralised IT activities and new IT projects. Depre-  
4
9
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
6
1
4
decrease in revenues reported for this market. By con-  
trast, revenues generated in South Korea were up sig-  
nificantly on the back of higher sales volume figures.  
External revenue in Germany grew by 10.1%. In the  
Rest of Europe region and in the Americas region, ex-  
ternal revenues increased by 9.2% and 5.3% respec-  
tively.  
ciation and amortisation on property, plant and equip-  
ment and intangible assets recorded in cost of sales and  
in selling and administrative expenses amounted to  
€ꢀ4,170 million (2013: €ꢀ3,741 million).  
6
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Other operating income and expenses improved from  
a net expense of €ꢀ33 million to a net income of €ꢀ5 mil-  
lion. The improvement was mainly attributable to gains  
on the sale of assets, including those arising on the  
deconsolidation of Noord Lease B.V., Groningen, and  
the sale of marketable securities.  
8
3
7
Group cost of sales were  
vious year and comprise mainly manufacturing costs  
2014: €ꢀ38,253 million; 2013: €ꢀ36,578 million), cost of  
sales directly attributable to financial services (2014:  
ꢀ14,716 million; 2013: €ꢀ14,044 million) and research  
and development expenses (2014: €ꢀ4,135 million; 2013:  
ꢀ4,118 million). Changes in the average exchange rates  
4.3% higher than in the pre-  
8
BMW Stock and Capital Markets  
(
€
The profit before financial result (EBIT) came in at  
€ꢀ9,118 million (2013: €ꢀ7,978 million).  
€
of some currencies as well as inter-segment elimina-  
tions worked in the opposite direction.  
The financial result for the twelve-month period was a  
net negative amount of €ꢀ411 million, a deterioration  
of €ꢀ326 million compared to the previous year. The net  
expense for other financial result increased by €ꢀ541 mil-  
lion to €ꢀ747 million, mostly reflecting the negative  
impact of currency and commodity derivatives. Impair-  
ment losses recognised on other investments, most  
notably on the investment in SGL Carbon SE, Wiesbaden,  
also contributed to the deterioration in other financial  
result. By contrast, the result from equity accounted in-  
vestments – which includes the Group’s share of the  
results of the joint ventures BMW Brilliance Automotive  
Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich,  
and DriveNow Verwaltungs GmbH, Munich – improved  
by €ꢀ248 million.  
Gross profit improved by 11.4% to €ꢀ17,005 million, re-  
sulting in a gross profit margin of 21.2% (2013: 20.1%).  
The gross profit margin recorded by the Automotive  
segment was 18.6% (2013: 18.2%), while that of the  
Motorcycles segment was 18.7% (2013: 16.7%). In the  
Financial Services segment, the gross profit margin  
improved from 13.1% to 13.7%.  
Compared to the previous year, research and develop-  
ment expenses increased by €ꢀ17 million to €ꢀ4,135 mil-  
lion. As a percentage of revenues, the research and  
development ratio fell by 0.3 percentage points to 5.1%.  
Research and development expenses include amorti-  
sation of capitalised development costs amounting to  
Profit before tax increased to €ꢀ8,707 million (2013:  
€ꢀ 893 million). The pre-tax return on sales was 10  
(2013: 10.4%).  
7,  
.8%  
€
ꢀ1,068 million (2013: €ꢀ1,069 million). Total research  
and development expenditure amounted to €ꢀ4,566 mil-  
lion (2013: €ꢀ4,793 million). This figure comprises re-  
search costs, non-capitalised development costs and  
capitalised development costs (excluding scheduled  
Income tax expense amounted to €ꢀ2,890 million (2013:  
€ꢀ 564 million), resulting in an effective tax rate of  
33 % (2013 32 %). The changed regional earnings  
2
.
,
2
:
.5  
5
1 COMBINED MANAGEMENT REPORT  
Revenues by segment  
Profit/loss before tax by segment  
in € million  
in € million  
*
*
2014  
2013  
2014  
2013  
Automotive  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
Group  
75,173  
1,679  
20,599  
7
70,630  
1,504  
Automotive  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
Group  
6,886  
107  
6,561  
76  
19,874  
6
1,723  
154  
1,619  
164  
–17,057  
80,401  
–15,955  
76,059  
–163  
8,707  
–527  
7,893  
*
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
mix as well as intergroup pricing issues contributed to  
the increase in the income tax expense for the year.  
counted investments – which includes the segment’s  
share of the results of BMW Brilliance Automotive  
Ltd., Shenyang, and the two DriveNow entities – im-  
proved by €ꢀ248 million.  
Earnings performance by segment  
Revenues of the Automotive segment grew by 6.4% to  
€
ꢀ75,173 million on the back of higher sales volume.  
Overall, profit before tax amounted to €ꢀ6,886 million  
(2013: €ꢀ6,561 million), resulting in an effective tax rate  
of 34.3% (2013: 32.8%).  
Adjusted for exchange rate factors, segment revenues  
rose by 7.5%. The gross profit margin improved year-  
on-year from 18.2% to 18.6%.  
Revenues of the Motorcycles segment climbed by 11.6%  
compared to the previous year (by 14.0% adjusted for  
exchange rate factors).  
Compared to the previous year, selling and administra-  
tive expenses increased by €ꢀ531 million to €ꢀ6,645 mil-  
lion. Administrative expenses increased due to a num-  
ber of factors, including the higher workforce size and  
higher expenses for centralised IT activities and new  
IT projects. Overall, selling and administrative expenses  
were equivalent to 8.8% (2013: 8.7%) of revenues.  
Segment profit before tax improved by €ꢀ31 million to  
€ꢀ107 million.  
Financial Services segment revenues grew by 3.6% to  
20 599 million (by % adjusted for exchange rate  
€
ꢀ
,
3.8  
The net expense from other operating income and ex-  
penses improved by €ꢀ26 million (2013: net expense of  
factors). The segment’s performance reflects the growth  
in the contract portfolio. The gross profit margin im-  
proved year-on-year to 13.7% (2013: 13.1%). Selling and  
administrative expenses were €ꢀ82 million higher at  
€
ꢀ89 million), mainly reflecting gains on the sale of mar-  
ketable securities.  
€ꢀ1,035 million. The net negative amount from other oper-  
The profit before financial result (EBIT) amounted to  
ating income and expenses deteriorated by €ꢀ17 million.  
€
ꢀ
7
,
244 million (2013: €ꢀ  
6
,
649 million), giving an EBIT  
Overall the Financial Services segment reports profit  
margin of 9.6% (2013: 9.4%).  
before tax of €ꢀ1,723 million, 6.4% up on the previous  
year (2013: €ꢀ1,619 million).  
The financial result of the Automotive segment was a  
net negative amount of €ꢀ358 million, a deterioration  
of €ꢀ270 million compared to the previous year. Other  
financial result was adversely affected by currency  
and commodity derivatives and fell to a net negative  
amount of €ꢀ724 million. This figure also includes im-  
pairment losses recognised on other investments,  
Profit before tax in the Other Entities segment, at  
€ꢀ154 million, was €ꢀ10 million lower than one year  
earlier.  
The negative impact on earnings at the level of profit  
before tax reported in the Eliminations column de-  
creased from €ꢀ527 million in 2013 to €ꢀ163 million in  
2014, partly reflecting product mix improvements  
most notably on the investment in SGL Carbon SE  
Wiesbaden. By contrast, the result from equity ac-  
,
5
2
within the leased products portfolio and partly due to  
elimination reversal effects.  
18.4% down on the previous year, primarily reflecting a  
€ꢀ594 million reduction in investments in property, plant  
and equipment and intangible assets (2014: €ꢀ6,099 mil-  
lion) and a €ꢀ737 million reduction in the net outflow for  
investments in marketable securities and term deposits  
(2014: net outflow of €ꢀ144 million).  
*
Financial position  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
The consolidated cash flow statements for the Group  
and the Automotive and Financial Services segments  
show the sources and applications of cash flows for the  
financial years 2014 and 2013, classified into cash flows  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
Further information on investments is provided in the  
section on the net assets position.  
2
2
6
6
Overall Assessment by Management from operating, investing and financing activities.  
Financial and Non-financial  
Performance Indicators  
Cash and cash equivalents in the cash flow statements  
correspond to the amount disclosed in the balance  
sheet.  
29  
Review of Operations  
Cash inflow from financing activities totalled €ꢀ3,133 mil-  
lion (2013: €ꢀ2,703 million). Proceeds from the issue of  
bonds amounted to €ꢀ10,892 million (2013: €ꢀ8,982 mil-  
lion), compared with an outflow of €ꢀ7,249 million (2013:  
€ꢀ7,242 million) for the repayment of bonds. Non-cur-  
rent other financial liabilities resulted in a cash inflow  
49  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
6
1
4
6
Cash flows from operating activities are determined in-  
directly, starting with Group and segment net profit.  
By contrast, cash flows from investing and financing  
activities are based on actual payments and receipts.  
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
of €ꢀ  
outflow of €ꢀ  
net cash inflow for current other financial liabilities  
5
,
900 million (2013: €ꢀ  
6
,
626 million) and a cash  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
creased by €ꢀ1,215 million to €ꢀ2,912 million. This dete- was €ꢀ2,132 million (2013: net cash outflow of €ꢀ721 mil-  
and Explanatory Comments  
5
,
697 million (2013: €ꢀ  
4,  
996 million). The  
The cash inflow from operating activities in 2014 de-  
8
3
7
rioration was mainly due to higher cash outflows for  
taxes (up by €ꢀ1,465 million) and included, among other  
items, a tax payment in the USA.  
lion). The change in commercial paper gave rise to  
a net cash outflow of €ꢀ 012 million (2013: net cash  
inflow of €ꢀ 812 million). The payment of dividends  
resulted in a cash outflow of €ꢀ 715 million (2013  
€ꢀ 653 million).  
8
BMW Stock and Capital Markets  
1
,
1
,
1
,
:
The cash outflow for investing activities amounted to  
1,  
€
ꢀ6,116 million (2013: €ꢀ7,491 million) and was therefore  
The cash outflow from investing activities exceeded  
the cash inflow from operating activities in 2014 by  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Change in cash and cash equivalents  
in € million  
1
1,000  
0,000  
1
9
,000  
,000  
,000  
8
7
6,000  
5,000  
4,000  
3,000  
2,000  
1,000  
Cash and cash  
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. 2014  
equivalents  
*
31.12. 2013  
7
,671  
+2,912  
–6,116  
+3,133  
+88  
7,688  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
5
3 COMBINED MANAGEMENT REPORT  
€
ꢀ
3
,
204 million. A similar constellation arose in the  
The cash flow statement for the Automotive segment  
shows that the cash inflow from operating activities  
exceeded the cash outflow from investing activities by  
€ꢀ3,587 million (2013: €ꢀ1,966 million). Adjusted for net  
proceeds from marketable securities and term deposits  
amounting to €ꢀ106 million (2013: net investments of  
€ꢀ1,037 million) – mainly in conjunction with securities  
held for strategic liquidity purposes – the excess amount  
was €ꢀ3,481 million (2013: €ꢀ3,003 million).  
same period last year, when the cash outflow from  
investing activities had exceeded the cash inflow from  
operating activities by €ꢀ3,364.  
After adjusting for the effects of exchange-rate fluctua-  
tions and changes in the composition of the BMW Group  
with a total positive amount of €ꢀ88 million (2013  
:
negative amount of €ꢀ42 million), the various cash flows  
resulted in an increase of cash and cash equivalents of  
€
ꢀ17 million (2013: decrease of €ꢀ703 million).  
Free cash flow of the Automotive segment can be ana-  
lysed as follows:  
*
in € million  
2014  
2013  
Cash inflow from operating activities  
9,423  
–5,836  
–106  
9,964  
–7,998  
1,037  
Cash outflow from investing activities  
Net investment in marketable securities and term deposits  
Free cash flow Automotive segment  
3,481  
3,003  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Cash outflows from operating activities of the Financial  
Services segment are driven primarily by cash flows  
relating to leased products and receivables from sales  
financing and totalled €ꢀ4,715 million (2013: €ꢀ5,358 mil-  
lion). Investing activities resulted in a cash outflow of  
Net financial assets of the Automotive segment com-  
prise the following:  
€
ꢀ297 million (2013: cash inflow of €ꢀ324 million).  
1
in € million  
31.12.2014  
31.12.2013  
Cash and cash equivalents  
5,752  
3,366  
6,775  
2,758  
Marketable securities and investment funds  
Intragroup net financial receivables  
Financial assets  
8,583  
4,411  
17,701  
13,944  
2
Less: external financial liabilities  
–3,478  
14,223  
–1,859  
Net financial assets  
12,085  
1
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Excluding derivative financial instruments.  
2
Refinancing  
Operating cash flow provides a stable financial basis for is used to refinance worldwide operations. Almost all of  
the BMW Group. A broadly based range of instruments  
transacted on international money and capital markets  
the funds raised are used to finance the BMW Group’s  
Financial Services business.  
5
4
The overall objective of Group financing is to ensure the  
solvency of the BMW Group at all times. Achieving this  
objective is tackled in three strategic areas:  
BMW Group – financial liabilities  
in € million  
35,000  
1
2
3
. the ability to act at all times by assuring permanent  
access to strategically important capital markets,  
. autonomy through the diversification of refinancing  
instruments and investors, and  
30,000  
1
8
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
25,000  
1
2
8
0
Business Model  
Management System  
20,000  
23  
Report on Economic Position  
1
5,000  
10,000  
,000  
23  
General and Sector-specific  
Environment  
. focus on value by optimising financing costs.  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
5
Financing measures undertaken centrally ensure access  
to liquidity for the Group’s operating subsidiaries on  
market-based and consistent loan conditions. Funds are  
acquired with a view to achieving a desired structure  
for the composition of liabilities, comprising a finely  
tuned mix of various financing instruments. The use  
of longer-term financing instruments to finance the  
Group’s financial services business and the mainte-  
nance of a sufficiently high liquidity reserve serves to  
avoid the liquidity risk intrinsic to any large portfolio  
of contracts. This prudent approach to financing also  
supports BMWAG’s ratings. Further information is  
provided in the “Liquidity risks” section of the “Report  
on outlook, risks and opportunities”.  
29  
Maturity (years)  
within1  
between1and5  
later than5  
4
9
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
6
1
4
37,482  
37,974  
5,193  
6
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
During 2014, the BMW Group issued five euro bench-  
mark bonds with a total issue volume of €ꢀ4.25 billion  
on European capital markets. Bonds were also issued  
in Canadian dollars, British pounds, US dollars, Aus-  
tralian dollars and other currencies for a total amount  
of €ꢀ6.9 billion.  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
8
3
7
8
BMW Stock and Capital Markets  
Nine ABS transactions were executed in 2014, including  
two public transactions in the USA and one each in  
Apart from issuing commercial paper on the money  
market, the BMW Group’s financing companies also  
issue bearer bonds. In addition, retail customer and  
dealer financing receivables on the one hand and  
leasing rights and obligations on the other are securi-  
tised in the form of asset-backed securities (ABS) financ-  
ing arrangements. Financing instruments employed  
by the Group’s in-house banks in Germany and the  
USA (e.ꢀg. customer deposits) are also used as a supple-  
mentary source of financing. Owing to the increased  
use of international money and capital markets to raise  
funds, the scale of funds raised in the form of loans  
from international banks is relatively small.  
BMW Group – financial liabilities  
in € million  
Other  
Derivative instruments  
Commercial paper  
Asset backed financing  
transactions  
Bonds  
Liabilities to banks  
Thanks to its good ratings and the high level of accept-  
ance it has on capital markets, the BMW Group was  
again able to refinance operations during the financial  
year 2014 at attractive conditions. In addition to the  
issue of bonds and loan notes on the one hand and pri-  
vate placements on the other, commercial paper was  
also issued on good conditions. Additional funds were  
raised via new securitised instruments and the prolon-  
gation of existing instruments. As in previous years,  
all issues were highly sought after by private and insti-  
tutional investors.  
Liabilities from customer  
deposits (banking)  
Bonds  
35,489  
12,466  
11,554  
10,884  
5,599  
Liabilities from customer deposits (banking)  
Liabilities to banks  
Asset backed financing transactions  
Commercial paper  
Derivative instruments  
Other  
3,143  
1,514  
5
5 COMBINED MANAGEMENT REPORT  
Germany, China and South Africa with a total volume  
accounted for using the equity method (70.5%), deferred  
equivalent to €ꢀ2.7 billion. Further funds were also raised tax assets (27.2%) and intangible assets (5.2%). At the  
via new ABS conduit transactions in Brazil, Canada,  
and Japan totalling €ꢀ0.8 billion. Other existing trans-  
actions remained in place in Switzerland, the UK, Korea  
and Australia.  
same time, financial assets decreased by 21.9%.  
Within current assets, increases were registered in par-  
ticular for receivables from sales financing (9.7%), in-  
ventories (15.6%), other assets (18.3%) and current tax  
(65.6%). Trade receivables went down by 12.1%.  
The regular issue of commercial paper also strengthens  
the BMW Group’s financial basis. The following table  
provides an overview of amounts utilised at 31 Decem-  
ber 2014 in connection with the BMW Group’s money  
and capital market programmes:  
The growth in business reported by the Financial Ser-  
vices segment is reflected in increases of €ꢀ2,085 million  
and €ꢀ4,822 million in current and non-current receiv-  
ables from sales financing respectively and in the higher  
level of leased products (up by €ꢀ4,251 million).  
Programme  
Amount utilised  
in € billion  
Non-current receivables from sales financing accounted  
for 24.2% (2013: 23.6%) of total assets, current receiv-  
ables from sales financing for 15.2% (2013: 15.5%). Total  
receivables from sales financing relate to retail customer  
and dealer financing (€ꢀ45,849 million) and finance leases  
Euro Medium Term Notes  
Australian Medium Term Notes  
Commercial paper  
30.9  
–
6.1  
(€ꢀ15,175 million). Adjusted for exchange rate factors,  
The BMW Group’s liquidity position is extremely robust, non-current receivables from sales financing grew by  
with liquid funds totalling €ꢀ11.7 billion on hand at 31 De- 9.1%, while current receivables from sales financing  
cember 2014. The BMW Group also has access to a  
syndicated credit line of €ꢀ billion, with a term up to  
October 2018. This credit line, which is provided on  
attractive conditions by a consortium of 38 international  
banks, had not been utilised at the end of the reporting  
period.  
went up by 4.8%. The currency impact was mainly at-  
tributable to the appreciation in the value of a number  
of currencies against the euro, most notably the US dol-  
lar, the British pound and the Chinese renminbi.  
6
At the end of the reporting period, leased products  
accounted for 19  
one year earlier (18.7  
.
5
% of total assets, above their level  
%). Adjusted for exchange rate  
Further information with respect to financial liabilities  
is provided in notes 35, 39 and 43 to the Group Finan-  
cial Statements.  
factors, leased products went up by 10.2%.  
Property, plant and equipment increased by €ꢀ2,014 mil-  
lion compared to the previous year. The main focus in  
*
Net assets position  
The Group balance sheet total increased by €ꢀ16,426 mil- 2014 was on product investments for production start-  
lion (11.9%) compared to the end of the previous finan-  
cial year to stand at €ꢀ154,803 million at 31 December  
ups (including the BMW 2 Series Active Tourer, the  
7 Series Sedan and the 2 Series Gran Tourer) and infra-  
structure improvements. In total, €ꢀ4,539 million (2013:  
€ꢀ4,494 million) was invested, most of which related  
to the Automotive segment. Depreciation on property,  
2
014. Adjusted for exchange rate factors, the balance  
sheet total increased by 7.5%.  
On the assets side of the balance sheet, the increase in  
non-current assets related primarily to receivables  
from sales financing (14.8%), leased products (16.4%),  
plant and equipment totalled €ꢀ2,924 million (2013:  
€ꢀ2,494 million). At 31 December 2014, property, plant  
and equipment accounted for 11.1% of total assets (2013:  
11.0%). Adjusted for exchange rate factors, property,  
plant and equipment increased by 10.8%. Capital com-  
mitments for the acquisition of items of property, plant  
property, plant and equipment (13.3%), investments  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
5
6
Balance sheet structure – Group  
Total equity and liabilities in € billion  
Non-current assets  
63%  
24%  
Equity  
18  
COMBINED MANAGEMENT REPORT  
62%  
26%  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
3
8%  
8%  
Non-current provisions and liabilities  
23  
Report on Economic Position  
3
7%  
23  
General and Sector-specific  
Environment  
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
2
2
6
6
29  
Current assets  
37%  
5%  
3
Current provisions and liabilities  
3
8%  
37%  
4
9
6
1
4
6
thereof cash and cash equivalents  
6%  
6
5
2
Report on Outlook, Risks and  
Opportunities  
*
*
2014  
2013  
2013  
2014  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
155  
138  
138  
155  
8
3
7
8
BMW Stock and Capital Markets  
Balance sheet structure – Automotive segment  
Total equity and liabilities in € billion  
Non-current assets  
46%  
39%  
Equity  
46%  
42%  
1
8%  
3%  
Non-current provisions and liabilities  
Current provisions and liabilities  
Current assets  
54%  
16%  
54%  
4
42%  
9
%
thereof cash and cash equivalents  
7%  
*
*
2
014  
2013  
2013  
2014  
7
9
73  
73  
79  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
and equipment totalled €ꢀ2,247 million at the end of the  
reporting period.  
of the joint venture BMW Brilliance Automotive Ltd.,  
Shenyang.  
Investments accounted for using the equity method, at  
Deferred tax assets increased by €ꢀ441 million to €ꢀ2,061 mil-  
€
ꢀ1,088 million, were €ꢀ450 million higher than one year  
lion, primarily reflecting lower fair values of derivative  
earlier, mainly reflecting the strong earnings performance financial instruments recognised directly in equity,  
5
7 COMBINED MANAGEMENT REPORT  
remeasurements of the net defined benefit liability for  
Trade receivables – which accounted for 1.4% of total  
pension plans and currency factors (in particular relating assets (2013: 1.8%) – went down over the twelve­month  
to the US dollar).  
period by €ꢀ296 million. Adjusted for exchange rate fac-  
tors, they decreased by 15.8%.  
At €ꢀ6,499 million, the carrying amount of intangible as-  
sets was €ꢀ320 million higher than at 31 December 2013. At €ꢀ  
7,688 million, cash and cash equivalents were  
Within intangible assets, capitalised development costs almost identical to their level one year earlier (2013  
:
rose by €ꢀ431 million. Investments in capitalised develop- €ꢀ7,671 million).  
ment costs totalled €ꢀ1,499 million in the year under re-  
port and were thus significantly lower than in the pre-  
vious year (2013: €ꢀ 744 million). In the previous year,  
The main increase on the equity and liabilities side of  
the balance sheet in percentage terms related to pen-  
1
,
additions to intangible assets included licenses acquired sion provisions (99  
for €ꢀ379 million which are being amortised on a straight- for non-current and current financial liabilities (9.4%  
line basis over a period of six years. The proportion of and 21.5% respectively), equity (5.2%), current and  
development costs recognised as assets was 32.8% (2013: non-current other provisions (32.5% and 11.5% respec-  
6.4%). Adjusted for exchange rate factors, intangible tively) and current and non-current other liabilities  
assets increased by 5.1%. In total, €ꢀ1,561 million was in- (10.1% and 18 % respectively). By contrast, current  
.9%). Increases were also recorded  
3
.
7
vested in intangible assets, most of which related to the  
Automotive segment.  
tax and deferred tax liabilities went down by 31.4% and  
19.7% respectively.  
Total capital expenditure on intangible assets and prop-  
erty, plant and equipment as a percentage of revenues  
decreased to 7.6% (2013: 8.8%). Capital commitments  
for intangible assets totalled €ꢀ750 million at the end of  
the reporting period.  
Pension provisions jumped by €ꢀ2,301 million to  
€ꢀ4,604 million, mainly as a result of the lower discount  
factors used in Germany, the UK and the USA.  
Current and non-current financial liabilities increased  
from €ꢀ70,304 to €ꢀ80,649 million over the twelve-month  
period. Within financial liabilities, derivative instru-  
Non­current financial assets decreased by €ꢀ569 million  
to €ꢀ2,024 million, mainly due to lower fair values of cur- ments went up from €ꢀ1,103 million to €ꢀ3,143 million,  
rency derivatives.  
mostly reflecting the negative impact of currency and  
commodity derivatives. Additional increases within  
financial liabilities included ABS transactions (7.5%),  
bonds (16.9%) and liabilities to banks (34.5%). By con-  
Within current assets, receivables from sales financing  
grew from €ꢀ21,501 million to €ꢀ23,586 million, mostly  
reflecting the general growth of Financial Services busi- trast, commercial paper decreased by 11.0%. Adjusted  
ness on the one hand and currency factors on the other. for exchange rate factors, non-current and current  
financial liabilities increased by 5.0% and 17.1% respec-  
Compared to the end of the previous year, inventories  
tively.  
increased by €ꢀ1,494 million (15.6%) to €ꢀ11,089 million  
and accounted for 7.2% (2013: 6.9%) of total assets. Most Group equity rose by €ꢀ1,837 million to €ꢀ37,437 million,  
of the increase related to finished goods, including the increased primarily by the profit attributable to share-  
impact of stocking up in conjunction with the introduc- holders of BMWAG (€ꢀ 798 million) and currency  
tion of new models. Adjusted for exchange rate factors, translation differences (€ꢀ764 million) and decreased  
5
,
the increase was 11.6%.  
mainly by remeasurements of the net defined benefit  
liability for pension plans (€ꢀ 298 million) mainly due  
2
,
Current other assets were €ꢀ780 million higher than one  
year earlier, mainly due to increases in prepayments,  
receivables from other companies in which an invest-  
ment is held and other taxes as well as the reclassifica-  
tion described in note 31. These increases were partly  
offset by the decrease in collateral receivables included  
in this line item.  
to the lower discount rates used in Germany, the United  
Kingdom and the USA. Fair value measurement had a  
negative impact in the case of derivative financial in-  
struments (€ꢀ2,194 million) and a positive impact in the  
case of marketable securities (€ꢀ40 million). Deferred  
taxes on items recognised directly in equity increased  
equity by €ꢀ1,438 million.  
5
8
Income and expenses relating to equity accounted in-  
vestments and recognised directly in equity (before tax)  
reduced equity by €ꢀ48 million.  
details, including an analysis of remuneration by each  
individual, are disclosed in the Compensation Report,  
which can be found in the section “Statement on Corpo-  
rate Governance”. The Compensation Report is a sub-  
section of the Combined Management Report.  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
The dividend payment decreased equity by €ꢀ1,707 mil-  
lion. Minority interests increased by €ꢀ29 million. A  
portion of the Authorised Capital 2014 created at the  
Annual General Meeting held on 14 May 2009 in con-  
1
2
8
0
Business Model  
Management System  
*
23  
Report on Economic Position  
Value added statement  
23  
General and Sector-specific  
Environment  
The value added statement shows the value of work per-  
formed less the value of work bought in by the BMW  
Group during the financial year. Depreciation and amor-  
tisation, cost of materials and other expenses are treated  
as bought-in costs in the value added calculation. The  
allocation statement applies value added to each of the  
participants involved in the value added process. It  
2
2
6
6
Overall Assessment by Management junction with the Employee Share Programme was used  
Financial and Non-financial  
Performance Indicators  
during the financial year under report to issue shares  
of preferred stock to employees. An amount of €ꢀ15 mil-  
lion was transferred to capital reserves in conjunction  
with this share capital increase.  
29  
Review of Operations  
49  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
6
1
4
6
The equity ratio of the BMW Group fell overall by 1.5 per- should be noted that the gross value added amount treats  
centage points to 24 %. The equity ratio of the Auto- depreciation as a component of value added which, in  
6
5
2
Report on Outlook, Risks and  
Opportunities  
.
2
6
7
5
0
Outlook  
motive segment was 39.2% (2013: 42.4%) and that of the the allocation statement, is treated as internal financing.  
Financial Services segment was 8.8% (2013: 9.1%).  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Net value added by the BMW Group in 2014 increased  
by 7.3% to €ꢀ20,620 million and was once again at a high  
level.  
8
3
7
Other provisions increased from €ꢀ  
7
,
240 million to  
€
ꢀ8,790 million during the year under report, mainly re-  
8
BMW Stock and Capital Markets  
flecting allocations to provisions for personnel-related  
expenses and ongoing operational expenses as well as  
the reclassification described in note 31.  
The bulk of the net value added (47.4%) is again applied  
to employees. The proportion applied to providers of  
finance fell to 8.4%, mainly due to the lower refinancing  
The €ꢀ711 million increase in current other liabilities was costs on international capital markets for the financial  
attributable to the expansion of service and leasing busi- services side of the business. The governmentꢀ/ꢀpublic  
ness and the related impact on amounts recognised as  
deferred income. In addition, value added tax payables  
were higher than at the end of the previous financial  
year as a result of the higher volume of vehicles sold.  
sector (including deferred tax expense) accounted for  
16.0%. The proportion of net value added applied to  
shareholders, at 9.2%, was higher than in the previous  
year. Minority interests take a 0.1% share of net value  
added. The remaining proportion of net value added  
Deferred tax liabilities fell by €ꢀ485 million to €ꢀ1,974 mil- (18.9%) will be retained in the Group to finance future  
lion as a result of lower fair values of derivative financial  
instruments recognised directly in equity, remeasure-  
ments of the net defined benefit liability for pension  
plans and currency factors. The €ꢀ729 million decrease  
in current tax liabilities to €ꢀ1,590 million was mainly at-  
tributable to a tax payment in the USA.  
operations.  
Overall, the results of operations, financial position and  
net assets position of the BMW Group continued to de-  
velop positively during the financial year under report.  
Compensation Report  
The compensation of the Board of Management com-  
prises both a fixed and a variable component. Benefits  
are also payable – primarily in the form of pension  
benefits – at the end of members’ mandates. Further  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
5
9 COMBINED MANAGEMENT REPORT  
BMW Group value added statement  
1
1
2
014  
2014  
in %  
2013  
in € million  
2013  
in %  
Change  
in %  
in € million  
Work performed  
Revenues  
80,401  
156  
98.7  
0.2  
76,059  
464  
98.3  
0.6  
Financial income  
Other income  
Total output  
877  
1.1  
842  
1.1  
81,434  
100.0  
77,365  
100.0  
5.3  
2
Cost of materials  
44,078  
9,012  
54.1  
11.1  
65.2  
42,681  
8,420  
55.2  
10.9  
66.1  
Other expenses  
Bought-in costs  
53,090  
51,101  
3.9  
7.9  
7.3  
Gross value added  
Depreciation and amortisation  
Net value added  
28,344  
7,724  
34.8  
9.5  
26,264  
7,047  
33.9  
9.1  
20,620  
25.3  
19,217  
24.8  
Applied to  
Employees  
9,764  
1,733  
3,306  
1,904  
3,894  
19  
47.4  
8.4  
8,992  
1,813  
3,083  
1,707  
3,596  
26  
46.9  
9.4  
8.6  
–4.4  
7.2  
Providers of finance  
Government/public sector  
Shareholders  
16.0  
9.2  
16.0  
8.9  
11.5  
8.3  
Group  
18.9  
0.1  
18.7  
0.1  
Minority interest  
Net value added  
–26.9  
7.3  
20,620  
100.0  
19,217  
100.0  
1
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).  
2
BMW Group value added 2014  
in %  
47.4%  
Employees  
Depreciation and amortisation  
Other expenses  
Net value added  
8.4%  
Providers of finance  
16.0%  
Government/public sector  
Cost of materials  
9
.2%  
Shareholders  
Group  
18.9%  
0.1%  
Minority interest  
Net value added  
Cost of materials  
25.3  
54.1  
Depreciation and amortisation  
Other expenses  
9.5  
11.1  
6
0
Key performance figures  
*
2014  
2013  
18  
COMBINED MANAGEMENT REPORT  
1
8
General Information on the BMW Group  
Group gross margin  
%
%
%
%
%
%
%
%
%
%
%
21.2  
16.5  
11.3  
10.8  
7.2  
20.1  
15.4  
10.5  
10.4  
7.0  
1
2
8
0
Business Model  
Management System  
Group EBITDA margin  
2
3
Report on Economic Position  
Group EBIT margin  
23  
General and Sector-specific  
Environment  
Group pre-tax return on sales  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Group post-tax return on sales  
Group pre-tax return on equity  
24.5  
16.3  
24.2  
39.2  
8.8  
25.8  
17.4  
25.7  
42.4  
9.1  
29  
Group post-tax return on equity  
4
9
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Group equity ratio  
61  
Automotive equity ratio  
64  
Events after the End of the  
Reporting Period  
Financial Services equity ratio  
Coverage of intangible assets, property, plant and equipment by equity (Group)  
158.1  
166.8  
6
5
2
Report on Outlook, Risks and  
Opportunities  
Return on capital employed  
6
7
5
0
Outlook  
Group  
%
%
%
20.8  
61.7  
21.8  
21.4  
63.0  
16.4  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Automotive  
Motorcycles  
8
3
7
Return on equity  
8
BMW Stock and Capital Markets  
Financial Services  
%
€ million  
€ million  
%
19.4  
2,912  
–6,116  
47.6  
20.0  
4,127  
–7,491  
55.1  
Cash inflow from operating activities (Group)  
Cash outflow from investing activities (Group)  
Coverage of cash outflow from investing activities by cash inflow from operating activities (Group)  
Free cash flow of Automotive segment  
Net financial assets Automotive segment  
€ million  
€ million  
3,481  
14,223  
3,003  
12,085  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
6
1 COMBINED MANAGEMENT REPORT  
Report on Economic Position  
Comments on Financial Statements of BMWAG  
Bayerische Motoren Werke Aktiengesellschaft (BMWAG), related to Europe and North America. Sales to Group  
which is based in Munich, Germany, is the parent com-  
pany of the BMW Group. The comments on the BMW  
entities accounted for €ꢀ50  
revenues of €ꢀ66.6 billion. Cost of sales developed roughly  
.7 billion or 76.1% of total  
Group and Automotive segment provided in earlier sec- in line with revenues, as a result of which gross profit  
tions are also relevant for BMWAG, unless presented  
differently in the following section. The Financial State-  
ments of BMWAG are drawn up in accordance with  
increased by €ꢀ1,380 million to €ꢀ14,787 million.  
At €ꢀ3,533 million, selling expenses were at a similar level  
to the previous year (2013: €ꢀ3,528 million).  
the provisions of the German Commercial Code (HGB  
and the relevant supplementary provisions contained  
in the German Stock Corporation Act (AktG).  
)
Administrative expenses were 5.5% up on the previous  
year, mainly as a result of higher expenses for centralised  
IT activities and new IT projects.  
The main financial and non-financial performance in-  
dicators relevant for BMWAG are largely identical and  
synchronous with those of the Automotive segment  
of the BMW Group and are described in detail in the  
Research and development expenses fell by 4.8%, mainly  
reflecting the production start of various development-  
intensive vehicle projects in the previous year. Most of  
the expense incurred for research and development ac-  
tivities related to new vehicle models, drive systems and  
“Report on Economic Position” section of the Combined  
Management Report.  
Differences between the accounting policies used in the innovative technologies.  
BMWAG financial statements (prepared in accordance  
with HGB) and the BMW Group Financial Statements  
prepared in accordance with IFRSs) arise primarily in  
connection with the accounting treatment of intangible  
assets, financial instruments, provisions and deferred  
taxes.  
The decrease in net other operating income and ex-  
(
penses was attributable mainly to the higher net nega-  
tive impact of realised exchange rate factors on the  
one hand and to higher allocations to provisions for  
commodity and currency hedging contracts on the  
other.  
Business environment and review of operations  
The general and sector-specific environment in which  
the BMWAG operates is the same as that for the BMW  
Group and is described in the “Report on Economic  
Position” section of the Combined Management Report.  
The financial result deteriorated year­on­year by €ꢀ121 mil-  
lion, mainly due to the impairment loss (€ꢀ196 million)  
recognised on the investment in SGL Carbon SE  
,
Wiesbaden, which was written down to its lower mar-  
ket value at the end of the reporting period. Higher  
interest income and lower interest expenses had a posi-  
BMWAG develops, manufactures and sells cars and  
motorcycles as well as spare parts and accessories manu- tive impact.  
factured by itself, foreign subsidiaries and external sup-  
pliers. Sales activities are carried out through branches,  
subsidiaries, independent dealers and importers. In  
The profit from ordinary activities increased from  
€ꢀ3,963 million to €ꢀ5,163 million.  
2
1
2
014, BMWAG was able to increase its sales volume by  
70,869 units to 2,166,772 units. This figure includes  
87,466 units relating to series sets supplied to the joint  
The expense for income taxes relates primarily to cur-  
rent tax for the financial year 2014.  
venture BMW Brilliance Automotive Ltd., Shenyang,  
an increase of 72 517 units over the previous year. At  
1 December 2014, BMWAG had 80,675 employees,  
,565 more than one year earlier.  
,
After deducting the expense for taxes, the Company  
reports a net profit of €ꢀ3,229 million compared to  
€ꢀ2,289 million in the previous year.  
3
3
Results of operations, financial position and net assets  
Revenues increased by 10.1% compared to the previous  
year, driven principally by higher sales volume on the  
one hand and the positive impact of the model mix on  
the other. In geographical terms, most of the increase  
Capital expenditure on intangible assets and property,  
plant and equipment in the year under report amounted  
to €ꢀ  
reason for this  
licences in the previous year. Product investments for  
3
,
150 million (2013: €ꢀ  
3,203 million). The main  
1.7  
% decrease was the acquisition of  
6
2
production start-ups of new models increased year-on-  
year. Depreciation and amortisation amounted to  
The carrying amount of investments decreased from  
€ꢀ3,377 million to €ꢀ3,236 million, mainly as a result of an  
impairment loss recognised in 2014.  
€
ꢀ1,890 million (2013: €ꢀ1,732 million).  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
BMWAG Balance Sheet at 31 December  
in € million  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2014  
2013  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Assets  
2
4
9
9
Intangible assets  
Property, plant and equipment  
405  
10,304  
3,236  
474  
8,982  
61  
Comments on Financial Statements Investments  
3,377  
of BMW AG  
Events after the End of the  
Reporting Period  
Tangible, intangible and investment assets  
13,945  
12,833  
64  
6
5
2
Report on Outlook, Risks and  
Opportunities  
Inventories  
3,859  
697  
3,863  
659  
6
7
5
0
Outlook  
Trade receivables  
Report on Risks and Opportunities  
Receivables from subsidiaries  
Other receivables and other assets  
Marketable securities  
Cash and cash equivalents  
Current assets  
5,200  
2,502  
3,572  
3,073  
18,903  
4,871  
3,194  
3,429  
3,757  
19,773  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
8
3
7
8
BMW Stock and Capital Markets  
Prepayments  
265  
1,123  
169  
990  
Surplus of pension and similar plan assets over liabilities  
Total assets  
34,236  
33,765  
Equity and liabilities  
Subscribed capital  
656  
2,084  
7,422  
1,904  
12,066  
656  
2,069  
Capital reserves  
Revenue reserves  
6,097  
Unappropriated profit available for distribution  
Equity  
1,707  
10,529  
Registered profit-sharing certificates  
31  
32  
Pension provisions  
Other provisions  
Provisions  
12  
7,308  
7,320  
43  
7,299  
7,342  
Liabilities to banks  
Trade payables  
1,864  
4,784  
6,872  
216  
1,463  
4,818  
8,795  
285  
Liabilities to subsidiaries  
Other liabilities  
Liabilities  
13,736  
15,361  
Deferred income  
1,083  
501  
Total equity and liabilities  
34,236  
33,765  
6
3 COMBINED MANAGEMENT REPORT  
BMWAG Income Statement  
in € million  
2014  
2013  
Revenues  
66,599  
–51,812  
14,787  
60,474  
–47,067  
13,407  
Cost of sales  
Gross profit  
Selling expenses  
–3,533  
–2,259  
–4,152  
28  
–3,528  
–2,141  
–4,362  
542  
Administrative expenses  
Research and development expenses  
Other operating income and expenses  
Result on investments  
741  
373  
Financial result  
–449  
5,163  
–328  
3,963  
Profit from ordinary activities  
Income taxes  
Other taxes  
Net profit  
–1,884  
–50  
–1,629  
–45  
3,229  
2,289  
Transfer to revenue reserves  
–1,325  
1,904  
–582  
Unappropriated profit available for distribution  
1,707  
At €ꢀ3,859 million, inventories were practically identical  
to the end of the previous year (2013: €ꢀ3,863 million).  
In order to secure obligations resulting from pre-retire-  
ment part-time work arrangements and the Company’s  
pension obligations, assets have been transferred to  
BMW Trust e.V., Munich, in conjunction with Contrac-  
The decrease in other receivables and other assets to  
€ꢀ2,502 million (2013: €ꢀ3,194 million) was mainly attribut- tual Trust Arrangements (CTA), on a trustee basis. The  
able to the lower volume of genuine repurchase (repo)  
transactions in place at the end of the reporting period.  
assets concerned comprise mainly holdings in investment  
fund assets and a receivable resulting from a so-called  
“Capitalisation Transaction” (Kapitalisierungsgeschäft).  
Liquidity within the BMW Group is managed centrally by Fund assets are offset against the related guaranteed  
BMWAG on the basis of a group-wide liquidity concept, obligations. The resulting surplus of assets over liabilities  
which revolves around the strategy of concentrating a  
significant part of the Group’s liquidity at the level of  
is reported in the BMWAG balance sheet on the line  
“Surplus of pension and similar plan assets over liabili-  
BMWAG. An important instrument used to achieve this ties”.  
aim is the cash pool headed by BMWAG. The liquidity  
position reported by BMWAG therefore reflects the  
Pension provisions, net of designated plan assets, de-  
global activities of BMWAG and other Group companies. creased from €ꢀ43 million to €ꢀ12 million.  
Cash and cash equivalents went down by €ꢀ684 million  
to €ꢀ3,073 million. This decrease mainly reflected the  
repayment of intragroup borrowings, as a result of  
which intragroup refinancing volumes also reduced  
significantly.  
At €ꢀ4,784 million, trade payables were at a similar level  
to the previous year (2013: €ꢀ4,818 million).  
Liabilities to banks increased in conjunction with a  
number of project-related loans.  
Equity rose by €ꢀ1,537 million to €ꢀ12,066 million, while  
Other liabilities fell from €ꢀ285 million to €ꢀ216 million,  
the equity ratio improved from 31.2% to 35.2%.  
mainly as a result of the expiry of option contracts.  
6
4
Report on Economic Position  
Events after the End of the Reporting Period  
Deferred income went up by €ꢀ582 million to €ꢀ1,083 mil- Events after the end of the reporting period  
lion, mainly reflecting the increased volume of services  
still to be performed for service and maintenance con-  
tracts in conjunction with multi-component business.  
No events have occurred since the end of the reporting  
period which could have a major impact on the results  
of operations, financial position and net assets of  
BMWAG or the BMW Group.  
1
8
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
Risks and opportunities  
23  
Report on Economic Position  
BMWAG’s performance is highly dependent on the  
same set of risks and opportunities that affect the BMW  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management Group and which are described in detail in the “Report  
Financial and Non-financial  
on Outlook, Risks and Opportunities” section of the Com-  
bined Management Report. As a general rule, BMWAG  
Performance Indicators  
2
4
9
9
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
participates in the risks entered into by Group entities  
on the basis of the relevant shareholding percentage.  
6
1
4
6
BMWAG is integrated in the group-wide risk manage-  
ment system and internal control system of the BMW  
Group. Further information is provided in the “Internal  
Control System and Risk Management System Relevant  
for the Consolidated Financial Reporting Process” sec-  
tion of the Combined Management Report.  
6
5
Report on Outlook, Risks and  
Opportunities  
65  
Outlook  
70  
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
8
3
7
8
BMW Stock and Capital Markets  
Outlook  
Due to its dominant role in the Group and its close ties  
with Group entities, expectations for the BMWAG with  
respect to the Company’s financial and non-financial  
performance indicators correspond largely to the BMW  
Group’s outlook for the Automotive segment, which is  
described in detail in the “Report on Outlook, Risks  
and Opportunities” section of the Combined Manage-  
ment Report.  
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich,  
has issued an unqualified audit opinion on the financial  
statements of BMWAG, of which the balance sheet and  
the income statement are presented here. The BMWAG  
financial statements for the financial year 2014 will be  
submitted to the operator of the electronic version of the  
German Federal Gazette and can be obtained via the  
Company Register website. These financial statements  
are available from BMWAG, 80788 Munich, Germany.  
6
5 COMBINED MANAGEMENT REPORT  
Report on Outlook, Risks and Opportunities  
Outlook  
The report on outlook, risks and opportunities describes cant risk factors. Various uncertainties prevail in Europe,  
the expected development of the BMW Group, together in particular with respect to future developments in  
with associated material risks and opportunities, from  
the perspective of Group management. The outlook  
covers a period of one year, in line with the Group’s in-  
Greece as well as in Russia and neighbouring countries.  
In addition, an interest rate turnaround is likely to take  
place in the USA. The global economy could also be  
ternal management system. By contrast, risks and oppor- negatively impacted by high public debt levels in Europe,  
tunities are managed on the basis of a two-year assess-  
ment. The report on risks and opportunities therefore  
covers a period of two years.  
the USA and Japan, as well as political developments in  
the Middle East and East Asia. More detailed informa-  
tion on these matters can be found in the section “Politi-  
cal and global economic risks” in the risk report.  
The report on outlook, risks and opportunities contains  
forward-looking assertions based on the BMW Group’s  
It seems likely that the upswing in the eurozone will  
expectations and assessments, which are, by their nature, continue in 2015, albeit at a low level, based on an ex-  
subject to uncertainty. As a result, actual outcomes, in-  
cluding those attributable to political and economic de-  
pected growth rate of 1.1%. Europe’s largest economy,  
Germany, is forecast to grow by approximately 1.4%.  
velopments, could differ substantially – either positively France is likely to see an increase of around 0.9%. Italy  
or negatively – from the expectations described below. should come out of recession in 2015 with a positive  
Further information can be found in the section “Report growth rate of 0.4%. The upswing in Spain seems set  
on risks and opportunities”.  
to continue with growth edging up to 2.0%. The United  
Kingdom’s economy is likely to remain strong and grow  
by a further 2.7% in 2015.  
Outlook  
Assumptions used in the outlook  
The following outlook relates to a forward-looking  
period of one year and is based on the composition of  
the BMW Group during that period. The outlook takes  
account of all information known up to the date on  
which the financial statements are authorised for issue  
and which could have a material impact on the course  
of business of the BMW Group. The expectations con-  
tained in the outlook are based on the BMW Group’s  
forecasts for 2015 and reflect the most recent status.  
The basis for the preparation of and the principal as-  
sumptions used in our forecasts, which take account  
of consensual opinions of leading organisations, such  
as economic research institutes and banks, are set out  
below. The BMW Group’s forecast is drawn up on the  
basis of these assumptions.  
Despite the anticipated interest rate turnaround in the  
USA, we expect growth to remain at its current high  
level. A growth rate of 3.2% is forecast for 2015, reflect-  
ing the expectation that the boom on the employment  
and property markets will remain intact.  
In view of the negative impact on Japan’s economy  
caused by the value added tax hike in 2014, the Japanese  
government has decided to postpone the second step –  
originally envisaged for 2015 – until 2017. Under these  
circumstances, we forecast a growth rate of 1.0% for the  
year 2015.  
Economic growth in China is likely to slow down again  
slightly in 2015 to a rate of 7.0%. The prerequisite for  
this forecast is that price falls on the property market do  
not have any lasting adverse impact on the macroeco-  
Our continuous forecasting process ensures that the  
BMW Group is always ready to take advantage of oppor- nomic trend.  
tunities as they arise and to react appropriately to un-  
expected risks. The principal risks and opportunities  
are described in detail in the section “Report on risks  
and opportunities”. The risks and opportunities dis-  
cussed in that section are relevant for all of the BMW  
Group’s key performance indicators and could result  
in variances between the outlook and actual outcomes.  
The Indian economy seems to be recovering now that  
the presidential elections are over and should grow by  
6.2% in 2015. The recovery in Brazil is only likely to be  
a very modest 0.5%. Russia is being negatively impacted  
in particular by lower oil prices and economic sanctions  
imposed in the wake of the unresolved Ukraine con-  
flict. Forecasts, which are currently being adjusted fur-  
ther downwards, indicate a 4.1% drop in Russian GDP.  
Economic outlook for 2015  
For the purposes of the outlook, we assume that the  
global economy will continue its moderate upswing in  
Currency markets  
2
015 and grow by  
3
.
5
%. Over-capacities and price  
Currencies which have the greatest impact on the BMW  
Group’s international business, such as the US dollar,  
bubbles on the Chinese property market remain signifi-  
6
6
but also the Chinese renminbi, the British pound and  
the Japanese yen, could well be subject to a significant  
degree of fluctuation again in 2015.  
is forecast to rise by 2.1% to 3.1 million. The French  
market is expected to grow by 6.7% to 1.9 million units,  
the Italian market by 2.1% to 1.4 million units. The  
economic upturn in Spain should maintain momentum  
and result in a further steep rise in car sales in the cur-  
rent year (0.95 million units; +11.3%). The UK car market  
is likely to remain flat in 2015, with registrations down  
marginally by 0.5% to approximately 2.5 million units.  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
The expected interest rate turnaround in the USA, low  
inflation in Europe and the fragile state of Europe’s  
economy, suggest that the US dollar will again tend to  
perform strongly against the euro in 2015.  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
The Chinese renminbi is likely to remain relatively closely Car registrations in Japan are forecast to be in the region  
2
4
9
9
coupled with the US dollar over the coming year. In the  
long term, however, it seems likely that volatility will  
increase, following the announcement that capital mar-  
kets in China are to be liberalised.  
of 4.8 million units and hence about 10.0% lower than  
in the previous year.  
6
1
4
6
Events after the End of the  
Reporting Period  
In the case of car markets in major emerging econo-  
mies, we predict some highly divergent developments.  
Due to the prevailing economic and political situation,  
65  
Report on Outlook, Risks and  
Opportunities  
The Japanese yen, which has lost significant ground  
6
5
Outlook  
against the euro since mid-2012, is not expected to see a Russia is expected to see a further 21.8% drop to 1.8 mil-  
70  
Report on Risks and Opportunities  
8
2
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
rapid recovery, given that the Japanese central bank is  
unlikely to change its monetary and exchange rate poli-  
cies in the near future.  
lion units. The Brazilian car market is also likely to con-  
tract slightly again in 2015 by approximately 2.0% to  
3.3 million units.  
8
3
7
8
BMW Stock and Capital Markets  
The current healthy state of the UK economy and the  
expected turnaround in interest rates that the Bank of  
England is likely to set in motion could well strengthen  
the British pound somewhat in the short and medium  
term.  
Motorcycle markets in 2015  
The markets for 500 cc plus motorcycles are again likely  
to continue their upward trend in 2015, albeit on a  
modest scale. Registrations are expected to rise slightly  
across Europe, including increases on a similar scale  
for the major motorcycle markets in Germany, Italy and  
The currencies of many emerging economies are expected France. The USA is also likely to see a continuation of  
to remain under pressure against the US dollar in the  
foreseeable future, due to the normalisation of US mon-  
etary policies, which is likely to get under way in 2015.  
Countries with current account and fiscal deficits are  
the positive trend.  
Financial Services sector in 2015  
The normalisation of monetary policies in the USA is  
most likely to be affected. Due to the expansionary mon- expected to continue throughout the coming year. The  
etary policies of the ECB, emerging market currencies  
will tend to gain in value against the euro. The rouble  
first steps in the direction of a slight rise in interest  
rates might be taken in summer 2015. The current debt  
will remain on the weak side until political tensions have situation, however, precludes any rapid interest rate  
eased.  
increases in the USA. In Europe, by contrast, the ECB  
will proceed with the plans it has already announced  
for a large scale bond-buying programme as inflation  
remains low in the first half of 2015. A weakly perform-  
ing economy and a low inflation rate will maintain the  
pressure on the Bank of Japan to intervene. We there-  
fore expect it to retain its expansionary monetary poli-  
cies and continue to buy government bonds. Reference  
interest rates in the eurozone and Japan are therefore  
set to remain at historically low levels at least until the  
end of 2015.  
Car markets  
We expect global car markets to grow in the current year  
by approximately 3.0% to 83.1 million units. The US  
market is forecast to grow by around 2.9% to 17.0 mil-  
lion units. Our prediction for passenger car registra-  
tions in China is a rise of around 10.0% to 20.3 million  
units.  
The majority of Europe’s car markets should continue  
to recover in 2015. The region’s core markets, however,  
are only likely to see growth on a modest scale. The  
number of new registrations in Germany, for instance,  
We expect the pattern of credit risks worldwide to re-  
main more or less stable during the current year.  
6
7 COMBINED MANAGEMENT REPORT  
Stable conditions are also predicted for used car mar-  
kets in Asia and Europe in 2015, while price levels in  
North America are, at the most, only likely to fall  
slightly.  
levels of upfront expenditure to safeguard business  
viability going forward and future challenges arising in  
the wake of the normalisation of the Chinese market.  
A number of risks will also have to be faced, including  
the precarious state of the Russian market and macro-  
economic uncertainties in Europe (see the section “Po-  
litical and global economic risks” in the risk report).  
We expect our attractive model range to generate positive  
momentum, which will help us achieve our target of  
balanced growth on all major markets.  
Expected impact on the BMW Group in 2015  
Future developments on international automobile mar-  
kets also have a direct impact on the BMW Group.  
While competition is likely to intensify in contracting  
markets, new opportunities are opening in growth  
regions. In some countries, sales volumes will be influ-  
enced to a great extent by the way we tackle new com-  
petitive challenges. After the uncertainties that have  
dominated recent years, we expect Europe to generate  
some positive momentum again, albeit on a slight scale.  
North America and China are likely to see a continua-  
tion of the positive trend in 2015. In contrast, the situa-  
tion on the Russian car market can be expected to re-  
main tense over the forecast period.  
Workforce at year-end: solid increase expected  
The BMW Group will continue to recruit staff in 2015  
and, based on our latest forecasts, we expect a solid in-  
crease in the size of the workforce (2014: 116,324 em-  
ployees), driven by car and motorcycle sales growth and  
the rapid pace of innovation.  
Automotive segment in 2015  
Deliveries to customers: solid increase expected  
As an enterprise with global operations, the BMW  
Group is ideally placed to exploit opportunities that  
arise and thus compensate for unfavourable develop-  
ments in other regions. Thanks to its strong brands, we  
forecast continued profitable growth for the BMW  
Group in the current year. We will push ahead with in-  
vestments in innovation, future technologies and the  
further internationalisation of our production network  
in 2015. As a manufacturer of premium vehicles, we will  
continue to profit from strong worldwide demand in  
this segment. Given all these factors, we forecast that  
the BMW Group will remain the world’s leading pre-  
mium manufacturer in 2015.  
We expect the pace of growth in the Automotive seg-  
ment to remain high in 2015. Assuming economic  
conditions continue to be stable, we predict a solid rise  
in deliveries to customers (2014: 2,117,965 units) to  
achieve a new high level, which will, in all probability,  
enable the BMW Group to maintain its position as the  
world’s foremost premium car manufacturer in 2015.  
Attractive new models and dynamic market conditions,  
particularly in North America, should have a positive  
impact on car sales. After some negative developments  
in recent years, the European car markets are expected  
to recover slightly overall. Nevertheless, the market en-  
vironment is likely to remain challenging.  
Our highly flexible international production network  
enables us to compensate for even substantial fluctua-  
tions in demand. Investing in major growth markets  
The new 2 Series Convertible was added to the BMW 2 Se-  
ries with effect from the end of February. Its predeces-  
provides the basis for the continued success of the BMW sor, the 1 Series Convertible, achieved worldwide sales  
Group. We attach great importance to ensuring that  
the global distribution of our sales remains balanced,  
while simultaneously expanding the global presence of  
the BMW Group.  
of more than 130,000 units and was therefore the un-  
disputed leader in its class.  
In April, the four-wheel drive BMW X5 M and X6 M will  
come onto the market. These high-performance models  
combine the characteristic features of the successful  
BMW X family – exclusivity, robustness, agility and every­  
day usability – with the commitment to high perfor-  
mance that defines an M car.  
Outlook for the BMW Group in 2015  
The BMW Group in 2015  
Profit before tax: solid increase expected  
The BMW Group will remain on course in 2015 and  
forecasts a solid increase in Group profit before tax  
compared to the preceding year (2014: €ꢀ8,707 million).  
However, the scale of the increase during the forecast  
period is likely to be held down by intense competition  
on car markets, rising personnel costs, continued high  
The new facelift of the BMW 1 Series, unveiled at the  
Geneva Motor Show, will provide additional sales  
momentum. With a fully revamped engine range and  
additional features that reduce fuel consumption and  
6
8
*
emissions, the new BMW 1 Series will again be playing  
a pioneering role in the introduction of newly devel-  
oped BMW EfficientDynamics technologies. The seven-  
seater BMW 2 Series Gran Tourer also made its world  
debut in Geneva, heralding the BMW Group’s entry  
into a new vehicle segment. With its generous interior  
spaciousness, versatility and flexibility, the BMW 2 Se-  
ries Gran Tourer is the first BMW to be launched in the  
Carbon fleet emissions : slight decrease expected  
Regulations for vehicle carbon emissions are becoming  
continually stricter worldwide. The BMW Group com-  
mitted itself at an early stage to meeting future legal  
requirements with the aid of its innovative Efficient  
Dynamics technology package. The increasing scope of  
electrification in our vehicle fleet is enabling us to play  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
a
pioneering role in reducing both carbon emissions  
2
2
6
6
Overall Assessment by Management multi-purpose vehicle segment.  
and fuel consumption. At the same time, our vehicles  
also set standards in terms of sporting flair and dynamic  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
2
4
9
9
The BMW 6 Series Coupé, Gran Coupé and Convertible driving pleasure.  
model upgrades were presented in January and will  
come onto the market in spring 2015. The new 6 Series  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
6
1
4
We will continue to work hard in the current year to re-  
duce carbon emissions across the entire fleet. Overall,  
we expect fleet emissions to decrease slightly in 2015  
6
Events after the End of the  
Reporting Period  
satisfies the most exacting requirements for luxury-  
segment sporting vehicles in terms of dynamic driving  
performance, comfort, technology and elegance.  
65  
Report on Outlook, Risks and  
Opportunities  
6
(2014: 130 grams CO /ꢀkm).  
2
5
Outlook  
70  
Report on Risks and Opportunities  
8
2
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
The highly efficient BMW X5 xDrive40e comes onto the  
market in 2015. It is the first BMW brand Sports Activity The generally positive business trend predicted for the  
Revenues: solid increase expected  
8
3
7
Vehicle to combine the intelligent BMW xDrive all-wheel  
drive system with a more advanced plug-in hybrid  
system, and represents a further important step in the  
transfer of innovative drivetrain systems from BMW i  
models to the BMW Group’s core brand.  
BMW Group is also expected to have a positive impact  
on Automotive segment revenues. Accordingly, we fore-  
cast solid revenue growth for the forecast period (2014:  
€ 75,173 million).  
8
BMW Stock and Capital Markets  
EBIT margin in target range between 8 and 10% expected  
Preparations for the new BMW 7 Series are already  
under way at the Dingolfing plant. Intelligent composite  
construction in the new BMW 7 Series and the imple-  
mentation of carbon fibre (CFRP) technology will set new  
standards in the market.  
An EBIT margin within a range of between 8 and 10%  
2014 %) remains the target for the Automotive  
segment.  
(
: 9.6  
We expect to see a moderate drop in segment RoCE  
2014: 61.7%). However, the long-term target RoCE of at  
least 26% for the Automotive segment will be clearly  
(
We also expect the MINI brand to generate new sales  
momentum in 2015, driven, among other factors, by the surpassed.  
low average age of its model range (2.5 years). The new  
MINI Clubman will be presented in 2015 and will excel  
with a wide range of high-value details, plenty of room  
for functionality and outstanding materials.  
Motorcycles segment in 2015  
Deliveries to customers: solid increase expected  
We expect the Motorcycles segment’s upward trend to  
continue, helped by a positive contribution from the  
new models – R1200 R, R1200 RS, S1000 RR, S1000 XR  
and F 800 R – presented at the autumn trade fairs. Within  
a positive market environment, we forecast a solid in-  
crease in BMW motorcycle sales in the forecast period  
(2014: 123,495 units).  
The Araquari plant in Brazil commenced production of  
BMW brand vehicles in autumn 2014. The completion  
of the new production site is scheduled for 2015. The  
plant will have a planned annual capacity of up to  
30,000 units. The BMW Group is also increasing pro-  
duction capacities in the USA. After the expansion  
of the Spartanburg plant has been completed, up to  
4
50,000 vehicles per year will roll off the production  
*
lines as from the end of 2016.  
EU-28.  
6
9 COMBINED MANAGEMENT REPORT  
Return on capital employed in line with last year’s level  
expected  
We expect the impetus provided by the new models  
will help keep segment RoCE in line with last year’s  
level (2014: 21.8%).  
thus reflecting the solid growth in sales volume and  
revenues anticipated by the Automotive segment. At  
the same time, we expect a slight decrease in carbon  
emissions from our fleet of vehicles. We aim to achieve  
profitable growth through a solid increase in the size  
of the workforce across the Group. The Automotive seg-  
ment’s EBIT margin will remain within the target range  
Financial Services segment in 2015  
Return on equity in line with last year’s level expected  
of between 8 and 10%. Based on the planned level of  
Based on our assessment, the Financial Services segment capital expenditure, we expect a moderate decrease in  
will continue to perform well in 2015. Despite rising the Automobile segment’s RoCE. The Financial Services  
equity capital requirements worldwide, we forecast RoE segment’s RoE should remain in line with last year’s  
in line with last year’s level 2014 19 %), thus remain- level. Both performance indicators will be nevertheless  
higher than their long-term targets of 26% and 18  
(
:
.4  
ing ahead of the target of at least 18%.  
%
respectively. For the Motorcycles segment, we forecast  
a solid increase in sales volume and RoCE in line  
with last year’s level. Depending on the political and  
economic situation and the outcome of the risks and  
opportunities described below, actual business per-  
formance could, however, differ from our current ex-  
pectations.  
Overall assessment by Group management for 2015  
We forecast a continuation of the upward trend in 2015  
and expect to achieve profitable growth on the back  
of a range of factors, including the introduction of new  
models. Despite the aforementioned challenges, Group  
profit before tax is forecast to achieve a solid increase,  
Principal performance indicators  
2014  
2015  
Outlook  
BMW Group  
Workforce at end of year  
116,324  
8,707  
solid increase  
solid increase  
Profit before tax  
€ million  
Automotive segment  
1
Sales volume  
units  
2,117,965  
130  
solid increase  
slight decrease  
2
Fleet emissions  
g CO /km  
2
Revenues  
€ million  
75,173  
9.6  
solid increase  
EBIT margin  
%
%
unchanged between 8 and 10  
moderate decrease  
Return on capital employed  
61.7  
Motorcycles segment  
Sales volume  
units  
%
123,495  
21.8  
solid increase  
Return on capital employed  
in line with last year’s level  
Financial Services segment  
Return on equity  
%
19.4  
in line with last year’s level  
1
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).  
EU-28.  
2
7
0
Report on Outlook, Risks and Opportunities  
Report on Risks and Opportunities  
As a world-leading manufacturer of premium cars and  
motorcycles and provider of premium financing and  
The scope of entities covered by the report on risks  
and opportunities corresponds to the scope of consoli-  
mobility services, the BMW Group is exposed to numer- dated entities included in the BMW Group Financial  
ous uncertainties and changes. Making full use of the  
opportunities that present themselves is the basis for its  
corporate success. In order to achieve growth, profita-  
bility, efficiency and sustainable levels of business in the The objective of the risk management system and one of  
future, the BMW Group consciously takes certain risks.  
Statements.  
1
8
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
Risk management system  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
the key functions of risk reporting is to identify, record  
and actively manage internal and external risks which  
pose a threat to the attainment of corporate targets. The  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
The prudent management of opportunities and risks is  
2
4
9
9
a fundamental prerequisite for the ability to react appro- risk management system covers all significant risks to  
priately to changes in political, legal, technical or eco- the Group, or those which could pose a threat to its going-  
nomic conditions. Identified opportunities and risks are concern status. With regard to the structure of the risk  
addressed in the Outlook Report if they are likely to  
materialise. The following sections focus on potential  
future developments or events, which could result in a  
positive variance (opportunities) or a negative variance  
(risks) in the BMW Group’s outlook. The potential im-  
6
1
4
6
Events after the End of the  
Reporting Period  
management system, the responsibility for risk reporting  
lies with each individual member of staff and manager –  
in their various roles – and not with that of any central-  
ised unit in particular. Each and every employee and  
manager is required to report risks via the available re-  
65  
Report on Outlook, Risks and  
Opportunities  
65  
Outlook  
70  
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
pact of risks and opportunities is always presented sepa- porting channels. This requirement is set out in guide-  
rately and without offset.  
8
3
7
lines that apply throughout the Group.  
8
BMW Stock and Capital Markets  
Risks and opportunities are assessed as a general rule  
over a medium-term period of two years. All potential  
risks of losses (individual and accumulated risks) are  
monitored and managed from a risk management per-  
spective. As a matter of principle, risks that pose a going-  
concern threat are avoided. If there is no specific  
reference to a segment, opportunities and risks relate  
to the Automotive segment.  
The Group risk management system comprises a de-  
centralised network covering all parts of the business,  
which is steered by a centralised risk management func-  
tion. Each of the BMW Group’s areas of responsibility  
is represented within the risk management network by  
so-called network representatives. The network’s for-  
mal organisational structure helps to strengthen its  
visibility and underline the importance attached to risk  
Risk management in the BMW Group  
Group-wide risk management  
Identification  
Effectiveness  
Reporting  
Analysis and  
Measurement  
Supervisory Board  
Risk management  
Compliance  
Committee  
Usefulness  
Risk Management  
Steering Committee  
Board of Management  
Completeness  
Monitoring  
Controlling  
Group Audit  
Internal Control System  
7
1 COMBINED MANAGEMENT REPORT  
management within the BMW Group. The duties, re-  
sponsibilities, and tasks of the centralised risk manage-  
ment unit and network representatives are clearly  
As a supplement to comprehensive risk management,  
managing the business on a sustainable basis also repre-  
sents one of the Group’s core corporate principles. Any  
described, documented and acted on. Group risk manage- risks or opportunities related to sustainability issues  
ment is geared towards meeting the following three  
criteria: effectiveness, usefulness and completeness. In  
view of the dynamic growth of business in recent years,  
are discussed by the Sustainability Committee. Strategic  
options and measures open to the BMW Group are put  
forward to the Sustainability Board, to which all mem-  
in-house thresholds and rules in place for risk reporting bers of the Board of Management belong. Risk aspects  
purposes were reviewed in 2014 for effectiveness and discussed at this level are integrated in the work of the  
usefulness and modified as seen appropriate. In addition, group-wide risk network. The composition of the Risk  
the design of the BMW Group’s risk management net- Management Steering Committee on the one hand and  
work was reviewed on the basis of the framework of the the Sustainability Committee on the other ensures that  
internationally recognised Committee of Sponsoring risk and sustainability management are closely coordi-  
Organizations of the Treadway Commission (COSO). This nated.  
review was carried out in conjunction with the Com-  
pliance Committee, Group Internal Audit, Internal  
Control System and overall Group risk management  
functions. Appropriate measures are in place to ensure  
that these functions are coordinated seamlessly.  
Risk measurement  
In order to determine which risks can be considered  
significant in relation to results of operations, financial  
position and net assets and to identify changes in key  
performance indicators used by the BMW Group, risks  
are classified as high, medium or low.  
Risk management process  
The risk management process is applied throughout  
the Group and comprises the early identification and  
penetration of risks, comprehensive analysis and risk  
measurement, the coordinated use of suitable manage-  
ment tools and also the monitoring and evaluation of  
measures taken.  
The overall impact on results of operations based on the  
assumption that the risk will materialise is measured  
for the two-year assessment period and allocated to the  
following categories:  
Class  
Earnings impact  
Risks reported to the centralised risk management team  
from within the network are firstly presented for review  
to the Risk Management Steering Committee, for which  
Group Controlling is responsible. After review, the risks  
are reported to the Board of Management and to the  
Supervisory Board. Significant and going-concern-  
related risks are classified on the basis of the potential  
scale of impact on the Group’s results of operations,  
Low  
> €0–500 million  
> €500–2,000 million  
> €2,000 million  
Medium  
High  
The significance of risks for the BMW Group is deter-  
financial position and net assets. The level of risk is quan- mined on the basis of risk amounts. The measure-  
tified, taking into account the probability of occurrence  
and risk mitigation measures.  
ment of the amount of a risk takes account of both its  
impact (net of appropriate countermeasures) and the  
likelihood of occurrence in each case. The amount of  
a risk is approximated in the case of risks measured on  
the basis of value­at­riskꢀ/ꢀcash­flow­at­risk models. In  
this situation, the following assessment criteria are ap-  
plied:  
The risk management system is tested regularly by  
Internal Audit. By sharing experiences with other com-  
panies on an ongoing basis, the BMW Group ensures  
that new insights are incorporated in the risk manage-  
ment system, thus ensuring continual improvement.  
Regular basic and further training as well as information  
events held throughout the BMW Group, and in par-  
ticular within the risk management network, are invalu-  
able ways of preparing people for new or additional  
challenges with regard to the processes in which they  
are involved.  
Class  
Risk amount  
Low  
> €0–50 million  
> €50–400 million  
> €400 million  
Medium  
High  
7
2
Opportunities management system and identification  
of opportunities  
Risks and opportunities  
Risk  
amount  
Change  
compared to  
prior year  
New opportunities regularly present themselves in the  
dynamic business environment in which the BMW Group  
operates. General economic trends and sector-specific  
factors – including external regulations, suppliers, cus-  
tomers and competitors – are monitored continuously.  
Identifying opportunities is an integral part of the pro-  
18  
COMBINED MANAGEMENT REPORT  
Political and global economic risks  
and opportunities  
18  
General Information on the BMW Group  
High  
Stable  
1
2
8
0
Business Model  
Management System  
Strategic and sector risks and  
opportunities  
23  
Report on Economic Position  
Medium  
Increased  
23  
General and Sector-specific  
Environment  
Risks and opportunities relating  
2
2
6
6
Overall Assessment by Management cess of developing strategies and drawing up forecasts for to operations  
Financial and Non-financial  
the BMW Group.  
Production and technology  
Medium  
High  
Stable  
Stable  
Stable  
Stable  
Stable  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
2
4
9
9
Purchasing  
Market, competition and scenario analyses are conducted  
and evaluated and forecasts are drawn up as part of  
the process of identifying opportunities. The Group’s  
product and service portfolio is permanently reviewed  
in the light of these analyses and, as appropriate, new  
product projects are presented to the Board of Manage-  
ment for consideration.  
Sales and marketing  
Pension obligations  
Information, data protection and IT  
Financial risks and opportunities  
Foreign currencies  
High  
6
1
4
High  
Medium  
6
Events after the End of the  
Reporting Period  
65  
Report on Outlook, Risks and  
Opportunities  
High  
High  
Low  
Stable  
Stable  
Stable  
65  
Outlook  
Raw materials  
70  
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Liquidity  
Risks and opportunities relating  
to the provision of financial services  
8
3
7
The continuous optimisation of important business  
processes and strict cost control are essential to ensure  
good profitability and a high return on capital em-  
Credit risk  
High  
High  
Stable  
Stable  
Stable  
Stable  
Stable  
8
BMW Stock and Capital Markets  
Residual value  
Interest rate changes  
Liquidity/operational risks  
Legal risks  
Medium  
Medium  
Low  
ployed. The forecast is drawn up on the assumption that  
profitability improvement measures will be imple-  
mented. One example is the implementation of modu-  
lar-based production and common architectures, which  
enable a greater commonality of features between  
different models and product lines. This, in turn, con-  
tributes to improved profitability by reducing develop-  
ment costs and investment on the series development  
of new vehicles. The new approach has a positive im-  
pact on production costs and helps increase production  
Risks and opportunities which could, from today’s per-  
spective, have a significant impact on the results of  
operations, financial position andꢀ/ꢀor net assets of the  
BMW Group are described in the following sections.  
flexibility. A more competitive cost basis opens up oppor- Political and global economic risks and  
tunities to engage in new market segments.  
opportunities  
As one of the world’s leading providers of premium  
products and services, the BMW Group faces a variety  
of major challenges. The world is changing at great  
speed. Resulting situations can give rise to risks on the  
one hand and opportunities on the other.  
The implementation of identified opportunities is un-  
dertaken on a decentralised basis. The significance of  
opportunities for the BMW Group is classified in the  
categories “material” or “not material”.  
Risks and opportunities  
Political and global economic risks  
The following table provides an overview of all risks and Individual mobility remains a key issue in a great many  
opportunities and shows their significance for the BMW  
Group.  
countries, in terms of political regulation and national  
industrial policymaking. Changing values in society are  
constantly calling for new solutions in the field of mo-  
Neither at the balance sheet date nor at the date on which bility. Unpredictable disturbances in economic interde-  
the Group Financial Statements were authorised for  
issue were any risks identified which could pose a  
threat to the going-concern status of the BMW Group.  
pendencies, together with ever-greater competition,  
may give rise to knock-on reactions that are practically  
impossible to measure.  
7
3 COMBINED MANAGEMENT REPORT  
The current high level of volatility prevailing in many  
economies continues to have an unsettling impact on  
result in an improved quality of earnings. Changes in  
the legal environment are monitored continuously at a  
markets and consumers. Many emerging economies are centralised level. At present, however, the BMW Group  
currently performing below their full potential. The  
eurozone is still having to cope with a range of structural  
problems, such as those evident in Greece.  
does not see any significant political andꢀ/ꢀor global eco-  
nomic opportunities, which could have a positive sus-  
tainable impact on its earnings performance.  
The slowing of economic growth in China, one of the  
Strategic and sector risks and opportunities  
BMW Group’s principal markets, also continues to pose New regulations and the development of fuel and energy  
a major risk. Upheavals in the property or banking sector prices also influence various aspects of our business,  
in this region could result in reduced demand for our  
products and services.  
including customer behaviour. Medium- and long-term  
targets have already been put in place in Europe, North  
America, Japan, China and other countries to minimise  
Any escalation of political conflicts (such as in Russia), fuel consumption and CO emissions.  
2
terrorist activities, natural disasters or possible pan-  
demics could have a negative impact on the world econ- Strategic and sector risks  
omy and international capital markets. The BMW Group One of the main risks for the automobile industry is  
counters these risks primarily by internationalising its  
sales and production structures, in order to reduce the  
potential impact of risk exposures in individual coun-  
the possible threat of short-term tightening of laws and  
regulations, including local registration restrictions. In  
some cases, changes in customer behaviour are not only  
tries. Political and global economic risks are determined brought on by new regulations, but also through changes  
by analysing historical data and applying a cash-flow-at- of opinion, values and environmental issues. Among  
risk approach.  
other factors, global climate change is having an effect  
on legislation, regulations and consumer behaviour. In  
order to meet structural changes in the demand for  
individual mobility that no longer necessarily entail  
actually owning a vehicle, the BMW Group is offering  
corresponding mobility services, such as the DriveNow  
car-sharing model.  
If risks from this category were to materialise, they  
could – due to sales volume fluctuations – have a high  
impact on results of operations over the two-year as-  
sessment period. Overall, the risk amounts attached  
to political and global economic risks are classified as  
high.  
With its Efficient Dynamics concept, the BMW Group  
is playing a pioneering role in the premium segment in  
reducing both fuel consumption and emissions. With  
effect from 2013, our range of products was expanded  
to include electric powertrains in BMW i series vehicles.  
These innovations also make an important contribution  
in our endeavours to fulfil statutory rules and require-  
ments in terms of CO2 emissions. The BMW Group is  
investing in the development of sustainable drive tech-  
nologies and materials, with the aim of providing highly  
efficient vehicles for individual mobility in the premium  
segment, both now and in the future.  
Political and global economic opportunities  
Despite the high level of risk involved, the BMW Group  
sees an opportunity for above-average growth in the  
Chinese market. In addition to the impact from eco-  
nomic developments, the BMW Group’s earnings can  
also be positively affected in the short to medium term  
by changes in the legal environment. A possible reduc-  
tion in tariff barriers, import restrictions or direct ex-  
cise duties could lower the cost of materials for the  
BMW Group, also enabling products and services to be  
offered to customers at lower prices. Another factor to  
consider is that regulatory support for forward-looking  
technologies, such as electromobility, help to make  
the total cost of ownership more attractive for customers  
in the form of incentives. Developments of this kind  
Employees make a vital contribution to sustainable  
growth and improved profitability through their inno-  
vative skills. One prerequisite for this is a consistent  
open up opportunities to achieve faster market penetra- strategic approach to the management of human re-  
tion for these technologies, which could, in turn, lead sources, even in the event of changes in the legal frame-  
to higher sales volumes and, all other things being equal, work. The BMW Group has appropriate measures in  
7
4
place for such eventualities. Risk amounts and earnings The BMW Group is constantly refining the tools it uses  
impact are measured on the basis of extensive scenario  
analyses.  
to recruit employees, encourage career development and  
bind employees to the enterprise. Within this environ-  
ment, employees find the optimal situation in which to  
develop their skills. If these measures generate greater  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
If risks from the strategic and sector category were to  
1
2
8
0
Business Model  
Management System  
materialise, they could have a medium impact on results benefits than currently expected, the BMW Group’s rev-  
of operations over the two-year assessment period. The enues, results of operations and cash flows could be  
amounts of risk attached to strategic and sector-specific positively impacted and forecasted figures surpassed.  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management risks are classified as medium.  
Creating a successful performance culture and the devel-  
opment of the expertise and skill sets of both staff and  
managers alike throughout the organisation could also  
have a positive impact on revenue and profitability.  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
2
4
9
9
Strategic and sector opportunities  
Additions to the product and mobility portfolio and  
6
1
4
expansion in growth regions are seen as the most im-  
portant opportunities for growth in the medium to  
long term for the BMW Group.  
6
Given the long lead times involved, the BMW Group’s  
earnings performance is unlikely to benefit over the as-  
sessment period from efficiency improvements or from  
the implementation of product and process developments  
to a significantly greater extent than that already incor-  
65  
Report on Outlook, Risks and  
Opportunities  
65  
Outlook  
Remaining on growth course depends above all else on  
the ability to develop innovative products and bring  
7
0
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
them to market. The launching of the BMW i brand opens porated in the outlook.  
up new customer target groups for the BMW Group and  
8
3
7
consolidates the position of BMW as a sustainable and  
Risks and opportunities relating to operations  
8
BMW Stock and Capital Markets  
forward-looking brand. BMW i products can be seen as Production and technology-related risks  
“empowerment projects” for new technologies and pro-  
Production stoppages and downtimes – in particular  
cesses, which will also benefit other vehicle concepts.  
due to fire, but also those attributable to manufacturing  
The existing product portfolio has been expanded by the equipment breakdowns, logistical disruptions or new  
addition of mobility services such as DriveNow, Charge-  
Now and ParkNow. The general acceptance of, and  
sales volumes generated with, planned future product  
innovations could be better than predicted in the out-  
look. In the short term, however, any potential positive  
impact is classified as not material.  
vehicle production line start­ups – represent risks which  
the BMW Group counters with a broad range of appro-  
priate measures. Production structures and processes  
are designed from the outset with a view to reducing  
potential damage and the probability of occurrence. In  
addition to technical fire protection measures, the BMW  
Group has implemented an array of strategies, including  
preventative maintenance, land development measures  
including contingencies against flooding, spare parts  
management on a multi-site basis and backup plans  
for alternative transportation. The level of risk is also  
reduced by the deployment of flexible work-schedule  
models and employee time accounts, but also by the  
ability to build specific models at additional sites if  
necessary. Moreover, risks arising from business inter-  
ruption and loss of production as a consequence of fire  
The long-term trend towards greater sustainability pro-  
vides opportunities to boost sales of sustainable prod-  
ucts and, under the right circumstances, achieve better  
selling prices. Innovations – such as the BMW i3 and i8  
in the field of electromobility or Efficient Dynamics  
across the entire BMW Group product portfolio – pro-  
vide excellent platforms for future growth. Potential  
is also seen by engaging in new product and market  
categories and by developing new customer target  
groups. New business models and cooperation arrange- are also insured up to economically reasonable levels  
ments with the BMW Group’s growing network of  
business partners often provide the best means to take  
advantage of these opportunities. Good examples of  
this are the implementation of the 360°ELECTRIC port-  
with insurance companies of good credit standing.  
If risks from the production and technology-related risks  
category were to materialise, they could have a high im-  
folio in the field of electromobility, the partnership with pact on the results of operations over the two-year as-  
SIXT in the field of mobility services and collaboration  
with Toyota on a hydrogen fuel cell system.  
sessment period. The level of risk attached to prouction  
and technology-related issues is classified as medium.  
7
5 COMBINED MANAGEMENT REPORT  
Production and technology-related opportunities  
parts. In order to attain the level of quality required, it  
may become necessary to invest in new technological  
concepts or discontinue planned innovations, with the  
consequence that the cost of materials could exceed  
levels incorporated in the outlook. Supplier sites are as-  
sessed for exposure to natural hazards, such as floods  
or earthquakes, in order to identify supply risks at an  
early stage and implement appropriate countermeasures.  
Production problems incurred by suppliers could have  
adverse consequences for the BMW Group, ranging  
from increased expenditure through to production in-  
terruptions and a corresponding reduction in sales  
volume.  
In addition to the risks involved, we firmly believe that  
the choice of sites for new production facilities also  
creates a wealth of opportunities. Selecting a new loca-  
tion goes hand in glove with the opportunity to shape  
the local environment in a positive way (e.ꢀg. job crea-  
tion, training, corporate social responsibility (CSR) pro-  
jects). Our aim is to continue our commitment to sus-  
tainability whenever a new site is selected. We therefore  
endeavour to incorporate flagship projects at our pro-  
duction sites that have a clear focus on sustainability  
(e.ꢀg. wind turbines in Leipzig). The option of offsetting  
capacities between BMW Group sites is always kept in  
mind if production technologies can be employed to  
achieve greater efficiency in the use of resources.  
Raw materials management procedures are in place to  
mitigate the risk of a production interruption due to  
shortages of supplies of critical raw materials. In order  
to reduce supply risks, the BMW Group works hard  
to reduce the input of raw materials or to use alternative  
raw materials as a substitute.  
Compared to the outlook, efficiency improvements are  
unlikely to have a significantly greater impact over  
the two-year assessment period than that already incor-  
porated in the outlook.  
Purchasing risks  
If purchasing risks were to materialise, they could have  
a high impact on the BMW Group’s results of opera-  
tions over the two-year assessment period. The level  
of risk attached to supply risks is classified as high,  
mainly due to the insufficient availability of raw materials  
in Asia.  
Close cooperation between carmakers and automotive  
suppliers creates economic benefits on the one hand,  
but also raises levels of dependency on the other. The  
increasing trend towards modular-based production  
with a set of common architectures covering various  
models and product lines exacerbates the consequences  
of the loss of a supplier or failure to supply on time.  
As part of the supplier preselection process, the BMW  
Group is careful to ensure that its future business part-  
ners meet the same high ecological, social and corpo-  
rate governance standards by which the BMW Group is  
generally measured. Suppliers are assessed on the basis  
of the BMW Group Sustainability Standard, which is  
applied throughout our supplier network worldwide.  
Risks relating to sales and marketing  
Changes in global economic conditions and increasingly  
protectionist trends are among the factors that could  
result in lower demand as well as fluctuations in the re-  
gional spread and composition of sales in terms of vehi-  
cles and mobility services. Risks relating to these  
developments can be reduced with the aid of flexible  
selling and production processes. At the same time, in-  
This set of fundamental principles and standards covers creased pressure on selling prices and margins caused  
both production and non-production aspects relevant by intense competition on the world’s markets, particu-  
for the goods and services provided by suppliers, which larly in Western Europe, the USA and China, requires  
also includes compliance with internationally recognised constant analysis, including keeping an eye on develop-  
human rights and applicable labour and social stand-  
ards. The principal tool for ensuring compliance with  
the BMW Group Sustainability Standard is a three-  
ments in grey market volumes from the USA to China.  
Selling price and margin risks are determined on the  
basis of past experience and changing global economic  
stage sustainability and risk management approach com- conditions, with risk exposures measured using a cash-  
prising a BMW Group-specific sustainability risk filter,  
a sustainability questionnaire and a sustainability audit.  
In addition, the technical and financial capabilities of  
flow-at-risk model.  
If sales and marketing risks were to materialise, they  
suppliers – especially those supplying for modular­based could have a high impact on the BMW Group’s results  
production – are continuously monitored during both  
the development and production phases of the Group’s  
of operations over the two-year assessment period. The  
level of risk attached to sales and marketing risks is  
vehicles. Particular attention is paid to the quality of the classified as high.  
7
6
Opportunities relating to sales and marketing  
The BMW Group considers that these opportunities will  
not have a material impact on the results of operations  
over the two-year assessment period compared to the  
assumptions made in the outlook.  
Opportunities may arise due to other technical innova-  
tions relating to products and processes and as a result  
of organisational changes. In the field of lightweight  
construction, for example, carbon was being put to use  
in high volumes for the first time in the automobile in-  
dustry in the construction of the BMW i3.  
18  
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
Risks relating to pension obligations  
23  
Report on Economic Position  
The BMW Group’s pension obligations to its employees  
resulting from defined benefit plans are measured on  
Overall Assessment by Management Since carbon could also be used in other vehicle projects, the basis of actuarial reports. Future pension payments  
Financial and Non-financial  
23  
General and Sector-specific  
Environment  
2
2
6
6
we see further competitive advantages in terms of fuel  
consumption and driving dynamics, which could, in  
turn, have a positive impact on sales volume growth. The ket fluctuation and therefore influence the level of pen-  
opportunities will not have a material impact over the  
assessment period on the results of operations of the  
BMW Group.  
are discounted by reference to market yields on high-  
quality corporate bonds. These yields are subject to mar-  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
2
4
9
9
6
1
4
sion obligations. Changes in other parameters, such as  
rises in inflation and longer life expectancy, also impact  
pension obligations and payments. Opportunities and  
risks arise depending on the nature and scale of changes  
in these parameters.  
6
Events after the End of the  
Reporting Period  
65  
Report on Outlook, Risks and  
Opportunities  
65  
Outlook  
The BMW Group focuses its selling capacities primarily  
on markets with the greatest sales volume and revenue  
7
0
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
potential and fastest growth rates. Investment in existing Most of the BMW Group’s pension obligations are ad-  
and new marketing concepts is firmly aimed at inten- ministered in external pension funds or trust arrange-  
sifying relationships with customers. A good example is ments and the related assets are kept separate from Com-  
the new marketing concept for BMW i products and pany assets. The amount of funds required to finance  
services, which will be offered in selected markets in the pension payments out of operations in the future is  
future via an innovative multi-channel model. There therefore substantially reduced, since most of the Group’s  
will be no relaxing of efforts in the active search for new pension obligations are settled out of pension fund as-  
8
3
7
8
BMW Stock and Capital Markets  
opportunities to create even greater added value for  
customers than currently expected, whilst at the same  
time looking for ways to boost sales volumes and achieve  
better selling prices. Developments in the field of digi-  
tal communication and networking are also opening  
up opportunities for marketing the BMW Group’s  
various brands. Consumers can meanwhile be reached  
sets. The pension assets of the BMW Group comprise  
interest-bearing securities, equities, real estate and other  
investment classes. Pension fund assets are monitored  
continuously and managed on a risk-and-yield basis.  
A broad spread of investments also helps to reduce risk.  
In order to reduce fluctuations in pension funding  
shortfalls, investments are structured to coincide with  
on a more targeted and individual basis, thus helping to the timing of pension payments and the expected pat-  
strengthen long-term relationships and brand loyalty. tern of pension obligations. Remeasurements on the  
The BMW Group keeps track of the latest developments obligations and fund asset sides are recognised, net of  
and trends in communication technology, including deferred taxes, in “Other comprehensive income” and  
the use of social media and networks, in order to extend hence directly in equity (within revenue reserves).  
customer reach for its brands. Automotive-related busi-  
ness activities of technology companies are also closely  
followed (autonomous driving). The BMW Group’s  
brands are present on numerous platforms, such as  
Facebook, YouTube and Twitter. Thanks to its intensive  
efforts in this area, the BMW Group is registering faster  
growth rates on the various platforms than its com-  
petitors, measured in terms of the number of fans and  
visits. The decisive advantage of digital communication  
is that the brands are able to engage in a direct dia-  
logue with customers and thus create a more intense  
product and brand experience.  
If risks relating to pension obligations were to mate-  
rialise, they could have a high impact on the BMW  
Group’s results of operations over the two-year assess-  
ment period. The level of risk attached to risks relating  
to pension obligations is classified as high.  
Opportunities relating to pension obligations  
Within a favourable capital market environment, the  
return generated by pension assets may exceed expec-  
tations and reduce the deficit of the relevant pension  
plans. This, in turn, could have a materially favourable  
7
7 COMBINED MANAGEMENT REPORT  
impact on the net assets position and earnings perfor-  
mance of the BMW Group.  
cluding the testing of data protection requirements) and  
rigorous security management ensure a high level of  
security.  
Further information on risks in conjunction with pen-  
sion provisions is provided in note 36 to the Group  
Financial Statements.  
Responsibility for data protection in each Group entity  
lies with the Board of Management (of BMWAG) or  
the relevant company management team. Local Data  
Privacy Protection Officers are embedded in each of the  
Group’s entities. In the case of cooperation arrange-  
ments and business partner relationships, the BMW  
Group protects its intellectual property as well as cus-  
tomer and employee data by stipulating clear instruc-  
tions with regard to data protection and the use of  
information technology. Information pertaining to key  
areas of expertise as well as sensitive personal data  
are subject to particularly stringent security measures.  
In a clear signal to employees, customers and Europe’s  
data protection authorities that data protection is taken  
Information, data protection and IT risks  
The importance of electronically processed data con-  
tinues to rise, with information technology (IT) playing  
an increasingly crucial role in every aspect of the  
business. These developments create opportunities on  
the one hand, whilst also posing a source of risk on the  
other.  
The BMW Group could incur damage if the confiden-  
tiality, integrity andꢀ/ꢀor availability of sensitive informa-  
tion and data are not maintained. Great importance is  
attached to the protection of business information and very seriously, the Board of Management of BMWAG  
of employee and customer data against unauthorised resolved a set of Binding Corporate Rules (BCR) that  
access andꢀ/ꢀor misuse. Data security, based on Interna- ensure the secure transfer of personal data throughout  
tional Security Standard ISOꢀ/ꢀIEC 27001, is an integral  
component of all business processes. Personal data is  
the BMW Group’s global organisation. The BMW Group  
has become the first car manufacturer worldwide to  
protected in accordance with the stringent requirements successfully complete the relevant BCR recognition pro-  
of the EU Data Protection Directive and the Federal  
cedures.  
Data Protection Act (Bundesdatenschutzgesetz – BDSG).  
The requirements placed on IT facilities – both externally  
and internally – are changing at a breathtaking pace in  
the face of technological developments. Potential risks  
are therefore investigated continuously and appropriate  
measures put in place to prevent or minimise their im-  
All employees are required to treat confidential infor-  
mation (such as customer and employee data) in an ap-  
propriate manner, ensure that information systems are  
properly used and that risks are handled with the ut-  
most transparency. Uniform requirements, documented pact. Despite regular testing and the whole gamut of  
in a coordinated and comprehensive set of principles,  
guidelines and work instructions, are applicable group-  
wide. Regular communication and sensitisation-rais-  
ing activities create a high degree of security and risk  
awareness among the employees involved. Employees  
receive training to ensure compliance with applicable  
requirements and in-house rules.  
preventative security measures employed, it is neverthe-  
less impossible to rule out risks completely in this area.  
If information, data protection and IT risks were to ma-  
terialise, they are only likely to result in a minor impact  
on the results of operations over the two-year assess-  
ment period. The levels of risk attached to information,  
data protection and IT risks are classified as medium.  
Risk management procedures include systematic docu-  
mentation of all informationꢀ/ꢀdata protection and IT  
risks, regular monitoring and the implementation of  
appropriate measures by the departments responsible.  
Technical data protection procedures include virus scan-  
ners, firewall systems, access controls at both operating  
system and application level, regular data backups and  
data encryption. Regular analyses and controls (in-  
Information, data protection and IT opportunities  
Conversely, the deployment of information technology  
also opens up many opportunities. New approaches  
to production and energy supply systems that are cur-  
rently being investigated in the context of “Industrie  
4.0” are generating significant efficiency improvements  
and resulting in greater sustainability. The range of  
7
8
services and apps on offer to customers through BMW  
ConnectedDrive is constantly being expanded and up-  
dated.  
over the two-year assessment period. A high level of  
risk is attached to currency risks. Significant opportuni-  
ties can arise if currency developments are favourable  
for the BMW Group.  
18  
COMBINED MANAGEMENT REPORT  
1
8
General Information on the BMW Group  
The opportunities arising from the deployment of infor-  
mation technology are not expected to have a material  
positive impact during the two-year assessment period tives used by the BMW Group are accounted for as  
1
2
8
0
Business Model  
Management System  
If the relevant recognition criteria are fulfilled, deriva-  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
compared to the assumptions made in the outlook.  
hedging relationships. Further information on risks in  
conjunction with financial instruments is provided in  
note 43 to the Group Financial Statements.  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Financial risks and opportunities  
Currency risks and opportunities  
As an internationally operating enterprise, the BMW  
2
4
9
9
Risks and opportunities relating to raw materials  
6
1
4
Group conducts business in a variety of currencies, thus Changes in prices of raw materials are monitored on the  
6
Events after the End of the  
Reporting Period  
giving rise to currency risks and opportunities. Since a  
substantial portion of Group revenues is generated out-  
side the eurozone (particularly in China and the USA)  
and the procurement of production material and funding  
is also organised on a worldwide basis, fluctuations in  
exchange rates can play a significant role for Group  
earnings. Cash-flow-at-risk models and scenario analyses (aluminium, copper, lead), and, to some extent, to steel  
are used to measure currency risks and opportunities. and steel ingredients (iron ore, coking coal) and energy  
Operational currency management is based on the results (gas, electricity) are hedged using financial derivatives  
provided by these tools. In 2014 the Chinese renminbi, andꢀ/ꢀor supply contracts with fixed pricing arrangements.  
the US dollar, the British pound, the Russian rouble and A description of the methods applied for risk measure-  
basis of a set of well-defined management procedures.  
The principal objective of these management processes  
is to increase planning reliability for the BMW Group.  
6
5
Report on Outlook, Risks and  
Opportunities  
65  
Outlook  
70  
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Price risks and opportunities relating to precious metals  
(platinum, palladium, rhodium) and non-ferrous metals  
8
3
7
8
BMW Stock and Capital Markets  
the Japanese yen constituted approximately 75% of the  
total foreign currency exposure of the BMW Group, with  
the Chinese renminbi and the US dollar accounting for  
the lion’s share of foreign currency transactions. The  
BMW Group manages currency risks at both strategic  
ment and hedging is provided in note 43 to the Group  
Financial Statements.  
If risks relating to raw materials were to materialise,  
they could have a medium impact on the BMW Group’s  
results of operations over the two-year assessment  
period. A high level of risk is attached to risks relating  
to raw materials.  
(
medium and long term) and operating level (short  
and medium term). Medium- and long-term measures  
include increasing production volumes in non-euro-  
region countries (natural hedging) and increasing pur-  
chase volumes denominated in foreign currencies.  
Constructing new plants in countries such as the USA,  
China or Brazil have also helped reduce foreign cur-  
rency exposures. Currency risks are managed in the  
short to medium term and for operational purposes by  
means of hedging. Hedging transactions are entered  
Conversely, significant opportunities can arise if prices  
of raw materials develop favourably for the BMW Group.  
If the relevant recognition criteria are fulfilled, deriva-  
tives used by the BMW Group are accounted for as  
hedging relationships. Further information on risks in  
into only with financial partners of good credit standing. conjunction with financial instruments is provided in  
Opportunities are also secured through the deployment note 43 to the Group Financial Statements.  
of options. A description of the methods applied for  
risk measurement and hedging is provided in note 43  
to the Group Financial Statements. Counterparty risk  
management procedures are carried out continuously  
in order to monitor the creditworthiness of business  
partners.  
Liquidity risks  
Based on experience gained during the financial crisis,  
a minimum liquidity concept has been developed and  
is rigorously adhered to. Solvency is assured at all times  
throughout the BMW Group by maintaining a liquidity  
reserve and by the broad diversification of refinancing  
sources. The liquidity position is monitored continu-  
ously at a separate entity level and managed by means  
If currency risks were to materialise, they could have a  
high impact on the BMW Group’s results of operations  
7
9 COMBINED MANAGEMENT REPORT  
of cash flow requirements and sourcing forecast sys-  
must be covered at all times by an appropriate asset  
tem in place throughout the Group. Liquidity risks may cushion in the form of equity capital. Unexpected losses  
be reflected in rising refinancing costs. They may also  
manifest themselves in restricted access to funds as a  
consequence of the general market situation or the de-  
fault of individual banks. The major part of the Finan-  
cial Services segment’s credit financing and lease busi-  
ness is refinanced on capital markets. Thanks to its  
excellent creditworthiness, the BMW Group has good  
access to financial markets and, as in previous years,  
was able to raise funds at good conditions in 2014, re-  
flecting a diversified refinancing strategy and the solid  
liquidity and earnings base of the BMW Group. Inter-  
nationally recognised rating agencies have additionally  
confirmed the BMW Group’s solid creditworthiness.  
are measured using a variety of value-at-risk techniques,  
adapted to each relevant risk category. Risks are aggre-  
gated after taking account of correlation effects. The  
total amount of risks calculated in this way is then com-  
pared with the resources available to cover risks (asset  
cushion). The segment’s risk-bearing capacity is moni-  
tored continuously with the aid of an integrated limit  
system which also differentiates between the various risk  
categories. The segment’s total risk exposure was  
covered at all times during the past year by the available  
risk-coverage volumes.  
Credit and counterparty risks and opportunities  
Credit and counterparty default risk arises within the  
Financial Services segment if a contractual partner (i.ꢀe.  
a customer or dealer) either becomes unable or is only  
partially able to fulfil its contractual obligations, such  
that lower income is generated or losses incurred. The  
Financial Services segment uses a variety of rating  
If liquidity risks were to materialise, they are only likely  
to result in a low impact on the BMW Group’s results  
of operations over the two-year assessment period.  
The risk of incurring liquidity risk is classified as low –  
including the risk of the BMW Group’s rating being  
downgraded and any ensuing deterioration in financing systems in order to assess the creditworthiness of its  
conditions.  
contractual partners. Credit risks are managed at the  
time of the initial credit decision on the basis of a calcu-  
lation of the present value of standard risk costs and  
subsequently, during the term of the credit, by using a  
range of risk provisioning techniques to cover risks  
emanating from changes in customer creditworthiness.  
In this context, individual customers are classified by  
category each month on the basis of their current con-  
tractual status, and appropriate levels of allowance  
recognised in accordance with that classification. If  
economies develop more favourably than assumed in  
the outlook, there is a chance that credit losses may be  
reduced and earnings improved accordingly.  
If the relevant recognition criteria are fulfilled, deriva-  
tives used by the BMW Group are accounted for as  
hedging relationships. Further information on risks in  
conjunction with financial instruments is provided in  
note 43 to the Group Financial Statements.  
Risks and opportunities relating to Financial Services  
The categories of risk relating to the provision of finan-  
cial services are credit and counterparty risk, residual  
value risk, interest rate risk, liquidity risk and opera-  
tional risk. In order to evaluate and manage these risks,  
a variety of internal methods has been developed  
based on regulatory environment requirements (such  
as Basel III) and which comply with both national and  
international standards. A set of strategic principles  
and rules derived from regulatory requirements serves  
as the basis for risk management within the Financial  
Services segment. At the heart of the risk management  
process is a clear division between front- and back-of-  
fice activities and a comprehensive internal control sys-  
tem. The key risk management tool employed within  
the Financial Services segment is aimed at ensuring  
If credit and counterparty risks were to materialise, they  
could have a medium impact on the BMW Group’s  
results of operations over the two-year assessment pe-  
riod. The level of risk attached to credit and counter-  
party risks is classified as high. The BMW Group classi-  
fies potential opportunities in this area as material.  
Residual value risks and opportunities  
Risks and opportunities arise at the end of the contrac-  
tual term of a lease if the market value of the leased vehi-  
that the Group’s risk-bearing capacity is not exceeded. cle differs from the residual value calculated at the in-  
In this context, all risks (defined as “unexpected losses”) ception of the lease and factored into the lease payments.  
8
0
A residual value risk exists if the expected market value the inappropriateness or failure of internal procedures  
of the vehicle at the end of the contractual term is lower (process risks), people (personnel-related risks), systems  
than its residual value at the date the contract is entered (infrastructure and IT risks) and external events (exter-  
into. Each vehicle’s market value is forecast on the basis nal risks). These four categories of risk also include re-  
18  
COMBINED MANAGEMENT REPORT  
1
8
General Information on the BMW Group  
of historical external and internal data and used to pre- lated legal and reputation risks. The comprehensive re-  
dict the expected market value of the vehicle at the end cording and measurement of risk scenarios, loss events  
of the contractual period. As part of the process of and countermeasures in the Operational Risk Manage-  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
managing residual value risks, a calculation is performed ment Suite (OpRisk-Suite) provides the basis for a system-  
2
2
6
6
Overall Assessment by Management at the inception of each contract to determine the pre-  
atic analysis and management of potential andꢀ/ꢀor actual  
operational risks. Annual self-assessments are also car-  
ried out.  
Financial and Non-financial  
Performance Indicators  
sent value of risk costs. Market developments are ob-  
served throughout the contractual period and the risk  
2
4
9
9
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
assessment updated appropriately.  
6
1
4
If operational risks were to materialise, they are only  
6
If residual value risks were to materialise, they could have likely to result in a low impact on the BMW Group’s  
a high impact on Group earnings over the two-year  
assessment period. The impact on the segments affected  
would be on a medium scale. The level of risk is classi-  
fied as high for the Group as a whole. The BMW Group  
classifies potential residual value opportunities as  
material.  
results of operations over the two-year assessment  
period. The level of risk attached to operational risks  
is classified as medium.  
65  
Report on Outlook, Risks and  
Opportunities  
65  
Outlook  
7
0
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
Legal risks  
8
3
7
Compliance with the law is a basic prerequisite for the  
success of the BMW Group. Current law provides the  
binding framework for the BMW Group’s various busi-  
8
BMW Stock and Capital Markets  
Interest rate risks and opportunities  
Interest rate risks in the Financial Services segment relate ness activities around the world. The growing interna-  
to potential losses caused by changes in market interest  
rates and can arise when fixed interest rate periods for  
tional scale of operations of the BMW Group, the com-  
plexity of the business world and the whole gamut of  
assets and liabilities recognised in the balance sheet do complex legal regulations increase the risk of laws not  
not match. Interest rate risks in the Financial Services being adhered to, simply because they are not known or  
line of business are managed by raising refinancing funds fully understood.  
with matching maturities and by employing interest rate  
derivatives.  
The BMW Group has established a Compliance Organi-  
sation aimed at ensuring that its representative bodies,  
managers and staff act in a lawful manner at all times.  
Further information on the BMW Group’s Compliance  
Organisation can be found in the section “Corporate  
Governance”.  
If interest rate risks were to materialise, they are only  
likely to result in a low impact on the BMW Group’s  
results of operations over the two-year assessment  
period. The level of risk attached to interest rate risks  
is classified as medium.  
Like all internationally operating enterprises, the BMW  
The BMW Group classifies potential interest rate oppor- Group is confronted with legal disputes relating, in par-  
tunities as material.  
ticular, to warranty claims, product liability, infringe-  
ments of protected rights, and proceedings initiated  
by government agencies. Any of these matters could,  
among other outcomes, have an adverse impact on the  
Group’s reputation. Such proceedings are typical for  
the sector and can arise as a consequence of realigning  
product or purchasing strategies to suit changed market  
conditions. Particularly in the US market, class action  
lawsuits and product liability risks can have substantial  
Liquidity and operational risks  
Use of the “matched funding principle” to finance the  
Financial Services segment’s operations eliminates  
liquidity risks to a large extent. Regular measurement  
and monitoring ensure that cash inflows and outflows  
from transactions in varying maturity cycles and curren-  
cies offset each other. The relevant procedures are in-  
corporated in the BMW Group’s target liquidity concept. financial consequences and cause damage to the Group’s  
Operational risks are defined in the Financial Services public image. The BMW Group recognises appropriate  
segment as the risk of losses arising as a consequence of levels of provision for lawsuits. A part of these risks,  
8
1 COMBINED MANAGEMENT REPORT  
particularly regarding the US market, is insured where  
this makes business sense. Some risks, however, cannot  
be assessed in full or completely defy assessment. It  
cannot be ruled out that losses from damages could  
arise which are either not covered or not fully covered  
by insurance policies or provisions.  
The high quality of the Group’s products, which is en-  
sured by regular quality audits and ongoing improvement  
measures, helps to reduce this risk. In comparison with  
competitors, this can give rise to benefits and opportu-  
nities for the BMW Group.  
If legal risks were to materialise, they are only likely to  
have a low impact on the BMW Group’s results of opera-  
tions over the two-year assessment period. The level of  
risk attached to legal risks is classified as low. This assess-  
ment also includes consideration of risks arising from  
ongoing court and arbitration proceedings. However, it  
cannot be ruled out that new legal risks, as yet uniden-  
tified, could materialise which could have a high impact  
on the BMW Group’s results of operations and financial  
condition.  
Overall assessment of the risk and  
opportunities situation  
The overall risk assessment is based on a consolidated  
view of all significant individual risks and opportunities.  
In view of the growing level of strategic and sector-spe-  
cific risks, the overall risk situation for the BMW Group  
has increased marginally compared to the previous year.  
In addition to the risk categories described above, it is  
possible that unforeseeable events could have an ad-  
verse impact on the BMW Group’s results of operations,  
financial position and net assets as well as its reputation.  
We have created a comprehensive risk management  
system that ensures we can master risks. In addition,  
the opportunities described above could potentially  
help the BMW Group to achieve its targets and fore-  
casts.  
From today’s perspective, management does not see any  
threat to the BMW Group’s going-concern status. As  
in the previous year, identified risks are considered to  
be manageable, but could – just like opportunities –  
have an impact on the BMW Group’s forecasts if they were  
to materialise. The BMW Group’s liquidity is stable and  
all cash requirements are currently covered by available  
funds and accessible credit lines.  
8
2
*
Internal Control System and Risk Management System Relevant for the  
Consolidated Financial Reporting Process  
The internal control system in place throughout the  
BMW Group is aimed at ensuring the effectiveness of  
Group level, thus ensuring that legal requirements and  
internal guidelines are complied with and that all busi-  
operations. It makes an important contribution towards ness transactions are properly executed. Controls are  
ensuring compliance with the laws that apply to the  
BMW Group as well as providing assurance on the pro-  
priety and reliability of internal and external financial  
reporting. The internal control system is therefore a sig-  
nificant factor in the management of process risks. The  
also carried out with the aid of IT applications, thus re-  
ducing the incidence of process risks.  
1
8
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
IT authorisations  
All IT applications used in financial reporting processes  
Overall Assessment by Management principal features of the internal control system and the throughout the BMW Group are subject to access restric-  
23  
General and Sector-specific  
Environment  
2
2
6
6
Financial and Non-financial  
Performance Indicators  
risk management system, as far as they relate to individ- tions, allowing only authorised persons to gain access  
ual entity and Group financial reporting processes, are  
described below.  
2
4
9
9
Review of Operations  
to systems and data in a controlled environment. Access  
authorisations are allocated on the basis of the nature  
of the duties to be performed. In addition, IT processes  
are designed and authorisations allocated using the dual  
control principle, as a result of which, for instance, re-  
quests cannot be submitted and approved by the same  
person.  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
6
1
4
6
Information and communication  
One component of the internal control system is that of  
“Information and Communication”. It ensures that all  
the information needed to achieve the objectives set for  
the internal control system is made available to those  
responsible in an appropriate and timely manner. The  
requirements relating to the provision of information  
relevant for financial reporting at the level of BMWAG,  
other consolidated Group entities and the BMW Group  
65  
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
82  
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant for Takeovers  
and Explanatory Comments  
Internal control training for employees  
83  
All employees are appropriately trained to carry out  
their duties and kept informed of any changes in regu-  
lations or processes that affect them. Managers and  
87  
BMW Stock and Capital Markets  
are primarily set out in organisational manuals, in guide- staff also have access to detailed best-practice descrip-  
lines covering internal and external financial reporting  
issues, in accounting manuals and through training.  
These instructions, which can be accessed at all levels  
tions relating to risks and controls in the various pro-  
cesses, thus increasing risk awareness at all levels.  
As a consequence, the internal control system can be  
via the BMW Group’s intranet system, provide the frame- evaluated regularly and further improved as necessary.  
work for ensuring that the relevant rules are applied  
consistently throughout the Group. The quality and  
relevance of these instructions are ensured by regular  
Employees can, at any time and independently, deepen  
their understanding of control methods and design  
using an information platform that is accessible through-  
review as well as by continuous communication between out the entire Group.  
the relevant departments.  
Evaluating the effectiveness of the internal  
Organisational measures  
control system  
All financial reporting processes (including Group finan- Responsibilities for ensuring the effectiveness of the  
cial reporting processes) are structured in organisational internal control system in relation to individual entity  
terms in accordance with the principle of segregation  
of duties. These structures allow errors to be identified at fined and allocated to the relevant managers and pro-  
an early stage and prevent potential wrongdoing. Regu- cess owners. The BMW Group assesses the design and  
lar comparison of internal forecasts and external financial effectiveness of the internal control system on the basis  
and Group financial reporting processes are clearly de-  
reports improves the quality of financial reporting. The  
internal audit department serves as a process-inde-  
of internal review procedures (e.ꢀg. management self­  
audits, internal audit findings). Continuous revision  
pendent function, testing and assessing the effectiveness and further development of the internal control system  
of the internal control system and proposing improve-  
ments when appropriate.  
ensure its continued effectiveness. Group entities are  
required to confirm regularly as part of their reporting  
duties that the internal control system is functioning  
properly. Effective measures are implemented when-  
Controls  
Extensive controls are carried out by management in all ever weaknesses are identified and reported.  
*
financial reporting processes at an individual entity and  
Disclosures pursuant to §289 (5) HGB and §315 (2) no.5 HGB.  
8
3 COMBINED MANAGEMENT REPORT  
1
Disclosures Relevant forTakeovers and Explanatory Comments  
Composition of subscribed capital  
(a) subsequent payment of any arrears on dividends on  
The subscribed capital (share capital) of BMWAG  
amounted to €ꢀ656,494,740 at 31 December 2014 (2013:  
non-voting preferred shares in the order of accrue-  
ment,  
€
ꢀ656,254,983) and, in accordance with Article 4 no.1  
(b) payment of an additional dividend of €ꢀ0.02 per €ꢀ1  
par value on non-voting preferred shares and  
(c) uniform payment of any other dividends on shares  
on common and preferred stock, provided the  
shareholders do not resolve otherwise at the Annual  
General Meeting.  
of the Articles of Incorporation, is sub-divided into  
6
6
01,995,196 shares of common stock (91.70%) (2013:  
01,995,196; 91.73%) and 54,499,544 shares of non-  
voting preferred stock (8.30%) (2013: 54,259,787; 8.27%),  
each with a par value of €ꢀ1. The Company’s shares  
are issued to bearer. The rights and duties of share-  
holders 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  
Restrictions on voting rights or the transfer of shares  
As well as shares of common stock, the Company has  
also issued non-voting shares of preferred stock. Fur-  
www.bmwgroup.com. The right of shareholders to have ther information relating to this can be found above in  
their shares evidenced is excluded in accordance with  
the Articles of Incorporation. The voting power at-  
tached to each share corresponds to its par value. Each  
the section “Composition of subscribed capital”.  
When the Company issues non-voting shares of pre-  
ferred stock to employees in conjunction with its  
Employee Share Programme, these shares are subject  
as a general rule to a Company-imposed vesting period  
of four years, measured from the beginning of the  
calendar year in which the shares are issued.  
€
ꢀ1 of par value of share capital represented in a vote  
entitles the holder to one vote (Article 18 no. of the  
1
Articles of Incorporation). The Company’s shares of pre-  
ferred stock are shares within the meaning of §139 et  
seq. AktG, which carry a cumulative preferential right  
in terms of the allocation of profit and for which voting  
rights are normally excluded. These shares only confer  
voting rights in exceptional cases stipulated by law, in  
particular when the preference amount has not been  
paid or has not been fully paid in one year and the ar-  
rears are not paid in the subsequent year alongside the  
full preference amount due for that year. With the ex-  
ception of voting rights, holders of shares of preferred  
stock are entitled to the same rights as holders of shares  
of common stock. Article 24 of the Articles of Incorpo-  
ration confers preferential treatment to the non-voting  
shares of preferred stock with regard to the appropria-  
tion of the Company’s unappropriated profit. Accord-  
Contractual holding period arrangements also apply to  
shares of common stock required to be acquired by  
Board of Management members and certain senior de-  
partment heads in conjunction with the share-based  
remuneration programmes (Compensation Report of  
the Corporate Governance section; note 20 to the Group  
Financial Statements).  
Direct or indirect investments in capital exceeding  
10% of voting rights  
Based on the information available to the Company, the  
following direct or indirect holdings exceeding 10% of  
ingly, the unappropriated profit is required to be appro- the voting rights at the end of the reporting period were  
2
held at the date stated :  
priated in the following order:  
Disclosures pursuant to §289 (4) HGB and §315 (4) HGB.  
1
Direct share of  
voting rights (%)  
Indirect share of  
voting rights (%)  
AQTON SE, Bad Homburg v.d.Höhe, Germany  
Stefan Quandt, Germany  
17.4  
0.4  
17.4  
16.4  
16.4  
Johanna Quandt, Germany  
Johanna Quandt GmbH, Bad Homburg v.d.Höhe, Germany  
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d.Höhe, Germany  
Susanne Klatten, Germany  
16.4  
12.6  
12.6  
Susanne Klatten Beteiligungs GmbH, Bad Homburg v.d.Höhe, Germany  
2
Based on voluntary balance notifications provided by the listed shareholders at 31 December 2014.  
8
4
The voting power percentages disclosed above may have Authorisations given to the Board of Management in  
changed subsequent to the stated date if these changes  
were not required to be reported to the Company. Due to  
the fact that the Company’s shares are issued to bearer,  
the Company is generally only aware of changes in  
shareholdings if such changes are subject to mandatory  
notification rules.  
particular with respect to the issuing or buying back of  
shares  
The Board of Management is authorised to buy back  
shares and sell repurchased shares in situations specified  
in §71 AktG, e.ꢀg. to avert serious and imminent damage  
to the Company andꢀ/ꢀor to offer shares to persons em-  
ployed or previously employed by BMWAG or one of its  
affiliated companies.  
1
8
COMBINED MANAGEMENT REPORT  
18  
General Information on the BMW Group  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
FO i vn ea r na cl l iAa ls as en sd s Nm oe nn -t f bi ny a Mn ca i na al gement Shares with special rights which confer control rights  
There are no shares with special rights which confer  
control rights.  
Performance Indicators  
2
4
9
9
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
In accordance with the resolution passed at the Annual  
General Meeting on 15 May 2014, the Board of Manage-  
ment is also authorised – up to 14 May 2019 – to acquire  
shares of non-voting preferred stock of the Company  
6
1
4
Comments on Financial Statements  
of BMW AG  
Events after the End of the  
Reporting Period  
System of control over voting rights when employees  
6
participate in capital and do not exercise their control  
rights directly  
via the stock exchange, up to a maximum of 1% of the  
6
5
2
Report on Outlook, Risks and  
Opportunities  
Like all other shareholders, employees exercise their  
control rights pertaining to shares they have acquired  
in conjunction with the Employee Share Programme  
andꢀ/ꢀor the share­based remuneration programme  
directly on the basis of relevant legal provisions and the  
Company’s Articles of Incorporation.  
share capital existing at the date of the resolution. The  
consideration paid by the Company per share of non-  
voting preferred stock (excluding transaction costs) may  
not be more than 10% above or below the market price  
determined by the opening auction on the date of trad-  
ing of the stock in the XETRA trading system (or a suc-  
cessor system having a comparable function). Moreover,  
the Board of Management is authorised to use the ac-  
quired Company’s own shares of non-voting preferred  
stock for all legally admissible purposes, specifically in-  
cluding the right to offer and transfer shares to persons  
employed by the Company or one of its affiliated com-  
panies up to a proportionate amount of €ꢀ5 million of  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant for Takeovers  
and Explanatory Comments  
83  
87  
BMW Stock and Capital Markets  
Statutory regulations and Articles of Incorporation  
provisions with regard to the appointment and removal  
of members of the Board of Management and changes  
to the Articles of Incorporation  
The appointment or removal of members of the Board  
of Management is based on the rules contained in  
§
84 et seq. AktG in conjunction with §31 of the German share capital. The subscription rights of existing share-  
Co-Determination Act (MitbestG).  
holders to the new shares of preferred stock used for  
the purpose stated above are excluded. The authorisa-  
tions may also be exercised in parts on more than one  
occasion.  
Amendments to the Articles of Incorporation must  
comply with §179 et seq. AktG. All amendments must  
be decided upon by the shareholders at the Annual  
General Meeting (§119  
(
1
) no.  
5
, §179  
(
1
) AktG). The  
In accordance with Article 4 no. 5 of the Articles of  
Supervisory Board is authorised to approve amend-  
ments to the Articles of Incorporation which only affect  
Incorporation, the Board of Management is authorised –  
with the approval of the Supervisory Board – to in-  
its wording (Article 14 no. 3 of the Articles of Incorpora- crease BMWAG’s share capital during the period until  
tion). Resolutions are passed at the Annual General  
Meeting by simple majority of shares unless otherwise  
explicitly required by binding provisions of law or,  
when a majority of share capital is required, by simple  
majority of shares represented in the vote (Article 20  
no.1 of the Articles of Incorporation).  
14 May 2019 by up to €ꢀ4,760,243 for the purposes of an  
Employee Share Programme by issuing new non-voting  
shares of preferred stock, which carry the same rights  
as existing non-voting preferred stock, in return for  
cash contributions (Authorised Capital 2014). Existing  
shareholders may not subscribe to the new shares. No  
conditional capital is in place at the reporting date.  
8
5 COMBINED MANAGEMENT REPORT  
Significant agreements entered into by the Company  
subject to control change clauses in the event of  
a takeover bid  
The BMWAG is party to the following major agreements  
which contain provisions for the event of a change in  
control or the acquisition of control as a result of a take-  
over bid:  
extraordinary right of termination which triggers the  
immediate settlement of all current transactions in  
the event that the creditworthiness of the party in-  
volved is materially weaker following a direct or indi-  
rect acquisition of beneficially owned equity capital  
which confers the power to elect a majority of the  
Supervisory Board of a contractual party or any other  
ownership interest that enables the acquirer to exer-  
cise control over a contractual party or which consti-  
tutes a merger or a transfer of net assets.  
–
An agreement concluded with an international con-  
sortium of banks relating to a syndicated credit line  
(which was not being utilised at the balance sheet  
date) entitles the lending banks to give extraordinary  
notice to terminate the credit line (such that all out-  
standing amounts, including interest, would fall due  
immediately) if one or more parties jointly acquire  
direct or indirect control of BMWAG. The term “con-  
trol” is defined as the acquisition of more than 50%  
of the share capital of BMWAG, 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.  
–
Financing agreements in place with the European  
Investment Bank (EIB) entitle the EIB to request early  
repayment of the loan in the event of an imminent  
or actual change in control at the level of BMWAG  
(partially in the capacity of guarantor and partially in  
the capacity of borrower), if the EIB has reason to as-  
sume – after the change of control has taken place or  
30 days after it has requested to discuss the situation –  
that the change in control could have a significant  
adverse impact, or, in all but one case, as an additional  
alternative, if the borrower refuses to hold such dis-  
cussions. A change in control of BMWAG arises if  
one or more individuals take over or lose control of  
BMWAG, with control being defined in the above-  
mentioned financing agreements as (i) holding or  
having control over more than 50% of the voting  
rights, (ii) the right to stipulate the majority of the  
members of the Board of Management or Supervisory  
Board, (iii) the right to receive more than 50% of  
dividends payable, and, in all but one case, as an ad-  
ditional alternative (iv) other comparable controlling  
influence over BMWAG.  
–
A cooperation agreement concluded with Peugeot SA  
relating to the joint development and production of  
a new family of small (1 to 1.6 litre) petrol-driven en-  
gines entitles each of the cooperation partners to give  
extraordinary notification of termination in the event  
of a competitor acquiring control over the other con-  
tractual party and if any concerns of the other con-  
tractual party concerning the impact of the change  
of control on the cooperation arrangements are not  
allayed during the subsequent discussion process.  
BMWAG acts as guarantor for all obligations arising  
from the joint venture agreement relating to BMW  
Brilliance Automotive Ltd. in China. This agreement  
grants an extraordinary right of termination to either  
joint venture partner in the event that, either directly  
or indirectly, more than 25% of the shares of the  
other party are acquired by a third party or the other  
party is merged with another legal entity. The termi-  
nation of the joint venture agreement may result in  
the sale of the shares to the other joint venture part-  
ner or in the liquidation of the joint venture entity.  
Framework agreements are in place with financial in-  
stitutions and banks (ISDA Master Agreements) with  
respect to trading activities with derivative financial  
instruments. Each of these agreements includes an  
–
– BMWAG is party to an agreement with SGL Carbon  
SE, Wiesbaden, relating to the joint operations SGL  
Automotive Carbon Fibers LLC, Delaware, USA and  
SGL Automotive Carbon Fibers GmbH & Co. KG,  
Munich. The agreement includes call and put rights  
in case – either directly or indirectly – 50% or more of  
the voting rights relating to the relevant other share-  
holder of the joint operations are acquired by a third  
party, or if 25% of such voting rights have been ac-  
quired by a third party if that third party is a com-  
petitor of the party that has not been affected by the  
acquisition of the voting rights. In the event of such  
acquisitions of voting rights by a third party, the non-  
–
8
6
affected shareholder has the right to purchase the  
shares of the joint operations from the affected share-  
holder or to require the affected party to acquire the  
other shareholder’s shares.  
18  
COMBINED MANAGEMENT REPORT  
1
8
General Information on the BMW Group  
– An engine supply agreement between BMWAG and  
Toyota Motor Europe SA relating to the sale of diesel  
engine entitles each of the contractual parties to give  
extraordinary notification of termination in the event  
that one of the contractual parties merges with an-  
other company or is taken over by another company.  
1
2
8
0
Business Model  
Management System  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management  
Financial and Non-financial  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
2
4
9
9
Compensation agreements with members of the  
Board of Management or with employees in the event  
of a takeover bid  
The BMW Group has not concluded any compensation  
agreements with members of the Board of Management  
or with employees for situations involving a takeover  
offer.  
6
1
4
6
Events after the End of the  
Reporting Period  
6
5
2
Report on Outlook, Risks and  
Opportunities  
6
7
5
0
Outlook  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant for Takeovers  
and Explanatory Comments  
8
3
7
8
BMW Stock and Capital Markets  
8
7 COMBINED MANAGEMENT REPORT  
BMW Stock and Capital Markets in 2014  
BMW stocks rose to a new all­time high of €ꢀ95.51 per  
share of common stock in 2014. The BMW Group  
continues to have the best ratings in the European  
automobile sector, enabling it to continue benefiting  
from excellent access to international capital markets.  
Development of BMW stock compared to stock exchange  
indices since 30 December 2009  
in %  
300  
250  
200  
Turbulent year for stock markets  
150  
100  
50  
International stock markets experienced broad fluctua-  
tions in 2014, attributable primarily to the expansionary  
monetary policies of the ECB and to political instability  
in a number of countries.  
BMW  
BMW  
Prime  
DAX  
preferred stock common stock  
Automobile  
At the beginning of the year, stock markets were bur-  
dened by uncertainties surrounding the Ukraine crisis  
and its likely negative economic impact. At the same  
time, favourable economic data from Europe, the USA’s  
improved employment market and the US Reserve  
Bank’s continued policy of monetary expansion pro-  
vided some positive momentum. Over the course of  
the second and third quarters, the ECB’s expansionary  
monetary policies provided an additional boost. The in-  
terest rate for the Eurosystem’s main refinancing opera-  
tions was reduced by 10 basis points in June to 0.15%  
and by a further 10 basis points to 0.05% in September  
and has remained at its new historical low since that  
time. A state of nervousness prevailed on the world’s  
financial centres during the third quarter 2014. The  
sharp loss in value of the rouble and the threat of state  
bankruptcy in Ukraine caused the mood of investors  
to deteriorate. In October the DAX fell to its low for the  
year of 8,572 points. By the end of the year, however,  
the more stable situation in the Ukraine crisis brought  
about by agreement in the gas dispute with Russia,  
combined with the fall in oil prices, helped markets to  
steady and gather momentum. The DAX recorded a  
2
95.0  
282.3  
274.4  
164.6  
new all-time high of 10  
,
087 points on  
5
December,  
before closing on the last day of trading below its high  
level for the year at 9,806 points, thus achieving a gain of  
254 points (+2.7%) over the volatile twelve-month period.  
The EURO STOXX 50 recorded a gain of 1.2% in 2014  
and closed on 31 December at 3,146 points.  
The Prime Automobile Index performed even better,  
gaining % over the year under report to reach  
490 points.  
7.0  
1
,
After a weak start to the year, BMW common stock sub-  
sequently climbed to a new high of €ꢀ95.51 in June. After  
falling back to a low for the year of €ꢀ77.41 in October,  
it returned to an upward trend in the fourth quarter and  
finished the year at €ꢀ89.77, 5.3% higher than one year  
earlier. BMW preferred stock gained 9.3% in value com-  
Development of BMW stock compared to stock exchange indices  
(Index: December 2009 =100)  
325  
300  
275  
250  
225  
200  
175  
150  
125  
100  
BMW preferred stock  
BMW common stock  
Prime Automobile  
DAX  
1
0
11  
12  
DAX  
13  
14  
BMW preferred stock  
BMW common stock  
Prime Automobile  
8
8
pared to its closing price at the end of the previous year. shares of preferred stock. This increase was executed on  
Its price at the end of the stock market year was €ꢀ67.84.  
A new all­time high of €ꢀ74.60 was recorded in July. At  
the end of 2014, the BMW Group had a market capitali-  
the basis of Authorised Capital 2014 in Article 4 (5) of  
the Articles of Incorporation. The new shares of pre-  
ferred stock carry the same rights as existing shares of  
18  
COMBINED MANAGEMENT REPORT  
1
8
General Information on the BMW Group  
sation of approximately €ꢀ58 billion, making it one of the preferred stock and were issued to enable employees  
1
2
8
0
Business Model  
Management System  
Top 10 of the most valuable stock corporations listed in  
Germany.  
to obtain an equity participation in the company. In ad-  
dition, 20 shares of preferred stock were bought back  
via the stock market in order to service the Employee  
Share Programme.  
23  
Report on Economic Position  
23  
General and Sector-specific  
Environment  
2
2
6
6
Overall Assessment by Management Employee Share Programme  
Financial and Non-financial  
BMWAG has enabled its employees to participate in its  
success for more than 40 years. Since 1989, this participa-  
tion has taken the form of an Employee Share Programme  
In total, 239,777 shares of preferred stock were issued to the Board of Management and the Supervisory Board  
employees in 2014 as part of this Programme.  
Performance Indicators  
Review of Operations  
Results of Operations, Financial  
Position and Net Assets  
Comments on Financial Statements  
of BMW AG  
2
4
9
9
Dividend increase  
In view of the strong earnings performance for the year,  
.
6
1
4
6
Events after the End of the  
Reporting Period  
will propose to the Annual General Meeting to use  
BMWAG’s unappropriated profit of €ꢀ1,904 million to  
6
5
2
Report on Outlook, Risks and  
Opportunities  
In this context, and with the approval of the Supervisory pay a dividend of €ꢀ2.90 for each share of common stock  
6
7
5
0
Outlook  
Board, BMWAG’s share capital was increased by the  
Board of Management by €ꢀ239 757 from €ꢀ656 254 983  
(2013: €ꢀ2.60) and a dividend of €ꢀ2.92 for each share of  
preferred stock (2013: €ꢀ2.62), giving a distribution rate  
of 32.7% for 2014 (2013: 32.0%).  
Report on Risks and Opportunities  
8
Internal Control System and Risk  
Management System Relevant for the  
Consolidated Financial Reporting Process  
Disclosures Relevant forTakeovers  
and Explanatory Comments  
,
,
,
to €ꢀ656,494,740 by the issue of 239,757 new non-voting  
83  
87  
BMW Stock and Capital Markets  
BMW stock  
2014  
2013  
2012  
2011  
2010  
Common stock  
Number of shares in 1,000  
601,995  
601,995  
601,995  
601,995  
601,995  
1
Stock exchange price in €  
Year-end closing price  
High  
89.77  
95.51  
77.41  
85.22  
85.42  
63.93  
72.93  
73.76  
53.16  
51.76  
73.52  
45.04  
58.85  
64.80  
28.65  
Low  
Preferred stock  
Number of shares in 1,000  
54,500  
54,260  
53,994  
53,571  
53,163  
1
Stock exchange price in €  
Year-end closing price  
High  
67.84  
74.60  
59.08  
62.09  
64.65  
48.69  
48.76  
49.23  
35.70  
36.55  
45.98  
32.01  
38.50  
41.90  
21.45  
Low  
Key data per share in €  
Dividend  
2
2
Common stock  
2.90  
2.92  
2.60  
2.62  
2.50  
2.52  
2.30  
2.32  
1.30  
1.32  
Preferred stock  
3
4
6
6
6
6
Earnings per share of common stock  
Earnings per share of preferred stock  
8.83  
8.08  
7.77  
7.45  
4.91  
8.85  
8.10  
7.79  
7.47  
4.93  
5
Cash flow  
14.36  
57.03  
15.19  
54.25  
13.98  
46.35  
12.38  
41.34  
12.45  
36.53  
Equity  
1
Xetra closing prices.  
Proposed by management.  
Annual average weighted amount.  
Stock weighted according to dividend entitlements.  
Cash inflow from operating activities of the Automotive segment.  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
2
3
4
5
6
8
9 COMBINED MANAGEMENT REPORT  
Ratings remain at top level  
The BMW Group continues to have the best ratings in  
the European automobile sector. Since December 2013,  
BMWAG has a long-term rating of A+ (stable outlook)  
and a short-term rating of A-1 from the rating agency  
Standard & Poor’s. The equivalent ratings from the  
rating agency Moody’s were A2 (stable outlook) and P-1.  
These rating assessments underline the BMW Group’s  
robust financial profile and solid creditworthiness.  
Thanks to these attributes, the company not only has  
good access to international capital markets, it also bene-  
fits from attractive refinancing conditions, which are  
particularly helpful for the BMW Group’s financial ser-  
vices business.  
Intensive communication with capital markets  
The BMW Group continued to keep analysts, private  
and institutional investors, and rating agencies up to  
date throughout 2014 by means of its regular quarterly  
and year-end financial reports. In addition, numerous  
one-to-one discussions, group discussions and road-  
shows addressed a broad range of capital market partici-  
pants. These activities also included roadshows for in-  
vestors interested in socially responsible investment  
(
SRI) and wishing to incorporate sustainability criteria  
in their investment decisions as well as a series of events  
for debt capital investors and credit analysts. Communi-  
cation focused primarily on the launch of numerous  
new models, BMW i and alternative drive systems, and  
developments on the Chinese market. In addition to  
presenting new models (including the BMW i8 and the  
2
Series Active Tourer) and arranging various events  
and test drives in the USA and Europe, we also organised  
a Capital Markets Day in China for analysts and investors.  
9
0
GROUP FINANCIAL STATEMENTS  
BMW Group  
Income Statements for Group and Segments  
Statement of Comprehensive Income for Group  
Income Statements for Group and Segments  
in € million  
Note  
Group  
Automotive  
unaudited supplementary information)  
(
*
*
2014  
2013  
2014  
2013  
Revenues  
10  
11  
80,401  
–63,396  
17,005  
76,059  
–60,791  
15,268  
75,173  
–61,221  
13,952  
70,630  
–57,778  
12,852  
Cost of sales  
Gross profit  
Selling and administrative expenses  
Other operating income  
12  
13  
13  
–7,892  
877  
–7,257  
842  
–6,645  
749  
–6,114  
742  
Other operating expenses  
–872  
9,118  
–875  
7,978  
–812  
7,244  
–831  
6,649  
Profit/loss before financial result  
Result from equity accounted investments  
Interest and similar income  
Interest and similar expenses  
Other financial result  
14  
15  
15  
16  
655  
200  
407  
183  
655  
331  
407  
303  
–519  
–747  
–411  
–469  
–206  
–85  
–620  
–724  
–358  
–535  
–263  
–88  
Financial result  
Profit/loss before tax  
8,707  
7,893  
6,886  
6,561  
Income taxes  
17  
–2,890  
5,817  
–2,564  
–2,365  
4,521  
–2,153  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Net profit/loss  
5,329  
4,408  
Attributable to minority interest  
35  
35  
19  
26  
7
17  
Attributable to shareholders of BMW AG  
5,798  
5,303  
4,514  
4,391  
92  
94  
96  
Basic earnings per share of common stock in €  
Basic earnings per share of preferred stock in €  
Dilutive effects  
18  
18  
8.83  
8.85  
–
8.08  
8.10  
–
98  
Notes  
98  
Accounting Principles and  
Policies  
Diluted earnings per share of common stock in  
€
18  
18  
8.83  
8.85  
8.08  
8.10  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Diluted earnings per share of preferred stock in  
€
1
1
1
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Statement of Comprehensive Income for Group  
in € million  
Note  
*
2014  
2013  
Net profit  
5,817  
5,329  
Remeasurement of the net defined benefit liability for pension plans  
Deferred taxes  
36  
–2,298  
706  
1,308  
–372  
936  
Items not expected to be reclassified to the income statement in the future  
–1,592  
Available-for-sale securities  
40  
–2,194  
–48  
8
1,357  
–7  
Financial instruments used for hedging purposes  
Other comprehensive income from equity accounted investments  
Deferred taxes  
732  
–407  
–633  
318  
Currency translation foreign operations  
764  
Items expected to be reclassified to the income statement in the future  
–706  
Other comprehensive income for the period after tax  
Total comprehensive income  
21  
35  
–2,298  
3,519  
1,254  
6,583  
Total comprehensive income attributable to minority interests  
19  
26  
Total comprehensive income attributable to shareholders of BMW AG  
3,500  
6,557  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
9
1 Group Financial StatementS  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
(
unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information)  
*
*
2014  
2013  
2014  
2013  
2014  
2013  
2014  
2013  
1
,679  
1,365  
14  
1,504  
–1,253  
251  
20,599  
–17,783  
2,816  
19,874  
–17,270  
2,604  
7
–
6
–
–17,057  
16,973  
–84  
–15,955  
15,510  
–445  
Revenues  
–
Cost of sales  
Gross profit  
3
7
6
–
201  
–
–177  
7
–1,035  
73  
–953  
57  
–28  
136  
–44  
71  
–23  
115  
–54  
44  
17  
–81  
83  
10  
–79  
Selling and administrative expenses  
Other operating income  
–
1
–2  
79  
–98  
–65  
77  
Other operating expenses  
1
12  
1,756  
1,643  
–65  
–437  
Profit/loss before financial result  
–
–
–
–
–
4
–
5
–
1,295  
–1,197  
–15  
–
1,340  
–1,279  
59  
–
–1,430  
1,332  
–
–
–1,465  
1,375  
–
Result from equity accounted investments  
Interest and similar income  
Interest and similar expenses  
Other financial result  
–
–
5
–
–3  
–
–29  
–8  
–27  
–2  
5
–3  
–33  
–24  
83  
120  
–98  
–90  
Financial result  
1
–
07  
34  
76  
1,723  
1,619  
154  
164  
–163  
–527  
Profit/loss before tax  
–25  
–525  
–518  
–49  
105  
–68  
83  
200  
Income taxes  
7
3
51  
1,198  
1,101  
96  
–80  
–327  
Net profit/loss  
–
–
11  
8
1
1
–
–
Attributable to minority interest  
7
3
51  
1,187  
1,093  
104  
95  
–80  
–327  
Attributable to shareholders of BMWAG  
Basic earnings per share of common stock in €  
Basic earnings per share of preferred stock in €  
Dilutive effects  
Diluted earnings per share of common stock in €  
Diluted earnings per share of preferred stock in €  
9
2
BMW Group  
Balance Sheets for Group and Segments at 31December  
Assets  
Note  
Group  
Automotive  
(unaudited supplementary information)  
*
*
*
2013  
in € million  
2014  
31.12. 2013  
1.1. 2013  
2014  
Intangible assets  
23  
24  
25  
26  
27  
28  
29  
17  
31  
6,499  
17,182  
30,165  
1,088  
408  
6,179  
15,168  
25,914  
638  
5,207  
13,376  
24,468  
505  
5,999  
16,863  
3
5,646  
14,863  
19  
Property, plant and equipment  
Leased products  
Investments accounted for using the equity method  
Other investments  
1,088  
5,110  
–
638  
553  
548  
5,253  
–
Receivables from sales financing  
Financial assets  
37,438  
2,024  
2,061  
1,094  
97,959  
32,616  
2,593  
1,620  
912  
32,309  
2,148  
1,967  
770  
447  
1,183  
2,226  
3,847  
33,675  
Deferred tax  
3,253  
3,662  
36,425  
Other assets  
Non-current assets  
86,193  
81,298  
Inventories  
32  
33  
28  
29  
30  
31  
34  
11,089  
2,153  
23,586  
5,384  
1,906  
5,038  
7,688  
–
9,595  
2,449  
21,501  
5,559  
1,151  
4,258  
7,671  
–
9,732  
2,543  
20,605  
4,612  
966  
10,698  
1,887  
–
9,269  
2,184  
–
Trade receivables  
Receivables from sales financing  
Financial assets  
3,952  
1,186  
19,231  
5,752  
–
4,479  
1,002  
15,480  
6,775  
–
Current tax  
Other assets  
3,664  
8,374  
45  
Cash and cash equivalents  
Assets held for sale  
Current assets  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
56,844  
52,184  
50,541  
42,706  
39,189  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Total assets  
154,803  
138,377  
131,839  
79,131  
72,864  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
Equity and liabilities  
Note  
Group  
Automotive  
unaudited supplementary information)  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
(
*
*
*
2013  
in € million  
2014  
31.12. 2013  
1.1. 2013  
2014  
1
1
1
Subscribed capital  
35  
35  
35  
35  
35  
656  
2,005  
656  
1,990  
656  
1,973  
Capital reserves  
Revenue reserves  
35,621  
–1,062  
37,220  
33,122  
–356  
28,510  
–674  
Accumulated other equity  
Equity attributable to shareholders of BMWAG  
35,412  
30,465  
Minority interest  
35  
217  
188  
107  
Equity  
37,437  
35,600  
30,572  
31,045  
30,909  
Pension provisions  
Other provisions  
36  
37  
17  
39  
40  
4,604  
4,268  
2,303  
3,828  
3,813  
3,481  
2,741  
3,777  
421  
938  
3,075  
Deferred tax  
1,974  
2,459  
2,094  
1,072  
Financial liabilities  
43,167  
4,275  
39,450  
3,603  
39,095  
3,404  
1,933  
5,445  
14,317  
1,604  
Other liabilities  
4,677  
Non-current provisions and liabilities  
58,288  
51,643  
51,887  
11,366  
Other provisions  
37  
38  
39  
41  
40  
4,522  
1,590  
37,482  
7,709  
7,775  
–
3,412  
2,319  
30,854  
7,485  
7,064  
–
3,246  
2,463  
30,412  
6,437  
6,792  
30  
3,746  
1,050  
3,250  
6,929  
18,794  
–
3,040  
1,021  
725  
Current tax  
Financial liabilities  
Trade payables  
6,774  
19,029  
–
Other liabilities  
Liabilities in conjunction with assets held for sale  
Current provisions and liabilities  
59,078  
51,134  
49,380  
33,769  
30,589  
Total equity and liabilities  
154,803  
138,377  
131,839  
79,131  
72,864  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
9
3
Group Financial StatementS  
Assets  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
(
unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information)  
*
*
2014  
2013  
2014  
2013  
2014  
2013  
2014  
2013  
5
4
63  
445  
34  
469  
34  
1
–
1
–
–
–
–
–
Intangible assets  
2
85  
–
271  
Property, plant and equipment  
Leased products  
–
35,366  
–
30,230  
–
–
–
–5,204  
–
–4,335  
–
–
–
–
–
Investments accounted for using the equity method  
Other investments  
–
–
6
6
5,808  
–
5,754  
–
–10,516  
–
–10,460  
–
–
–
–
37,438  
210  
32,616  
276  
Receivables from sales financing  
Financial assets  
–
1,751  
367  
21,895  
29,822  
1,779  
290  
19,677  
27,501  
–384  
–1,846  
–26,396  
–44,346  
–645  
–1,181  
–24,048  
–40,669  
–
–
287  
285  
Deferred tax  
2
0
–
1,913  
75,699  
1,436  
65,352  
Other assets  
3
59  
334  
Non-current assets  
3
1
83  
28  
–
318  
8
137  
8
145  
–
1
–
–
–
Inventories  
120  
–
–
–
–
Trade receivables  
Receivables from sales financing  
Financial assets  
–
23,586  
1,048  
102  
21,501  
826  
–
–
–
–
–
898  
618  
36,682  
153  
–
936  
60  
–514  
–682  
–
–
–
89  
–
–
Current tax  
–
3,953  
1,783  
–
3,530  
879  
32,775  
17  
–54,828  
–47,527  
Other assets  
–
–
–
–
–
–
Cash and cash equivalents  
Assets held for sale  
Current assets  
–
–
–
–
5
8
11  
438  
30,617  
26,978  
38,352  
33,788  
–55,342  
–48,209  
70  
772  
106,316  
92,330  
68,174  
61,289  
–99,688  
–88,878  
Total assets  
Equity and liabilities  
Motorcycles Financial Services Other Entities Eliminations  
unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information)  
(
*
*
*
2013  
2014  
2013  
2014  
2013  
2014  
2013  
2014  
Subscribed capital  
Capital reserves  
Revenue reserves  
Accumulated other equity  
Equity attributable to shareholders of BMWAG  
Minority interest  
–
–
9,357  
8,388  
12,031  
10,781  
–14,996  
–14,478  
Equity  
7
8
29  
141  
–
75  
273  
40  
289  
1,710  
58  
1,296  
323  
–
–
–
–
Pension provisions  
Other provisions  
1
60  
–
5,078  
14,695  
23,680  
43,801  
4,171  
13  
6
–3,538  
–384  
–2,790  
–645  
Deferred tax  
–
–
14,376  
21,134  
40,010  
26,923  
51  
24,115  
68  
Financial liabilities  
357  
95  
318  
488  
–25,258  
–29,180  
–22,594  
–26,029  
Other liabilities  
5
28,755  
25,808  
Non-current provisions and liabilities  
6
2
–
–
57  
–
432  
162  
309  
155  
282  
378  
3
1,143  
14,805  
5
–
3
Other provisions  
–
–514  
–
–
–682  
–
Current tax  
–
19,122  
571  
16,006  
502  
15,624  
17  
Financial liabilities  
1
92  
204  
23  
–
Trade payables  
2
1
–
32,871  
–
26,960  
–
11,087  
–
8,744  
–
–54,998  
–
–47,692  
–
Other liabilities  
Liabilities in conjunction with assets held for sale  
Current provisions and liabilities  
2
8
75  
284  
53,158  
43,932  
27,388  
24,700  
–55,512  
–48,371  
70  
772  
106,316  
92,330  
68,174  
61,289  
–99,688  
–88,878  
Total equity and liabilities  
9
4
BMW Group  
Cash Flow Statements for Group and Segments  
Note  
Group  
1
in € million  
2014  
2013  
Net profit  
5,817  
5,329  
Reconciliation between net profit and cash inflow/outflow from operating activities  
Current tax  
2,774  
127  
2,581  
147  
Other interest and similar income/expenses  
Depreciation and amortisation of other tangible, intangible and investment assets  
Change in provisions  
4,323  
1,103  
–2,720  
–3,898  
116  
3,832  
480  
Change in leased products  
–2,048  
–4,501  
–17  
Change in receivables from sales financing  
Change in deferred taxes  
Other non-cash income and expense items  
Gain/loss on disposal of tangible and intangible assets and marketable securities  
Result from equity accounted investments  
Changes in working capital  
331  
–552  
–21  
–63  
–655  
–551  
–971  
379  
–407  
986  
Change in inventories  
–195  
22  
Change in trade receivables  
Change in trade payables  
41  
1,159  
969  
Change in other operating assets and liabilities  
Income taxes paid  
323  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
–4,252  
137  
–2,787  
136  
Interest received  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Cash inflow/outflow from operating activities  
44  
2,912  
4,127  
9
9
9
2
4
6
Investment in intangible assets and property, plant and equipment  
Proceeds from the disposal of intangible assets and property, plant and equipment  
Expenditure for investments  
–6,099  
36  
–6,693  
22  
98  
Notes  
98  
Accounting Principles and  
Policies  
–99  
–76  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Proceeds from the disposal of investments  
190  
137  
Investments in marketable securities and term deposits  
Proceeds from the sale of marketable securities and from matured term deposits  
Cash inflow/outflow from investing activities  
–4,216  
4,072  
–6,116  
–4,131  
3,250  
–7,491  
1
1
1
44  
Issue/buy-back of treasury shares  
Payments into equity  
–
15  
–
17  
Payment of dividend for the previous year  
Intragroup financing and equity transactions  
Interest paid  
–1,715  
–
–1,653  
–
–133  
–122  
8,982  
–7,242  
6,626  
–4,996  
–721  
1,812  
2,703  
Proceeds from the issue of bonds  
Repayment of bonds  
10,892  
–7,249  
5,900  
–5,697  
2,132  
–1,012  
3,133  
Proceeds from new non-current other financial liabilities  
Repayment of non-current other financial liabilities  
Change in current other financial liabilities  
Change in commercial paper  
Cash inflow/outflow from financing activities  
44  
Effect of exchange rate on cash and cash equivalents  
Effect of changes in composition of Group on cash and cash equivalents  
Change in cash and cash equivalents  
86  
2
–89  
47  
44  
17  
–703  
Cash and cash equivalents as at 1January  
7,671  
7,688  
8,374  
Cash and cash equivalents as at 31December  
7,671  
1
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Interest relating to financial services business is classified as revenues/cost of sales.  
2
9
5
Group Financial StatementS  
Automotive  
Financial Services  
(
unaudited supplementary information) (unaudited supplementary information)  
1
1
2014  
2013  
2014  
2013  
4
2
,521  
4,408  
1,198  
1,101  
Net profit  
Reconciliation between net profit and cash inflow/outflow from operating activities  
Current tax  
,786  
2,516  
154  
–40  
24  
9
17  
2
2
1
59  
Other interest and similar income/expenses  
Depreciation and amortisation of other tangible, intangible and investment assets  
Change in provisions  
4
1
,230  
,034  
3,747  
374  
29  
20  
109  
–3,309  
–3,898  
383  
14  
153  
–2,895  
–4,501  
523  
54  
1
5
–
109  
Change in leased products  
–
Change in receivables from sales financing  
Change in deferred taxes  
–
124  
–239  
–56  
–
5
Other non-cash income and expense items  
Gain/loss on disposal of tangible and intangible assets and marketable securities  
Result from equity accounted investments  
Changes in working capital  
–
54  
–21  
8
–
–
–
655  
552  
907  
–407  
1,018  
–229  
53  
–
–
70  
24  
–
–
4
Change in inventories  
3
71  
16  
14  
–25  
45  
Change in trade receivables  
–
1,194  
657  
56  
Change in trade payables  
4
19  
2,531  
80  
,423  
858  
–161  
–
269  
–132  
–
Change in other operating assets and liabilities  
Income taxes paid  
–
–
–2,487  
191  
2
2
1
Interest received  
9
9,964  
–4,715  
–5,358  
Cash inflow/outflow from operating activities  
6,021  
–6,599  
15  
–9  
–
–9  
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  
3
6
–
134  
77  
3,775  
,881  
–514  
137  
–
–
1
–
163  
–179  
342  
324  
Proceeds from the disposal of investments  
–
–
–3,945  
2,908  
–7,998  
–458  
170  
–297  
Investments in marketable securities and term deposits  
Proceeds from the sale of marketable securities and from matured term deposits  
Cash inflow/outflow from investing activities  
3
5,836  
–
–
17  
–
–
–
–
Issue/buy-back of treasury shares  
Payments into equity  
1
5
–
–
1,715  
4,299  
–1,653  
–582  
–150  
–
–
–
Payment of dividend for the previous year  
Intragroup financing and equity transactions  
Interest paid  
4,094  
–
3,844  
–
2
2
–
136  
–
–
1,009  
–733  
5,298  
–4,814  
1,073  
–
1,099  
–1,383  
6,015  
–4,940  
517  
Proceeds from the issue of bonds  
Repayment of bonds  
–
4
52  
41  
85  
Proceeds from new non-current other financial liabilities  
Repayment of non-current other financial liabilities  
Change in current other financial liabilities  
Change in commercial paper  
–
–26  
1
,042  
–
125  
–489  
–2,673  
–
–
–
4,682  
5,927  
5,152  
Cash inflow/outflow from financing activities  
7
0
2
–53  
47  
–11  
–
–36  
–
Effect of exchange rate on cash and cash equivalents  
Effect of changes in composition of Group on cash and cash equivalents  
Change in cash and cash equivalents  
1,023  
–713  
904  
82  
6
,775  
,752  
7,488  
879  
797  
Cash and cash equivalents as at 1January  
5
6,775  
1,783  
879  
Cash and cash equivalents as at 31December  
9
6
BMW Group  
Group Statement of Changes in Equity  
*
in € million  
Note  
Subscribed  
capital  
Capital  
reserves  
Revenue reserves  
1
January 2013, as originally reported  
35  
35  
656  
1,973  
28,544  
*
Adjustment IAS 8  
–
–
–34  
1
January 2013 (adjusted)  
656  
1,973  
28,510  
Dividends paid  
–
–
–1,640  
Net profit  
–
–
–
–
–
–
5,303  
936  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2013  
6,239  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
17  
–
–
–
–
13  
31 December 2013  
35  
656  
1,990  
33,122  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
98  
Notes  
9
8
Accounting Principles and  
Policies  
in € million  
Note  
Subscribed  
capital  
Capital  
reserves  
Revenue reserves  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
1
January 2014  
35  
656  
1,990  
33,122  
Dividends paid  
–
–
–1,707  
Net profit  
–
–
–
–
–
–
5,798  
–1,592  
4,206  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2014  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
15  
–
–
–
–
–
31 December 2014  
35  
656  
2,005  
35,621  
9
7 Group Financial StatementS  
Accumulated other equity  
Equity  
attributable to  
shareholders  
Minority  
interest  
Total  
of BMW AG  
Translation*  
differences  
Securities  
Derivative  
financial  
instruments  
–
–
984  
108  
202  
30,499  
107  
30,606  
1 January 2013, as originally reported  
*
–
–
–
–34  
–
–34  
Adjustment IAS 8  
984  
108  
202  
30,465  
107  
30,572  
1 January 2013 (adjusted)  
–
–
–
–1,640  
–
–1,640  
Dividends paid  
–
643  
643  
–
27  
27  
–
934  
934  
5,303  
1,254  
6,557  
26  
–
5,329  
1,254  
6,583  
Net profit  
–
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2013  
–
26  
–
–
–
–
–
–
–
17  
–
–
–
17  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
13  
55  
68  
–
1,627  
135  
1,136  
35,412  
188  
35,600  
31 December 2013  
Accumulated other equity  
Equity  
attributable to  
shareholders  
Minority  
interest  
Total  
of BMW AG  
Translation  
differences  
Securities  
Derivative  
financial  
instruments  
–
1,627  
135  
1,136  
35,412  
188  
35,600  
–1,707  
1 January 2014  
–
–
–
–1,707  
–
Dividends paid  
–
–
6
6
–
–1,616  
–1,616  
5,798  
–2,298  
3,500  
19  
–
5,817  
–2,298  
3,519  
Net profit  
9
04  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2014  
9
04  
19  
–
–
–
–
–
–
–
15  
–
–
–
15  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
–
10  
10  
–
723  
141  
–480  
37,220  
217  
37,437  
31 December 2014  
9
8
BMW Group  
Notes to the Group Financial Statements  
Accounting Principles and Policies  
1
Basis of preparation  
The consolidated financial statements of Bayerische  
The inclusion of the financial services activities of the  
Group therefore has an impact on the Group Financial  
Motoren Werke Aktiengesellschaft (BMW Group Finan­ Statements.  
cial Statements or Group Financial Statements) at 31 De­  
cember 2014 have been drawn up in accordance with  
International Financial Reporting Standards (IFRSs) as  
endorsed by the EU. The designation “IFRSs” also in­  
Inter­segment transactions – relating primarily to inter­  
nal sales of products, the provision of funds and the  
related interest – are eliminated in the “Eliminations”  
cludes all valid International Accounting Standards (IASs). column. Further information regarding the allocation  
All Interpretations of the IFRS Interpretations Commit­  
tee (IFRICs) mandatory for the financial year 2014 are  
also applied.  
of activities of the BMW Group to segments and a  
description of the segments is provided in note 50  
.
In conjunction with the refinancing of financial services  
business, a significant volume of receivables arising  
from retail customer and dealer financing is sold. Simi­  
larly, rights and obligations relating to leases are sold.  
The sale of receivables is a well­established instrument  
used by industrial companies. These transactions usu­  
ally take the form of asset­backed financing transac­  
tions involving the sale of a portfolio of receivables to a  
trust which, in turn, issues marketable securities to re­  
finance the purchase price. The BMW Group continues  
to “service” the receivables and receives an appropriate  
fee for these services. In accordance with IFRS 10 (Con­  
solidated Financial Statements) such assets remain in  
the Group Financial Statements although they have been  
legally sold, since all the conditions relevant for control  
are met. Gains and losses relating to the sale of such  
assets are not recognised until the assets are removed  
from the Group balance sheet. The balance sheet value of  
The Group Financial Statements comply with §315ꢀa of  
the German Commercial Code (HGB). This provision,  
in conjunction with the Regulation (EC) No. 1606ꢀ/ꢀ2002  
of the European Parliament and Council of 19 July  
2
002, relating to the application of International Finan­  
cial Reporting Standards, provides the legal basis for  
preparing consolidated financial statements in accord­  
ance with international standards in Germany and  
applies to financial years beginning on or after 1 January  
2005.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
The BMW Group and segment income statements are  
presented using the cost of sales method. The Group  
and segment balance sheets correspond to the classi­  
fication provisions contained in IAS 1 (Presentation of  
Financial Statements).  
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
In order to improve clarity, various items are aggregated the assets sold at 31 December 2014 totalled €ꢀ10.9 bil­  
in the income statements and balance sheets presented. lion (31 December 2013: €ꢀ10.1 billion).  
These items are disclosed and analysed separately in the  
1
1
1
notes.  
In addition to credit financing and leasing contracts, the  
Financial Services segment also brokers insurance busi­  
ness via cooperation arrangements entered into with  
local insurance companies. These activities are not ma­  
terial to the BMW Group as a whole.  
A Statement of Comprehensive Income is presented at  
Group level reconciling the net profit to comprehensive  
income for the year.  
In order to provide a better insight into the net assets,  
financial position and performance of the BMW Group  
and going beyond the requirements of IFRS 8 (Operat­  
ing Segments), the Group Financial Statements also  
include balance sheets and income statements for the  
Automotive, Motorcycles, Financial Services and Other  
Entities segments. The Group Cash Flow Statement is  
supplemented by statements of cash flows for the Auto­  
motive and Financial Services segments. This supple­  
mentary information is unaudited.  
The Group currency is the euro. All amounts are dis­  
closed in millions of euros (€ million) unless stated  
otherwise.  
Bayerische Motoren Werke Aktiengesellschaft has its  
seat in Munich, Petuelring 130, and is registered in the  
Commercial Register of the District Court of Munich  
under the number HRB 42243.  
All consolidated subsidiaries have the same year end as  
BMW AG with the exception of BMW India Private  
Ltd., Gurgaon, and BMW India Financial Services Private  
Ltd., Gurgaon, both of whose year­ends are 31 March in  
In order to facilitate the sale of its products, the BMW  
Group provides various financial services – mainly loan  
and lease financing – to both retail customers and dealers. accordance with local legal requirements.  
9
9 Group Financial StatementS  
The Group Financial Statements, drawn up in accord­  
Financial Statements and the Combined Management  
ance with §315a HGB, and the Combined Management Report can be downloaded from the BMW Group web­  
Report for the financial year ended 31 December 2014  
will be submitted to the operator of the electronic version  
of the German Federal Gazette and can be obtained via  
the Company Register website. Printed copies will also  
be made available on request. In addition the Group  
site at www.bmwgroup.comꢀ/ꢀir.  
The Board of Management authorised the Group Finan­  
cial Statements for issue on 19 February 2015.  
2
Consolidated companies  
The scope of the consolidated financial statements is  
based on the application of IFRS 10 (Consolidated  
Financial Statements) and IFRS 11 (Joint Arrangements).  
trusts, almost all of which are used for asset­backed  
financing transactions.  
The number of subsidiaries, including the special pur­  
pose securities fund and the special purpose trusts,  
consolidated in the Group Financial Statements  
changed in 2014 as follows:  
The BMW Group Financial Statements include, besides  
BMWAG, all material subsidiaries, including one  
special purpose securities fund and 30 special purpose  
Germany  
Foreign  
Total  
Included at 31 December 2013  
Included for the first time in 2014  
No longer included in 2014  
20  
2
167  
13  
187  
15  
–
13  
13  
Included at 31 December 2014  
22  
167  
189  
4
3 subsidiaries (2013: 48), either dormant or generating  
a negligible volume of business, and four joint opera­  
tions (2013 ) are not consolidated on the grounds  
vestments”, measured at cost less – where applicable –  
accumulated impairment losses.  
:
1
that their inclusion would not influence the economic  
decisions of users of the Group Financial Statements.  
A “List of Group Investments” pursuant to §313  
HGB will be submitted to the operator of the electronic  
(2)  
Non­inclusion of operating subsidiaries and joint oper­ version of the German Federal Gazette. This list, along  
ations reduces total Group revenues by  
.0%).  
0
.
3
% (2013  
:
with the “List of Third Party Companies which are not  
of Minor Importance for the Group”, will also be posted  
on the BMW Group website at www.bmwgroup.comꢀ/ꢀir.  
The List of Group Investments, the List of Third Party  
Companies which are not of Minor Importance for the  
Group and the full list of consolidated companies are  
also posted as appendices on the BMW Group website.  
1
The joint operations – SGL Automotive Carbon Fibers  
GmbH & Co. KG, Munich, SGL Automotive Carbon  
Fibers Verwaltungs GmbH, Munich, and SGL Automo­  
tive Carbon Fibers LLC, Dover, DE – are consolidated  
proportionately for the first time in the financial year  
2
014 on the basis of the BMW Group’s 49% sharehold­  
BMW Madrid S.L., Madrid, BMW Amsterdam B.ꢀV.,  
Amsterdam, BMW Den Haag B.ꢀV., The Hague, BMW  
Retail Nederland B.ꢀV., The Hague, BMW Milano  
S.r.l., Milan, BMW Distribution S.A.S., Montigny­le­  
Bretonneux, BMW Vermögensverwaltungs GmbH,  
Munich, BMW Beteiligungs GmbH & Co. KG, Munich,  
and BMW International Holding B.ꢀV., The Hague, were  
ing. These entities supply carbon fibre and carbon fibre  
fabrics for vehicle production. Further information is  
provided in note 9.  
The joint ventures – BMW Brilliance Automotive Ltd.,  
Shenyang, DriveNow GmbH & Co. KG, Munich, and  
DriveNow Verwaltungs GmbH, Munich – are accounted consolidated for the first time in the financial year 2014.  
for using the equity method. As in the previous year,  
five participations are not consolidated using the equity BMW Österreich Finanzierungs GmbH, Steyr, was  
method on the grounds of immateriality. They are in­  
merged with BMW Motoren GmbH, Steyr, and there­  
cluded in the Group balance sheet in the line “Other in­ fore ceased to be a consolidated company. Noord Lease  
1
00  
B.ꢀV., Groningen, was sold and therefore ceased to be a  
consolidated company. In addition, Alphabet Belgium  
N.ꢀV., Bornem, and Bavaria NTTBL Company Ltd.,  
Dublin, were liquidated and ceased to be consolidated  
companies. The British Motor Corporation Ltd.,  
Bracknell, was wound up and ceased to be a consolidated  
company.  
The Group reporting entity also changed by comparison  
to the previous year as a result of the first­time consoli­  
dation of six special purpose trusts and the deconsolida­  
tion of eight special purpose entities.  
The changes to the composition of the Group do not have  
a material impact on the results of operations, financial  
position or net assets of the Group.  
3
Sale of business  
With the purchase of the ING Car Lease Group in  
of Management put up Noord Lease B.ꢀV., Groningen  
for sale during the financial year 2014. At the end of  
a bidding process, Noord Lease B.ꢀV., Groningen, was  
2
011, the BMW Group also acquired Noord Lease B.ꢀV.,  
Groningen. This entity was managed alongside Alphabet sold to Noordlease Midco B.ꢀV., Groningen. The pur­  
Nederland B.ꢀV., Breda, as a second fleet leasing com­  
pany in the Netherlands, with a strong regional focus  
and a high proportion of private leasing. As part of an  
evaluation of the strategic direction of fleet business  
in the Netherlands, it was decided to focus on only one  
company in this region. Accordingly, BMWAG’s Board  
chase agreement was signed in June 2014 and the  
shares transferred in August 2014. The deconsolidation  
of Noord Lease B.ꢀV., Groningen, gave rise in the third  
quarter to a gain of €ꢀ7.4 million, which is included in  
other operating income and expenses of the Financial  
Services segment.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
4
Consolidation principles  
92  
94  
96  
The equity of subsidiaries is consolidated in accordance  
with IFRS 3 (Business Combinations). IFRS 3 requires  
that all business combinations are accounted for using  
In the case of a joint operation, the parties that have joint  
control of the arrangement have rights to the assets,  
and obligations for the liabilities, relating to the arrange­  
98  
Notes  
the acquisition method, whereby identifiable assets and ment. Assets, liabilities, revenues and expenses of a  
98  
Accounting Principles and  
Policies  
liabilities acquired are measured at their fair value at  
acquisition date. An excess of acquisition cost over the  
Group’s share of the net fair value of identifiable assets,  
liabilities and contingent liabilities is recognised as good­  
will as a separate balance sheet line item and allocated  
to the relevant cash­generating unit (CGU). Goodwill of  
joint operation are recognised proportionately in the  
Group Financial Statements on the basis of the BMW  
Group’s rights and obligations.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
Investments accounted for using the equity method  
(joint ventures and associated companies) are measured  
at the BMW Group’s share of equity taking account of  
fair value adjustments. Any difference between the cost  
of investment and the Group’s share of equity is ac­  
€ꢀ91 million which arose prior to 1 January 1995 remains  
netted against reserves.  
Receivables, payables, provisions, income and expenses counted for in accordance with the acquisition method.  
and profits between consolidated companies (intra­group Investments in other companies are accounted for as  
profits) are eliminated on consolidation.  
a general rule using the equity method when significant  
influence can be exercised (IAS 28 Investments in Asso­  
ciates and Joint Ventures). As a general rule, there is a  
rebuttable assumption that the Group has significant in­  
fluence if it holds between 20% and 50% of the associated  
Joint operations and joint ventures are forms of joint  
arrangements. Such an arrangement exists when the  
BMW Group jointly carries out activities on the basis of  
a contractual agreement with a third party that requires company’s or joint venture’s voting power.  
the unanimous consent of both parties with respect to  
all significant activities of the joint arrangement.  
1
01 Group Financial StatementS  
5
Foreign currency translation  
come statement are also recognised directly in accumu­  
lated other equity.  
The financial statements of consolidated companies  
which are drawn up in a foreign currency are translated  
using the functional currency concept (IAS 21 The  
Effects of Changes in Foreign Exchange Rates) and the  
modified closing rate method. The functional currency  
of a subsidiary is determined as a general rule on the  
basis of the primary economic environment in which it  
operates and corresponds therefore usually to the rele­  
vant local currency. Income and expenses of foreign  
Foreign currency receivables and payables in the single  
entity accounts of BMWAG and subsidiaries are re­  
corded, at the date of the transaction, at cost. At the end  
of the reporting period, foreign currency receivables  
and payables are translated at the closing exchange rate.  
The resulting unrealised gains and losses as well as the  
subsequent realised gains and losses arising on settle­  
subsidiaries are translated in the Group Financial State­ ment are recognised in the income statement in accord­  
ments at the average exchange rate for the year and  
assets and liabilities are translated at the closing rate.  
Exchange differences arising from the translation of  
shareholders’ equity are recognised directly in accumu­  
lated other equity. Exchange differences arising from  
the use of different exchange rates to translate the in­  
ance with the underlying substance of the relevant  
transactions.  
The exchange rates of those currencies which have a ma­  
terial impact on the Group Financial Statements were as  
follows:  
Closing rate  
Average rate  
31.12. 2014  
31.12. 2013  
2014  
2013  
US Dollar  
1.21  
0.78  
1.38  
0.83  
1.33  
0.81  
1.33  
0.85  
8.16  
British Pound  
Chinese Renminbi  
Japanese Yen  
Russian Rouble  
7.53  
8.34  
8.19  
144.95  
70.98  
144.55  
45.29  
140.38  
51.03  
129.70  
42.34  
6
Accounting policies  
The financial statements of BMWAG and of its subsidi­  
the effective interest method and reported as revenues  
within the line item “Interest income on loan financing”.  
aries in Germany and elsewhere have been prepared for If the sale of products includes a determinable amount  
consolidation purposes using uniform accounting poli­ for subsequent services (multiple­component contracts),  
cies in accordance with IFRS 10 (Consolidated Financial the related revenues are deferred and recognised as  
Statements).  
income over the relevant service period. Amounts are  
normally recognised as income by reference to the pat­  
Revenues from the sale of products are recognised when tern of related expenditure. Profits arising on the sale  
the risks and rewards of ownership of the goods are  
transferred to the dealer or customer, provided that the  
amount of revenue can be measured reliably, it is  
of vehicles for which a Group company retains a repur­  
chase commitment (buy­back contracts) are not recog­  
nised until such profits have been realised. The differ­  
probable that the economic benefits associated with the ence between the sales and buy­back price is accounted  
transaction will flow to the entity and costs incurred  
or to be incurred in respect of the sale can be measured  
reliably. Revenues are stated net of settlement discount,  
for as deferred income and recognised in instalments as  
revenue over the contract term.  
bonuses and rebates. Revenues also include lease rentals Cost of sales comprises the cost of products sold and the  
and interest income earned in conjunction with finan­ acquisition cost of purchased goods sold. In addition  
cial services. Revenues from leasing instalments relate to to directly attributable material and production costs, it  
operating leases and are recognised in the income state­ also includes research costs and development costs not  
ment on a straight line basis over the relevant term of  
the lease. Interest income from finance leases and from  
customer and dealer financing are recognised using  
recognised as assets, the amortisation of capitalised  
development costs as well as overheads (including depre­  
ciation of property, plant and equipment and amortisation  
1
02  
of other intangible assets relating to production), write­  
downs on inventories, freight and insurance costs re­  
statement (as personnel expense) over the vesting period  
of the programmes and recognised in the balance sheet  
lating to deliveries to dealers and agency fees on direct as a provision.  
sales. Expenses which are directly attributable to finan­  
cial services business (including depreciation on leased  
products), the interest expense from refinancing the  
entire financial services business as well as the expense  
The share­based remuneration programme for Board  
of Management members and senior heads of depart­  
ment entitles BMWAG to elect whether to settle its  
of risk provisions and write­downs relating to such busi­ commitments in cash or with shares of BMWAG com­  
ness are also reported in cost of sales.  
mon stock. Following the decision to settle in cash,  
this programme is accounted for as a cash­settled  
In accordance with IAS 20 (Accounting for Government share­based transaction. Further information on  
Grants and Disclosure of Government Assistance), pub- share­based remuneration programmes is provided  
lic sector grants are not recognised until there is reason­ in note 20  
.
able assurance that the conditions attaching to them  
have been complied with and the grants will be received. Purchased and internally­generated intangible assets are  
They are recognised as income over the periods neces­ recognised as assets in accordance with IAS 38 (Intan­  
sary to match them with the related costs which they are gible Assets), where it is probable that the use of the asset  
intended to compensate.  
will generate future economic benefits and where the  
costs of the asset can be determined reliably. Such assets  
Basic earnings per share are computed in accordance with are measured at acquisition andꢀ/ꢀor manufacturing cost  
IAS 33 (Earnings per Share). Basic earnings per share  
are calculated for common and preferred stock by di­  
viding the Group net profit after minority interests, as  
attributable to each category of stock, by the average  
number of outstanding shares. The net profit is accord­  
ingly allocated to the different categories of stock. The  
and, to the extent that they have a finite useful life,  
amortised over their estimated useful lives. With the ex­  
ception of capitalised development costs, intangible  
assets are generally amortised over their estimated use­  
ful lives of between three and ten years.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
98  
Notes  
portion of the Group net profit for the year which is not Development costs for vehicle and engine projects are  
98  
Accounting Principles and  
Policies  
being distributed is allocated to each category of stock  
based on the number of outstanding shares. Profits  
available for distribution are determined directly on the  
basis of the dividend resolutions passed for common  
and preferred stock. Diluted earnings per share are dis­  
closed separately.  
capitalised at manufacturing cost, to the extent that  
attributable costs can be measured reliably and both  
technical feasibility and successful marketing are as­  
sured. It must also be probable that the development  
expenditure will generate future economic benefits.  
Capitalised development costs comprise all expenditure  
that can be attributed directly to the development pro­  
cess, including development­related overheads. Capi­  
talised development costs are amortised systematically  
over the estimated product life (usually four to eleven  
years) following start of production.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
Share-based remuneration programmes which are ex­  
pected to be settled in shares are, in accordance with  
IFRS 2 (Share­based Payments), measured at their fair  
value at grant date. The related expense is recognised  
in the income statement (as personnel expense) over  
the vesting period, with a contra (credit) entry recorded Goodwill arises on first­time consolidation of an acquired  
against capital reserves.  
business when the cost of acquisition exceeds the  
Group’s share of the fair value of the individually iden­  
tifiable assets acquired and liabilities and contingent  
liabilities assumed.  
Share­based remuneration programmes expected to be  
settled in cash are revalued to their fair value at each  
balance sheet date between the grant date and the settle­  
ment date and on the settlement date itself. The ex­  
All items of property, plant and equipment are considered  
pense for such programmes is recognised in the income to have finite useful lives. They are recognised at acqui­  
1
03 Group Financial StatementS  
sition or manufacturing cost less scheduled depreciation property, plant and equipment with different useful  
based on the estimated useful lives of the assets. De­  
preciation on property, plant and equipment reflects  
lives are depreciated separately.  
the pattern of their usage and is generally computed us­ Systematic depreciation is based on the following useful  
ing the straight­line method. Components of items of  
lives, applied throughout the BMW Group:  
in years  
Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities  
Plant and machinery  
8 to 50  
3 to 21  
2 to 25  
Other equipment, factory and office equipment  
For machinery used in multiple­shift operations, depre­  
ciation rates are increased to account for the additional  
utilisation.  
are measured at manufacturing cost. All other leased  
products are measured at acquisition cost. All leased  
products are depreciated over the period of the lease  
using the straight­line method down to their expected  
residual value. Changes in residual value expectations  
are recognised – in situations where the recoverable  
amount of the lease exceeds the carrying amount of the  
asset – by adjusting scheduled depreciation prospec­  
tively over the remaining term of the lease contract. If  
the recoverable amount is lower than the expected  
residual value, an impairment loss is recognised for the  
shortfall. A test is carried out at each balance sheet  
date to determine whether an impairment loss recog­  
nised in prior years no longer exists or has decreased.  
In these cases, the carrying amount of the asset is in­  
creased to the recoverable amount. The higher carrying  
amount resulting from the reversal may not, however,  
exceed the rolled­forward amortised cost of the asset.  
The cost of internally constructed plant and equipment  
comprises all costs which are directly attributable to  
the manufacturing process as well as an appropriate  
proportion of production­related overheads. This in­  
cludes production­related depreciation and an appro­  
priate proportion of administrative and social costs.  
As a general rule, borrowing costs are not included in  
acquisition or manufacturing cost. Borrowing costs that  
are directly attributable to the acquisition, construction  
or production of a qualifying asset are recognised as a  
part of the cost of that asset in accordance with IAS 23  
(Borrowing Costs).  
Non­current assets also include assets relating to leases.  
The BMW Group uses property, plant and equipment as If there is any evidence of impairment of non-financial  
lessee on the one hand and leases out vehicles produced  
by the Group and other brands as lessor on the other.  
IAS 17 (Leases) contains rules for determining, on the  
basis of risks and rewards, the economic owner of the  
assets. In the case of finance leases, the assets are at­  
assets (except inventories and deferred taxes), or if an  
annual impairment test is required to be carried out –  
i.ꢀe. for intangible assets not yet available for use, intan­  
gible assets with an indefinite useful life and goodwill  
acquired as part of a business combination – an impair­  
tributed to the lessee and in the case of operating leases ment test pursuant to IAS 36 (Impairment of Assets) is  
the assets are attributed to the lessor.  
performed. Each individual asset is tested separately  
unless the asset generates cash flows that are largely in­  
dependent of the cash flows from other assets or groups  
of assets (cash­generating unitsꢀ/ꢀCGUs). For the purposes  
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, of the impairment test, the asset’s carrying amount is  
if lower. The assets are depreciated using the straight­ compared with its recoverable amount, the latter defined  
line method over their estimated useful lives or over the as the higher of the asset’s fair value less costs to sell and  
lease period, if shorter. The obligations for future lease  
instalments are recognised as other financial liabilities.  
its value in use. An impairment loss is recognised when  
the recoverable amount is lower than the asset’s carrying  
amount. Fair value is the price that would be received  
to sell an asset in an orderly transaction between mar­  
ket participants at the measurement date. The value in  
Where Group products are recognised by BMW Group  
entities as leased products under operating leases, they  
1
04  
use corresponds to the present value of future cash  
flows expected to be derived from an asset or group of  
assets.  
Investments accounted for using the equity method are  
(except when the investment is impaired) measured at  
the Group’s share of equity taking account of fair value  
adjustments on acquisition. Investments accounted for  
using the equity method comprise joint ventures and  
significant associated companies.  
The first step of the impairment test is to determine the  
value in use of an asset. If the calculated value in use is  
lower than the carrying amount of the asset, then its fair  
value less costs to sell are also determined. If the latter  
Investments in non­consolidated Group companies and  
is also lower than the carrying amount of the asset, then interests in associated companies not accounted for using  
an impairment loss is recorded, reducing the carrying  
amount to the higher of the asset’s value in use or fair  
value less costs to sell. The value in use is determined  
on the basis of a present value computation. Cash flows  
used for the purposes of this calculation are derived  
the equity method are reported as Other investments and  
measured at cost or, if lower, at their fair value.  
Participations are measured at their fair value. If this  
value is not available or cannot be determined reliably,  
from long­term forecasts approved by management. The participations are measured at cost.  
long­term forecasts themselves are based on detailed  
forecasts drawn up at an operational level and, based on  
a planning period of six years, correspond roughly to  
a typical product’s life­cycle. For the purposes of calcu­  
lating cash flows beyond the planning period, the as­  
set’s assumed residual value does not take growth into  
account. Forecasting assumptions are continually  
brought up to date and regularly compared with exter­  
nal sources of information. The assumptions used take  
account in particular of expectations of the profitability  
of the product portfolio, future market share develop­  
ments, macro­economic developments (such as currency, asset or as a financial liability.  
interest rate and raw materials prices) as well as the le­  
gal environment and past experience. Cash flows of the  
Automotive and Motorcycles CGUs are discounted us­  
ing a risk­adjusted pre­tax weighted average cost of cap­ ured at their fair value. Transaction costs are included  
ital (WACC) of 12.0% (2013: 12.0%). In the case of the in the fair value unless the financial assets are allocated  
Financial Services CGU, a sector­compatible pre­tax cost to the category “financial assets measured at fair value  
Non­current marketable securities are measured ac­  
cording to the category of financial asset to which they  
are classified. No held­for­trading financial assets are  
included under this heading.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
A financial instrument is a contract that gives rise to a  
financial asset of one entity and a financial liability  
or equity instrument of another entity. Once a BMW  
Group entity becomes party to such to a contract, the  
financial instrument is recognised either as a financial  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Financial assets are accounted for on the basis of the  
settlement date. On initial recognition, they are meas­  
1
1
1
of equity capital of 13.4% (2013: 13.4%) is applied. In  
conjunction with the impairment tests for CGUs, sensi­  
tivity analyses are performed for the main assumptions.  
through profit or loss”.  
Subsequent to initial recognition, available­for­sale and  
Analyses performed in the year under report confirmed, held­for­trading financial assets are measured at their  
as in the previous year, that no impairment loss was re­  
quired to be recognised.  
fair value. When market prices are not available, the fair  
value of available­for­sale financial assets is measured  
using appropriate valuation techniques e.ꢀg. discounted  
If the reason for a previously recognised impairment loss cash flow analysis based on market information available  
no longer exists, the impairment loss is reversed up to  
the level of the recoverable amount, capped at the level  
of rolled­forward amortised cost. This does not apply  
at the balance sheet date.  
Available­for­sale assets include non­current investments,  
to goodwill: previously recognised impairment losses on securities and investment fund shares. This category  
goodwill are not reversed. includes all non­derivative financial assets which are  
1
05 Group Financial StatementS  
not classified as “loans and receivables” or “held­to­  
maturity investments” or as items measured “at fair  
value through profit and loss”.  
balances or the incidence of similar events in the past  
are examples of such objective evidence. In the event of  
overdue receivables, impairment losses are always recog­  
nised individually based on the length of period of the  
arrears. In the case of dealer financing receivables, the  
Loans and receivables which are not held for trading  
and held­to­maturity financial investments with a fixed allocation of the dealer to a corresponding rating cate­  
term are measured at amortised cost using the effec­  
tive interest method. All financial assets for which pub­  
gory is also deemed to represent objective evidence of  
impairment. If there is no objective evidence of impair­  
lished price quotations in an active market are not avail­ ment, impairment losses are recognised on financial as­  
able and whose fair value cannot be determined reliably sets using a portfolio approach based on similar groups  
are required to be measured at cost.  
of assets. Company­specific loss probabilities and loss  
ratios, derived from historical data, are used to measure  
In accordance with IAS 39 (Financial Instruments: Recog­ impairment losses on similar groups of assets.  
nition and Measurement), assessments are made regu­  
larly as to whether there is any objective evidence that a The recognition of impairment losses on receivables  
financial asset or group of assets may be impaired. Im­  
pairment losses identified after carrying out an impair­  
relating to industrial business is also, as far as possible,  
based on the same procedures applied to financial ser­  
ment test are recognised as an expense. Gains and losses vices business. Impairment losses (write­downs and  
on available­for­sale financial assets are recognised di­ allowances) on receivables are always recorded on sepa­  
rectly in accumulated other equity until the financial as­ rate accounts and derecognised at the same time the  
set is disposed of or is determined to be impaired, at  
which time the cumulative loss previously recognised in  
other comprehensive income is reclassified to profit or  
loss for the period.  
corresponding receivables are derecognised.  
Items are presented as financial assets to the extent that  
they relate to financing transactions.  
With the exception of derivative financial instruments,  
all receivables and other current assets relate to loans  
and receivables which are not held for trading. All such  
items are measured at amortised cost. Receivables with  
maturities of over one year which bear no or a lower­  
than­market interest rate are discounted. Appropriate  
Derivative financial instruments are only used within the  
BMW Group for hedging purposes in order to reduce cur­  
rency, interest rate, fair value and market price risks from  
operating activities and related financing requirements.  
All derivative financial instruments (such as interest, cur­  
impairment losses are recognised to take account of all rency and combined interestꢀ/ꢀcurrency swaps, forward  
identifiable risks.  
currency and forward commodity contracts) are meas­  
ured in accordance with IAS 39 at their fair value, irre­  
spective of their purpose or the intention for which they  
are held.  
Receivables from sales financing comprise receivables  
from retail customer, dealer and lease financing.  
Impairment losses on receivables relating to financial ser­ If there are no quoted prices on active markets for de­  
vices business are recognised using a uniform method­  
ology that is applied throughout the Group and meets  
rivative financial instruments, credit risk is taken into  
account as an adjustment to the fair value of the finan­  
the requirements of IAS 39. This methodology results in cial instrument. The BMW Group applies the option of  
the recognition of impairment losses both on individual measuring the credit risk for a group of financial assets  
assets and on groups of assets. If there is objective evi­  
dence of impairment, the BMW Group recognises im­  
and financial liabilities on the basis of its net exposure.  
Portfolio­based value adjustments to the individual  
pairment losses on the basis of individual assets. Within financial assets and financial liabilities are allocated using  
the retail customer business, the existence of overdue the relative fair value approach (net method).  
1
06  
Derivative financial instruments are measured using  
market information and recognised valuation tech­  
niques. In those cases where hedge accounting is ap­  
plied, changes in fair value are recognised either in  
profit or loss or in other comprehensive income as a  
component of accumulated other equity, depending  
on whether the transactions are classified as fair value  
hedges or cash flow hedges. In the case of fair value  
hedges, the results of the fair value measurement of  
the derivative financial instruments and the related  
hedged items are recognised in the income statement.  
In the case of fair value changes in cash flow hedges  
which are used to mitigate the future cash flow risk  
on a recognised asset or liability or on forecast trans­  
actions, unrealised gains and losses on the hedging  
instrument are recognised initially directly in accumu­  
lated other equity. Any such gains or losses are recog­  
nised subsequently in the income statement when the  
hedged item (usually external revenue) is recognised  
in the income statement. The portion of the gains or  
losses from fair value measurement not relating to the  
hedged item is recognised immediately in the income  
statement. If, contrary to the normal case within the  
BMW Group, hedge accounting cannot be applied, the  
gains or losses from the fair value measurement of  
derivative financial instruments are recognised imme­  
diately in the income statement.  
value. Manufacturing cost comprises all costs which  
are directly attributable to the manufacturing process  
and an appropriate proportion of production­related  
overheads. This includes production­related deprecia­  
tion and an appropriate proportion of administrative and  
social costs.  
Borrowing costs are not included in the acquisition or  
manufacturing cost of inventories.  
Cash and cash equivalents comprise mainly cash on hand  
and cash at bank with an original term of up to three  
months.  
Assets held for sale and disposal groups held for sale  
are presented separately in the balance sheet in ac­  
cordance with IFRS 5, if the carrying amount of the  
relevant assets will be recovered principally through a  
sale transaction rather than through continuing use.  
This situation only arises if the assets can be sold imme­  
diately in their present condition, the sale is expected  
to be completed within one year from the date of classi­  
fication and the sale is highly probable. At the date of  
classification, property, plant and equipment, intangible  
assets and disposal groups which are being held for  
sale are measured at the lower of their carrying amount  
and their fair value less costs to sell and scheduled de­  
preciationꢀ/ꢀamortisation ceases. This does not apply,  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
In accordance with IAS 12 (Income Taxes), deferred taxes however, to items within the disposal group which are  
are recognised on all temporary differences between not covered by the measurement rules contained in  
the tax and accounting bases of assets and liabilities and IFRS 5. Simultaneously, liabilities directly related to the  
on consolidation procedures. Deferred tax assets also sale are presented separately on the equity and liabili­  
include claims to future tax reductions which arise from ties side of the balance sheet as “Liabilities in conjunction  
1
1
1
the expected usage of existing tax losses available for  
carryforward to the extent that future usage is probable.  
Deferred taxes are computed using enacted or planned  
tax rates which are expected to apply in the relevant  
national jurisdictions when the amounts are recovered.  
with assets held for sale”.  
Provisions for pensions are recognised using the pro­  
jected unit credit method in accordance with IAS 19  
(Employee Benefits). Under this method, not only obli­  
gations relating to known vested benefits at the re­  
porting date are recognised, but also the effect of future  
increases in pensions and salaries. This involves taking  
account of various input factors which are evaluated  
on a prudent basis. The calculation is based on an inde­  
pendent actuarial valuation which takes into account  
all relevant biometric factors.  
Inventories of raw materials, supplies and goods for re­  
sale are stated at the lower of average acquisition cost  
and net realisable value.  
Work in progress and finished goods are stated at the  
lower of average manufacturing cost and net realisable  
1
07 Group Financial StatementS  
Remeasurements of the net defined benefit liability  
for pension plans are recognised, net of deferred tax,  
directly in equity (revenue reserves).  
period. Non­current provisions with a remaining period  
of more than one year are discounted to the present  
value of the expenditures expected to settle the obligation  
at the end of the reporting period.  
Net interest expense on the net defined benefit liability  
andꢀ/ꢀor net interest income on the net defined benefit  
Financial liabilities are measured on first­time recogni­  
asset are presented separately within the financial result. tion at cost which corresponds to the fair value of the  
All other costs relating to allocations to pension pro­  
visions are allocated to costs by function in the income  
statement.  
consideration given. Transaction costs are also taken  
into account except for financial liabilities allocated to  
the category “financial liabilities measured at fair value  
through profit or loss”. Subsequent to initial recogni­  
tion, liabilities are – with the exception of derivative  
financial instruments – measured at amortised cost  
using the effective interest method. The BMW Group  
Other provisions are recognised when the BMW Group  
has a present obligation (legal or constructive) arising  
from past events, the settlement of which is probable  
and when a reliable estimate can be made of the amount has no liabilities which are held for trading. Liabilities  
of the obligation. Measurement of provisions is based  
on the best estimate of the expenditure required to  
settle the present obligation at the end of the reporting  
from finance leases are stated at the present value of  
the future lease payments and disclosed under other  
financial liabilities.  
7
Assumptions, judgements and estimations  
The preparation of the Group Financial Statements in  
accordance with IFRSs requires management to make  
certain assumptions and judgements and to use estima-  
tions that can affect the reported amounts of assets and  
liabilities, revenues and expenses and contingent lia­  
bilities. Major items requiring assumptions and estima­  
tions are described below. The assumptions used are  
continuously checked for their validity. Actual amounts  
could differ from the assumptions and estimations used  
portfolio, future market share developments, macro­  
economic developments (such as currency, interest rate  
and raw materials) as well as the legal environment and  
past experience.  
The BMW Group regularly checks the recoverability of  
its leased products. One of the main assumptions re­  
quired for leased products relates to their residual value  
since this represents a significant portion of future cash  
if business conditions develop differently to the Group’s inflows. In order to estimate the level of prices likely  
expectations.  
to be achieved in the future, the BMW Group incorpo­  
rates internally available historical data, current market  
data and forecasts of external institutions into its cal­  
Estimations are required to assess the recoverability of  
a cash-generating unit (CGU). If the recoverability of an culations. Internal back­testing is applied to validate the  
asset is being tested at the level of a CGU, assumptions estimations made. Further information is provided in  
must be made with regard to future cash inflows and out­ note 25.  
flows, involving in particular an assessment of the fore­  
casting period to be used and of developments after that The bad debt risk relating to receivables from sales financ-  
period. For the purposes of determining future cash  
inflows and outflows, management applies forecasting  
assumptions which are continually brought up to date  
and regularly compared with external sources of in­  
formation. The assumptions used take account in par­  
ing is assessed regularly by the BMW Group. For these  
purposes, the main factors taken into consideration are  
past experience, current market data (such as the level  
of financing business arrears), rating classes and  
scoring information. Further information is provided  
ticular of expectations of the profitability of the product in note 28.  
1
08  
The calculation of deferred tax assets requires assump­  
tions to be made with regard to the level of future tax­ potential repair costs and price increases per product  
able income and the timing of recovery of deferred tax and market. Provisions for warranties are adjusted  
assets. These assumptions take account of forecast oper­ regularly to take account of new circumstances and the  
estimations also involve assessing the future level of  
ating results and the impact on earnings of the reversal  
of taxable temporary differences. Since future business  
impact of any changes recognised in the income state­  
ment. Further information is provided in note 37  
.
developments cannot be predicted with certainty and to Similar estimates are also made in conjunction with the  
some extent cannot be influenced by the BMW Group,  
the measurement of deferred tax assets is subject to un­  
certainty. Further information is provided in note 17.  
measurement of expected reimbursement claims.  
In the event of involvement in legal proceedings or  
when claims are brought against a Group entity, provi-  
sions for litigation and liability risks are recognised  
when an outflow of resources is probable and a reliable  
estimate can be made of the amount of the obligation.  
Management is required to make assumptions with re­  
spect to the probability of occurrence, the amount in­  
volved and the duration of the legal dispute. For these  
reasons, the recognition and measurement of provi­  
sions for litigation and liability risks are subject to un­  
certainty. Further information is provided in note 37.  
Current income taxes are computed throughout the  
BMW Group in accordance with tax legislation appli­  
cable in each relevant country. In situations where a  
permissible element of discretion has been applied in  
determining the amount of a tax exposure to be recog­  
nised in the financial statements, there is always a pos­  
sibility that local tax authorities may reach a different  
conclusion.  
The calculation of pension provisions requires assump­  
tions to be made with regard to discount factors, salary  
trends, employee fluctuation and the life expectancy  
of employees. As in previous years, discount factors are  
determined by reference to market yields at the end of  
the reporting period on high quality corporate bonds.  
The salary level trend refers to the expected rate of  
salary increase which is estimated annually depending  
on inflation and the career development of employees  
within the Group. Further information is provided in  
note 36.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
In addition, judgement is required in particular when  
assessing whether the risks and rewards incidental to  
ownership of a leased asset have been transferred for  
the purposes of determining the classification of leasing  
arrangements.  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
Determining the scope of consolidated companies to  
be included in the Group Financial Statements may  
involve the use of judgement. In particular when the  
BMW Group holds 50% or less of the voting rights, a  
detailed assessment must be made as to whether sole  
control, joint control or significant influence applies.  
For instance, other contractual rights andꢀ/ꢀor other mat­  
ters and circumstances could result in the conclusion  
that the BMW entity concerned controls or jointly con­  
trols an entity in which it has a participation. In the  
latter case, it must then be decided whether the joint  
arrangement is a joint operation or a joint venture. In  
making its judgement, the BMW Group must take all  
contractual arrangements and other circumstances into  
account, and not just the structure and legal form of  
the entity. A new assessment is made in the event of  
any indication of changes in the previous assessment of  
(joint) control. Further information is provided in note 2.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
Estimations are required for the purposes of recognis­  
ing and measuring provisions for warranty obligations  
(
statutory, contractual and voluntary). In addition to  
statutorily prescribed manufacturer warranties, the  
BMW Group also offers various categories of warranty  
depending on the product and sales market concerned.  
Warranty provisions are recognised when the risks  
and rewards of ownership of the goods are transferred  
to the dealer or retail customer or when a new category  
of warranty is introduced. In order to determine the  
level of the provision, various factors are taken into  
consideration, including estimations based on past ex­  
perience with the nature and amount of claims. These  
1
09 Group Financial StatementS  
8
New financial reporting rules  
a) Financial reporting rules applied for the first time in the financial year 2014  
(
The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in  
the financial year 2014:  
Standard/Interpretation  
Date of  
issue by IASB  
Date of  
mandatory  
application  
IASB  
Date of  
mandatory  
application  
EU  
Impact  
on BMW Group  
IFRS 10  
IFRS 11  
IFRS 12  
Consolidated Financial Statements  
12.5.2011  
12.5.2011  
12.5.2011  
28.6.2012  
1.1.2013  
1.1.2013  
1.1.2013  
1.1.2013  
1.1.2014  
1.1.2014  
1.1.2014  
1.1.2014  
Significant in principle  
Significant in principle  
Significant in principle  
Significant in principle  
Joint Arrangements  
Disclosure of Interest in Other Entities  
Changes in Transitional Regulations  
(IFRS 10, IFRS 11 and IFRS 12)  
Investment Entities (Amendments to  
IFRS 10, IFRS 12 and IAS 27)  
31.10.2012  
1.1.2014  
1.1.2014  
Insignificant  
IAS 27  
IAS 28  
Separate Financial Statements  
12.5.2011  
12.5.2011  
1.1.2013  
1.1.2013  
1.1.2014  
1.1.2014  
None  
None  
Investments in Associates and  
Joint Ventures  
IAS 32  
IAS 39  
Presentation – Offsetting of Financial Assets  
and Financial Liabilities  
16.12.2011  
27.6.2013  
1.1.2014  
1.1.2014  
1.1.2014  
1.1.2014  
Insignificant  
Insignificant  
Novation of Derivatives and Continuation  
of Hedge Accounting  
(Amendments to IAS 39)  
Information regarding the introduction and impact of the consolidation­related Standards IFRS 10, IFRS 11 and  
IFRS 12 is provided note 9.  
(
b) Financial reporting pronouncements issued by the IASB, but not yet applied  
Standard/Interpretation  
Date of  
issue by IASB  
Date of  
mandatory  
application  
IASB  
Date of  
mandatory  
application  
EU  
Expected impact  
on BMW Group  
IFRS 9  
Financial Instruments  
12.11. 2009/  
1.1.2018  
No  
Significant in principle  
2
8.10. 2010/  
6.12.2011/  
1
19.11.2013/  
24.7.2014  
IFRS 10 /  
IAS 28  
Sale or Contribution of Assets between an  
Investor and an Associate or Joint Venture  
11.9.2014  
18.12.2014  
6.5.2014  
1.1.2016  
1.1.2016  
1.1.2016  
No  
No  
No  
Insignificant  
Insignificant  
Insignificant  
(Amendments to IFRS 10 and IAS 28)  
IFRS10 /  
IFRS12 /  
IAS 28  
Investment Entities: Applying the  
Consolidation Exception (Amendments to  
IFRS10, IFRS12 and IAS 28)  
IFRS 11  
Acquisition of an Interest in a Joint Operation  
(Amendments to IFRS 11)  
IFRS 14  
IFRS 15  
Regulatory Deferral Accounts  
30.1.2014  
28.5.2014  
1.1.2016  
1.1.2017  
No  
No  
Insignificant  
Revenue from Contracts with Customers  
Significant in principle  
1
10  
Standard/Interpretation  
Date of  
issue by IASB  
Date of  
mandatory  
application  
IASB  
Date of  
mandatory  
application  
EU  
Expected impact  
on BMW Group  
IAS1  
Presentation of Financial Statements  
Initiative to Improve Disclosure Require-  
18.12.2014  
12.5.2014  
1.1.2016  
1.1.2016  
No  
No  
No  
Significant in principle  
Insignificant  
(
ments – Amendments to IAS 1)  
IAS 16/  
IAS 38  
Clarification of Acceptable Methods of  
Depreciation and Amortisation  
(Amendments to IAS 16 and IAS 38)  
IAS 16/  
IAS 41  
Agriculture: Bearer Plants  
30.6.2014  
1.1.2016  
1.7.2014  
None  
(Amendments to IAS 16 and IAS 41)  
1
IAS 19  
Employment Benefits:  
Employee Contributions (Amendments to  
IAS 19)  
21.11.2013  
1.2.2015  
No  
Insignificant  
IAS 27  
Equity Method in Separate Financial  
Statements (Amendments to IAS 27)  
12.8.2014  
1.1.2016  
None  
2
1
IFRIC 21  
Levies  
20.5.2013  
12.12.2013  
12.12.2013  
25.9.2014  
1.1.2014  
1.7.2014  
1.7.2014  
1.1.2016  
17.6.2014  
1.2.2015  
1.1.2015  
No  
Insignificant  
Insignificant  
Insignificant  
Insignificant  
Annual Improvements to IFRS 2010 –2012  
Annual Improvements to IFRS 2011 –2013  
Annual Improvements to IFRS 2012–2014  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
1
Mandatory application in annual periods beginning on or after 1 February 2015.  
Mandatory application in annual periods beginning on or after 17 June 2014.  
2
98  
Notes  
In November 2009 the IASB issued IFRS 9 (Financial  
Instruments) as part of a project to revise the accounting  
for financial instruments. This Standard marks the  
first of three phases of the IASB project to replace the  
on 19 November 2013. On the one hand, the amend­  
ments overhaul the requirements for hedge accounting  
by introducing a new hedge accounting model. They  
also enable entities to change the accounting for lia­  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
existing IAS 39 (Financial Instruments: Recognition and bilities they have elected to measure at fair value, before  
Measurement). The first phase deals initially only with  
financial assets. IFRS 9 amends the recognition and  
measurement requirements for financial assets, includ­  
ing various hybrid contracts.  
applying any other requirement in IFRS 9, such that fair  
value changes due to changes in “own credit risk” would  
not require to be recognised in profit or loss. The man­  
datory effective date of 1 January 2015 was removed and  
a new application date of 1 January 2018 set. The impact  
of adoption of the Standard on the Group Financial  
Statements is currently being assessed.  
Financial assets are measured at either amortised cost  
or fair value. IFRS 9 harmonises the various rules con­  
tained in IAS 39 and reduces the number of valuation  
categories for financial instruments on the assets side  
of the balance sheet.  
In May 2014 the IASB issued IFRS 15 (Revenue from  
Contracts with Customers) together with the Financial  
Accounting Standards Board. The objective of the new  
Standard is to assimilate all the various existing require­  
ments and Interpretations relating to revenue recogni­  
tion (IAS 11 Construction Contracts, IAS 18 Revenue,  
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agree­  
ments for the Construction of Real Estate, IFRIC 18  
Transfers of Assets from Customers, SIC­31 Revenue –  
Barter Transactions involving Advertising Services) in a  
single Standard. The new Standard also stipulates uni­  
The new categorisation is based partly on the entity’s  
business model and partly on the contractual cash flow  
characteristics.  
In October 2010, additional rules for financial liabilities  
were added to IFRS 9. The requirements for financial  
liabilities contained in IAS 39 remain unchanged with  
the exception of new requirements relating to the  
measurement of an entity’s own credit risk at fair value. form revenue recognition principles for all sectors and  
A package of amendments to IFRS 9 was announced all categories.  
1
11 Group Financial StatementS  
The new Standard is based on a five­step model, which  
sets out the rules for revenue from contracts with cus­  
tomers, with the exception – among other things – of  
lease arrangements, insurance contracts, financial in­  
struments and specified contractual rights and obliga­  
tions relating to non­monetary transactions between  
entities within the same sector. Revenue can be recog­  
nised either over time or at a specific point in time. The  
five­step model describes the five steps necessary to  
of the new requirements on the Group Financial State­  
ments is currently being assessed.  
In December 2014, the IASB issued Amendments to  
IAS 1 as part of its disclosure initiative. The amend­  
ments relate primarily to clarifications relating to the  
presentation of financial reports.  
Firstly, disclosures are only required to be made in the  
recognise revenue on the basis of the transfer of control: notes if their inclusion is material for users of the  
1
2
3
4
. Identify the contract with the customer  
. Identify the performance obligations in the contract  
. Determine the transaction price  
financial statements. This also applies when an IFRS  
Standard explicitly specifies a minimum list of disclo­  
sures. Secondly, items to be presented in the balance  
. Allocate the transaction price to separate performance sheet, income statement and comprehensive income  
obligations  
can be aggregated or disaggregated by using subtotals.  
Thirdly, it clarifies that an entity’s share of other com­  
prehensive income of equity­accounted entities is re­  
quired to be analysed – within the Statement of Com­  
prehensive Income – to show “components, which  
will be subsequently reclassified to profit and loss” and  
“components, which will be not subsequently reclassi­  
fied to profit and loss”. Fourthly, it is stressed that there  
is no standard template for the notes and that the em­  
phasis should be on structuring the notes based on the  
relevance for the specific reporting entity.  
5
. Recognise revenue when a performance obligation is  
satisfied.  
In the case of multi­component transactions or trans­  
actions with variable consideration, it is possible that  
revenue may have to be recognised earlier or later un­  
der IFRS 15 compared with the previous Standard.  
A major difference to the previous Standard is the in­  
creased scope of discretion for estimates and the intro­  
duction of thresholds that could influence the amount  
and timing of revenue recognition.  
The Standard is mandatory for the first time for annual  
periods beginning on or after  
1 January 2016. Early  
The Standard is mandatory for the first time for annual  
adoption is permitted. The potential impact of adoption  
of the new requirements on the Group Financial State­  
periods beginning on or after  
1 January 2017. Early  
adoption is permitted under IFRS. The impact of adoption ments is currently being assessed.  
9
Adjustments in accordance with IAS 8  
IFRS 10 introduces a uniform consolidation model which  
Adjustments as a result of consolidation-related Standards  
In May 2011, the IASB issued three new Standards –  
IFRS 10 (Consolidated Financial Statements), IFRS 11  
establishes control as the basis for consolidation – con­  
trol of a subsidiary entity by a parent entity – and which  
can be applied to all entities. The control concept must  
therefore be applied both to parent­subsidiary relation­  
ships based on voting rights as well as to parent­sub­  
sidiary relationships arising from other contractual ar­  
rangements. Under the control concept established in  
IFRS 10, an investor controls another entity when it is  
exposed to or has rights to variable returns from its in­  
volvement with the investee and has the ability to affect  
(
Joint Arrangements), IFRS 12 (Disclosure of Interests  
in Other Entities) – as well as amendments to IAS 27  
Separate Financial Statements) and to IAS 28 (Invest­  
(
ments in Associates and Joint Ventures), all relating  
to accounting for business combinations. The three new  
Standards, which were endorsed by the EU in Decem­  
ber 2012, are mandatory for the first time for annual  
periods beginning on or after 1 January 2014 and are re­ those returns through its power over the investee.  
quired to be applied retrospectively.  
IFRS 11 supersedes IAS 31 (Interests in Joint Ventures)  
IFRS 10 replaces the consolidation guidelines contained and SIC­13 (Jointly Controlled Entities – Non­Monetary  
in IAS 27 and SIC­12 (Consolidation – Special Purpose  
Contributions by Venturers). This Standard sets out the  
Entities). The requirements for separate financial state­ requirements for accounting for joint arrangements and  
ments remain unchanged in the revised version of  
IAS 27  
places the emphasis on the rights and obligations that  
arise from such arrangements. IFRS 11 distinguishes  
.
1
12  
between two types of joint arrangements, namely joint  
operations and joint ventures, and therefore results in  
a change in the classification of joint arrangements. A  
joint operation is a joint arrangement whereby the par­  
ties that have joint control of the arrangement have  
In accordance with IAS 8.14, the resulting adjustments  
relating to the financial year 2013 are presented in the  
tables at the end of this section. The transition require­  
ments contained in these new Standards were com­  
plied with and, accordingly, the impact on the Group’s  
rights to the assets, and obligations for the liabilities, re­ Balance Sheet, Income Statement and Cash Flow State­  
lating to the arrangement. A joint venture is a joint ar­  
rangement whereby the parties that have joint control  
of the arrangement have rights to the net assets result­  
ing from the arrangement. IFRS 11 requires joint opera­  
tors to account for their share of assets and liabilities in  
the joint operation (and their share of income and ex­  
ment is not presented separately for the financial year  
2014.  
Restatement of income taxes in conjunction with leased  
products in the USA  
In previous years, there had been a misallocation between  
penses). Joint venturers are required to account for their current and deferred income taxes for leased products  
investment using the equity method. The withdrawal  
of IAS 31 means the removal of the option to account  
in the USA. The figures have been restated in accordance  
with IAS 8.41 et seq., involving a reclassification from  
for joint ventures using either the proportionate consoli­ deferred tax liabilities to current tax payables. The re­  
dation or the equity method. The equity method must  
be applied in accordance with amended IAS 28.  
lated interest and penalty charges up to 31 December  
2012 were recorded directly in equity (in revenue re­  
serves). Interest relating to the financial year 2013 is  
IFRS 12 sets out the requirements for disclosures relating reported as an expense for that period (in financial  
to all types of interests in other entities, including joint  
arrangements, associated companies, structured entities  
and unconsolidated entities.  
result).  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Prior year figures in the Balance Sheet, Income State­  
ment, Statement of Comprehensive Income, Statement  
of Changes in Equity, Cash Flow Statement and Notes  
to the Group Financial Statements have been restated  
retrospectively. The restatements also impacted the  
figures reported for the Financial Services and Other  
Entities segments. The Financial Service’s segment re­  
sult for 2013 was reduced by €ꢀ20 million and amounted  
to €ꢀ1,619 million after restatement, while segment as­  
sets were reduced by €ꢀ19 million to €ꢀ8,388 million. Seg­  
ment assets reported for the Other Entities segment  
92  
94  
96  
Application of IFRS 10 has no impact on the scope of  
entities included in the Group Financial Statements.  
The removal of the option for accounting for joint ven­  
tures (as stipulated by IFRS 11) does not have any im­  
pact since the BMW Group already accounted for joint  
ventures using the equity method. By contrast, the  
classification of joint arrangements in accordance with  
IFRS 11 has changed. The investments in SGL Automo­  
tive Carbon Fibers GmbH & Co. KG, Munich, SGL  
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
Automotive Carbon Fibers Verwaltungs GmbH, Munich, amounted to €ꢀ55,300 million at the end of the financial  
and SGL Automotive Carbon Fibers LLC, Dover, DE –  
previously accounted for at equity – have been classi­  
fied with effect from the first quarter of the financial  
year 2014 as joint operations and consolidated propor­  
tionately on the basis of the BMW Group’s 49% share­  
holding. This change in classification reflects the fact  
that the arrangement is primarily designed to provide  
the joint operators with an output (i.ꢀe. production) as  
well as the fact that settlement of the liabilities relating  
to the activities conducted through the arrangement  
depends on both parties on a continuous basis. Appli­  
cation of IFRS 12 impacts the scope of disclosures  
required to be made in the notes to the BMW Group  
Financial Statements, in particular the requirement to  
disclose more detailed financial information with re­  
year 2013, correcting the previously reported amount  
by €ꢀ 050 million. The tables at the end of this section  
show the impact for the Group.  
1
,
Change in presentation of term deposits within the Cash  
Flow Statement  
The BMW Group uses a broad range of instruments on  
international capital markets to manage its liquidity.  
Due to the situation on the financial markets, the BMW  
Group is increasingly investing in term deposits with  
longer terms (i.ꢀe. money deposits that mature after more  
than three months). Term deposits were previously re­  
ported in the Cash Flow Statement on the line “Change  
in other operating assets and liabilities” within operating  
cash flows. Since the payments related to these money  
spect to significant joint ventures. Further details can be deposits qualify as instruments pursuant to IAS 7.16ꢀcꢀ–ꢀd,  
found in note 26.  
they are required to be presented as cash flows from  
investing activities. In accordance with IAS 8.41 et seq.,  
these amounts have been reclassified to the line items  
“Investments in marketable securities and term deposits”  
The new requirements pertaining to IFRS 10, IFRS 11  
and IFRS 12 are required to be applied retrospectively.  
1
13 Group Financial StatementS  
and “Proceeds from the sale of marketable securities and in the previous year increased by €ꢀ500 million, whereas  
from matured term deposits”. As a result of the reclassi­ the net cash outflow for investing activities was in­  
fication, the net cash inflow from operating activities  
creased by the same amount.  
Changes in Group Balance Sheet presentation  
1
January 2013  
As originally  
reported  
Adjustments in  
accordance with  
IAS 8.14  
Restatements in  
accordance with  
IAS 8.41 et seq.  
As reported  
131,839  
in € million  
Total assets  
131,835  
4
–
Total non-current assets  
81,305  
13,341  
514  
–7  
35  
–9  
–33  
11  
7
–
–
–
–
–
–
–
81,298  
13,376  
505  
thereof property, plant and equipment  
thereof investments accounted for using the equity method  
thereof non-current other assets  
Total current assets  
803  
770  
50,530  
9,725  
8,370  
50,541  
9,732  
8,374  
thereof inventories  
thereof cash and cash equivalents  
4
Total equity  
30,606  
30,499  
28,544  
52,834  
3,441  
–
–
–
–
–
–
4
–
4
–34  
–34  
–34  
–947  
40  
30,572  
30,465  
28,510  
51,887  
3,481  
thereof equity attributable to shareholders of BMWAG  
thereof revenue reserves  
Total non-current provisions and liabilities  
thereof other provisions  
thereof deferred tax  
3,081  
–987  
981  
981  
–
2,094  
Total current provisions and liabilities  
thereof current tax  
48,395  
1,482  
49,380  
2,463  
thereof trade payables  
6,433  
6,437  
3
1 December 2013  
As originally  
reported  
Adjustments in  
accordance with  
IAS 8.14  
Restatements in  
accordance with  
IAS 8.41 et seq.  
As reported  
in € million  
Total assets  
138,368  
9
–
138,377  
Total non-current assets  
86,194  
15,113  
652  
–1  
55  
–
–
–
–
–
–
–
–
86,193  
15,168  
638  
thereof property, plant and equipment  
thereof investments accounted for using the equity method  
thereof non-current other assets  
Total current assets  
–14  
–42  
10  
954  
912  
52,174  
9,585  
4,265  
7,664  
52,184  
9,595  
4,258  
7,671  
thereof inventories  
10  
thereof current other assets  
–7  
thereof cash and cash equivalents  
7
Total equity  
35,643  
35,455  
33,167  
–358  
–
–
–43  
–43  
–45  
2
35,600  
35,412  
33,122  
–356  
thereof equity attributable to shareholders of BMWAG  
thereof revenue reserves  
–
thereof accumulated other equity  
Total non-current provisions and liabilities  
thereof other provisions  
–
52,682  
3,772  
3,554  
50,043  
3,411  
1,237  
7,475  
7,066  
–
–1,039  
56  
51,643  
3,828  
2,459  
51,134  
3,412  
2,319  
7,485  
7,064  
–
thereof deferred tax  
–
–1,095  
1,082  
–
Total current provisions and liabilities  
thereof other provisions  
9
1
thereof current tax  
–
1,082  
–
thereof trade payables  
10  
–2  
thereof other liabilities  
–
1
14  
Changes in Group Income Statement presentation  
2
013  
As originally  
reported  
Adjustments in  
accordance with  
IAS 8.14  
Restatements in  
accordance with  
IAS 8.41 et seq.  
As reported  
in € million  
Revenues  
76,058  
–60,784  
15,274  
–7,255  
841  
1
–7  
–6  
–2  
1
–
–
76,059  
–60,791  
15,268  
–7,257  
842  
Cost of sales  
Gross profit  
–
Selling and administrative expenses  
Other operating income  
–
–
Other operating expenses  
Profit/loss before financial result  
Result from equity accounted investments  
Interest and similar income  
Interest and similar expenses  
Financial result  
–874  
7,986  
398  
–1  
–8  
9
–
–875  
7,978  
407  
–
–
184  
–1  
–
–
183  
–449  
–73  
–20  
–20  
–20  
9
–469  
–85  
8
Profit/loss before tax  
7,913  
–2,573  
5,340  
5,314  
8.10  
–
7,893  
–2,564  
5,329  
5,303  
8.08  
Income taxes  
–
Net profit  
–
–11  
–11  
–0.02  
–0.02  
–0.02  
–0.02  
Attributable to shareholders of BMW AG  
Basic earnings per share of common stock in €  
Basic earnings per share of preferred stock in €  
Diluted earnings per share of common stock in €  
Diluted earnings per share of preferred stock in €  
–
–
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
8.12  
–
8.10  
8.10  
–
8.08  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
8.12  
–
8.10  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
Changes in presentation of the Statement of Comprehensive Income  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
2013  
in € million  
As originally  
reported  
Restatements in  
accordance with  
IAS 8.41 et seq.  
As reported  
1
1
1
Net profit  
5,340  
–635  
–11  
2
5,329  
–633  
Currency translation foreign operations  
Items expected to be reclassified to the income statement  
in the future  
316  
1,252  
6,592  
6,566  
2
2
318  
1,254  
6,583  
6,557  
Other comprehensive income for the period after tax  
Total comprehensive income  
–9  
–9  
Total comprehensive income attributable to shareholders of BMW AG  
1
15 Group Financial StatementS  
Changes in Group Cash Flow Statement presentation  
2
013  
As originally  
reported accordance with  
IAS 8.14  
Adjustments in  
Restatements in  
accordance  
with IAS 8.41 et seq.  
As reported  
in € million  
USA  
Ter m  
deposits  
Cash inflow from operating activities  
Net profit  
3,614  
5,340  
2,435  
126  
13  
–
–
–11  
146  
20  
500  
4,127  
5,329  
2,581  
147  
–
–
–
Current tax  
–
Other interest and similar income/expenses  
1
Depreciation and amortisation of other tangible, intangible  
and investment assets  
3,830  
479  
2
1
–
–
–
–
–
–
3,832  
480  
Change in provisions  
Change in deferred taxes  
138  
–
–155  
–
–17  
Other non-cash income and expense items  
–551  
–1  
–552  
Gain/loss on disposal of tangible and intangible assets  
and marketable securities  
–22  
–398  
983  
1
–9  
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–21  
–407  
986  
Result from equity accounted investments  
Changes in working capital  
–
–
Change in inventories  
–192  
–3  
6
–
–195  
1,159  
969  
Change in trade payables  
1,153  
453  
–
Change in other operating assets and liabilities  
Interest received  
16  
–1  
–10  
–24  
14  
–
500  
137  
–
136  
Cash outflow from investing activities  
Investment in intangible assets and property, plant and equipment  
Expenditure for investments  
–6,981  
–6,669  
–90  
–500  
–7,491  
–6,693  
–76  
–
–
Investments in marketable securities and time deposits  
Change in cash and cash equivalents  
Cash and cash equivalents as at 1January  
Cash and cash equivalents as at 31December  
–3,631  
–706  
–500  
–4,131  
–703  
8,374  
7,671  
3
–
–
–
8,370  
7,664  
4
7
1
16  
BMW Group  
Notes to the Group Financial Statements  
Notes to the Income Statement  
10  
Revenues  
Revenues by activity comprise the following:  
*
in € million  
2014  
2013  
Sales of products and related goods  
Income from lease instalments  
Sale of products previously leased to customers  
Interest income on loan financing  
Other income  
60,280  
7,748  
6,716  
2,881  
2,776  
80,401  
56,812  
7,296  
6,412  
2,868  
2,671  
Revenues  
76,059  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
An analysis of revenues by business segment and geographical region is shown in the segment information in  
note 50  
.
11  
Cost of sales  
Cost of sales comprises:  
*
in € million  
2014  
2013  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Manufacturing costs  
38,253  
4,135  
1,451  
14,716  
1,407  
362  
36,578  
4,118  
1,243  
14,044  
1,483  
435  
Research and development expenses  
Warranty expenditure  
92  
94  
96  
Cost of sales directly attributable to financial services  
Interest expense relating to financial services business  
Expense for risk provisions and write-downs for financial services business  
Other cost of sales  
98  
Notes  
98  
Accounting Principles and  
Policies  
3,072  
63,396  
2,890  
60,791  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Cost of sales  
1
1
1
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Group cost of sales include €ꢀ16  
,
485 million (2013  
:
on assets and reduced consumption­based taxes amount­  
€
ꢀ15,962 million) relating to Financial Services business.  
ing to €ꢀ54 million (2013: €ꢀ45 million).  
As in the previous year, manufacturing costs do not con­ Total research and development expenditure comprises  
tain any impairment losses on intangible assets and  
property, plant and equipment. Cost of sales is reduced  
by public­sector subsidies in the form of reduced taxes  
research costs, non­capitalised development costs and  
capitalised development costs (excluding scheduled  
amortisation). Total research and development expendi­  
ture was as follows:  
*
in € million  
2014  
2013  
Research and development expenses  
Amortisation  
4,135  
–1,068  
1,499  
4,566  
4,118  
–1,069  
1,744  
New expenditure for capitalised development costs  
Total research and development expenditure  
4,793  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
12  
Selling and administrative expenses  
Administrative expenses amounted to €ꢀ2,548 million  
(2013 : €ꢀ2,371 million) and comprise expenses for ad­  
*
*
Selling expenses amounted to €ꢀ  
5
,
344 million (2013  
:
€
ꢀ4,886 million) and comprise mainly marketing, adver­  
ministration not attributable to development, produc­  
tion or sales functions.  
tising and sales personnel costs.  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
17 Group Financial StatementS  
13  
Other operating income and expenses  
*
in € million  
2014  
2013  
Exchange gains  
311  
184  
30  
346  
183  
13  
Income from the reversal of provisions  
Income from the reversal of impairment losses and write-downs  
Gains on the disposal of assets  
Sundry operating income  
101  
251  
877  
53  
247  
842  
Other operating income  
Exchange losses  
–334  
–225  
–86  
–324  
–265  
–37  
Expense for additions to provisions  
Expense for impairment losses and write-downs  
Losses on the disposal of assets  
Sundry operating expenses  
–25  
–27  
–202  
–872  
–222  
–875  
Other operating expenses  
Other operating income and expenses  
5
–33  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
4
5
Result from equity accounted investments  
marily the Group’s share of the result of the joint  
The profit from equity accounted investments amounted venture, BMW Brilliance Automotive Ltd., Shenyang.  
*
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
to €ꢀ655 million (2013 : €ꢀ407 million) and includes pri­  
1
Net interest result  
*
2013  
in € million  
2014  
Other interest and similar income  
200  
200  
183  
*
thereof from subsidiaries: €18 million (2013 : €17 million)  
Interest and similar income  
183  
Net interest expense on the net defined benefit liability for pension plans  
Expense relating to interest impact on other long-term provisions  
Write-downs on current marketable securities  
–88  
–105  
–
–127  
–5  
–7  
Other interest and similar expenses  
–326  
–330  
thereof to subsidiaries: €–6 million (2013: €–6 million)  
Interest and similar expenses  
Net interest result  
–519  
–319  
–469  
–286  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
18  
16  
Other financial result  
in € million  
2014  
3
2013  
12  
Income from investments in subsidiaries and participations  
thereof from subsidiaries: €2 million (2013: €8 million)  
Impairment losses on investments in subsidiaries and participations  
Expenses from investments in subsidiaries  
Result on investments  
–153  
–
–91  
–2  
–150  
–81  
Losses and gains relating to financial instruments  
–597  
–597  
–125  
Sundry other financial result  
–125  
Other financial result  
–747  
–206  
The result from investments in 2014 was negatively  
impacted by an impairment loss on other investments  
amounting to €ꢀ152 million (2013: €ꢀ73 million).  
The deterioration in other financial result was primarily  
due to the negative impact of currency and commodity  
derivatives.  
17  
Income taxes  
Taxes on income comprise the following:  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
*
Comprehensive Income  
Balance Sheets  
in € million  
2014  
2013  
9
9
9
2
4
6
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Current tax expense  
Deferred tax expense/income  
Income taxes  
2,774  
116  
2,581  
–17  
9
8
Notes  
98  
Accounting Principles and  
Policies  
2,890  
2,564  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
1
1
Current tax expense includes €ꢀ275 million (2013: €ꢀ222 mil­ surcharge of 5.5% applies in Germany, giving a tax rate  
lion) relating to prior periods.  
of 15.8%, unchanged from the previous year. After taking  
account of an average municipal trade tax multiplier  
rate (Hebesatz) of 425.0% (2013: 420.0%), the municipal  
*
A deferred tax expense of €ꢀ83 million (2013 : income of  
€ꢀ42 million) is attributable to new temporary differences trade tax rate for German entities is 14.9% (2013: 14.7%).  
and the reversal of temporary differences brought for­  
The overall income tax rate in Germany is therefore  
30 % (2013 30 %). Deferred taxes for non­German  
entities are calculated on the basis of the relevant country­  
The tax expense was reduced by €ꢀ27 million (2013: €ꢀ5 mil­ specific tax rates and remained in a range of between  
ward.  
.
7
:
.5  
lion) as a result of utilising tax lossesꢀ/ꢀtax credits brought 12.5% and 46.9% once again in the financial year 2014.  
forward, for which deferred assets had not previously  
been recognised.  
Changes in tax rates resulted in a deferred tax expense  
of €ꢀ22 million (2013: €ꢀ2 million).  
The change in the valuation allowance on deferred tax  
assets relating to tax losses available for carryforward  
and temporary differences resulted in a tax expense of  
The actual tax expense for the financial year 2014 of  
*
€ꢀ  
(
2
,
890 million (2013 : €ꢀ  
2
,
564 million) is €ꢀ217 million  
*
2013 : €ꢀ157 million) higher than the expected tax ex­  
*
€
ꢀ49 million (2013: €ꢀ7 million).  
pense of €ꢀ2,673 million (2013 : €ꢀ2,407 million) which  
would theoretically arise if the tax rate of 30.7% (2013:  
30.5%), applicable for German companies, was applied  
across the Group.  
Deferred taxes are computed using enacted or planned  
tax rates which are expected to apply in the relevant  
national jurisdictions when the amounts are recovered.  
A uniform corporation tax rate of 15.0% plus solidarity  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
19 Group Financial StatementS  
The difference between the expected and actual tax expense is explained in the following reconciliation:  
*
in € million  
2014  
2013  
Profit before tax  
8,707  
30.7%  
2,673  
7,893  
30.5%  
2,407  
Tax rate applicable in Germany  
Expected tax expense  
Variances due to different tax rates  
–55  
150  
–134  
164  
Tax increases (+)/tax reductions (–) as a result of non-deductible expenses and tax-exempt income  
Tax expense (+)/benefits (–) for prior years  
Other variances  
275  
222  
–153  
2,890  
33.2%  
–95  
Actual tax expense  
2,564  
32.5%  
Effective tax rate  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Tax increases as a result of non­deductible expenses  
and tax reductions due to tax­exempt income remained  
more or less at a similar level to the previous year. As  
in the previous year, tax increases as a result of non­tax­  
deductible expenses were attributable primarily to the  
The line “Other variances” comprises primarily recon­  
ciling items relating to the Group’s share of results of  
equity accounted investments.  
The allocation of deferred tax assets and liabilities to  
impact of non­recoverable withholding taxes and trans­ balance sheet line items at 31 December is shown in the  
fer price issues.  
following table:  
Deferred tax assets  
Deferred tax liabilities  
*
*
in € million  
2014  
2013  
2014  
2013  
Intangible assets  
Property, plant and equipment  
Leased products  
Investments  
11  
50  
9
26  
1,706  
400  
1,571  
264  
393  
436  
5,486  
12  
4,498  
5
5
6
Other assets  
1,289  
566  
1,078  
512  
2,687  
–
3,747  
–
Tax loss carryforwards  
Provisions  
4,175  
2,827  
2,945  
2,261  
3,220  
2,955  
2,570  
10,812  
95  
47  
Liabilities  
602  
449  
Eliminations  
690  
661  
1
11,678  
11,242  
Valuation allowance  
Netting  
–496  
–409  
–8,783  
1,620  
–
–9,704  
1,974  
–
–8,783  
2,459  
839  
–9,704  
2,061  
87  
Deferred taxes  
Net  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
*
Deferred tax assets on tax loss carryforwards and capi­*  
tal losses before allowances totalled €ꢀ566 million (2013  
(2013 : €ꢀ402 million). This includes an amount of €ꢀ228 mil­  
lion (2013: €ꢀ42 million), for which a valuation allowance  
of €ꢀ74 million (2013: €ꢀ14 million) was recognised on  
:
€
ꢀ512 million). After valuation allowances of €ꢀ496 mil­  
lion (2013: €ꢀ409 million), their carrying amount stood at the related deferred tax asset. For entities with tax losses  
*
€
ꢀ70 million (2013 : €ꢀ103 million).  
available for carryforward, a net surplus of deferred  
tax assets over deferred tax liabilities is reported at  
Tax losses available for carryforward – for the most part  
usable without restriction – amounted to €ꢀ469 million  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
20  
3
€
1
December 2014 amounting to €ꢀ140 million (2013  
:
Netting relates to the offset of deferred tax assets and  
liabilities within individual separate entities or tax  
groups to the extent that they relate to the same tax  
authorities.  
ꢀ192 million). Deferred tax assets are recognised on  
the basis of management’s assessment of whether it is  
probable that the relevant entities will generate suffi­  
cient future taxable profits, against which deductible  
temporary differences can be offset.  
Deferred taxes recognised directly in equity amounted  
to €ꢀ1,889 million (2013: €ꢀ451 million), an increase of  
Capital losses available for carryforward in the United  
€ꢀ1,438 million (2013: decrease of €ꢀ771 million) com­  
Kingdom which do not relate to ongoing operations in­  
pared to the previous year. The change includes an  
increase in deferred taxes recognised in conjunction  
with currency translation amounting to €ꢀ9 million  
creased to €ꢀ2,112 million due to exchange rate factors  
2013: €ꢀ1,975 million). As in previous years, deferred  
(
tax assets recognised on these tax losses – amounting to (2013: reduction of €ꢀ1 million).  
€
€
ꢀ
ꢀ
422 million at the end of the reporting period (2013  
395 million) – were fully written down since they can  
:
Changes in deferred tax assets and liabilities during the  
only be utilised against future capital gains.  
reporting period can be summarised as follows:  
*
in € million  
2014  
2013  
Deferred taxes at 1 January (assets (–)/liabilities (+))  
839  
116  
128  
–17  
770  
–42  
839  
Deferred tax expense (+)/income (–) recognised through income statement  
Change in deferred taxes recognised directly in equity  
Exchange rate impact and other changes  
–1,429  
387  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Deferred taxes at 31 December (assets (–)/liabilities (+))  
–87  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
*
9
9
9
2
4
6
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Changes in deferred taxes include changes relating to  
items recognised either through the income statement  
or directly in equity as well as the impact of exchange  
rate fluctuations, first­time consolidations and decon­  
solidations. Deferred taxes recognised directly in equity panies. A computation was not made of the potential im­  
increased in total by €ꢀ1,429 million (2013: decrease of  
Deferred taxes are not recognised on retained profits  
of €ꢀ30.7 billion (2013: €ꢀ28.0 billion) of foreign subsidi­  
aries, as it is intended to invest these profits to maintain  
and expand the business volume of the relevant com­  
9
8
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
pact of income taxes on the grounds of disproportionate  
expense.  
€
€
ꢀ
ꢀ
770 million). Of this amount, €ꢀ759 million (2013  
421 million) related to the fair value measurement of  
:
derivative financial instruments and marketable securi­  
ties (recognised directly in equity), shown in the sum­  
The tax returns of BMW Group entities are checked reg­  
ularly by German and foreign tax authorities. Taking ac­  
mary above in the line items “Other assets” and “Liabili­ count of a variety of factors – including existing interpre­  
ties”. A further €ꢀ670 million (2013: decrease of €ꢀ349 mil­  
lion) related to the remeasurements of the net defined  
benefit liability for pension plans, shown in the sum­  
mary above in the line item “Provisions”.  
tations, commentaries and legal decisions taken relating  
to the various tax jurisdictions and the BMW Group’s  
past experience – adequate provision has, as far as identi­  
fiable, been made for potential future tax obligations.  
1
21 Group Financial StatementS  
18  
Earnings per share  
*
2014  
2013  
Net profit for the year after minority interest  
€ million  
5,798.1  
5,302.8  
Profit attributable to common stock  
Profit attributable to preferred stock  
€ million  
€ million  
5,317.7  
480.4  
4,865.3  
437.5  
Average number of common stock shares in circulation  
Average number of preferred stock shares in circulation  
number  
number  
601,995,196  
54,259,767  
601,995,196  
53,993,635  
Basic earnings per share of common stock  
Basic earnings per share of preferred stock  
€
€
8.83  
8.85  
8.08  
8.10  
Dividend per share of common stock  
Dividend per share of preferred stock  
€
€
2.90  
2.92  
2.60  
2.62  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Basic earnings per share of preferred stock are com­  
puted on the basis of the number of preferred stock  
shares entitled to receive a dividend in each of the rele­  
vant financial years. As in the previous year, diluted  
earnings per share correspond to basic earnings per  
share.  
19  
Other disclosures relating to the income statement  
Personnel expenses  
The income statement includes personnel expenses as follows:  
*
in € million  
2014  
2013  
Wages and salaries  
8,094  
1,670  
7,401  
1,591  
Social security, retirement and welfare costs  
thereof pension costs: €991 million (2013: €958 million)  
Personnel expenses  
9,764  
8,992  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Personnel expenses include €ꢀ42 million (2013: €ꢀ48 mil­  
The average number of employees during the year  
lion) of expenditure incurred to adjust the workforce size. was:  
*
2014  
2013  
Employees  
105,743  
7,560  
100,057  
7,165  
thereof 186 (2013: 96) at proportionately-consolidated entities  
Apprentices and students gaining work experience  
thereof 2 (2013: 3) at proportionately-consolidated entities  
Average number of employees  
113,303  
107,222  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
The number of employees at the end of the reporting period is disclosed in the Combined Management Report.  
1
22  
Fee expense  
The fee expense pursuant to §314 (1) no. 9 HGB recog­  
nised in the financial year 2014 for the Group auditors  
amounted to €ꢀ23 million (2013: €ꢀ26 million) and consists  
of the following:  
in € million  
2014  
2013  
Audit of financial statements  
15  
3
14  
3
thereof KPMG AG Wirtschaftsprüfungsgesellschaft  
Other attestation services  
2
3
thereof KPMG AG Wirtschaftsprüfungsgesellschaft  
Tax advisory services  
1
2
4
7
thereof KPMG AG Wirtschaftsprüfungsgesellschaft  
Other services  
1
3
2
2
thereof KPMG AG Wirtschaftsprüfungsgesellschaft  
Fee expense  
1
1
23  
6
26  
9
thereof KPMG AG Wirtschaftsprüfungsgesellschaft  
The total fee comprises expenses recorded by BMWAG,  
Munich, and all consolidated subsidiaries.  
Government grants and government assistance  
Income from asset­related and performance­related  
*
grants, amounting to €ꢀ30 million (2013 : €ꢀ25 million)  
The fee expense shown for KPMG AG Wirtschaftsprü­  
fungsgesellschaft, Berlin, relates only to services pro­  
vided on behalf of BMWAG, Munich, and its German  
subsidiaries.  
and €ꢀ73 million (2013: €ꢀ73 million) respectively, were  
recognised in the income statement in 2014.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
*
92  
94  
96  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
98  
Notes  
20  
Share-based remuneration  
separate custodian account for each member concerned  
(annual tranche). Each annual tranche is subject to a  
holding period of four years (vesting period). Once the  
holding period is fulfilled, BMWAG grants one addi­  
tional share of BMWAG common stock for each three  
held or, at its discretion, pays the equivalent amount in  
cash (share­based remuneration component) provided  
98  
Accounting Principles and  
Policies  
The BMW Group operates three share­based remunera­  
tion schemes, namely the Employee Share Programme  
(for entitled employees), share­based commitments to  
members of the Board of Management and share­based  
commitments to senior heads of department.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
In the case of the Employee Share Programme, non­vot­ that the term of office has not been terminated before  
ing shares of preferred stock in BMWAG were granted  
to qualifying employees during the financial year 2014  
at favourable conditions (see note 35 for the number  
the end of the agreed contract period (except in the case  
of death or invalidity).  
and price of issued shares). The holding period for these With effect from the financial year 2012, qualifying de­  
shares is up to 31 December 2017. The BMW Group re­  
corded a personnel expense of €ꢀ6 million (2013: €ꢀ5 mil­  
lion) for the Employee Share Programme in 2014, cor­  
partment heads are also entitled to opt for a share­based  
remuneration component, which, in most respects, is  
comparable to the share­based remuneration arrange­  
responding to the difference between the market price ments for Board of Management members.  
and the reduced price of the shares of preferred stock  
purchased by employees. The Board of Management re­  
serves the right to decide anew each year with respect  
to an Employee Share Programme.  
The share­based remuneration component is measured  
at its fair value at each balance sheet date between grant  
and settlement date, and on the settlement date itself.  
The appropriate amounts are recognised as personnel  
expense on a straight­line basis over the vesting period  
and reported in the balance sheet as a provision.  
For financial years beginning after  
1 January 2011,  
BMWAG has added a share­based remuneration com­  
ponent to the existing compensation system for Board  
of Management members.  
The cash­settlement obligation for the share­based re­  
muneration component is measured at its fair value at  
the balance sheet date (based on the closing price of  
BMWAG common stock in Xetra trading at 31 Decem­  
ber 2014).  
Each Board of Management member is required to  
invest 20% of hisꢀ/ꢀher total bonus (after tax) in shares  
of BMWAG common stock, which are recorded in a  
1
23 Group Financial StatementS  
BMW Group  
Notes to the Group Financial Statements  
Notes to the Statement of Comprehensive Income  
The total carrying amount of the provision for the share­ grant of the share­based remuneration components  
based remuneration component of eligible current and  
former Board of Management members and depart­  
ment heads at 31 December 2014 was €ꢀ3,096,674 (2013:  
was €ꢀ1,479,939 (2013: €ꢀ1,453,500), based on a total of  
17,712 shares (2013: 19,196 shares) of BMWAG com­  
mon stock or a corresponding cash­based settlement  
measured at the relevant market share price prevailing  
on the grant date.  
€
ꢀ1,647,188).  
The total expense recognised in 2014 for the share­based  
remuneration component of eligible current and former Further details on the remuneration of the Board of  
Board of Management members and department heads Management are provided in the 2014 Compensation  
was €ꢀ1,449,486 (2013: €ꢀ989,912).  
Report, which is part of the Combined Management  
Report.  
The fair value of the programmes for Board of Manage­  
ment members and department heads at the date of  
21  
Disclosures relating to total comprehensive income  
Other comprehensive income for the period after tax comprises the following:  
*
in € million  
2014  
2013  
Remeasurement of the net defined benefit liability for pension plans  
Deferred taxes  
–2,298  
706  
1,308  
–372  
936  
Items not expected to be reclassified to the income statement in the future  
–1,592  
Available-for-sale securities  
40  
109  
8
48  
thereof gains/losses arising in the period under report  
thereof reclassifications to the income statement  
Financial instruments used for hedging purposes  
thereof gains/losses arising in the period under report  
thereof reclassifications to the income statement  
Other comprehensive income from equity accounted investments  
Deferred taxes  
–69  
–40  
–2,194  
–1,939  
–255  
–48  
1,357  
1,536  
–179  
–7  
732  
–407  
–633  
318  
Currency translation foreign operations  
764  
Items expected to be reclassified to the income statement in the future  
–706  
Other comprehensive income for the period after tax  
–2,298  
1,254  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Deferred taxes on components of other comprehensive income are as follows:  
*
2013  
in € million  
2014  
Before  
tax  
Deferred  
taxes  
After  
tax  
Before  
tax  
Deferred  
taxes  
After  
tax  
Remeasurement of the net defined benefit liability for pension plans  
Available-for-sale securities  
–2,298  
40  
706  
–34  
719  
47  
–1,592  
6
1,308  
8
–372  
19  
936  
27  
Financial instruments used for hedging purposes  
Other comprehensive income from equity accounted investments  
Currency translation foreign operations  
–2,194  
–48  
–1,475  
–1  
1,357  
–7  
–425  
–1  
932  
–8  
764  
–
764  
–633  
2,033  
–
–633  
1,254  
Other comprehensive income  
–3,736  
1,438  
–2,298  
–779  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Other comprehensive income arising at the level of  
equity accounted investments is reported in the  
Statement of Changes in Equity within “Translation  
differences” with a positive amount of €ꢀ140 million  
(2013: negative amount of €ꢀ10 million) and within  
“Derivative financial instruments” with a negative  
amount of €ꢀ141 million (2013: positive amount of  
€ꢀ2 million).  
1
24  
BMW Group  
Notes to the Group Financial Statements  
Notes to the Balance Sheet  
22  
Analysis of changes in Group tangible, intangible and investment assets 2014  
Acquisition and manufacturing cost  
1
in € million  
1.1.2014  
Translation  
differences  
Additions  
Reclassi-  
fications  
Disposals  
31.12.  
2014  
Development costs  
Goodwill  
9,667  
374  
–
–
1,499  
–
–
–
–
–
1,825  
5
9,341  
369  
Other intangible assets  
Intangible assets  
1,459  
11,500  
15  
15  
62  
93  
1,443  
11,153  
1,561  
1,923  
Land, titles to land, buildings, including buildings on  
third party land  
8,812  
28,843  
2,355  
207  
607  
65  
407  
2,436  
207  
428  
2,023  
32  
51  
1,145  
149  
9,803  
32,764  
2,510  
Plant and machinery  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
2,972  
37  
1,489  
4,539  
–2,483  
–
1
2,014  
42,982  
916  
1,346  
47,091  
Leased products  
32,486  
638  
1,954  
–
14,576  
600  
–
–
12,047  
150  
36,969  
1,088  
Investments accounted for using the equity method  
Investments in non-consolidated subsidiaries  
Participations  
240  
575  
–
2
–
41  
66  
–
–
–
–
57  
–
226  
641  
–
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Non-current marketable securities  
Other investments  
–
–
–
815  
2
107  
57  
867  
92  
94  
96  
1
Including first-time consolidations.  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Including assets under construction of €1,679 million.  
2
98  
Notes  
3
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
Analysis of changes in Group tangible, intangible and investment assets 2013  
Acquisition and manufacturing cost  
1
1
1
2
in € million  
1.1.2013  
Adjust-  
ment  
Translation  
differences  
Additions  
Reclassi-  
fications  
Disposals  
31.12.  
2013  
3
Development costs  
Goodwill  
8,488  
374  
–
–
–
–
–
–
1,744  
–
–
–
–
–
565  
–
9,667  
374  
Other intangible assets  
Intangible assets  
1,008  
9,870  
–6  
–6  
473  
22  
1,453  
11,494  
2,217  
587  
Land, titles to land, buildings, including buildings on  
third party land  
8,182  
26,823  
2,314  
–
–
–
–
–
–125  
–212  
–55  
489  
2,210  
178  
226  
982  
15  
51  
961  
8,721  
28,842  
2,331  
Plant and machinery  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
121  
2,617  
–37  
1,617  
4,494  
–1,223  
–
3
2,971  
39,936  
–429  
1,136  
42,865  
4
Leased products  
31,412  
514  
–46  
–
–734  
–
13,192  
361  
–
–
11,338  
237  
32,486  
638  
Investments accounted for using the equity method  
Investments in non-consolidated subsidiaries  
Participations  
205  
571  
–
–
–
–
–
–1  
–
66  
6
–
–
–
–
30  
2
240  
575  
–
Non-current marketable securities  
Other investments  
–
–
–
776  
–1  
72  
32  
815  
1
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Including mergers.  
Amended for the effect of refining the accounting policy for leased products as described in note 6 to the Group Financial Statements 2013.  
This line includes the adjustments described in note 24 to the Group Financial Statements 2013.  
Including assets under construction of €2,570 million.  
2
3
4
5
1
25 Group Financial StatementS  
Depreciation and amortisation  
Carrying amount  
1
1.1.2014  
Trans-  
lation  
differ-  
ences  
Current  
year  
Changes  
not effect-  
ing net  
Dis-  
posals  
31.12.  
2014  
31.12.  
2014  
31.12.  
2013  
2
income  
4
,645  
–
–
1,068  
–
–
–
–
–
1,825  
–
3,888  
5
5,453  
364  
5,022  
369  
Development costs  
Goodwill  
5
665  
10  
10  
178  
92  
761  
4,654  
682  
788  
Other intangible assets  
Intangible assets  
5
,315  
1,246  
1,917  
6,499  
6,179  
Land, titles to land, buildings, including buildings on  
third party land  
3
,849  
85  
431  
52  
282  
2,461  
181  
–
–
–
–
–
38  
1,129  
145  
4,178  
23,834  
1,897  
–
5,625  
8,930  
613  
4,890  
6,771  
536  
22,071  
Plant and machinery  
1,809  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
3
–
–
–
–
2,014  
17,182  
2,971  
15,168  
2
7,729  
568  
2,924  
1,312  
29,909  
6
,572  
–
293  
–
3,401  
–
–
–
3,462  
–
6,804  
–
30,165  
1,088  
25,914  
638  
Leased products  
Investments accounted for using the equity method  
7
6
1
–
1
152  
–
–
57  
–
16  
–
62  
397  
–
164  
244  
–
166  
387  
–
Investments in non-consolidated subsidiaries  
Participations  
1
88  
–
–
–
Non-current marketable securities  
Other investments  
2
64  
1
153  
57  
16  
459  
408  
553  
Depreciation and amortisation  
Carrying amount  
2
1.1.2013  
Adjust-  
ment  
Trans-  
lation  
differ-  
ences  
Current  
year  
Changes  
not effect-  
ing net  
Dis-  
posals  
31.12.  
2013  
31.12.  
2013  
31.12.  
2012  
3
income  
4
,141  
–
–
–
–
–
–
1,069  
–
–
–
–
–
565  
–
4,645  
5
5,022  
369  
4,347  
369  
Development costs  
Goodwill  
5
516  
–11  
–11  
178  
18  
665  
5,315  
788  
491  
Other intangible assets  
Intangible assets  
4
,662  
1,247  
583  
6,179  
5,207  
Land, titles to land, buildings, including buildings on  
third party land  
3
,667  
–
–
–
–
–
–53  
–166  
–40  
–
251  
2,084  
159  
–
–
–
–
–
34  
946  
3,831  
22,071  
1,795  
–
4,890  
6,771  
536  
4,502  
5,705  
530  
2
1,099  
Plant and machinery  
1,785  
109  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
5
–
–
–
2,971  
15,168  
2,604  
13,341  
2
6,551  
–259  
2,494  
1,089  
27,697  
4
6
,944  
–
–175  
–
–132  
–
3,215  
–
–
–
3,280  
–
6,572  
–
25,914  
638  
24,468  
514  
Leased products  
Investments accounted for using the equity method  
5
8
–
–
–
–
–
–
–
–
16  
75  
–
–
–57  
–
–
–
–
–
74  
188  
–
166  
387  
–
147  
401  
–
Investments in non-consolidated subsidiaries  
Participations  
1
70  
–
Non-current marketable securities  
Other investments  
2
28  
91  
–57  
262  
553  
548  
1
26  
23  
Intangible assets  
Intangible assets mainly comprise capitalised develop­  
ment costs on vehicle and engine projects as well as  
subsidies for tool costs, licences, purchased development  
projects, software and purchased customer bases.  
Amortisation on intangible assets is presented in cost of  
sales, selling expenses and administrative expenses.  
Intangible assets amounting to €ꢀ46 million (2013:  
€ꢀ43 million) are subject to restrictions on title.  
As in the previous year, there was no requirement to  
recognise impairment losses or reversals of impair­  
ment losses on intangible assets in 2014.  
Other intangible assets include a brand­name right  
amounting to €ꢀ46 million (2013: €ꢀ43 million). This  
line item also includes goodwill of €ꢀ33 million (2013:  
As in the previous year no borrowing costs were recog­  
nised as a cost component of intangible assets during  
the year under report.  
€
ꢀ
33 million) allocated to the Automotive cash­gener­  
ating unit (CGU) and goodwill of €ꢀ331 million (2013:  
ꢀ336 million) allocated to the Financial Services CGU,  
An analysis of changes in intangible assets is provided  
in note 22.  
€
whereby the decrease compared to 31 December 2013  
related to the sale of Noord Lease B.ꢀV., Groningen.  
24  
Property, plant and equipment  
buildings, for which economic ownership is attributable  
to the BMW Group due to the nature of the lease ar­  
rangements (finance leases). Leases to which BMWAG  
is party, with a carrying amount of €ꢀ64 million (2013:  
€ꢀ37 million), run for periods up to 2028 at the latest and  
contain price adjustment clauses as well as extension  
and purchase options. The asset leased by BMW Tokyo  
Corp., Tokyo, has a carrying amount of €ꢀ2 million (2013:  
A break­down 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 in note 22.  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
As in the previous year, there was no requirement to  
recognise impairment losses in 2014.  
98  
Notes  
€ꢀ2 million) under a lease with a remaining term of  
98  
Accounting Principles and  
Policies  
17 years. BMW Osaka Corp., Osaka, is party to finance  
leases running until 2022 for operational buildings with  
a carrying amount of €ꢀ1 million at 31 December 2014  
(2013: €ꢀ2 million).  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
No borrowing costs were recognised as a cost compo­  
nent of property, plant and equipment during the year  
under report.  
1
1
1
Property, plant and equipment include a total of €ꢀ67 mil­ Minimum lease payments of the relevant leases are as  
lion (2013: €ꢀ42 million) relating to land and operational  
follows:  
in € million  
31.12.2014  
31.12.2013  
Total of future minimum lease payments  
due within one year  
13  
53  
53  
14  
13  
44  
71  
due between one and five years  
due later than five years  
1
19  
Interest portion of the future minimum lease payments  
due within one year  
8
25  
12  
3
7
due between one and five years  
due later than five years  
13  
23  
4
5
Present value of future minimum lease payments  
due within one year  
5
11  
6
due between one and five years  
due later than five years  
28  
41  
31  
48  
7
4
1
27 Group Financial StatementS  
25  
Leased products  
The BMW Group, as lessor, leases out its own products  
and those of other manufacturers as part of its finan­  
cial services business. Minimum lease payments of  
€ꢀ14,712 million (2013: €ꢀ12,906 million) from non­can­  
cellable operating leases fall due as follows:  
in € million  
31.12.2014  
31.12.2013  
within one year  
7,267  
7,442  
3
6,314  
6,587  
5
between one and five years  
later than five years  
Minimum lease payments  
14,712  
12,906  
Contingent rents of €ꢀ56 million (2013: €ꢀ171 million),  
based principally on the distance driven, were recog­  
nised in income. Some of the agreements contain price  
adjustment clauses as well as extension and purchase  
options.  
sals of impairment losses totalled €ꢀ44 million (2013:  
€ꢀ104 million).  
An analysis of changes in leased products is provided in  
note 22.  
Impairment losses recognised on leased products  
totalled €ꢀ137 million (2013: €ꢀ139 million), while rever­  
26  
Investments accounted for using the equity method  
Investments accounted for using the equity method re­  
late to the joint ventures BMW Brilliance Automotive  
Ltd., Shenyang (BMW Brilliance) on the one hand and  
DriveNow GmbH & Co. KG, Munich, and DriveNow  
The DriveNow joint venture – comprising DriveNow  
GmbH & Co. KG, Munich, and DriveNow Verwaltungs  
GmbH, Munich, (both 50% shareholdings) – is a car  
sharing provider which currently offers individual mo­  
Verwaltungs GmbH, Munich, (DriveNow) on the other. bility services in major German cities and, going for­  
ward, increasingly outside Germany.  
The BMW Brilliance Automotive Ltd., Shenyang, joint  
venture (in which BMW has a 50% shareholding)  
produces various BMW brand models for the Chinese  
market and also has engine manufacturing facilities,  
The accounting treatment applied to investments  
accounted for using the equity method is described in  
note 6. Financial information relating to equity ac­  
which supply the joint venture’s two plants with petrol counted investments is aggregated in the following  
engines.  
table:  
BMW Brilliance  
DriveNow  
in € million  
2014  
2013  
2014  
2013  
Disclosures relating to the income statement  
Revenues  
11,550  
247  
1,702  
24  
8,963  
157  
1,096  
16  
32  
–
18  
–
Scheduled depreciation  
Profit/loss before financial result  
Interest income  
–5  
–
–6  
–
Interest expenses  
–
–
–
–
Income taxes  
449  
–
285  
–
–
–
Other comprehensive income  
Total comprehensive income  
Dividends received by the Group  
–
–
1,339  
147  
834  
127  
–5  
–
–7  
–
1
28  
BMW Brilliance  
DriveNow  
in € million  
2014  
2013  
2014  
2013  
Disclosures relating to the balance sheet  
Non-current assets  
4,171  
976  
2,741  
593  
2,727  
1,868  
–
1
13  
19  
12  
–
1
4
Cash and cash equivalents  
Current assets  
3,404  
2,910  
–
10  
6
Equity  
Non-current financial liabilities  
Non-current provisions and liabilities  
Current financial liabilities  
Current provisions and liabilities  
–
450  
237  
–
–
–
236  
–
–
4,215  
3,363  
8
5
Reconciliation of aggregated financial information  
Assets  
7,575  
4,665  
2,910  
1,455  
–373  
5,468  
3,600  
1,868  
934  
20  
8
11  
5
Equity and liabilities  
Net assets  
12  
6
6
Group’s interest in net assets (50%)  
Eliminations  
3
–299  
635  
–
–
Carrying amount  
1,082  
6
3
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
If the Group’s share of the at­equity result of BMW  
Brilliance Automotive Ltd., Shenyang, were reported  
as part of the Automotive segment’s EBIT, the EBIT  
margin would increase by 0.9 percentage points (2013:  
0.6 percentage points) to 10.5% (2013: 10.0%).  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
27 Other investments  
Disposals of investments in subsidiaries result from the  
first­time consolidation of six European branches.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Other investments relate to investments in non­con­  
solidated subsidiaries, interests in associated com­  
panies not accounted for using the equity method  
and joint operations, participations and non­current  
marketable securities.  
1
1
1
Impairment losses on participations – recognised with  
income statement effect – related mainly to the invest­  
ment in SGL Carbon SE, Wiesbaden, which was written  
down on the basis of objective criteria.  
The additions to investments in subsidiaries relate  
primarily to a share capital increase at the level of  
BMW iVentures B.ꢀV., Rijswijk.  
A break­down of the different classes of other invest­  
ments disclosed in the balance sheet and changes  
during the year are shown in the analysis of changes in  
Group tangible, intangible and investment assets in  
note 22.  
Additions to participations mainly reflect the purchase  
of available­for­sale marketable securities.  
1
29 Group Financial StatementS  
28  
Receivables from sales financing  
Receivables from sales financing, totalling €ꢀ61,024 mil­  
lion (2013: €ꢀ54,117 million), comprise €ꢀ45,849 million  
customers and dealers and €ꢀ15,175 million (2013:  
€ꢀ13,276 million) for finance leases. Finance leases are  
(2013: €ꢀ40,841 million) for credit financing for retail  
analysed as follows:  
in € million  
31.12.2014  
31.12.2013  
Gross investment in finance leases  
due within one year  
5,366  
11,231  
109  
4,816  
9,748  
98  
due between one and five years  
due later than five years  
1
6,706  
14,662  
Present value of future minimum lease payments  
due within one year  
4,898  
4,378  
8,813  
85  
due between one and five years  
due later than five years  
10,175  
102  
1
5,175  
13,276  
Unrealised interest income  
1,531  
1,386  
Contingent rents recognised as income (generally re­  
lating to the distance driven) amounted to €ꢀ2 million  
benefit of the lessor amounted to €ꢀ140 million (2013:  
€ꢀ120 million).  
(
2013: €ꢀ3 million). Write­downs on finance leases  
amounting to €ꢀ183 million (2013: €ꢀ159 million) were  
measured and recognised on the basis of specific credit  
risks. Non­guaranteed residual values that fall to the  
Receivables from sales financing include €ꢀ37,438 mil­  
lion (2013: €ꢀ32,616 million) with a remaining term of  
more than one year.  
Allowances for impairment and credit risk  
in € million  
31.12.2014  
31.12.2013  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
62,539  
–1,515  
61,024  
55,697  
–1,580  
54,117  
Allowances on receivables from sales financing – which only arise within the Financial Services segment – developed  
as follows:  
2014  
Allowance for impairment recognised on a  
Total  
in € million  
specific item basis  
group basis  
*
Balance at 1 January  
Allocated/reversed  
Utilised  
1,098  
239  
482  
41  
1,580  
280  
–371  
34  
–20  
12  
–391  
46  
Exchange rate impact and other changes  
Balance at 31 December  
1,000  
515  
1,515  
*
Balance at 1 January adjusted due to deconsolidation of entities.  
1
30  
2013  
Allowance for impairment recognised on a  
Total  
in € million  
specific item basis  
group basis  
Balance at 1 January  
1,268  
194  
411  
104  
–15  
–19  
481  
1,679  
298  
Allocated/reversed  
Utilised  
–302  
–61  
–317  
–80  
Exchange rate impact and other changes  
Balance at 31 December  
1,099  
1,580  
*
At the end of the reporting period, impairment allow­  
ances of €ꢀ515 million (2013: €ꢀ481 million) were recog­  
nised on a group basis on gross receivables from sales  
financing totalling €ꢀ38,780 million (2013 : €ꢀ33,740 mil­  
lion). Impairment allowances of €ꢀ1,000 million (2013:  
€ꢀ10,808 million (2013 : €ꢀ9,746 million). No impairment  
losses were recognised for these balances.  
*
The estimated fair value of collateral received for receiv­  
ables on which impairment losses were recognised to­  
talled €ꢀ25,443 million (2013: €ꢀ23,689 million) at the end  
of the reporting period. This collateral related primarily  
to vehicles. The carrying amount of assets held as col­  
lateral and taken back as a result of payment default  
amounted to €ꢀ41 million (2013: €ꢀ30 million).  
€ꢀ1,099 million) were recognised at 31 December 2014  
on a specific item basis on gross receivables from sales  
financing totalling €ꢀ12,951 million (2013: €ꢀ12,211 mil­  
lion).  
Receivables from sales financing which were not over­  
due at the end of the reporting period amounted to  
*
Prior year figures amended.  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
9
9
9
2
4
6
29 Financial assets  
Financial assets comprise:  
in € million  
31.12.2014  
31.12.2013  
9
8
Notes  
98  
Accounting Principles and  
Policies  
Derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
Credit card receivables  
Other  
2,888  
3,972  
12  
4,013  
3,060  
32  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
239  
222  
297  
825  
Financial assets  
7,408  
8,152  
thereof non-current  
thereof current  
2,024  
5,384  
2,593  
5,559  
The decrease in derivative instruments was primarily  
attributable to negative market price developments of  
currency derivatives.  
(€ꢀ48 million; 2013: €ꢀ44 million) is reported under “Other  
financial assets”. Investment funds are held to secure  
these obligations. These funds are managed by BMW  
Trust e.ꢀV., Munich, as part of a Contractual Trust  
Arrangement (CTA) and are therefore netted against  
the corresponding settlement arrears for pre­retirement  
part­time work arrangements.  
The rise in marketable securities and investment funds  
mainly reflects an increase in the BMW Group’s strate­  
gic liquidity reserve.  
The amount by which the value of the investment funds  
exceeds obligations for part­time working arrangements  
1
31 Group Financial StatementS  
Marketable securities and investment funds relate to available­for­sale financial assets and comprise:  
in € million  
31.12.2014  
31.12.2013  
Stocks  
100  
3,340  
532  
87  
2,551  
422  
Fixed income securities  
Other debt securities  
Marketable securities and investment funds  
3,972  
3,060  
The contracted maturities of debt securities are as follows:  
in € million  
31.12.2014  
31.12.2013  
Fixed income securities  
due within three months  
due later than three months  
595  
73  
2,745  
2,478  
Other debt securities  
due within three months  
due later than three months  
Debt securities  
532  
–
422  
–
3,872  
2,973  
Allowances for impairment and credit risk  
Receivables relating to credit card business comprise the following:  
in € million  
31.12.2014  
31.12.2013  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
247  
–8  
231  
–9  
239  
222  
Allowances for impairment losses on receivables relating to credit card business developed as follows during the  
year under report:  
2014  
Allowance for impairment recognised on a  
Total  
in € million  
specific item basis  
group basis  
Balance at 1January  
9
6
–
–
–
–
–
9
6
Allocated/reversed  
Utilised  
–8  
1
–8  
1
Exchange rate impact and other changes  
Balance at 31 December  
8
8
2013  
Allowance for impairment recognised on a  
Total  
in € million  
specific item basis  
group basis  
Balance at 1January  
13  
6
–
–
–
–
–
13  
6
Allocated/reversed  
Utilised  
–10  
–
–10  
–
Exchange rate impact and other changes  
Balance at 31 December  
9
9
1
32  
3
0
1
Income tax assets  
Income tax assets totalling €ꢀ  
1
,
906 million (2013  
:
settled after more than twelve months. Some of the  
claims may be settled earlier than this depending on  
the timing of proceedings.  
€
ꢀ1,151 million) include claims amounting to €ꢀ653 mil­  
lion (2013: €ꢀ530 million) which are expected to be  
3
Other assets  
Other assets comprise:  
*
in € million  
31.12.2014  
31.12.2013  
Other taxes  
1,078  
721  
867  
779  
Receivables from subsidiaries  
Receivables from other companies in which an investment is held  
Prepayments  
1,055  
1,323  
412  
950  
1,074  
706  
Collateral receivables  
Sundry other assets  
1,543  
6,132  
794  
Other assets  
5,170  
thereof non-current  
thereof current  
1,094  
5,038  
912  
4,258  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
9
9
9
2
4
6
Receivables from subsidiaries include trade receivables  
of €ꢀ41 million (2013: €ꢀ102 million) and financial receiva­ than one year.  
bles of €ꢀ680 million (2013: €ꢀ677 million). They include  
€ꢀ674 million (2013: €ꢀ565 million) have a maturity of less  
9
8
Notes  
€
ꢀ293 million (2013: €ꢀ253 million) with a remaining term Collateral receivables comprise mainly customary  
98  
Accounting Principles and  
Policies  
of more than one year.  
collateral (banking deposits) arising on the sale of re­  
ceivables.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Receivables from other companies in which an invest­  
1
1
1
*
ment is held include €ꢀ1,054 million (2013 : €ꢀ905 mil­  
In the financial year 2014, expected reimbursement  
claims totalling €ꢀ641 million arising in connection with  
warranty arrangements with suppliers were reclassified  
from other provisions to sundry other assets.  
lion) due within one year.  
*
Prepayments of €ꢀ1,323 million (2013 : €ꢀ1,074 million)  
relate mainly to prepaid interest, insurance premiums  
and commission paid to dealers. Prepayments of  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
32  
Inventories  
Inventories comprise the following:  
*
in € million  
31.12.2014  
31.12.2013  
Raw materials and supplies  
Work in progress, unbilled contracts  
Finished goods and goods for resale  
Inventories  
918  
944  
851  
851  
9,227  
11,089  
7,893  
9,595  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
33 Group Financial StatementS  
At 31 December 2014, inventories measured at their  
net realisable value amounted to €ꢀ723 million (2013:  
to net realisable value amounting to €ꢀ29 million (2013:  
€ꢀ28 million) were recognised in 2014. Reversals of  
write­downs amounted to €ꢀ3 million (2013: €ꢀ4 million).  
€
€
ꢀ
ꢀ
592 million) and are included in total inventories of  
*
*
11  
,
089 million (2013 : €ꢀ  
9
,
595 million). Write­downs  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
33  
Trade receivables  
Trade receivables totalling €ꢀ2,153 million (2013: €ꢀ2,449 million) include an unchanged amount of €ꢀ47 million which  
is due later than one year.  
Allowances for impairment and credit risk  
in € million  
31.12.2014  
31.12.2013  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
2,236  
–83  
2,555  
–106  
2,153  
2,449  
Allowances on trade receivables developed as following during the year under report:  
2014  
Allowance for impairment recognised on a  
Total  
in € million  
specific item basis  
group basis  
*
Balance at 1January  
Allocated/reversed  
Utilised  
98  
–6  
9
–2  
–
107  
–8  
–15  
–1  
–15  
–1  
Exchange rate impact and other changes  
–
Balance at 31 December  
76  
7
83  
*
Including entities consolidated for the first time during the financial year.  
2013  
Allowance for impairment recognised on a  
Total  
in € million  
specific item basis  
group basis  
Balance at 1January  
105  
2
6
4
111  
6
Allocated/reversed  
Utilised  
–8  
–2  
97  
–
–8  
Exchange rate impact and other changes  
Balance at 31 December  
–1  
9
–3  
106  
Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are  
analysed into the following time windows:  
in € million  
31.12.2014  
31.12.2013  
1–30 days overdue  
31–60 days overdue  
61–90 days overdue  
91–120 days overdue  
100  
73  
80  
30  
26  
8
30  
13  
More than 120 days overdue  
52  
17  
2
81  
148  
1
34  
Receivables that are overdue by between one and  
0 days do not normally result in bad debt losses since  
the overdue nature of the receivables is primarily at­  
tributable to the timing of receipts around the month­  
end. In the case of trade receivables, collateral is gen­  
erally held in the form of vehicle documents and  
bank guarantees so that the risk of bad debt loss is ex­  
tremely low.  
3
3
4
5
Cash and cash equivalents  
Cash and cash equivalents of €ꢀ7,688 million (2013  
*
:
with an original term of up to three months.  
*
€
ꢀ7,671 million) comprise cash on hand and at bank, all  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
3
Equity  
Number of shares issued  
Preferred stock  
Common stock  
2014  
2
014  
2013  
2013  
Shares issued / in circulation at 1 January  
54,259,787  
239,777  
20  
53,994,217  
266,152  
582  
601,995,196  
601,995,196  
Shares issued in conjunction with Employee Share Scheme  
Less: shares repurchased and re-issued  
–
–
–
–
Shares issued / in circulation at 31 December  
54,499,544  
54,259,787  
601,995,196  
601,995,196  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
At 31 December 2014 common stock issued by BMWAG 4.8 million shares and €ꢀ4.8 million respectively at the  
was divided, as at the end of the previous year, into end of the reporting period. The Company is authorised  
01,995,196 shares of common stock with a par­value of to issue 5 million shares of non­voting preferred stock  
€ꢀ1. Preferred stock issued by BMWAG was divided into amounting to nominal €ꢀ5.0 million prior to 14 May 2019.  
92  
94  
96  
6
98  
Notes  
5
4,499,544 shares (2013: 54,259,787 shares) with a par­  
The share premium of €ꢀ14.6 million arising on the share  
98  
Accounting Principles and  
Policies  
value of €ꢀ1. 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 addi­  
tional dividend of €ꢀ0.02 per share.  
capital increase was transferred to capital reserves.  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Capital reserves  
1
1
1
Capital reserves include premiums arising from the issue  
of shares and totalled €ꢀ2,005 million (2013: €ꢀ1,990 mil­  
lion). The change related to the share capital increase in  
In 2014, a total of 239,777 shares of preferred stock was  
sold to employees at a reduced price of €ꢀ37.08 per share conjunction with the issue of shares of preferred stock  
in conjunction with the Company’s Employee Share  
Programme. These shares are entitled to receive divi­  
dends with effect from the financial year 2015. 20 shares  
of preferred stock were bought back via the stock ex­  
change in conjunction with the Company’s Employee  
Share Programme.  
to employees.  
Revenue reserves  
Revenue reserves comprise the post­acquisition and non­  
distributed earnings of consolidated companies. In  
addition, remeasurements of the net defined benefit lia­  
bility for pension plans are also presented in revenue  
reserves along with positive and negative goodwill aris­  
ing on the consolidation of Group companies prior to  
Further information on share­based remuneration is  
provided in note 20.  
3
1 December 1994.  
Issued share capital increased by €ꢀ0.2 million as a re­  
sult of the issue to employees of 239,757 shares of non­  
Revenue reserves increased during the financial year  
voting preferred stock. The number of authorised shares 2014 to €ꢀ35,621 million. They were increased by the  
and the Authorised Capital of BMWAG amounted to amount of the net profit attributable to shareholders of  
1
35 Group Financial StatementS  
*
BMWAG amounting to €ꢀ5,798 million (2013 : €ꢀ5,303  
Capital management disclosures  
million) and reduced by the payment of the dividend for The BMW Group’s objectives when managing capital  
2
013 amounting to €ꢀ1,707 million (for 2012: €ꢀ1,640 mil­  
are to safeguard the Group’s ability to continue as  
a going concern in the long­term and to provide an  
lion). Revenue reserves decreased by €ꢀ 592 million  
1
,
(2013: increased by €ꢀ936 million) as a result of remeasure­ adequate return to shareholders.  
ments of the net defined benefit liability for pension  
plans (net of deferred tax recognised directly in equity).  
The BMW Group manages the capital structure and  
makes adjustments to it in the light of changes in eco­  
nomic conditions and the risk profile of the underlying  
assets.  
The unappropriated profit of BMWAG at 31 December  
2
014 amounts to €ꢀ1,904 million and will be proposed  
to the Annual General Meeting for distribution. This  
amount includes €ꢀ158 million relating to preferred stock. The BMW Group is not subject to any external minimum  
The amount proposed for distribution represents an  
amount of €ꢀ2.92 per share of preferred stock and €ꢀ2.90  
per share of common stock. The proposed distribution  
must be authorised by the shareholders at the Annual  
General Meeting of BMWAG. It is therefore not recog­  
nised as a liability in the Group Financial Statements.  
equity capital requirements. Within the Financial Ser­  
vices segment, however, there are a number of indi­  
vidual entities which are subject to equity capital require­  
ments set by regulatory banking agencies.  
In order to manage its capital structure, the BMW Group  
uses various instruments including the amount of divi­  
dends paid to shareholders and share buy­backs.  
Accumulated other equity  
Accumulated other equity comprises all amounts recog­  
nised directly in equity resulting from the translation  
of the financial statements of foreign subsidiaries, the  
Moreover, the BMW Group pro­actively manages debt  
capital, determining levels of debt capital transactions  
effects of recognising changes in the fair value of deriva­ with a target debt structure in mind. An important  
tive financial instruments and marketable securities  
directly in equity and the related deferred taxes recog­  
nised directly in equity.  
aspect of the selection of financial instruments is the  
objective to achieve matching maturities for the Group’s  
financing requirements. In order to reduce non­sys­  
tematic risk, the BMW Group uses a variety of financial  
instruments available on the world’s capital markets to  
achieve optimal diversification.  
Minority interests  
Equity attributable to minority interests amounted to  
€
ꢀ217 million (2013: €ꢀ188 million). This includes a mi­  
nority interest of €ꢀ19 million in the results for the year  
The capital structure at the end of the reporting period  
was as follows:  
(
2013: €ꢀ26 million).  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
*
in € million  
31.12.2014  
31.12.2013  
Equity attributable to shareholders of BMWAG  
Proportion of total capital  
37,220  
31.6%  
35,412  
33.5%  
Non-current financial liabilities  
Current financial liabilities  
Total financial liabilities  
Proportion of total capital  
Total capital  
43,167  
37,482  
80,649  
68.4%  
117,869  
39,450  
30,854  
70,304  
66.5%  
105,716  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
36  
Equity attributable to shareholders of BMWAG decreased a European car manufacturer. Since July 2011, the  
during the financial year by percentage points, BMWAG has a long­term rating of A2 (with stable out­  
look) and a short­term rating of P­ from the rating  
1.9  
primarily reflecting the increase in financial liabilities.  
1
agency Moody’s. This means that BMWAG continues  
to enjoy the best ratings of all European car manufac­  
Since December 2013, the BMWAG has a long­term  
rating of A+ (with stable outlook) and a short­term rating turers, clearly reflecting the financial strength of the  
of A­1 from the rating agency Standard & Poor’s, cur­  
rently the highest rating given by Standard & Poor’s to  
BMW Group.  
Company rating  
Moody’s  
Standard&Poor’s  
Non-current financial liabilities  
Current financial liabilities  
Outlook  
A2  
P-1  
A+  
A-1  
stable  
stable  
With their current long­term ratings of A+ (Standard &  
for short­term debt is also classified by the rating agen­  
Poor’s) and A2 (Moody’s), the agencies continue to con­ cies as very good, thus enabling it to obtain refinancing  
firm BMWAG’s robust creditworthiness for debt with a  
term of more than one year. BMWAG’s creditworthiness  
funds on competitive conditions.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
36 Pension provisions  
Pension commitments in Germany are mostly covered  
Pension provisions are recognised as a result of commit­ by assets contributed to BMW Trust e.ꢀV. , Munich,  
92  
94  
96  
ments to pay future vested pension benefits and cur­  
rent pensions to present and former employees of the  
BMW Group and their dependants. Depending on the  
legal, economic and tax circumstances prevailing in each Belgium and Japan.  
country, various pension plans are used, based generally  
in conjunction with a contractual trust arrangement  
CTA). The main other countries with funded plans  
are the UK, the USA, Switzerland, the Netherlands,  
(
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
on the length of service, salary and remuneration struc­ In the case of externally funded plans, the defined bene­  
ture of the employees involved. Due to similarity of na­  
ture, the obligations of BMW Group companies in the  
USA and of BMW (South Africa) (Pty) Ltd., Pretoria, for  
post­retirement medical care are also accounted for as  
pension provisions in accordance with IAS 19.  
fit obligation is offset against plan assets measured at  
their fair value. Where the plan assets exceed the pen­  
sion obligations and the BMW Group has a right of re­  
imbursement or a right to reduce future contributions,  
it reports an asset (within “Other financial assets”) at  
an amount equivalent to the present value of the future  
economic benefits attached to the plan assets. If the  
plan is externally funded, a liability is recognised under  
1
1
1
Post­employment benefit plans are classified as either  
defined contribution or defined benefit plans. Under  
defined contribution plans an enterprise pays fixed con­ pension provisions where the benefit obligation exceeds  
tributions into a separate entity or fund and does not  
assume any other obligations. The total pension expense  
for defined contribution plans of the BMW Group  
amounted to €ꢀ60 million (2013: €ꢀ51 million). Employer  
contributions paid to state pension insurance plans to­  
talled €ꢀ517 million (2013: €ꢀ470 million).  
fund assets.  
Remeasurements of the net liability arise from changes  
in the present value of the defined benefit obligation,  
the fair value of the plan assets or the asset ceiling. Rea­  
sons for remeasurements include changes in financial  
and demographic assumptions as well as changes in the  
Under defined benefit plans the enterprise is required to detailed composition of beneficiaries. Remeasurements  
pay the benefits granted to present and past employees. are recognised immediately in “Other comprehensive  
Defined benefit plans may be funded or unfunded,  
income” and hence directly in equity (within revenue  
the latter sometimes covered by accounting provisions. reserves).  
1
37 Group Financial StatementS  
Past service cost arises where a BMW Group entity in­  
troduces a defined benefit plan or changes the benefits  
payable under an existing plan. These costs are recog­  
nised immediately in the income statement. Similarly,  
gains and losses arising on the settlement of a defined  
benefit plan are recognised immediately in the income  
statement.  
The defined benefit obligation is calculated on an actu­  
arial basis. The actuarial computation requires the use  
of estimates and assumptions, which depend on the  
economic situation in each particular country. The most  
important assumptions applied by the BMW Group are  
shown below. The following weighted average values  
have been used for Germany, the United Kingdom and  
other countries:  
31 December  
Germany  
United Kingdom  
Other  
in %  
2014  
2013  
2014  
2013  
2014  
2013  
Discount rate  
2.10  
1.60  
3.50  
2.00  
3.40  
2.43  
4.40  
3.32  
3.48  
0.03  
4.46  
0.05  
Pension level trend  
The following mortality tables are applied in countries, in which the BMW Group has significant defined benefit plans:  
Germany  
United Kingdom S1PA tables weighted accordingly, and S1NA tables minus 2 years, both with a minimum long term annual improvement allowance  
USA  
RP2014 MortalityTable with collar adjustments projected with MP2014  
MortalityTable 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)  
In Germany, the so­called “pension entitlement trend”  
the UK also takes account of restrictions due to caps  
(Festbetragstrend) also represents a significant actuarial and floors.  
assumption for the purposes of determining benefits  
payable at retirement and was left unchanged at 2.0%.  
By contrast, the salary level trend assumption is subject  
to a comparatively low level of sensitivity within the  
BMW Group. The calculation of the salary level trend in  
Based on the measurement principles contained in  
IAS 19, the following balance sheet carrying amounts  
apply to the Group’s pension plans:  
3
1 December  
Germany  
United Kingdom  
Other  
2013  
Total  
in € million  
2014  
2013  
2014  
2013  
2014  
2014  
2013  
Present value of defined benefit obligations  
Fair value of plan assets  
9,636  
7,323  
–
7,400  
6,749  
–
9,499  
7,734  
–
7,409  
6,076  
–
1,327  
804  
2
949 20,462 15,758  
636 15,861 13,461  
Effect of limiting net defined benefit asset to asset ceiling  
Carrying amounts at 31December  
4
2
4
2,313  
651  
1,765  
1,333  
525  
317  
4,603  
2,301  
thereof pension provision  
thereof assets  
2,313  
–
652  
–1  
1,765  
–
1,333  
–
526  
–1  
318  
–1  
4,604  
–1  
2,303  
–2  
1
38  
The increase in defined benefit obligations results mainly The assets of the German pension plans are administered  
from the change in the discount rate used for the ac­  
tuarial computation in Germany, the UK and the USA  
by BMW Trust e.ꢀV. , Munich, (German registered asso­  
ciation) in accordance with a CTA. The representative  
bodies of this entity are the Board of Directors and the  
Members’ General Meeting. BMW Trust e.V., Munich,  
currently has seven members and three Board of Direc­  
tors members elected by the Members’ General Meeting.  
.
The provision for pension­like obligations for post­em­  
ployment medical care in the USA and South Africa  
amounts to €ꢀ57 million (2013: €ꢀ45 million) and is deter­  
mined on a similar basis to the measurement of pension The Board of Directors is responsible for investments,  
obligations in accordance with IAS 19. Increased costs  
do not have a direct impact on medical care obligations  
relating to pensioners in the USA. In the case of South  
Africa, however, it was assumed that costs would in­  
drawing up and deciding on investment guidelines as  
well as monitoring compliance with those guidelines.  
The members of the association can be employees, senior  
executives and members of the Board of Directors. An  
ordinary Members’ General Meeting takes place once  
every calendar year and deals with a range of matters,  
including receiving and approving the association’s an­  
nual report, ratifying the activities of the Board of Direc­  
tors and adopting changes to the association’s statutes.  
crease in the long term by 8.3% (2013: 8.1%) p.ꢀa. The  
expense recognised for obligations relating to post­em­  
ployment medical care amounted to €ꢀ8 million (2013:  
income of €ꢀ40 million).  
Numerous defined benefit plans are in place through­  
out the BMW Group, the most significant of which are  
described below.  
United Kingdom  
In the United Kingdom, the BMW Group has defined  
benefit plans, which are primarily employer­funded  
combined with employee­funded components based  
on the conversion of employee remuneration. These  
plans are subject to statutory minimum recovery require­  
ments. Benefits paid in conjunction with these plans  
comprise old­age retirement pensions as well as inva­  
lidity and surviving dependants’ benefits. These de­  
fined benefit plans have been closed to new entrants,  
who, since 1 January 2014, are covered by a defined  
contribution plan.  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Germany  
Both employer­ and employee­funded benefit plans are  
in place in Germany. Benefits paid in conjunction with  
these plans comprise old­age retirement pensions as  
well as invalidity and surviving dependents’ benefits.  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
98  
Notes  
98  
Accounting Principles and  
Policies  
The Deferred Remuneration Retirement Plan is an em­  
ployee­financed defined contribution plan with a mini­  
mum rate of return. The fact that the plan involves a  
minimum rate of return means that it is classified as a  
defined benefit plan. Employees have the option to  
waive payment of certain remuneration components in  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
The pension plans are administered by BMW Pension  
Trustees Limited, Hams Hall, and BMW (UK) Trustees  
return for a future benefit. Any employer social security Limited, Hams Hall, both trustee companies which act  
contributions saved are credited in the following year  
to the individual’s benefits account. The converted re­  
muneration components and the social security contri­  
butions saved are invested on capital markets. When  
the benefit falls due, it is paid on the basis of the higher  
of the value of the depot account or a guaranteed mini­  
mum amount.  
independently of the BMW Group. BMW (UK) Trustees  
Limited, Hams Hall, is represented by 14 trustees and  
BMW Pension Trustees Limited, Hams Hall, by five  
trustees. A minimum of one third of the trustees must  
be elected by plan participants. The trustees represent  
the interests of plan participants and decide on invest­  
ment strategies and plan amendments. Recovery con­  
tributions to the funds are determined in agreement  
Defined benefit obligations also remain in Germany, for with the BMW Group.  
which benefits are determined either by multiplying  
a fixed amount by the number of years of service or on  
USA  
the basis of an employee’s final salary. The defined bene­ The BMW Group’s defined benefit plans in the USA are  
fit plans have been closed to new entrants. With effect  
from January 2014, new employees receive a defined  
contribution entitlement with minimum rate of return.  
primarily employer­funded and include final salary  
pension plans and a post­retirement medical care plan.  
Benefits paid in conjunction with these plans comprise  
1
1
39 Group Financial StatementS  
old­age retirement pensions, early retirement benefits,  
surviving dependants’ benefits as well as post­retire­  
ment medical care benefits.  
and selection of investment managers as well as regular  
allocations and retrospective allocations to the plan.  
The committee members are nominated by the manage­  
ment of the relevant participating US entities. Plan  
committees act in a fiduciary capacity and are subject to  
statutory framework conditions.  
Statutory minimum funding requirements apply to the  
final salary pension plans. Plan participants are repre­  
sented by a committee consisting of six members, which  
is authorised to take all decisions pertaining to the rele­  
The change in the net defined benefit liability for pen-  
vant pension plan, including plan structure, investments sion plans can be derived as follows:  
Defined benefit  
obligation  
Plan assets  
Total  
Limitation of  
the net defined  
benefit asset to  
the asset ceiling  
Net defined  
benefit liability  
in € million  
1
January 2014  
15,758  
–13,461  
2,297  
4
2,301  
Expense/income  
Current service cost  
337  
628  
–3  
–
337  
88  
–
–
–
–
337  
88  
Interest expense (+)/income (–)  
Past service cost  
–540  
–
–
–3  
–3  
Gains (–) or losses (+) arising from settlements  
–8  
–8  
–8  
Remeasurements  
Gains (–) or losses (+) on plan assets, excluding  
amounts included in interest income  
–
53  
–1,394  
–1,394  
53  
–
–
–1,394  
53  
Gains (–) or losses (+) arising from changes in  
demographic assumptions  
–
–
–
–
Gains (–) or losses (+) arising from changes in  
financial assumptions  
3,490  
–
3,490  
–
–
3,490  
–1  
Changes in the limitation of the net defined benefit  
asset to the asset ceiling  
–1  
–
Gains (–) or losses (+) arising from  
experience adjustments  
–24  
–24  
–24  
Transfers to fund  
–
71  
–383  
–71  
–383  
–
–
–
–383  
–
Employee contributions  
Pensions and other benefits paid  
Translation differences and other changes  
–519  
679  
522  
3
–
3
–534  
145  
4,601  
–1  
2
144  
4,603  
3
1 December 2014  
20,462  
–15,861  
thereof pension provision  
thereof assets  
4,604  
–1  
1
40  
Defined benefit  
obligation  
Plan assets  
–12,447  
Total  
Limitation of  
the net defined  
benefit asset to  
the asset ceiling  
Net defined  
benefit liability  
in € million  
1
January 2013  
16,255  
3,808  
4
3,812  
Expense/income  
Current service cost  
362  
565  
–53  
2
–
362  
127  
–53  
2
–
–
–
–
362  
127  
–53  
2
Interest expense (+)/income (–)  
Past service cost  
–438  
–
–
Gains (–) or losses (+) arising from settlements  
Remeasurements  
Gains (–) or losses (+) on plan assets, excluding  
amounts included in interest income  
–
4
–481  
–481  
4
–
–
–
1
–
–481  
4
Gains (–) or losses (+) arising from changes in  
demographic assumptions  
–
–
–
–
Gains (–) or losses (+) arising from changes in  
financial assumptions  
–818  
–
–818  
–
–818  
1
Changes in the limitation of the net defined benefit  
asset to the asset ceiling  
Gains (–) or losses (+) arising from  
experience adjustments  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
34  
34  
34  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Transfers to fund  
–
64  
–509  
–64  
–509  
–
–
–
–509  
–
9
9
9
2
4
6
Employee contributions  
Pensions and other benefits paid  
Translation differences and other changes  
31 December 2013  
–460  
–197  
324  
–136  
–43  
–
–136  
–44  
9
8
Notes  
154  
–1  
4
98  
Accounting Principles and  
Policies  
15,758  
–13,461  
2,297  
2,301  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
thereof pension provision  
thereof assets  
2,303  
–2  
1
1
1
Net interest expense on the net defined benefit liability Remeasurements on the obligations side gave rise  
is presented within the financial result. All other com­ to a positive amount of €ꢀ3,519 million (2013: negative  
ponents of pension expense are presented in the income amount of €ꢀ780 million) and related mainly to the  
statement under cost of sales, selling and administrative lower discount rates used in Germany, the UK and  
expenses.  
the USA.  
1
41 Group Financial StatementS  
The net defined benefit liability for pension plans in Germany, the UK and other countries changed as follows:  
Germany  
Defined benefit obligation  
Plan assets  
Net liability  
in € million  
2014  
2013  
2014  
2013  
2014  
2013  
1
January  
7,400  
475  
1,872  
–
7,974  
483  
–946  
–
–6,749  
–237  
–351  
–97  
–6,064  
–183  
–174  
–301  
–42  
651  
238  
1,521  
–97  
–
1,910  
300  
–1,120  
–301  
–
Expense(+)/income (–)  
Remeasurements  
Payments to external funds  
Employee contributions  
Payments on account and pension payments  
Other changes  
48  
42  
–48  
–159  
–
–154  
1
159  
15  
–
–139  
1
–
–
–
31December  
9,636  
7,400  
–7,323  
–6,749  
2,313  
651  
United Kingdom  
Defined benefit obligation  
Plan assets  
Net liability  
in € million  
2014  
2013  
2014  
2013  
2014  
2013  
1
January  
7,409  
405  
1,390  
–
7,137  
345  
–6,076  
–275  
–990  
–212  
–20  
–5,782  
–233  
–305  
–135  
–18  
1,333  
130  
400  
–212  
–
1,355  
112  
25  
Expense(+)/income (–)  
Remeasurements  
330  
Payments to external funds  
–
–135  
–
Employee contributions  
20  
18  
Payments on account and pension payments  
Translation differences and other changes  
–294  
569  
9,499  
–261  
–160  
7,409  
302  
269  
8
8
–463  
–7,734  
128  
106  
1,765  
–32  
1,333  
31December  
–6,076  
Other  
Defined benefit  
obligation  
Plan assets  
Effect of limiting the  
net defined benefit  
Net liability  
asset to the asset ceiling  
in € million  
2014  
2013  
2014  
2013  
2014  
2013  
2014  
2013  
1
January  
949  
–
1,144  
–
–636  
–
–601  
–
4
–
4
–
317  
–
547  
–
Effect of first-time consolidation  
Expense(+)/income (–)  
74  
48  
–28  
–53  
–74  
–3  
–22  
–2  
–
–
46  
203  
–74  
–
26  
Remeasurements  
257  
–
–164  
–
–1  
–
1
–165  
–73  
–
Payments to external funds  
–73  
–4  
–
Employee contributions  
3
4
–
–
Payments on account and pension payments  
Translation differences and other changes  
–66  
110  
1,327  
–45  
–38  
949  
61  
40  
–
–
–5  
38  
525  
–5  
–71  
–804  
26  
–1  
2
–1  
4
–13  
317  
31December  
–636  
Depending on the cash flow profile and risk structure of the pension obligations involved, pension plan assets are  
invested in various investment classes.  
1
42  
Plan assets in Germany, the UK and other countries comprised the following:  
Components of plan assets  
Germany  
United Kingdom  
Other  
Total  
2014  
in € million  
2014  
2013  
2014  
2013  
2014  
2013  
2013  
Equity instruments  
Debt instruments  
1,865  
4,509  
3,271  
1,238  
–
1,718  
4,143  
2,987  
1,156  
–
1,230  
4,562  
4,331  
231  
3
1,030  
3,333  
3,160  
173  
3
203  
379  
334  
45  
–
133  
263  
243  
20  
3,298  
9,450  
7,936  
1,514  
3
2,881  
7,739  
6,390  
1,349  
22  
thereof investment grade  
thereof non-investment grade  
Real estate  
19  
Money market funds  
Absolute return funds  
Other  
–
89  
100  
26  
113  
21  
12  
–
43  
112  
245  
–
–
–
26  
21  
–
–
5
26  
–
1
5
27  
Total with quoted market price  
6,374  
5,950  
5,926  
4,526  
594  
459  
12,894  
10,935  
Debt instruments  
183  
183  
–
177  
177  
–
298  
111  
187  
683  
9
310  
136  
174  
570  
–
12  
12  
–
12  
9
493  
306  
187  
895  
20  
499  
322  
177  
733  
2
thereof investment grade  
thereof non-investment grade  
Real estate  
3
107  
11  
99  
105  
–
64  
1
Cash and cash equivalents  
Absolute return funds  
Other  
1
424  
224  
949  
361  
161  
799  
557  
261  
1,808  
454  
216  
1,550  
–
–
981  
578  
2,967  
815  
477  
2,526  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
93  
210  
100  
177  
Total without quoted market price  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
31December  
7,323  
6,749  
7,734  
6,076  
804  
636  
15,861  
13,461  
98  
Notes  
Employer contributions to plan assets are expected to  
amount to €ꢀ652 million in the coming year. Plan assets  
of the BMW Group include own transferable financial  
account in the actuarial assumptions applied. The finan­  
cial risk of longer­than­assumed life expectancy is hedged  
for the BMW Group’s largest pension plan in the UK by  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
instruments amounting to €ꢀ5 million (2013: €ꢀ4 million). means of a so­called “longevity hedge”.  
1
1
1
The BMW Group is exposed to risks arising from de­  
In order to reduce currency exposures, a substantial  
fined benefit plans on the one hand and defined contri­ portion of plan assets are either invested in the same  
bution plans with a minimum return guarantee on the  
currency as the underlying plan or hedged by means of  
other. Pension obligations to employees under such plans currency derivatives.  
are measured on the basis of actuarial reports. Future  
pension payments are discounted by reference to mar­  
Pension fund assets are monitored continuously and  
ket yields on high quality corporate bonds. These yields managed from a risk­and­yield perspective. Risk is  
are subject to market fluctuation and influence the level  
of pension obligations. Furthermore, changes in other  
reduced by ensuring a broad spread of investments. In  
this context, the BMW Group continuously monitors  
actuarial parameters, such as expected rates of inflation, the degree of coverage of pension plans as well as adher­  
also have an impact on pension obligations.  
ence to the stipulated investment strategy.  
A substantial portion of plan assets is invested in debt  
instruments in order to minimise the effect of capital  
market fluctuations on the net liability. The asset port­  
folio also includes equity instruments, property and  
alternative investments – asset classes capable of gener­  
ating the higher rates of return necessary to cover risks  
As part of the internal reporting procedures and for in­  
ternal management purposes, financial risks relating  
to the pension plans are reported on using a deficit­  
value­at­risk approach. The investment strategy is also  
subjected to regular review together with external con­  
sultants, with the aim of ensuring that investments  
are structured to coincide with the timing of pension  
(
such as changes in mortality tables) not taken into  
1
43 Group Financial StatementS  
payments and the expected pattern of pension obliga­  
tions. In their own way, each of these measures helps to  
reduce fluctuations in pension funding shortfalls.  
payments out of operations will be substantially re­  
duced in the future, since most of the Group’s pension  
obligations are settled out of the assets of pension  
fundsꢀ/ꢀtrust fund arrangements.  
Most of the BMW Group’s pension assets are adminis­  
tered separately and kept legally segregated from com­  
pany assets using trust fund arrangements. As a conse­  
quence, the level of funds required to finance pension  
The defined benefit obligation relates to current em­  
ployees, former employees with vested benefits and  
pensioners as follows:  
31 December  
Germany  
United Kingdom  
Other  
in € million  
2014  
2013  
2014  
2013  
2014  
2013  
Current employees  
6,495  
2,650  
491  
4,715  
2,297  
388  
2,295  
4,208  
2,996  
9,499  
1,604  
3,651  
2,154  
7,409  
1,003  
212  
723  
141  
85  
Pensioners  
Former employees with vested benefits  
Defined benefit obligation  
112  
9,636  
7,400  
1,327  
949  
The sensitivity analysis provided below shows the ex­  
tent to which – based on an appropriate review – the  
defined benefit obligation would have been affected by  
changes in the relevant assumptions that were possible  
at the end of the reporting period, if the other assump­  
tions used in the calculation were kept constant. The  
defined benefit obligation amounted to €ꢀ20,462 million  
at 31 December 2014.  
31 December  
Change in defined benefit obligation  
2014  
2013  
in € million  
in %  
in € million  
in %  
Discount rate  
increase of 0.75%  
decrease of 0.75%  
increase of 0.25%  
decrease of 0.25%  
increase of 1year  
decrease of 1year  
increase of 0.25%  
decrease of 0.25%  
–2,888  
3,675  
727  
–14.1  
18.0  
3.6  
–2,028  
2,528  
506  
–12.9  
16.0  
3.2  
Pension level trend  
Average life expectancy  
Pension entitlement trend  
–679  
703  
–3.3  
3.4  
–479  
510  
–3.0  
3.2  
–700  
152  
–3.4  
0.7  
–514  
101  
–3.3  
0.6  
–146  
–0.7  
–97  
–0.6  
In the UK, the sensitivity analysis for the pension level  
trend also takes account of restrictions due to caps and  
floors.  
The weighted duration of all pension obligations in  
Germany, the UK and other countries (based on present  
values of the defined benefit obligation) developed as  
follows:  
3
1 December  
Germany  
2014  
United Kingdom  
Other  
in years  
2013  
19.6  
2014  
19.9  
2013  
18.3  
2014  
19.2  
2013  
14.9  
Weighted duration of all pension obligations  
21.4  
1
44  
Statutory minimum funding and recovery requirements to measure the level of funding. In conjunction with  
apply in the UK and the USA which may have an effect these valuations, funding plans are drawn up and the  
on future amounts. Valuations are performed regularly amount of any special allocations determined.  
37  
Other provisions  
Other provisions comprise the following items:  
*
31.12.2013  
in € million  
31.12.2014  
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  
1,871  
4,887  
2,032  
8,790  
1,442  
1,786  
1,294  
4,522  
1,698  
3,468  
2,074  
7,240  
1,300  
1,076  
1,036  
3,412  
Other provisions  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Provisions for obligations for personnel and social ex­  
and other guaranties offered by the BMW Group. De­  
penses comprise mainly performance­related remunera­ pending on when claims are made, it is possible that  
tion components, early retirement part­time working  
arrangements and employee long­service awards. Obli­  
gations for performance­related remuneration compo­  
nents are normally settled in the following financial year. risks and obligations of uncertain timing and amount,  
Provisions for obligations for on­going operational ex­  
penses relate primarily to warranty obligations and com­  
the BMW Group may be called upon to fulfil obligations  
over the whole period of the warranty or guarantee.  
Provisions for other obligations cover numerous specific  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
in particular for litigation and liability risks.  
98  
Notes  
prise both statutorily prescribed manufacturer warranties Other provisions changed during the year as follows:  
98  
Accounting Principles and  
Policies  
in € million  
1.1. 2014  
Translation  
differences  
Additions  
Reversal of  
discounting  
Utilised  
Reversed  
31.12.2014  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
Obligations for personnel and social expenses  
Obligations for ongoing operational expenses  
Other obligations  
1,698  
3,468  
2,074  
7,240  
13  
304  
62  
1,438  
2,435  
602  
9
70  
–1,271  
–1,304  
–449  
–16  
–86  
1,871  
4,887  
2,032  
8,790  
*
23  
–280  
–382  
Other provisions  
379  
4,475  
102  
–3,024  
*
Including the reclassification described in note 31 amounting to €641 million.  
Income from the reversal of other provisions amounting to €ꢀ198 million (2013: €ꢀ134 million) is recorded in cost of  
sales and in selling and administrative expenses.  
1
45 Group Financial StatementS  
*
38  
Income tax liabilities  
Current tax liabilities of €ꢀ1,590 million (2013 : €ꢀ2,319 mil­  
Current income tax liabilities totalling €ꢀ  
1
,
590 million  
lion) comprise €ꢀ151 million (2013: €ꢀ197 million) for  
*
*
(
2013 : €ꢀ2,319 million) include obligations amounting to taxes payable and €ꢀ1,439 million (2013 : €ꢀ2,122 million)  
€
ꢀ956 million (2013: €ꢀ823 million) which are expected to  
for tax provisions. Tax provisions totalling €ꢀ1 million were  
reversed in the year under report (2013: €ꢀ44 million).  
be settled after more than twelve months. Some of the  
liabilities may be settled earlier than this depending on  
the timing of proceedings.  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
39  
Financial liabilities  
Financial liabilities include all liabilities of the BMW  
Group at the relevant balance sheet dates relating to  
financing activities. Financial liabilities comprise the  
following:  
3
1 December 2014  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
in € million  
Bonds  
8,561  
7,784  
9,157  
5,599  
3,825  
1,930  
626  
22,817  
3,281  
3,309  
–
4,111  
489  
–
35,489  
11,554  
12,466  
5,599  
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
–
Asset backed financing transactions  
Derivative instruments  
Other  
6,990  
1,190  
387  
69  
10,884  
3,143  
23  
501  
5,193  
1,514  
Financial liabilities  
37,482  
37,974  
80,649  
3
1 December 2013  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
in € million  
Bonds  
7,166  
4,326  
9,342  
6,292  
2,579  
426  
20,329  
4,146  
3,115  
–
2,875  
118  
–
30,370  
8,590  
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
12,457  
6,292  
–
Asset backed financing transactions  
Derivative instruments  
Other  
7,517  
632  
32  
10,128  
1,103  
45  
723  
307  
334  
3,404  
1,364  
Financial liabilities  
30,854  
36,046  
70,304  
The increase in liabilities relating to derivatives results  
The main instruments used are corporate bonds, asset­  
from the fair value measurement of currency and com­ backed financing transactions, liabilities to banks and  
modity derivative instruments. liabilities from customer deposits (banking).  
The BMW Group uses various short­term and long­term Customer deposit liabilities arise in the BMW Group’s  
refinancing instruments on money and capital markets banks in Germany and the USA, both of which offer a  
to finance its operations. This diversification enables it to range of investment products.  
obtain attractive market conditions.  
1
46  
Bonds comprise:  
Issuer  
Interest  
Issue volume  
in relevant currency  
Weighted  
average maturity  
period (in years)  
Weighted  
average nominal  
interest rate (in %)  
(ISO-Code)  
BMW Finance N.V., The Hague  
variable  
variable  
variable  
variable  
fixed  
EUR 4,835 million  
GBP 380 million  
SEK 6,500 million  
USD 540 million  
AUD 700 million  
CHF 300 million  
EUR 13,564 million  
GBP 1,050 million  
JPY 31,000 million  
NOK 3,500 million  
CHF 500 million  
GBP 300 million  
EUR 100 million  
SEK 1,000 million  
USD 1,710 million  
AUD 200 million  
CHF 325 million  
EUR 3,590 million  
GBP 300 million  
HKD 500 million  
JPY 6,000 million  
NOK 1,500 million  
NZD 100 million  
USD 2,245 million  
AUD 200 million  
EUR 150 million  
USD 330 million  
JPY 6,500 million  
JPY 10,000 million  
INR 6,000 million  
CAD 2,275 million  
JPY 53,000 million  
KRW 370,000 million  
2.3  
1.2  
2.3  
1.8  
3.9  
6.0  
6.6  
6.1  
2.8  
3.7  
5.0  
8.0  
3.0  
2.7  
2.8  
3.2  
7.0  
5.5  
5.0  
3.0  
2.0  
3.0  
3.0  
8.0  
3.0  
2.3  
2.3  
2.0  
3.0  
4.2  
3.9  
3.8  
3.2  
0.3  
0.2  
0.3  
0.3  
4.6  
1.8  
3.0  
3.0  
0.3  
3.2  
2.1  
5.0  
0.1  
0.3  
0.3  
4.0  
3.6  
3.0  
2.0  
1.4  
0.3  
2.4  
4.4  
3.5  
3.3  
0.3  
0.7  
0.3  
0.3  
10.2  
2.3  
0.5  
3.2  
fixed  
fixed  
fixed  
fixed  
fixed  
BMW (UK) Capital plc, Farnborough  
BMW US Capital, LLC, Wilmington, DE  
fixed  
fixed  
variable  
variable  
variable  
fixed  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
fixed  
fixed  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
fixed  
fixed  
fixed  
98  
Notes  
fixed  
98  
Accounting Principles and  
Policies  
fixed  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
fixed  
BMW Australia Finance Ltd., Melbourne, Victoria  
variable  
variable  
variable  
fixed  
1
1
1
Other  
variable  
fixed  
fixed  
fixed  
fixed  
1
47 Group Financial StatementS  
The following details apply to the commercial paper:  
Issuer  
Issue volume  
in relevant currency  
Weighted  
average maturity  
period (in days)  
Weighted  
average nominal  
interest rate (in %)  
(ISO-Code)  
BMW Finance N.V., The Hague  
EUR 1,007 million  
GBP 825 million  
30  
56  
0.03  
0.5  
USD 725 million  
EUR 250 million  
USD 3,260 million  
73  
12  
33  
0.2  
0.03  
0.1  
BMW Malta Finance Ltd., Floriana  
BMW US Capital, LLC, Wilmington, DE  
40  
Other liabilities  
Other liabilities comprise the following items:  
3
1 December 2014  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
in € million  
Other taxes  
929  
69  
–
7
14  
2
943  
78  
Social security  
Advance payments from customers  
Deposits received  
460  
105  
348  
–
–
565  
415  
5
768  
Payables to subsidiaries  
Payables to other companies in which an investment is held  
Deferred income  
162  
–
162  
5
–
–
5
1,894  
3,841  
7,775  
3,373  
193  
4,026  
221  
7
5,488  
4,041  
12,050  
Other  
Other liabilities  
249  
*
3
1 December 2013  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
in € million  
Other taxes  
729  
60  
1
11  
15  
3
745  
74  
Social security  
Advance payments from customers  
Deposits received  
528  
77  
–
605  
274  
93  
14  
–
381  
Payables to subsidiaries  
Payables to other companies in which an investment is held  
Deferred income  
157  
–
157  
70  
–
–
70  
1,666  
3,580  
7,064  
3,069  
121  
3,372  
191  
8
4,926  
3,709  
10,667  
Other  
Other liabilities  
231  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
48  
Deferred income comprises the following items:  
in € million  
31.12. 2014  
31.12.2013  
Total  
thereof  
Total  
thereof  
due within  
one year  
due within  
one year  
Deferred income from lease financing  
Deferred income relating to service contracts  
Grants  
1,685  
3,370  
306  
780  
1,027  
31  
1,774  
2,855  
193  
761  
837  
20  
Other deferred income  
127  
56  
104  
48  
Deferred income  
5,488  
1,894  
4,926  
1,666  
Deferred income relating to service contracts relates to  
service and repair work to be provided under commit­  
ments given at the time of the sale of a vehicle (multi­  
component arrangements). Grants comprise primarily  
public sector funds to promote regional structures and  
which have been invested in the production plants in  
Brazil, Leipzig and Berlin. The grants in Leipzig and  
Berlin are subject to holding periods for the assets con­  
cerned of up to five years and minimum employment  
figures. All conditions attached to the grants were com­  
plied with at 31 December 2014. In accordance with  
IAS 20, grant income is recognised over the useful lives  
of the assets to which they relate.  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
41 Trade payables  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
31 December 2014  
in € million  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
7,709  
Total  
9
9
9
2
4
6
9
8
Notes  
Trade payables  
7,580  
129  
–
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
*
1
1
1
31 December 2013  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
in € million  
Trade payables  
7,293  
192  
–
7,485  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
The total amount of financial liabilities, other liabilities and trade payables with a maturity later than five years  
amounts to €ꢀ5,442 million (2013: €ꢀ3,635 million).  
1
49 Group Financial StatementS  
BMW Group  
Notes to the Group Financial Statements  
Other Disclosures  
42  
Contingent liabilities and other financial commitments  
Contingent liabilities  
No provisions were recognised for the following contingent liabilities (stated at estimated amounts), since an out­  
flow of resources is not considered to be probable:  
in € million  
31.12.2014  
31.12.2013  
Guarantees  
33  
4
33  
4
Performance guarantees  
Other  
84  
39  
76  
Contingent liabilities  
121  
Contingent liabilities relate entirely to non­group  
entities.  
options (also including compensation for inflation). In  
2014 an amount of €ꢀ350 million (2013: €ꢀ320 million)  
was recognised as expense in conjunction with operating  
leases. All of these amounts relate to minimum lease  
payments.  
Other financial commitments  
In addition to liabilities, provisions and contingent lia­  
bilities, the BMW Group also has other financial com­  
mitments, primarily under lease contracts for land,  
buildings, plant and machinery, tools, office and other  
facilities. The leases run for periods of one to 50 years  
and in some cases contain extension andꢀ/ꢀor purchase  
The total of future minimum lease payments under non­  
cancellable and other operating leases can be analysed  
by maturity as follows:  
in € million  
31.12.2014  
31.12.2013  
due within one year  
299  
888  
335  
852  
due between one and five years  
due later than five years  
603  
587  
Other financial obligations  
1,790  
1,774  
Other financial commitments include €ꢀ7 million (2013:  
€ꢀ10 million) in respect of obligations to non­consoli­  
dated subsidiaries and, as in the previous year, €ꢀ1 mil­  
lion for back­to­back operating leases.  
Purchase commitments amounted to €ꢀ2,247 million  
(2013: €ꢀ2,661 million) for property, plant and equipment  
and €ꢀ750 million (2013: €ꢀ446 million) for intangible  
assets.  
1
50  
43  
Financial instruments  
The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as  
1
, 2  
follows:  
3
1 December 2014  
Cash funds  
Loans  
and receivables  
Held-to-maturity  
investments  
in € million  
Fair value  
Carrying  
Fair value  
Carrying  
Fair value  
Carrying  
amount  
amount  
amount  
Assets  
Other investments  
–
–
–
–
–
–
–
–
–
–
Receivables from sales financing  
Financial assets  
62,642  
61,024  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Fair value hedges  
–
–
Other derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
Credit card receivables  
Other  
–
–
–
–
–
–
200  
12  
200  
12  
–
–
–
–
239  
297  
–
239  
297  
–
–
7,688  
–
–
7,688  
–
Cash and cash equivalents  
Trade receivables  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
2,153  
2,153  
Other assets  
Receivables from subsidiaries  
–
–
721  
721  
–
–
92  
94  
96  
Receivables from companies in which  
an investment is held  
–
412  
–
412  
1,055  
–
1,055  
–
–
–
–
–
–
–
–
–
98  
Notes  
Collateral receivables  
98  
Accounting Principles and  
Policies  
Other  
–
–
971  
971  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Total  
8,100  
8,100  
68,290  
66,672  
1
1
1
31 December 2014  
in € million  
Cash funds  
Loans  
and receivables  
Held-to-maturity  
investments  
Fair value  
Carrying  
amount  
Fair value  
Carrying  
amount  
Fair value  
Carrying  
amount  
Liabilities  
Financial liabilities  
Bonds  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
Asset backed financing transactions  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Fair value hedges  
Other derivative instruments  
Other  
Trade payables  
Other liabilities  
Payables to subsidiaries  
–
–
–
–
–
–
Payables to other companies in which  
an investment is held  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other  
Total  
1
The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.  
Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.  
Carrying amount corresponds to market value.  
2
3
1
51 Group Financial StatementS  
Other liabilities  
Available-  
for-sale  
Fair value  
option  
Held for  
trading  
Fair value  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
3
amount  
3
3
Assets  
–
–
–
–
408  
–
–
–
–
–
Other investments  
Receivables from sales financing  
Financial assets  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
708  
–
1,294  
Fair value hedges  
–
886  
–
Other derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
Credit card receivables  
Other  
3,772  
–
–
–
–
–
–
–
–
–
Cash and cash equivalents  
Trade receivables  
–
Other assets  
–
–
–
–
–
Receivables from subsidiaries  
Receivables from companies in which  
an investment is held  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Collateral receivables  
Other  
4,180  
2,888  
Total  
Other liabilities  
Available-  
for-sale  
Fair value  
option  
Held for  
trading  
Fair value  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
1, 3  
amount  
3
3
Liabilities  
Financial liabilities  
3
1
1
6,083  
1,636  
2,487  
35,489  
11,554  
12,466  
5,599  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Bonds  
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
Asset backed financing transactions  
Derivative instruments  
Cash flow hedges  
5
,599  
10,886  
10,884  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,302  
721  
1,120  
–
Fair value hedges  
–
Other derivative instruments  
Other  
1
,514  
,709  
1,514  
7,709  
7
–
Trade payables  
Other liabilities  
162  
162  
–
–
–
Payables to subsidiaries  
Payables to other companies in which  
an investment is held  
5
5
4,281  
–
–
–
–
–
–
–
–
4
,281  
Other  
9
0,362  
89,663  
3,143  
Total  
1
52  
1, 2  
3
1 December 2013  
Cash funds  
Loans  
and receivables  
Held-to-maturity  
investments  
in € million  
Fair value  
Carrying  
Fair value  
Carrying  
Fair value  
Carrying  
amount  
amount  
amount  
Assets  
Other investments  
–
–
–
–
–
–
–
–
–
–
Receivables from sales financing  
Financial assets  
55,536  
54,117  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Fair value hedges  
–
–
Other derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
Credit card receivables  
Other  
–
–
–
–
–
–
250  
32  
250  
32  
–
–
–
–
222  
825  
–
222  
825  
–
–
7,671  
–
–
7,671  
–
Cash and cash equivalents  
Trade receivables  
2,449  
2,449  
Other assets  
Receivables from subsidiaries  
–
–
779  
779  
–
–
Receivables from companies in which  
an investment is held  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
–
382  
–
382  
950  
–
950  
–
–
–
–
–
–
–
–
–
Collateral receivables  
92  
94  
96  
Other  
–
–
172  
172  
Total  
8,053  
8,053  
61,215  
59,796  
98  
Notes  
3
1 December 2013  
Cash funds  
Loans  
and receivables  
Held-to-maturity  
investments  
98  
Accounting Principles and  
Policies  
in € million  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Fair value  
Carrying  
amount  
Fair value  
Carrying  
amount  
Fair value  
Carrying  
amount  
1
1
1
Liabilities  
Financial liabilities  
Bonds  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
Asset backed financing transactions  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Fair value hedges  
Other derivative instruments  
Other  
Trade payables  
Other liabilities  
Payables to subsidiaries  
–
–
–
–
–
–
Payables to other companies in which  
an investment is held  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other  
Total  
1
2
3
4
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.  
Carrying amount corresponds to market value.  
The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.  
1
53 Group Financial StatementS  
Other liabilities  
Available-  
for-sale  
Fair value  
option  
Held for  
trading  
Fair value  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
3 , 4  
amount  
3
3
Assets  
–
–
–
–
553  
–
–
–
–
–
Other investments  
Receivables from sales financing  
Financial assets  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,914  
–
1,050  
Fair value hedges  
–
1,049  
Other derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
Credit card receivables  
Other  
2,810  
–
–
–
–
–
–
–
–
–
–
–
Cash and cash equivalents  
Trade receivables  
Other assets  
–
–
–
–
–
Receivables from subsidiaries  
Receivables from companies in which  
an investment is held  
–
–
–
–
–
–
–
–
–
324  
–
–
–
–
–
–
–
Collateral receivables  
–
Other  
3,687  
4,013  
Total  
Other liabilities  
Available-  
for-sale  
Fair value  
option  
Held for  
trading  
2
Fair value  
Carrying  
amount  
Carrying  
amount  
Carrying  
amount  
Carrying  
3 , 4  
amount  
3
3
Liabilities  
Financial liabilities  
3
1
1
0,860  
,671  
2,471  
,292  
30,370  
8,590  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Bonds  
8
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
Asset backed financing transactions  
Derivative instruments  
Cash flow hedges  
12,457  
6,292  
6
0,173  
10,128  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
317  
321  
465  
–
Fair value hedges  
–
Other derivative instruments  
Other  
1
,364  
,485  
1,364  
7,485  
7
–
Trade payables  
Other liabilities  
157  
157  
–
–
–
Payables to subsidiaries  
Payables to other companies in which  
an investment is held  
7
0
70  
4,126  
–
–
–
–
–
–
–
–
4
,126  
Other  
8
1,669  
81,039  
1,103  
Total  
1
54  
Fair value measurement of financial instruments  
appropriate measurement methods, e.ꢀg. discounted cash  
flow models. In the latter case, amounts were discounted  
at 31 December 2014 on the basis of the following inter­  
est rates:  
The fair values shown are computed using market in­  
formation available at the balance sheet date, on the  
basis of prices quoted by the contract partners or using  
ISO Code  
in %  
EUR  
USD  
GBP  
JPY  
CNY  
Interest rate for six months  
Interest rate for one year  
Interest rate for five years  
Interest rate for ten years  
0.13  
0.16  
0.36  
0.82  
0.31  
0.43  
1.78  
2.31  
0.68  
0.74  
1.45  
1.87  
0.07  
0.14  
0.22  
0.52  
4.91  
4.44  
4.16  
4.22  
Interest rates taken from interest rate curves were ad­  
justed, where necessary, to take account of the credit  
quality and risk of the underlying financial instrument.  
tracts which have matching terms and which can be ob­  
served on the market.  
Financial instruments measured at fair value are allo­  
cated to different measurement levels in accordance  
with IFRS 13. This includes financial instruments that  
are  
1. measured at their fair values in an active market for  
identical financial instruments (Level 1),  
2. measured at their fair values in an active market for  
comparable financial instruments or using measure­  
ment models whose main input factors are based on  
observable market data (Level 2), or  
Derivative financial instruments are measured at their  
fair value. The fair values of derivative financial instru­  
ments are determined using measurement models, as a  
consequence of which there is a risk that the amounts  
calculated could differ from realisable market prices on  
disposal. Observable financial market price spreads are  
taken into account in the measurement of derivative  
financial instruments. The supply of data to the model  
used to calculate fair values also takes account of tenor  
and currency basis spreads, thus helping to minimise  
differences between the carrying amounts of the instru­  
ments and the amounts that can be realised on the finan­  
cial markets on their disposal. In addition, the Group’s  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
98  
Notes  
3. using input factors not based on observable market  
data (Level 3).  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
The following table shows the amounts allocated to  
1
1
1
own default risk and that of counterparties is taken into each measurement level at the end of the reporting  
account in the form of credit default swap (CDS) con­ period:  
3
1 December 2014  
Level hierarchy in accordance with IFRS 13  
in € million  
Level 1  
Level 2  
Level 3  
Marketable securities, investment fund shares and collateral assets – available-for-sale  
Other investments – available-for-sale  
Derivative instruments (assets)  
Cash flow hedges  
3,772  
231  
–
–
–
–
–
–
–
708  
1,294  
886  
–
–
–
Fair value hedges  
Other derivative instruments  
Derivative instruments (liabilities)  
Cash flow hedges  
–
–
–
1,302  
721  
–
–
–
Fair value hedges  
Other derivative instruments  
1,120  
1
55 Group Financial StatementS  
31 December 2013  
Level hierarchy in accordance with IFRS 13  
in € million  
Level 1  
Level 2  
Level 3  
Marketable securities, investment fund shares and collateral assets – available-for-sale  
Other investments – available-for-sale  
Derivative instruments (assets)  
Cash flow hedges  
3,134  
379  
–
–
–
–
–
–
–
1,914  
1,050  
1,049  
–
–
–
Fair value hedges  
Other derivative instruments  
Derivative instruments (liabilities)  
Cash flow hedges  
–
–
–
317  
321  
465  
–
–
–
Fair value hedges  
Other derivative instruments  
Other investments (available­for­sale) amounting to  
poses, this was achieved using the discounted cash flow  
€
ꢀ177 million (2013: €ꢀ174 million) are measured at amor­ method and taking account of the BMW Group’s own  
tised cost since quoted market prices are not available  
or cannot be determined reliably. These are therefore  
not included in the level hierarchy shown above. In  
addition, other investments amounting to €ꢀ231 million  
default risk; for this reason, the fair values calculated can  
be allocated to Level 2.  
Offsetting of financial instruments  
(
2013: €ꢀ379 million) are measured at fair value since  
In the BMW Group, financial assets and liabilities relat­  
ing to derivative financial instruments would normally  
be required to be offset. No offsetting takes place for ac­  
counting purposes, however, since the necessary crite­  
ria are not met. Since legally enforceable master netting  
quoted market prices are available. These items are in­  
cluded in Level 1.  
As in the previous year, there were no reclassifications  
within the level hierarchy during the financial year 2014. agreements or similar contracts are in place, actual off­  
setting would be possible in principle, for instance in  
In situations where a fair value was required to be meas­ the case of insolvency. Offsetting would have the follow­  
ured for a financial instrument only for disclosure pur­  
ing impact on the carrying amounts of derivatives:  
in € million  
31.12.2014  
31.12.2013  
Reported on  
Reported on  
Reported on  
equity and  
Reported on  
assets side  
assets side  
equity and  
liabilities side  
liabilities side  
Balance sheet amounts as reported  
2,888  
–1,228  
1,660  
3,143  
–1,228  
1,915  
4,013  
–710  
1,103  
–710  
393  
Gross amount of derivatives which can be offset in case of insolvency  
Net amount after offsetting  
3,303  
1
56  
Gains and losses on financial instruments  
The following table shows the net gains and losses arising for each of the categories of financial instrument defined  
by IAS 39:  
in € million  
2014  
2013  
Held for trading  
Gains/losses from the use of derivative instruments  
Available-for-sale  
Gains and losses on sale and fair value measurement of marketable securities held for sale  
including investments in subsidiaries and participations measured at cost)  
–971  
571  
(
–65  
3
–57  
10  
Net income from participations and investments  
Accumulated other equity  
Balance at 1January  
135  
6
108  
27  
Total change during the year  
thereof recognised in the income statement during the period under report  
Balance at 31December  
–69  
141  
–40  
135  
Loans and receivables  
Impairment losses/reversals of impairment losses  
Other income/expenses  
–278  
–506  
–310  
126  
Other liabilities  
Income/expenses  
238  
–235  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
9
9
9
2
4
6
Gainsꢀ/ꢀlosses from the use of derivatives relate pri­  
marily to fair value gains or losses arising on stand­alone  
derivatives.  
The disclosure of interest income resulting from the un­  
winding of interest on future expected receipts would  
normally only be relevant for the BMW Group where as­  
sets have been discounted as part of the process of de­  
termining impairment losses. However, as a result of the  
assumption that most of the income that is subsequently  
recovered is received within one year and the fact that  
the impact is not material, the BMW Group does not dis­  
count assets for the purposes of determining impairment  
losses.  
9
8
Notes  
98  
Accounting Principles and  
Policies  
Net interest income from interest rate and interest  
rateꢀ/ꢀcurrency swaps amounted to €ꢀ101 million (2013:  
€ꢀ126 million).  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
Impairment losses of €ꢀ152 million (2013: €ꢀ73 million)  
were recognised in the income statement in 2014 on  
available­for­sale securities accounted for as participa­  
tions, for which fair value changes had previously been  
recognised directly in equity. Reversals of impairment  
Cash flow hedges  
The effect of cash flow hedges on accumulated other  
losses on marketable securities amounting to €ꢀ7 million equity was as follows:  
2013: €ꢀ70 million) were recognised directly in equity.  
(
in € million  
2014  
2013  
Balance at 1January  
1,136  
–1,616  
–255  
202  
934  
Total changes during the year  
thereof reclassified to the income statement  
Balance at 31 December  
–179  
1,136  
–480  
Fair value gains and losses recognised on derivatives and of cash flow hedges amounting to €ꢀ27 million were rec­  
recorded initially in accumulated other equity are re­  
classified to cost of sales when the derivatives mature.  
ognised in “Financial Result” (2013: gains of €ꢀ8 million).  
Losses of €ꢀ6 million (2013: €ꢀ– million) arising in con­  
nection with forecasting errors relating to cash flow  
As in the previous year, no gainsꢀ/ꢀlosses were recognised hedges for commodities and gains of €ꢀ6 million (2013:  
in “Financial Result” in 2014 in connection with fore­ loss of €ꢀ8 million) attributable to the ineffective portion  
casting errors and the resulting over­hedging of currency of commodity hedges were recognised in “Financial  
exposures. Losses attributable to the ineffective portion Result” in 2014.  
1
57 Group Financial StatementS  
At 31 December 2014 the BMW Group held derivative  
financial instruments (mainly forward currency and op­ rates are fixed. It is expected that €ꢀ  
in the same periods over which the relevant interest  
million of net  
1
tion contracts) with terms of up to 60 months (2013:  
0 months) in order to hedge currency risks attached to  
losses, recognised in equity at the end of the reporting  
period, will be reclassified to profit and loss in the new  
financial year (2013: €ꢀ– million).  
6
future transactions. These derivative instruments are  
intended to hedge forecast sales denominated in a for­  
eign currency over the coming 60 months. The income  
statement impact of the hedged cash flows will be rec­  
ognised as a general rule in the same periods in which  
external revenues are recognised. It is expected that  
At 31 December 2014 the BMW Group held derivative  
financial instruments (mostly commodity swaps) with  
terms of up to 59 months (2013: 60 months) to hedge  
raw materials price risks attached to future transactions  
over the coming 59 months. The income statement im­  
€ꢀ278 million of net losses, recognised in equity at the  
end of the reporting period, will be reclassified to profit pact of the hedged cash flows will be recognised as a  
and loss in the new financial year (2013: net gains of  
ꢀ162 million).  
general rule in the same period in which the derivative  
instruments mature. It is expected that €ꢀ54 million of  
net losses, recognised in equity at the end of the report­  
ing period, will be reclassified to profit and loss in the  
new financial year (2013: €ꢀ60 million).  
€
At 31 December 2014 the BMW Group held derivative  
financial instruments (mostly interest rate swaps) with  
terms of up to one month (2013: 13 months) to hedge  
interest rate risks. These derivative instruments are in­  
tended to hedge interest­rate risks arising on financial  
instruments with variable interest payments within  
the coming month. The income statement impact of the  
hedged cash flows will be recognised as a general rule  
Fair value hedges  
The following table shows gains and losses on hedging  
instruments and hedged items which are deemed to be  
part of a fair value hedge relationship:  
in € million  
31.12.2014  
31.12.2013  
Gains/losses on hedging instruments designated as part of a fair value hedge relationship  
Gains/losses from hedged items  
369  
–359  
10  
–525  
503  
Ineffectiveness of fair value hedges  
–22  
The difference between the gainsꢀ/ꢀlosses on hedging  
instruments (mostly interest rate swaps) and the results  
recognised on hedged items represents the ineffective  
portion of fair value hedges.  
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.  
Fair value hedges are mainly used to hedge the market  
prices of bonds, other financial liabilities and receivables Within the financial services business, the financed  
from sales financing.  
items (e.ꢀg. vehicles, equipment and property) in the re­  
tail customer and dealer lines of business serve as first­  
ranking collateral with a recoverable value. Security is  
also put up by customers in the form of collateral asset  
pledges, asset assignment and first­ranking mortgages,  
supplemented where appropriate by warranties and  
Bad debt risk  
Notwithstanding the existence of collateral accepted,  
the carrying amounts of financial assets generally take  
account of the maximum credit risk arising from the  
possibility that the counterparties will not be able to ful­ guarantees. If an item previously accepted as collateral  
fil their contractual obligations. The maximum credit risk is acquired, it undergoes a multi­stage process of repos­  
for irrevocable credit commitments relating to credit  
card business amounts to €ꢀ1,181 million (2013: €ꢀ943 mil­  
lion). The equivalent figure for dealer financing is  
session and disposal in accordance with the legal situa­  
tion prevailing in the relevant market. The assets in­  
volved are generally vehicles which can be converted  
into cash at any time via the dealer organisation.  
€
ꢀ22,025 million (2013: €ꢀ19,856 million).  
In the case of performance relationships underlying  
non­derivative financial instruments, collateral will be  
required, information on the credit­standing of the  
Impairment losses are recorded as soon as credit risks  
are identified on individual financial assets, using a  
methodology specifically designed by the BMW Group.  
1
58  
More detailed information regarding this methodology  
enters into such contracts with parties of first­class  
is provided in the section on accounting policies (note 6). credit standing. The general credit risk on derivative  
financial instruments utilised by the BMW Group is  
Creditworthiness testing is an important aspect of the  
BMW Group’s credit risk management. Every borrower’s  
creditworthiness is tested for all credit financing and  
lease contracts entered into by the BMW Group. In the  
case of retail customers, creditworthiness is assessed  
using validated scoring systems integrated into the pur­  
chasing process. In the area of dealer financing, credit­  
worthiness is assessed by means of ongoing credit  
monitoring and an internal rating system that takes ac­  
count not only of the tangible situation of the borrower  
but also of qualitative factors such as past reliability in  
business relations.  
therefore not considered to be significant.  
A concentration of credit risk with particular borrowers  
or groups of borrowers has not been identified in con­  
junction with financial instruments.  
Further disclosures relating to credit risk – in particular  
with regard to the amounts of impairment losses recog­  
nised – are provided in the explanatory notes to the  
relevant categories of receivables in notes 28, 29 and 33.  
Liquidity risk  
The following table shows the maturity structure of ex­  
pected contractual cash flows (undiscounted) for finan­  
cial liabilities:  
The credit risk relating to derivative financial instru­  
ments is minimised by the fact that the Group only  
3
1 December 2014  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
in € million  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Bonds  
9,266  
8,110  
9,225  
5,601  
3,882  
2,100  
7,581  
177  
23,786  
3,432  
3,461  
–
4,232  
37,284  
12,031  
12,686  
5,601  
92  
94  
96  
Liabilities to banks  
489  
Liabilities from customer deposits (banking)  
Commercial paper  
–
–
77  
98  
Notes  
Asset backed financing transactions  
Derivative instruments  
Trade payables  
7,226  
1,317  
129  
11,185  
3,418  
98  
Accounting Principles and  
Policies  
1
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
–
7,710  
Other financial liabilities  
Total  
434  
500  
5,299  
1,111  
1
1
1
45,942  
39,785  
91,026  
3
1 December 2013  
Maturity  
within  
one year  
Maturity  
between one  
and five years  
Maturity  
later than  
five years  
Total  
in € million  
Bonds  
7,933  
4,686  
9,405  
6,294  
2,814  
426  
21,434  
4,328  
3,243  
–
3,043  
126  
–
32,410  
9,140  
12,648  
6,294  
10,460  
1,165  
7,478  
938  
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
–
Asset backed financing transactions  
Derivative instruments  
Trade payables  
7,614  
659  
32  
80  
7,283  
210  
195  
–
Other financial liabilities  
Total  
361  
367  
3,648  
39,051  
37,834  
80,533  
The cash flows shown comprise principal repayments  
and the related interest. The amounts disclosed for de­  
that have a negative fair value at the balance sheet date.  
At 31 December 2014 irrevocable credit commitments  
rivatives comprise only cash flows relating to derivatives to dealers which had not been called upon at the end of  
1
59 Group Financial StatementS  
the reporting period amounted to €ꢀ7,247 million (2013:  
ꢀ6,760 million).  
maining after netting. Financial instruments are only  
used to hedge underlying positions or forecast trans­  
actions.  
€
Solvency is assured at all times by managing and moni­  
toring the liquidity situation on the basis of a rolling  
cash flow forecast. The resulting funding requirements  
are secured by a variety of instruments placed on the  
world’s financial markets. The objective is to minimise  
risk by matching maturities for the Group’s financing  
requirements within the framework of the target debt  
structure. The BMW Group has good access to capital  
markets as a result of its solid financial position and a  
diversified refinancing strategy. This is underpinned by  
the longstanding long­ and short­term ratings issued  
by Moody’s and Standard & Poor’s.  
The scope of permitted transactions, responsibilities,  
financial reporting procedures and control mechanisms  
used for financial instruments are set out in internal  
guidelines. This includes, above all, a clear separation of  
duties between trading and processing. Currency, inter­  
est rate and raw materials price risks of the BMW Group  
are managed at a corporate level.  
Further information is provided in the “Report on out­  
look, risks and opportunities” section of the Combined  
Management Report.  
Short­term liquidity is managed primarily by issuing  
Currency risks  
money market instruments (commercial paper). In this As an enterprise with worldwide operations, business  
area too, competitive refinancing conditions can be  
achieved thanks to Moody’s and Standard & Poor’s short  
term ratings of P­1 and A­1 respectively.  
is conducted in a variety of currencies, from which cur­  
rency risks arise. Since a significant portion of Group  
revenues is generated outside the euro currency region  
and the procurement of production material and fund­  
ing is also organised on a worldwide basis, the currency  
risk is an extremely important factor for Group earnings.  
­
Also reducing liquidity risk, additional secured and  
unsecured lines of credit are in place with first­class in­  
ternational banks, including a syndicated credit line  
totalling €ꢀ6 billion (2013: €ꢀ6 billion). Intra­group cash  
At 31 December 2014 derivative financial instruments,  
flow fluctuations are evened out by the use of daily cash mostly in the form of forward currency and option con­  
pooling arrangements.  
tracts, were in place to hedge the main currencies.  
Market risks  
A description of the management of this risk is pro­  
vided in the Combined Management Report. The BMW  
Group measures currency risk using a cash­flow­at­risk  
model.  
The principal market risks to which the BMW Group  
is exposed are currency risk, interest rate risk and raw  
materials price risk.  
Protection against such risks is provided in the first in­  
stance through natural hedging which arises when  
the values of non­derivative financial instruments have  
matching maturities and amounts (netting). Derivative  
financial instruments are used to reduce the risk re­  
The starting point for analysing currency risk with this  
model is the identification of forecast foreign currency  
transactions or “exposures”. At the end of the reporting  
period, the principal exposures for the relevant coming  
year were as follows:  
in € million  
31.12.2014  
31.12.2013  
Euro/Chinese Renminbi  
Euro/US Dollar  
10,937  
4,743  
4,818  
758  
10,691  
4,401  
3,852  
1,738  
1,469  
Euro/British Pound  
Euro/Russian Rouble  
Euro/Japanese Yen  
1,004  
1
60  
In the next stage, these exposures are compared to all  
hedges that are in place. The net cash flow surplus rep­  
resents an uncovered risk position. The cash­flow­at­  
dence level of 95% and a holding period of up to one  
year. Correlations between the various currencies are  
taken into account when the risks are aggregated, thus  
risk approach involves allocating the impact of potential reducing the overall risk.  
exchange rate fluctuations to operating cash flows on  
the basis of probability distributions. Volatilities and  
correlations serve as input factors to assess the relevant  
probability distributions.  
The following table shows the potential negative impact  
for the BMW Group – measured on the basis of the  
cash­flow­at­risk approach – attributable to unfavoura­  
ble changes in exchange rates. The impact for the prin­  
cipal currencies, in each case for the following financial  
year, is as follows:  
The potential negative impact on earnings is computed  
for each currency for the following financial year on the  
basis of current market prices and exposures to a confi­  
in € million  
31.12.2014  
31.12.2013  
Euro/Chinese Renminbi  
Euro/US Dollar  
173  
73  
197  
65  
Euro/British Pound  
Euro/Russian Rouble  
Euro/Japanese Yen  
66  
80  
160  
6
109  
44  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Currency risk for the BMW Group is concentrated on  
the currencies referred to above.  
These risks arise when funds with differing fixed­rate  
periods or differing terms are borrowed and invested. All  
items subject to, or bearing, interest are exposed to in­  
terest rate risk. Interest rate risks can affect either side  
92  
94  
96  
Interest rate risks  
The BMW Group’s financial management system involves of the balance sheet.  
the use of standard financial instruments such as short­  
term deposits, investments in variable and fixed­income The fair values of the Group’s interest rate portfolios for  
securities as well as securities funds. The BMW Group  
is therefore exposed to risks resulting from changes in  
interest rates.  
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
the five main currencies were as follows at the end of the  
reporting period:  
1
1
1
in € million  
31.12.2014  
31.12.2013  
*
Euro  
17,535  
12,087  
5,091  
574  
16,495  
11,931  
3,960  
1,787  
189  
US Dollar  
British Pound  
Chinese Renminbi  
Japanese Yen  
113  
*
Prior year figures amended for one additional interest-bearing exposure.  
Interest rate risks can be managed by the use of interest and to manage interest rate risks. This is based on a  
rate derivatives. The interest rate contracts used for  
hedging purposes comprise mainly swaps which are ac­  
counted for on the basis of whether they are designated  
as a fair value hedge or as a cash flow hedge. A descrip­  
state­of­the­art 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  
tion of the management of interest rate risks is provided period of 250 days and a confidence level of 99  
.
98%.  
in the Combined Management Report.  
Aggregation of these results creates a risk reduction  
effect due to correlations between the various port­  
folios.  
As stated there, the BMW Group applies a group­wide  
value­at­risk approach for internal reporting purposes  
1
61 Group Financial StatementS  
In the following table the potential volumes of fair value approach – are compared with the expected value for  
fluctuations – measured on the basis of the value­at­risk the interest­rate­sensitive exposures of the BMW Group:  
in € million  
31.12.2014  
31.12.2013  
*
Euro  
398  
347  
108  
44  
363  
246  
62  
11  
6
US Dollar  
British Pound  
Chinese Renminbi  
Japanese Yen  
11  
*
Prior year figures amended for the value-at-risk of one additional interest-bearing exposure.  
Raw materials price risk  
The first step in the analysis of the raw materials price  
risk is to determine the volume of planned purchases  
The BMW Group is exposed to the risk of price fluctua­  
tions for raw materials. A description of the management of raw materials (and components containing those raw  
of these risks is provided in the Combined Management  
Report.  
materials). These amounts, which represent the gross  
exposure, were as follows at each reporting date for the  
following financial year:  
in € million  
31.12.2014  
31.12.2013  
Raw materials price exposures  
3,770  
4,550  
In the next stage, these exposures are compared to all  
hedges that are in place. The net cash flow surplus  
and exposure to a confidence level of 95% and a hold­  
ing period of up to one year. Correlations between the  
represents an uncovered risk position. The cash­flow­at­ various categories of raw materials are taken into ac­  
risk approach involves allocating the impact of potential count when the risks are aggregated, thus reducing the  
raw materials fluctuations to operating cash flows on  
the basis of probability distributions. Volatilities and cor­  
relations serve as input factors to assess the relevant  
probability distributions.  
overall risk.  
The following table shows the potential negative impact  
for the BMW Group – measured on the basis of the cash­  
flow­at­risk approach – attributable to fluctuations in  
prices across all categories of raw materials. The risk at  
each reporting date for the following financial year was  
as follows:  
The potential negative impact on earnings is com­  
puted for each raw material category for the following  
financial year on the basis of current market prices  
in € million  
31.12.2014  
31.12.2013  
Cash flow at risk  
230  
405  
44  
Explanatory notes to the cash flow statements  
bank, to the extent that they are available within three  
months from the end of the reporting period and are  
subject to an insignificant risk of changes in value.  
The cash flow statements show how the cash and cash  
equivalents of the BMW Group and of the Automotive  
and Financial Services segments have changed in the  
course of the year as a result of cash inflows and cash  
outflows. In accordance with IAS 7 (Statement of Cash  
Flows), cash flows are classified into cash flows from  
operating, investing and financing activities.  
The cash flows from investing and financing activities  
are based on actual payments and receipts. By con­  
trast, the cash flow from operating activities is derived  
indirectly from the net profit for the year. Under this  
method, changes in assets and liabilities relating to  
operating activities are adjusted for currency translation  
effects and changes in the composition of the Group.  
Cash and cash equivalents included in the cash flow  
statement comprise cash in hand, cheques, and cash at  
1
62  
The changes in balance sheet positions shown in the  
lessor) is also reported within cash flows from operating  
cash flow statement do not therefore agree directly with activities.  
the amounts shown in the Group and segment balance  
sheets.  
Income taxes paid and interest received are classified  
as cash flows from operating activities in accordance  
with IAS 7.31 and IAS 7.35. Interest paid is presented  
Cash inflows and outflows relating to operating leases,  
where the BMW Group is the lessor, are aggregated and on a separate line within cash flows from financing ac­  
shown on the line “Change in leased products” within  
cash flows from operating activities.  
tivities. Dividends received in the financial year 2014  
amounted to €ꢀ1 million (2013: €ꢀ4 million).  
The net change in receivables from sales financing (in­  
cluding finance leases, where the BMW Group is the  
45  
Related party relationships  
with these companies are small in scale, arise in the  
normal course of business and are conducted on the  
basis of arm’s length principles.  
In accordance with IAS 24 (Related Party Disclosures),  
related individuals or entities which have the ability to  
control the BMW Group or which are controlled by the  
BMW Group, must be disclosed unless such parties are  
already included in the Group Financial Statements of  
BMWAG as consolidated companies. Under the con­  
trol concept established in IFRS 10, an investor controls  
another entity when it is exposed to or has rights to  
variable returns from its involvement with the investee  
and has the ability to affect those returns through its  
power over the investee.  
Transactions of BMW Group companies with the joint  
venture BMW Brilliance Automotive Ltd., Shenyang,  
all arise in the normal course of business and are con­  
ducted on the basis of arm’s length principles. Group  
companies sold goods and services to BMW Brilliance  
Automotive Ltd., Shenyang, during the financial year  
under report for an amount of €ꢀ4,417 million (2013:  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
€ꢀ3,588 million). At 31 December 2014, receivables of  
98  
Notes  
Group companies from BMW Brilliance Automotive  
Ltd., Shenyang, totalled €ꢀ943 million (2013: €ꢀ898 mil­  
lion). Group companies had no payables to BMW  
Brilliance Automotive Ltd., Shenyang, at the end of  
the reporting period (2013: €ꢀ66 million). Group compa­  
98  
Accounting Principles and  
Policies  
In addition, the disclosure requirements of IAS 24 also  
cover transactions with associated companies, joint  
ventures, joint operations and individuals that have the  
ability to exercise significant influence over the finan­  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
cial and operating policies of the BMW Group. This also nies received goods and services from BMW Brilliance  
includes close relatives and intermediary entities. Sig­  
nificant influence over the financial and operating poli­  
cies of the BMW Group is presumed when a party holds  
Automotive Ltd., Shenyang, in 2014 for an amount of  
€ꢀ34 million (2013: €ꢀ31 million).  
2
0% or more of the voting power of BMWAG. In addi­  
All relationships of BMW Group entities with the joint  
ventures DriveNow GmbH & Co. KG, Munich, and  
DriveNow Verwaltungs GmbH, Munich, are conducted  
on the basis of arm’s length principles. Transactions  
with these entities arise in the normal course of business  
and are small in scale.  
tion, the requirements contained in IAS 24 relating to  
key management personnel and close members of their  
families or intermediary entities are also applied. In the  
case of the BMW Group, this applies to members of the  
Board of Management and Supervisory Board.  
In the financial year 2014, the disclosure requirements  
contained in IAS 24 affect the BMW Group with re­  
gard to business relationships with non­consolidated  
subsidiaries, joint ventures, joint operations and asso­  
ciated companies as well as with members of the Board  
of Management and Supervisory Board of BMWAG.  
Transactions of Group companies with SGL Automotive  
Carbon Fibers GmbH & Co. KG, Munich, SGL Auto­  
motive Carbon Fibers Verwaltungs GmbH, Munich, and  
SGL Automotive Carbon Fibers LLC, Dover, DE, were  
reported in their entirety in the Group Financial State­  
ments until 1 January 2014. As a result of the first­time  
application of IFRS 11 (Joint Arrangements) in the finan­  
cial year 2014, these entities are now consolidated, as  
joint operations, on a proportionate basis (49%) and  
The BMW Group maintains normal business relation­  
ships with non-consolidated subsidiaries. Transactions  
1
63 Group Financial StatementS  
the appropriate portion of transactions eliminated on  
consolidation. The remaining 51% of the transactions  
continue to be reported in the Group Financial State­  
electromobility. The focus of this collaboration is on  
providing complete photovoltaic solutions for rooftop  
systems and carports to BMW i customers. Solarwatt  
ments (non­consolidated portion) and are described be­ GmbH, Dresden, leased vehicles from the BMW Group  
low. Prior year figures have been adjusted accordingly.  
All relationships with the joint operations are attributa­  
ble to the ordinary activities of the entities concerned.  
All transactions were conducted on the basis of arm’s  
length principles. At 31 December 2014, loans receiva­  
in 2014. The service, cooperation and lease contracts  
referred to above are not material for the BMW Group.  
They all arise in the normal course of business and are  
conducted on the basis of arm’s length principles.  
ble from the joint operations amounted to €ꢀ111 million  
Susanne Klatten is a shareholder and member of the  
Supervisory Board of BMWAG and also a shareholder  
and Deputy Chairman of the Supervisory Board of  
Altana AG, Wesel. Altana AG, Wesel, acquired vehicles  
from the BMW Group during the financial year 2014,  
mostly in the form of lease contracts. These contracts  
are not material for the BMW Group, arise in the course  
*
(
2013 : €ꢀ52 million). Interest income recognised on  
*
these loans amounted to €ꢀ2.4 million (2013 : €ꢀ1.4 mil­  
lion) in the financial year 2014. Goods and services re­  
ceived by Group companies from the joint operations  
during the twelve­month period totalled €ꢀ62 million  
*
(
2013 : €ꢀ18 million). Amounts payable to the joint oper­  
ations at the end of the reporting period totalled €ꢀ5 mil­ of ordinary activities and are made, without exception,  
*
lion (2013 : €ꢀ4 million).  
on the basis of arm’s length principles.  
The BMW Group maintains normal business relation­  
ships with associated companies. Transactions with  
these companies are small in scale, arise in the normal  
course of business and are conducted on the basis of  
arm’s length principles.  
Apart from vehicle lease contracts concluded on an  
arm’s length basis, companies of the BMW Group have  
not entered into any contracts with members of the  
Board of Management or Supervisory Board of BMW  
AG. The same applies to close members of the families  
of those persons.  
Stefan Quandt is a shareholder and Deputy Chairman  
of the Supervisory Board of BMWAG. He is also the  
sole shareholder and Chairman of the Supervisory  
BMW Trust e.V., Munich, administers assets on a trustee  
basis to secure obligations relating to pensions and  
Board of DELTON AG, Bad Homburg v.d.H., which, via pre­retirement part­time work arrangements in Germany  
its subsidiaries, performed logistic­related services for and is therefore a related party of the BMW Group in  
the BMW Group during the financial year 2014. In addi­ accordance with IAS 24. This entity, which is a registered  
tion, companies of the DELTON Group used vehicles  
provided by the BMW Group, mostly in the form of  
association (eingetragener Verein) under German law,  
does not have any assets of its own. It did not have any  
leasing contracts. Stefan Quandt is also the indirect ma­ income or expenses during the period under report.  
jority shareholder of Solarwatt GmbH, Dresden. Co­  
operation arrangements are in place between BMWAG  
and Solarwatt GmbH, Dresden, within the field of  
BMWAG bears expenses on a minor scale and renders  
services on behalf of BMW Trust e.ꢀV., Munich.  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
4
6
7
Declaration with respect to the Corporate  
Governance Code  
The Board of Management and the Supervisory Board  
of Bayerische Motoren Werke Aktiengesellschaft  
have issued the prescribed Declaration of Compliance  
pursuant to §161 of the German Stock Corporation  
Act. It is reproduced in the Annual Report 2014 of the  
BMW Group and is also available to shareholders on  
the BMW Group website at www.bmwgroup.comꢀ/ꢀir.  
4
Shareholdings of members of the Board of Management 16.07%) relates to Stefan Quandt, Germany, and 11.54%  
and Supervisory Board  
(2013: 11.55%) to Susanne Klatten, Germany. As at  
The members of the Supervisory Board of BMWAG hold  
in total 27.61% (2013: 27.62%) of the issued common  
and preferred stock shares, of which 16.06% (2013:  
the end of the previous financial year, shareholdings of  
members of the BMWAG Board of Management account,  
in total, for less than 1% of issued shares.  
1
64  
48  
Compensation of members of the Board of  
Management and Supervisory Board  
The total compensation of the current members of the  
Board of Management and the Supervisory Board of  
BMWAG for the financial year 2014 amounted to €ꢀ46.1  
million (2013: €ꢀ43.4 million) and comprised the following:  
in € million  
2014  
2013  
Short-term employment benefits  
39.5  
1.0  
38.4  
0.7  
Share-based remuneration component  
Post-employment benefits  
2.1  
2.2  
Benefits in conjunction with the termination of an employment relationship  
Compensation  
3.5  
2.1  
46.1  
43.4  
The total compensation of the current Board of Manage­  
Pension obligations to former members of the Board  
ment members for 2014 amounted to €ꢀ35.7 million (2013: of Management and their surviving dependants are  
€
€
€
ꢀ34.5 million). This comprised fixed components of  
ꢀ7.7 million (2013: €ꢀ7.9 million), variable components of lion (2013: €ꢀ58.0 million), computed in accordance with  
ꢀ27.0 million (2013: €ꢀ25.9 million) and a share­based IAS 19.  
million (2013  
ꢀ0.7 million). Pension obligations to current members of The compensation systems for members of the Super­  
covered by pension provisions amounting to €ꢀ68.4 mil­  
compensation component totalling €ꢀ  
€
1
.
0
:
the Board of Management are covered by provisions  
amounting to €ꢀ31.3 million (2013: €ꢀ24.8 million), com­  
puted in accordance with IAS 19 (Employee Benefits).  
visory Board do not include any stock options, value  
appreciation rights comparable to stock options or any  
other stock­based compensation components. Apart  
from vehicle lease contracts entered into on customary  
market conditions, no advances or loans were granted to  
members of the Board of Management and the Super­  
visory Board, nor were any contingent liabilities entered  
into on their behalf.  
9
9
9
0
0
0
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
The compensation of the members of the Supervisory  
Board for the financial year 2014 amounted to €ꢀ4.8 mil­  
lion (2013: €ꢀ4.6 million). This comprised fixed compo­  
nents of €ꢀ2.0 million (2013: €ꢀ2.0 million) and variable  
components of €ꢀ2.8 million (2013: €ꢀ2.6 million).  
98  
Notes  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
Further details about the remuneration of current mem­  
bers of the Board of Management and the Supervisory  
Board can be found in the Compensation Report, which  
is part of the Combined Management Report.  
1
1
1
The remuneration of former members of the Board  
of Management and their dependants amounted to  
€
ꢀ5.8 million (2013: €ꢀ4.7 million).  
49  
Application of exemption provisions  
The following German entities apply the exemption  
A number of companies and incorporated partnerships  
available in §264 (3) and §264ꢀb HGB with regard to  
publication:  
(as defined by §264ꢀa HGB) which are consolidated sub­  
sidiaries of BMWAG and for which the Group Financial – Bavaria Wirtschaftsagentur GmbH, Munich  
Statements of BMWAG represent exempting consoli­ – Alphabet International GmbH, Munich  
dated financial statements, apply the exemptions available – BMW Hams Hall Motoren GmbH, Munich  
in §264 (3) and §264b HGB with regard to the drawing  
up of a management report. The exemptions have been  
applied by:  
– BMW M GmbH Gesellschaft für individuelle  
Automobile, Munich  
– BMW INTEC Beteiligungs GmbH, Munich  
– BMW Verwaltungs GmbH, Munich  
– Rolls­Royce Motor Cars GmbH, Munich  
– BMW Beteiligungs GmbH & Co. KG, Munich  
–
–
–
–
Bavaria Wirtschaftsagentur GmbH, Munich  
BMW Fahrzeugtechnik GmbH, Eisenach  
BMW Hams Hall Motoren GmbH, Munich  
BMW M GmbH Gesellschaft für individuelle  
Automobile, Munich  
In addition, the Dutch entity, BMW International  
Holding B.ꢀV., The Hague, applies the exemption pro­  
vision contained in Article 2:403 of the Civil Code  
of the Netherlands.  
–
Rolls­Royce Motor Cars GmbH, Munich  
1
65 Group Financial StatementS  
BMW Group  
Notes to the Group Financial Statements  
Segment Information  
50  
Explanatory notes to segment information  
Internal management and reporting  
Information on reportable segments  
Segment information is prepared in conformity with  
the accounting policies adopted for preparing and  
presenting the Group Financial Statements. Excep­  
tions to this general principle is the treatment of inter­  
segment warranties (the earnings impact of which  
is allocated to the Automotive and Financial Services  
For the purposes of presenting segment information,  
the activities of the BMW Group are divided into oper­  
ating segments in accordance with IFRS 8 (Operating  
Segments). Operating segments are identified on the  
same basis that is used internally to manage and report  
on performance and takes account of the organisational segments on the basis used internally to manage the  
structure of the BMW Group based on the various prod­ business) and cross­segment impairment losses on  
ucts and services of the reportable segments.  
investments in subsidiaries. Inter­segment receivables  
and payables, provisions, income, expenses and profits  
are eliminated in the column “Eliminations”. Inter­  
The activities of the BMW Group are broken down into  
the operating segments Automotive, Motorcycles, Finan­ segment sales take place at arm’s length prices.  
cial Services and Other Entities.  
The role of “chief operating decision maker” with respect  
The Automotive segment develops, manufactures, as­  
sembles and sells cars and off­road vehicles, under the  
brands BMW, MINI and Rolls­Royce as well as spare  
to resource allocation and performance assessment of  
the reportable segment is embodied in the full Board of  
Management. In order to assist the decision­taking pro­  
cess, various measures of segment performance as well  
as segment assets have been set for the various operat­  
ing segments.  
parts and accessories. BMW and MINI brand products  
are sold in Germany through branches of BMWAG  
and by independent, authorised dealers. Sales outside  
Germany are handled primarily by subsidiary com­  
panies and, in a number of markets, by independent  
import companies. Rolls­Royce brand vehicles are sold  
in the USA, China and Russia via subsidiary companies  
and elsewhere by independent, authorised dealers.  
The performance of the Automotive and Motorcycles  
segments is managed on the basis of return on capital  
employed (RoCE). The relevant measure of segment  
results used is therefore profit before financial result.  
Capital employed is the corresponding measure of seg­  
ment assets used to determine how to allocate resources  
and comprises all current and non­current operational  
assets after deduction of liabilities used operationally  
which are not subject to interest (e.ꢀg. trade payables).  
The BMW Motorcycles segment develops, manufac­  
tures, assembles and sells motorcycles as well as spare  
parts and accessories.  
The principal lines of business of the Financial Services  
segment are car leasing, fleet business, multi­brand busi­ The performance of the Financial Services segment is  
ness, retail customer and dealer financing, customer de­ measured on the basis of return on equity (RoE), with  
posit business and insurance activities.  
profit before tax therefore representing the measure of  
segment result used. For this reason, the measure of  
Holding and Group financing companies are included in segment assets in the Financial Services segment corre­  
the Other Entities segment. This segment also includes sponds to net assets, defined as total assets less total  
operating companies – BMW Services Ltd., Farnborough, liabilities.  
BMW (UK) Investments Ltd., Farnborough, Bavaria Lloyd  
Reisebüro GmbH, Munich, and MITEC Mikroelektronik  
Mikrotechnik Informatik GmbH, Munich, – which are  
not allocated to one of the other segments.  
The performance of the Other Entities segment is as­  
sessed on the basis of profit or loss before tax. The  
corresponding measure of segment assets used to  
manage the Other Entities segment is total assets less  
tax assets and intragroup investments.  
1
66  
Segment information by operating segment is as follows:  
Segment information by operating segment  
Automotive  
2013  
Motorcycles  
2013  
*
in € million  
2014  
2014  
External revenues  
Inter-segment revenues  
Total revenues  
59,654  
15,519  
75,173  
56,286  
14,344  
70,630  
1,671  
8
1,495  
9
1,679  
1,504  
Segment result  
7,244  
655  
6,649  
407  
112  
–
79  
–
Income from equity accounted investments  
Capital expenditure on non-current assets  
Depreciation and amortisation on non-current assets  
6,022  
4,080  
6,659  
3,657  
69  
64  
85  
65  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Automotive  
Motorcycles  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
*
in € million  
31.12.2014  
31.12.2013  
31.12.2014  
31.12.2013  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
92  
94  
96  
Segment assets  
11,489  
1,088  
10,318  
638  
575  
–
488  
–
Investments accounted for using the equity method  
98  
Notes  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
98  
Accounting Principles and  
Policies  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
1
1
1
1
67 Group Financial StatementS  
Financial  
Services  
Other Entities  
Reconciliation to  
Group figures  
Group  
*
*
*
2013  
2014  
2013  
2014  
2013  
2014  
2013  
2014  
1
9,073  
,526  
0,599  
18,276  
1,598  
3
4
7
2
4
6
–
–17,057  
–17,057  
–
–15,955  
–15,955  
80,401  
–
76,059  
–
External revenues  
Inter-segment revenues  
Total revenues  
1
2
19,874  
80,401  
76,059  
1
,723  
–
1,619  
–
154  
164  
–526  
–
–618  
–
8,707  
655  
7,893  
407  
Segment result  
–
–
–
–
–
–
Income from equity accounted investments  
Capital expenditure on non-current assets  
Depreciation and amortisation on non-current assets  
1
9,206  
,539  
17,484  
7,021  
–4,621  
–4,112  
–4,325  
–3,787  
20,676  
7,571  
19,903  
6,956  
7
Financial  
Services  
Other Entities  
Reconciliation to  
Group figures  
Group  
*
*
*
*
31.12.2013  
3
1.12.2014  
31.12.2013  
31.12.2014  
31.12.2013  
31.12.2014  
31.12.2013  
31.12.2014  
9
,357  
–
8,388  
–
61,516  
–
55,300  
–
71,866  
–
63,883  
–
154,803  
1,088  
138,377  
638  
Segment assets  
Investments accounted for using the equity method  
1
68  
Write­downs on inventories to their net realisable value  
recognised on leased products. Reversals of impair­  
amounting to €ꢀ29 million (2013: €ꢀ28 million) were recog­ ment losses amounted to €ꢀ169 million.  
nised by the Automotive segment in the financial year  
2
014. Reversals of write­downs during the same period  
The Other Entities segment result includes interest  
amounted to €ꢀ3 million (2013: €ꢀ4 million).  
and similar income amounting to €ꢀ1,295 million (2013:  
€
ꢀ
1
,
340 million) and interest and similar expenses  
Impairment losses on other investments amounting to  
amounting to €ꢀ1,197 million (2013: €ꢀ1,279 million). The  
€
ꢀ153 million (2013: €ꢀ84 million) relating to the Automo­ segment result was not impacted by any impairment  
tive segment were recognised as part of the financial  
result and are therefore not included in segment result.  
losses in the financial year 2014 (2013: €ꢀ7 million).  
The information disclosed for capital expenditure and  
depreciation and amortisation relates to non­current  
property, plant and equipment, intangible assets and  
leased products.  
Interest and similar income of the Financial Services  
segment is a component of segment result and totalled  
€
ꢀ4 million (2013: €ꢀ5 million). Interest and similar ex­  
penses of the Financial Services segment amounted to  
*
€
ꢀ29 million (2013 : €ꢀ27 million).  
Segment figures can be reconciled to the corresponding  
Group figures as follows:  
Financial Services segment result was negatively im­  
pacted by impairment losses totalling €ꢀ268 million  
*
in € million  
2014  
2013  
90  
90  
90  
GROUP FINANCIAL STATEMENTS  
Income Statements  
Statement of  
Reconciliation of segment result  
Comprehensive Income  
Balance Sheets  
Cash Flow Statements  
Group Statement of Changes in  
Equity  
Total for reportable segments  
9,233  
–363  
–163  
8,707  
8,511  
–91  
9
9
9
2
4
6
Financial result of Automotive segment and Motorcycles segment  
Elimination of inter-segment items  
Group profit before tax  
–527  
7,893  
9
8
Notes  
98  
Accounting Principles and  
Policies  
Reconciliation of capital expenditure on non-current assets  
Total for reportable segments  
1
1
16 Notes to the Income Statement  
23 Notes to the Statement  
of Comprehensive Income  
24 Notes to the Balance Sheet  
49 Other Disclosures  
65 Segment Information  
25,297  
–4,621  
20,676  
24,228  
–4,325  
19,903  
1
1
1
Elimination of inter-segment items  
Total Group capital expenditure on non-current assets  
Reconciliation of depreciation and amortisation on non-current assets  
Total for reportable segments  
11,683  
–4,112  
7,571  
10,743  
–3,787  
6,956  
Elimination of inter-segment items  
Total Group depreciation and amortisation on non-current assets  
*
in € million  
31.12.2014  
31.12.2013  
Reconciliation of segment assets  
Total for reportable segments  
82,937  
6,658  
74,494  
5,989  
Non-operating assets – Other Entities segment  
Operating liabilities – Financial Services segment  
Interest-bearing assets – Automotive and Motorcycles segments  
Liabilities of Automotive and Motorcycles segments not subject to interest  
Elimination of inter-segment items  
96,959  
39,449  
28,488  
–99,688  
154,803  
83,942  
37,357  
25,473  
–88,878  
138,377  
Total Group assets  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
1
69 Group Financial StatementS  
In the case of information by geographical region, exter­ current assets relates to property, plant and equip­  
nal sales are based on the location of the customer’s  
registered office. Revenues with major customers were  
not material overall. The information disclosed for non­  
ment, intangible assets and leased products. Elimina­  
tions disclosed for non­current assets relate to leased  
products.  
Information by region  
External  
revenues  
Non-current  
assets  
*
*
2013  
in € million  
2014  
2013  
2014  
Germany  
USA  
12,992  
13,666  
15,002  
24,635  
2,961  
11,145  
–
11,797  
12,691  
15,348  
22,552  
3,103  
27,137  
17,093  
25  
25,320  
12,911  
21  
China  
Rest of Europe  
Rest of the Americas  
Other  
11,643  
2,050  
1,102  
–5,204  
53,846  
10,651  
1,668  
10,568  
–
1,025  
Eliminations  
Group  
–4,335  
47,261  
80,401  
76,059  
*
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Munich, 19 February 2015  
Bayerische Motoren Werke  
Aktiengesellschaft  
The Board of Management  
Dr.­Ing. Dr.­Ing. E.h. Norbert Reithofer  
Milagros Caiña Carreiro­Andree  
Dr. Friedrich Eichiner  
Harald Krüger  
Dr.­Ing. Klaus Draeger  
Klaus Fröhlich  
Dr. Ian Robertson (HonDSc)  
Peter Schwarzenbauer  
1
70  
STATEMENT ON CORPORATE GOVERNANCE  
Good corporate governance – acting in accordance with In accordance with the requirements of the German  
the principles of responsible management aimed at in­  
creasing the value of the business on a sustainable basis – ploy more than 20,000 people, the Supervisory Board  
is an essential requirement for the BMW Group em­ of BMWAG is required to comprise ten shareholder  
bracing all areas of the business. Corporate culture within representatives elected at the Annual General Meeting  
Co­determination Act for companies that generally em­  
the BMW Group is founded on transparent reporting  
and internal communication, a policy of corporate  
(Supervisory Board members representing equity or  
shareholders) and ten employees elected in accordance  
governance aimed at the interests of stakeholders, fair with the provisions of the Co­determination Act (Super­  
and open dealings between the Board of Management visory Board members representing employees). The  
and the Supervisory Board as well as among employees ten Supervisory Board members representing employees  
and compliance with the law. The Board of Management comprise seven Company employees, including one  
and Supervisory Board report in this statement on  
important aspects of corporate governance pursuant to  
executive staff representative, and three members elected  
following nomination by unions.  
§
289a HGB and section 3.10 of the German Corporate  
Governance Code (GCGC).  
The close interaction between Board of Management  
and Supervisory Board in the interests of the enterprise  
as described above is also known as a “two­tier board  
structure”.  
Information on the Company’s Governing Constitution  
The designation “BMW Group” comprises Bayerische  
Motoren Werke Aktiengesellschaft (BMWAG) and its  
group entities. BMWAG is a stock corporation (Aktien­  
gesellschaft) based on the German Stock Corporation  
Act (Aktiengesetz) and has its registered office in  
Munich, Germany. It has three representative bodies:  
the Annual General Meeting, the Supervisory Board  
and the Board of Management. The duties and authori­  
ties of those bodies derive from the Stock Corporation  
Declaration of Compliance and the BMW Group  
Corporate Governance Code  
Management and supervisory boards of companies listed  
in Germany are required by law (§161 German Stock  
Corporation Act) to report once a year whether the offi­  
cially published and relevant recommendations issued  
by the “German Government Corporate Governance  
Code Commission”, as valid at the date of the declara­  
tion, have been, and are being, complied with. Com­  
panies affected are also required to state which of the  
recommendations of the Code have not been or are not  
being applied, stating the reason or reasons. The full  
Act and the Articles of Incorporation of BMWAG  
.
Shareholders, as the owners of the business, exercise  
their rights at the Annual General Meeting. The Annual  
General Meeting decides in particular on the utilisation  
of unappropriated profit, the ratification of the acts  
of the members of the Board of Management and of the text of the declaration, together with explanatory com­  
Supervisory Board, the appointment of the external  
auditor, changes to the Articles of Incorporation, speci­  
fied capital measures and elects the shareholders’  
representatives to the Supervisory Board. The Board of  
Management manages the enterprise under its own  
responsibility. Within this framework, it is monitored  
ments, is shown on the following page of this Annual  
Report.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
The Board of Management and the Supervisory Board  
approved the Group’s own Corporate Governance Code  
based on the GCGC in previous years in order to pro­  
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
and advised by the Supervisory Board. The Supervisory vide interested parties with a comprehensive and stand­  
1
Board appoints the members of the Board of Manage­  
ment and can, at any time, revoke an appointment if  
there is an important reason. The Board of Manage­  
ment keeps the Supervisory Board informed of all sig­  
nificant matters regularly, promptly and comprehen­  
sively, following the principles of conscientious and  
faithful accountability and in accordance with prevailing  
alone document covering the corporate governance  
practices applied by the BMW Group. A coordinator  
responsible for all corporate governance issues reports  
directly and on a regular basis to the Board of Manage­  
ment and Supervisory Board.  
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
The Corporate Governance Code for the BMW Group,  
189 Compensation Report  
law and the reporting duties allocated to it by the Super­ together with the Declaration of Compliance, Articles  
visory Board. The Board of Management requires  
the approval of the Supervisory Board for certain major  
transactions. The Supervisory Board is not, however,  
authorised to undertake management measures itself.  
of Incorporation and other information, can be viewed  
and/ꢀor downloaded from the BMW Group’s website at  
www.bmwgroup.com/ir under the menu items “Corpo­  
rate Facts” and “Corporate Governance”.  
1
71 Statement on corporate Governance  
Declaration by the Board of Management and the  
Supervisory Board of Bayerische Motoren Werke  
Aktiengesellschaft with respect to the recommendations  
of the “Government Commission on the German  
Corporate Governance Code” pursuant to §161 German  
Stock Corporation Act  
The Board of Management and Supervisory Board  
of Bayerische Motoren Werke Aktiengesellschaft  
(“BMWAG”) declare the following regarding the recom­  
mendations of the “Government Commission on the  
German Corporate Governance Code”:  
1
.
.
Since issuance of the last Declaration in December  
013, BMWAG has complied with all of the recommen­  
dations published officially on 10 June 2013 (Code  
version dated 13 May 2013), to the extent that they were  
already applicable.  
2
2
BMWAG will in future comply with all of the recom­  
mendations published on 30 September 2014 in the  
electronic Federal Gazette (Code version dated 24 June  
2
014), with the following exception:  
It is recommended in section sentences 5 and 6  
4
.
2
.
5
of the Code that specified information pertaining to  
management board compensation be disclosed in the  
Compensation Report. These recommendations will  
not be complied with, due to uncertainties with respect  
to their interpretation and doubts as to whether the  
supplementary use of model tables would be instru­  
mental in making the BMW Group’s Compensation  
Report transparent and generally understandable in ac­  
cordance with generally applicable financial reporting  
requirements (see section 4.2.5 sentence 3 of the Code).  
Munich, December 2014  
Bayerische Motoren Werke  
Aktiengesellschaft  
On behalf of the  
On behalf of the  
Supervisory Board  
Board of Management  
Prof. Dr.­Ing. Dr. h.c.  
Dr.­Ing. E.h. Joachim Milberg  
Chairman  
Dr.­Ing. Dr.­Ing. E.h.  
Norbert Reithofer  
Chairman  
1
72  
Members of the Board of Management  
Dr.-Ing. Dr.-Ing.E.h. Norbert Reithofer (born 1956)  
Dr. Friedrich Eichiner (born 1955)  
Chairman  
Finance  
Mandates  
Mandates  
Siemens Aktiengesellschaft  
Allianz Deutschland AG  
(since 27.01.2015)  
FESTO Aktiengesellschaft  
Henkel AG & Co. KGaA (Shareholders’ Committee)  
BMW Brilliance Automotive Ltd. (Deputy Chairman)  
FESTO Management Aktiengesellschaft  
Milagros Caiña Carreiro-Andree (born 1962)  
Human Resources, Industrial Relations Director  
Klaus Fröhlich (born 1960)  
Development  
(since 09.12.2014)  
Dr.-Ing. Herbert Diess (born 1958)  
Development  
(until 09.12.2014)  
Harald Krüger (born 1965)  
Production  
Mandates  
Dr.-Ing. Klaus Draeger (born 1956)  
Purchasing and Supplier Network  
BMW (South Africa) (Pty) Ltd. (Chairman)  
BMW Motoren GmbH (Chairman)  
Dr. Ian Robertson (HonDSc) (born 1958)  
Sales and Marketing BMW,  
Sales Channels BMW Group  
Mandates  
Dyson James Group Limited  
Peter Schwarzenbauer (born 1959)  
MINI, Motorcycles, Rolls­Royce,  
Aftersales BMW Group  
Mandates  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
Rolls­Royce Motor Cars Limited (Chairman)  
(
1
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
1
General Counsel:  
Dr. Jürgen Reul  
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
Membership of other statutory supervisory boards.  
Membership of equivalent national or foreign boards of business enterprises.  
1
73 Statement on corporate Governance  
Members of the Supervisory Board  
1
Prof. Dr.-Ing. Dr.h.c. Dr.-Ing. E.h.  
Joachim Milberg (born 1943)  
Chairman  
Stefan Schmid (born 1965)  
Deputy Chairman  
Chairman of the Works Council, Dingolfing  
Former Chairman of the Board of  
Management of BMWAG  
Member of the Presiding Board, Personnel Committee,  
Audit Committee and Mediation Committee  
Chairman of the Presiding Board, Personnel Committee  
and Nomination Committee; member of Audit Committee  
and the Mediation Committee  
Dr. jur. Karl-Ludwig Kley (born 1951)  
Deputy Chairman  
Mandates  
Bertelsmann Management SE (Deputy Chairman)  
Bertelsmann SE & Co. KGaA (Deputy Chairman)  
FESTO Aktiengesellschaft (Deputy Chairman)  
Chairman of the Executive Management of  
Merck KGaA  
(
until 25.04.2014)  
Chairman of the Audit Committee and Independent  
Finance Expert; member of the Presiding Board,  
Personnel Committee and Nomination Committee  
Deere & Company  
FESTO Management Aktiengesellschaft (Deputy Chairman)  
(until 25.04.2014)  
Mandates  
Bertelsmann Management SE  
Bertelsmann SE & Co. KGaA  
Deutsche Lufthansa Aktiengesellschaft  
1
Manfred Schoch (born 1955)  
Deputy Chairman  
Chairman of the European and  
General Works Council  
Industrial Engineer  
2
Christiane Benner (born 1968)  
(since 15.05.2014)  
Executive Member of the  
Executive Board of IG Metall  
Member of the Presiding Board, Personnel Committee,  
Audit Committee and Mediation Committee  
Mandates  
Robert Bosch GmbH  
T­Systems International GmbH (until 31.07.2014)  
Stefan Quandt (born 1966)  
Deputy Chairman  
Entrepreneur  
2
Bertin Eichler (born 1952)  
(
until 15.05.2014)  
Member of the Presiding Board, Personnel Committee,  
Audit Committee, Nomination Committee and Mediation  
Committee  
Former Executive Member of the  
Executive Board of IG Metall  
Mandates  
Mandates  
C.+H.Winter GmbH (since 01.05.2014)  
Luitpoldhütte AG  
ThyssenKrupp AG (Deputy Chairman)  
(until 17.01.2014)  
BGAG Beteiligungsgesellschaft der  
Gewerkschaften GmbH (Chairman Advisory Board)  
DELTON AG (Chairman)  
AQTON SE (Chairman)  
DataCard Corp. (until 11.11.2014)  
Entrust Datacard Corp. (since 12.11.2014)  
1
Employee representatives (company employees).  
Employee representatives (union representatives).  
Employee representatives (members of senior management).  
2
3
Membership of other statutory supervisory boards.  
Membership of equivalent national or foreign boards of business enterprises.  
1
74  
Franz Haniel (born 1955)  
Engineer, MBA  
Prof. Dr. rer. pol. Renate Köcher (born 1952)  
Director of Institut für Demoskopie Allensbach  
Gesellschaft zum Studium der öffentlichen  
Meinung mbH  
Mandates  
DELTON AG (Deputy Chairman)  
Franz Haniel & Cie. GmbH (Chairman)  
Heraeus Holding GmbH  
Mandates  
Allianz SE  
Metro AG (Chairman)  
Infineon Technologies AG  
Nestlé Deutschland AG  
Robert Bosch GmbH  
secunet Security Networks AG (until 14.05.2014)  
Giesecke&Devrient GmbH (until 08.04.2014)  
TBG Limited  
3
Ulrich Kranz (born 1958)  
Prof. Dr. rer. nat. Dr.h.c. Reinhard Hüttl (born 1957)  
Chairman of the Executive Board of  
Helmholtz­Zentrum Potsdam Deutsches  
GeoForschungsZentrum – GFZ  
(since 15.05.2014)  
Head of Product Line BMWi  
University Professor  
Dr.h.c. Robert W. Lane (born 1949)  
Former Chairman and Chief Executive Officer of  
Deere & Company  
Prof. Dr. rer. nat. Dr.-Ing. E.h.  
Mandates  
Henning Kagermann (born 1947)  
President of acatech – Deutsche Akademie der  
Technikwissenschaften e.V.  
General Electric Company  
Northern Trust Corporation  
Verizon Communications Inc.  
Mandates  
Deutsche Bank AG  
Deutsche Post AG  
2
Horst Lischka (born 1963)  
Franz Haniel & Cie GmbH  
Münchener Rückversicherungs­Gesellschaft  
Aktiengesellschaft in München  
Nokia Corporation (until 17.06.2014)  
Wipro Limited (until 30.06.2014)  
General Representative of IG Metall Munich  
Mandates  
KraussMaffei Group GmbH  
KraussMaffei Technologies GmbH  
MAN Truck & Bus AG  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
1
Susanne Klatten (born 1962)  
Willibald Löw (born 1956)  
(
Entrepreneur  
Chairman of the Works Council, Landshut  
1
1
71 Declaration of the Board of  
Member of the Nomination Committee  
Mandates  
Management and of the  
Supervisory Board pursuant to  
§
Wolfgang Mayrhuber (born 1947)  
Chairman of the Supervisory Board of  
Deutsche Lufthansa Aktiengesellschaft  
161AktG  
72 Members of the Board of  
Management  
1
ALTANA AG (Deputy Chairman)  
SGL Carbon SE (Chairman)  
UnternehmerTUM GmbH (Chairman)  
173 Members of the Supervisory  
Board  
Mandates  
176 Work Procedures of the  
Board of Management  
78 Work Procedures of the  
Supervisory Board  
83 Information on Corporate  
Governance Practices  
84 Compliance in the BMW Group  
89 Compensation Report  
Deutsche Lufthansa Aktiengesellschaft (Chairman)  
Infineon Technologies AG (Chairman)  
Münchener Rückversicherungs­Gesellschaft  
Aktiengesellschaft in München  
HEICO Corporation  
1
1
1
1
1
Employee representatives (company employees).  
Employee representatives (union representatives).  
Employee representatives (members of senior management).  
2
3
Membership of other statutory supervisory boards.  
Membership of equivalent national or foreign boards of business enterprises.  
1
75 Statement on corporate Governance  
1
Dr. Dominique Mohabeer (born 1963)  
Member of the Works Council, Munich  
1
Brigitte Rödig (born 1963)  
Member of the Works Council, Dingolfing  
3
Dr. Markus Schramm (born 1963)  
(until 15.05.2014)  
Head of Development Aftersales  
Business Management and  
Mobility Services BMW Group  
2
Jürgen Wechsler (born 1955)  
Regional Head of IG Metall Bavaria  
Mandates  
Schaeffler AG (Deputy Chairman)  
1
Werner Zierer (born 1959)  
Chairman of the Works Council, Regensburg  
1
76  
Composition and work procedures of the Board of  
Management of BMWAG and its committees  
also takes decisions at a basic policy level relating to  
the Group’s automobile product strategies and product  
The Board of Management governs the enterprise under projects inasmuch as these are relevant for all brands.  
its own responsibility, acting in the interests of the BMW  
Group with the aim of achieving sustainable growth  
in value. The interests of shareholders, employees and  
other stakeholders are also taken into account in the  
pursuit of this aim.  
The Board of Management and its committees may, as  
required and depending on the subject matters being  
discussed, invite non­voting advisers to participate at  
meetings.  
Terms of reference approved by the Board of Manage­  
ment contain a planned allocation of divisional respon­  
sibilities between the individual board members. These  
terms of reference also incorporate the principle that  
the full Board of Management bears joint responsibility  
for all matters of particular importance and scope. In  
addition, members of the Board of Management man­  
age the relevant portfolio of duties under their responsi­  
bility, whereby case­by­case rules can be put in place  
for cross­divisional projects. Board members continually  
provide the Chairman of the Board of Management  
with all information regarding major transactions and  
developments within their area of responsibility. The  
Chairman of the Board of Management coordinates  
cross­divisional matters with the overall targets and plans  
of the BMW Group, involving other board members to  
the extent that divisions within their area of responsi­  
bility are affected.  
The Board of Management determines the strategic  
orientation of the enterprise, agrees upon it with the  
Supervisory Board and ensures its implementation.  
The Board of Management is responsible for ensuring  
that all provisions of law and internal regulations are  
complied with. Further details about compliance within  
the BMW Group can be found in the “Corporate  
Governance” section of the Annual Report. The Board  
of Management is also responsible for ensuring that  
appropriate risk management and risk controlling sys­  
tems are in place throughout the Group.  
During their period of employment for BMWAG, mem­  
bers of the Board of Management are bound by a com­  
prehensive non­competition clause. They are required  
to act in the enterprise’s best interests and may not  
pursue personal interests in their decisions or take ad­  
vantage of business opportunities intended for the  
enterprise. They may only undertake ancillary activities,  
in particular supervisory board mandates outside  
the BMW Group, with the approval of the Supervisory  
Board’s Personnel Committee. Each member of the  
Board of Management of BMWAG is obliged to disclose  
conflicts of interest to the Supervisory Board without  
delay and inform the other members of the Board of  
Management accordingly.  
The Board of Management takes its decisions at meetings  
generally held on a weekly basis which are convened,  
coordinated and headed by the Chairman of the Board  
of Management. At the request of the Chairman, de­  
cisions can also be taken outside of board meetings if  
none of the board members object to this procedure. A  
meeting is quorate if all Board of Management members  
are invited to the meeting in good time. Members unable  
to attend any meeting are entitled to vote in writing,  
by fax or by telephone. Votes cast by phone must be sub­  
sequently confirmed in writing. Except in urgent cases,  
matters relating to a division for which the responsible  
board member is not present will only be discussed and  
decided upon with that member’s consent.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
171 Declaration of the Board of  
Following the appointment of a new member to the  
Board of Management, the BMW Corporate Governance  
Officer informs the new member of the framework  
conditions under which the board member’s duties are  
to be carried out – in particular those enshrined in the  
BMW Group’s Corporate Governance Code – as well  
as the duty to cooperate when a transaction or event  
triggers reporting requirements or requires the approval  
of the Supervisory Board.  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
1
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
Unless stipulated otherwise by law or in BMWAG’s  
statutes, the Board of Management makes decisions on  
the basis of a simple majority of votes cast at meetings.  
Outside of board meetings, decisions are taken on  
the basis of a simple majority of board members. In the  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
The Board of Management consults and takes decisions  
as a collegiate body in meetings of the Board of Manage­ event of a tied vote, the Chairman of the Board of  
ment, the Sustainability Board, the Operations Com­  
mittee and the Committee for Executive Management  
Matters. At its meetings, the Board of Management  
defines the overall framework for business strategies  
and the use of resources, takes decisions regarding the  
implementation of strategies and deals with issues of  
particular importance to the BMW Group. The full board  
Management has the casting vote. Any changes to the  
board’s terms of reference must be passed unanimously.  
A board meeting may only be held if more than half of  
the board members are present.  
In the event that the Chairman of the Board of Manage­  
ment is not present or is unable to attend a meeting, the  
1
77 Statement on corporate Governance  
Member of the Board responsible for Finance will  
represent him.  
management positions). This committee has, on the  
one hand, an advisory and preparatory role (e.ꢀg.  
making suggestions for promotions to the two remu­  
neration groups below board level and preparing  
decisions to be taken at board meetings with regard  
to human resources principles with the emphasis on  
executive management issues) and a decision­taking  
function on the other (e.ꢀg. deciding on appointments  
to senior management positions and promotions to  
higher remuneration groups or the wording of human  
resources principles decided on by the full board).  
The Committee has two members who are entitled to  
vote at meetings, namely the Chairman of the Board  
of Management (who also chairs the meetings) and  
Minutes are taken of all meetings and the Board of  
Management’s resolutions and signed by the Chairman.  
Decisions taken by the Board of Management are  
binding for all employees.  
The rules relating to meetings and resolutions taken  
by the full Board of Management are also applicable for  
its committees.  
Members of the Board of Management not represented  
in a committee are provided with the agendas and  
minutes of committee meetings. Committee matters are the board member responsible for Human Resources  
dealt with in full board meetings if the committee con­  
siders it necessary or at the request of a member of the  
Board of Management.  
and Social Affairs. The Head of Human Resources,  
Personnel Network and Human Resources Interna­  
tional and the Head of Human Resources Executive  
Management also participate in an advisory function.  
A secretariat for Board of Management matters has been At the request of the Chairman, resolutions may also  
established to assist the Chairman and other board  
members with the preparation and follow­up work con­  
nected with board meetings.  
be passed outside of committee meetings by casting  
votes in writing, by fax or by telephone if the other  
member entitled to vote does not object immediately.  
As a general rule, between five and ten meetings are  
At meetings of the Operations Committee (generally held held each year.  
three times a month), decisions are reached in connec­  
tion with automobile product projects, based on the  
strategic orientation and decision framework stipulated  
at Board of Management meetings. The Operations  
Committee comprises the Board of Management mem­  
ber responsible for Development (who also chairs the  
The Board of Management is represented by its Chair­  
man in its dealings with the Supervisory Board. The  
Chairman of the Board of Management maintains  
regular contact with the Chairman of the Supervisory  
Board and keeps him informed of all important mat­  
meetings), together with the board members responsible ters. The Supervisory Board has passed a resolution  
for the following areas: Purchasing and Supplier Network; specifying the information and reporting duties of the  
Production; Sales and Marketing BMW, Sales Channels Board of Management. As a general rule, in the case  
BMW Group; and MINI, Motorcycles, Rolls­Royce,  
Aftersales BMW Group. If the committee chairman is  
not present or unable to attend a meeting, the Member  
of the Board responsible for Production represents  
him. Resolutions taken at meetings of the Operations  
Committee are made online.  
of reports required by dint of law, the Board of Manage­  
ment submits its reports to the Supervisory Board in  
writing. To the extent possible, documents required as  
a basis for taking decisions are sent to the members of  
the Supervisory Board in good time before the relevant  
meeting. Regarding transactions of fundamental im­  
portance, the Supervisory Board has stipulated specific  
transactions which require the approval of the Super­  
visory Board. Whenever necessary, the Chairman of  
the Board of Management obtains the approval of the  
Supervisory Board and ensures that reporting duties  
to the Supervisory Board are complied with. In order  
to fulfil these tasks, the Chairman is supported by all  
members of the Board of Management. The fundamen­  
tal principle followed when reporting to the Supervi­  
sory Board is that the latter should be kept informed  
regularly, without delay and comprehensively of all  
significant matters relating to planning, business per­  
formance, risk exposures, risk management and com­  
pliance, as well as any major variances between actual  
and budgeted figures.  
The full board usually convenes twice a year in its func­  
tion as Sustainability Board in order to define strategy  
with regard to sustainability and decide upon measures  
to implement that strategy. The Head of Corporate  
Affairs and the Representative for Sustainability and  
Environmental Protection participate in these meetings  
in an advisory capacity.  
The Board’s Committee for Executive Management  
Matters deals with enterprise­wide issues affecting ex­  
ecutive managers of the BMW Group, either in their  
entirety or individually (such as the executive manage­  
ment structure, potential candidates for executive  
management, nominations for or promotions to senior  
1
78  
Composition and work procedures of the Supervisory  
Board of BMWAG and its committees  
BMWAG’s Supervisory Board, comprising ten share­  
holder representatives (elected by the Annual General  
Meeting) and ten employee representatives (elected  
representatives and employee representatives prepare the  
Supervisory Board meetings separately and, if necessary,  
together with members of the Board of Management.  
Members of the Supervisory Board are in particular le­  
gally bound to maintain confidentiality with respect to  
by employees in accordance with the German Co­deter­ any confidential reports they receive and any confiden­  
mination Act), has the task of advising and supervising  
the Board of Management in its governance of the  
BMW Group. It is involved in all decisions of fundamen­  
tal importance for the BMW Group. The Supervisory  
Board appoints the members of the Board of Manage­  
ment and decides upon the level of compensation  
they are to receive. The Supervisory Board can revoke  
appointments for important reasons.  
tial discussions in which they partake.  
The Chairman of the Supervisory Board coordinates  
work within the Supervisory Board, chairs its meet­  
ings, handles the external affairs of the Supervisory  
Board and represents it in its dealings with the Board  
of Management.  
The Supervisory Board is quorate if all members have  
been invited to the meeting and at least half of its  
members participate in the vote on a particular resolu­  
Together with the Personnel Committee and the Board  
of Management, the Supervisory Board ensures that  
long­term successor planning is in place. In their assess­ tion. A resolution relating to an agenda item not in­  
ment of candidates for a post on the Board of Manage­ cluded in the invitation is only valid if none of the mem­  
ment, the underlying criteria applied by the Supervisory bers of the Supervisory Board who were not present  
Board for determining the suitability of candidates are  
their expertise in the relevant area of board responsi­  
bility, outstanding leadership qualities, a proven track  
at the meeting object to the resolution and a minimum  
of two­thirds of the members are present.  
record and an understanding of the BMW Group’s busi­ As a basic rule, resolutions are passed by the Super­  
ness. The Supervisory Board takes diversity into ac­ visory Board by simple majority. The German Co­de­  
count when assessing, on balance, which individual will termination Act contains specific requirements with  
best complement the Board of Management as a repre­  
sentative body of the Company. “Diversity” in the con­  
text of the decision process is understood by the Super­  
visory Board to encompass different, complementary  
individual profiles, work and life experiences, at both a  
national and international level, as well as appropriate  
representation of both genders. The Supervisory Board  
strives to ensure appropriate female representation  
on the Board of Management. The Board of Manage­  
ment reports accordingly to the Personnel Committee  
and the Supervisory Board at regular intervals on the  
proportion of, and changes in, management positions  
held by women, in particular below senior executive  
level and at uppermost management level. When actu­  
ally selecting an individual for a post on the Board of  
Management, the Supervisory Board decides in the  
best interests of the Company and after taking account  
of all relevant circumstances.  
regard to majority voting and technical procedures,  
particularly with regard to the appointment and revoca­  
tion of appointment of management board members  
and the election of a supervisory board chairman or  
deputy chairman. In the event of a tied vote in the  
Supervisory Board, the Chairman of the Supervisory  
Board has two votes in a renewed vote, if it also results  
in a tie.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
In practice, resolutions are taken by the Supervisory  
Board and its committees at the relevant meetings. A  
Supervisory Board member who is not present at a  
meeting can have hisꢀ/ꢀher vote cast by another Super­  
visory Board member if an appropriate request has  
been made in writing, by fax or in electronic form. This  
rule also applies to the casting of the second vote by  
the Chairman of the Supervisory Board. The Chairman  
of the Supervisory Board can also accept the retrospec­  
tive casting of votes by any members not present at a  
meeting if this is done within the time limit previously  
set. In special cases, resolutions may also be taken  
outside of meetings, i.ꢀe. in writing, by fax or by elec­  
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
1
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
The Supervisory Board holds a minimum of two meet­  
ings in each of the first and second six­month periods of  
the calendar year. Normally, five plenary meetings are  
189 Compensation Report  
held per calendar year. One meeting each year is planned tronic means. Minutes are taken of all resolutions and  
to cover a number of days and is used, amongst other  
things, to enable an in­depth exchange on strategic and  
meetings.  
technological matters. The main emphases of meetings in After its meetings, the Supervisory Board is generally  
the period under report are described in the Report of provided information on new vehicle models in the  
the Supervisory Board. As a general rule, the shareholder form of a short presentation.  
1
79 Statement on corporate Governance  
Following the election of a new Supervisory Board mem­ measures such as that may be necessary to carry out  
ber, the BMW Corporate Governance Officer informs  
the new member of the principal issues affecting his or  
her duties – in particular those enshrined in the BMW  
Group Corporate Governance Code – including the  
duty to cooperate when a transaction or event triggers  
reporting requirements or is subject to the approval of  
the Supervisory Board.  
the tasks assigned to them. The Company provides  
appropriate assistance to members of the Supervisory  
Board in this respect.  
The ability of the Supervisory Board to supervise and  
advise the Board of Management independently is also  
assisted by the fact that the Supervisory Board is required,  
based on its own assessment, to have an appropriate  
number of independent members. Prof. Dr.­Ing. Dr. h. c.  
Dr.­Ing. E. h. Joachim Milberg is the only person on the  
Supervisory Board to have previously served on the  
Board of Management, of which he ceased to be a mem­  
ber in 2002. Supervisory Board members do not exercise  
All members of the Supervisory Board of BMWAG are  
required to ensure that they have sufficient time to  
perform their mandate. If members of the Supervisory  
Board of BMWAG are also members of the management  
board of a listed company, they may not accept more  
than a total of three mandates on non­BMW Group super­ directorships or similar positions or undertake advisory  
visory boards of listed companies or in other bodies  
with comparable requirements.  
tasks for important competitors of the BMW Group.  
Taking into account the specific circumstances of the  
BMW Group and the number of board members, the  
Supervisory Board has set up a Presiding Board and  
four committees, namely the Personnel Committee, the  
Audit Committee, the Nomination Committee and  
the Mediation Committee (see “Overview of Supervisory  
Board Committees, Meetings”). Such committees serve  
to raise the efficiency of the Supervisory Board’s work  
and facilitate the handling of complex issues. The estab­  
lishment and function of a mediation committee is pre­  
The Supervisory Board examines the efficiency of its  
activities on a regular basis. Joint discussions are also  
held at plenum meetings, prepared on the basis of a  
questionnaire previously devised by and distributed to  
the members of the Supervisory Board. The Chairman  
of the Supervisory Board is open to suggestions for  
improvement at all times.  
Each member of the Supervisory Board of BMWAG is  
bound to act in the enterprise’s best interests. Members scribed by law. The person chairing a committee reports  
of the Supervisory Board may not pursue personal in­  
terests in their decisions or take advantage of business  
in detail on its work at each plenum meeting.  
opportunities intended for the benefit of the enterprise. The composition of the Presiding Board and the various  
committees is based on legal requirements, BMWAG’s  
Members of the Supervisory Board are obliged to in­  
Articles of Incorporation, terms of reference and corpo­  
form the full Supervisory Board of any conflicts of inter­ rate governance principles. The expertise and technical  
est which may result from a consultant or directorship  
function with clients, suppliers, lenders or other busi­  
skills of its members are also taken into account.  
ness partners, enabling the Supervisory Board to report According to the relevant terms of reference, the Chair­  
to the shareholders at the Annual General Meeting on  
how it has dealt with such issues. Material conflicts of  
interest and those which are not merely temporary in  
nature result in the termination of the mandate of the  
relevant Supervisory Board member.  
man of the Supervisory Board is, in this capacity, auto­  
matically a member of the Presiding Board, the Personnel  
Committee and the Nomination Committee, and also  
chairs these committees.  
The number of meetings held by the Presiding Board  
With regard to nominations for the election of members and the committees depends on current requirements.  
of the Supervisory Board, care is taken that the Super­  
visory Board in its entirety has the required knowledge,  
skills and expert experience to perform its tasks in a  
proper manner.  
The Presiding Board, the Personnel Committee and  
the Audit Committee normally hold several meetings in  
the course of the year (see “Overview of Supervisory  
Board Committees, Meetings” for details of the number  
of meetings held in 2014).  
The Supervisory Board has set out specific targets for its  
own composition (see section “Composition targets for  
the Supervisory Board”).  
In line with the terms of reference for the activities of  
the plenum, the Supervisory Board has also set terms of  
reference for the Presiding Board and the various com­  
mittees. The committees are only quorate if all members  
are present. Resolutions taken by the committees are  
The members of the Supervisory Board are responsible  
for undertaking appropriate basic and further training  
1
80  
passed by simple majority unless stipulated otherwise  
by law. Minutes are also taken at the meetings and for  
the resolutions of the committees and the Presiding  
Board, and signed by the person chairing the particular  
meeting. This person also represents the committee in  
each case taking account of the consequences of related  
parties), as well as other activities of members of the Board  
of Management, including the acceptance of non­BMW  
Group supervisory board mandates.  
any dealings it may have with the Board of Management The Audit Committee deals in particular with issues  
or third parties.  
relating to the supervision of the financial reporting  
process, the effectiveness of the internal control system,  
Members of the Supervisory Board may not delegate their the risk management system, internal audit arrange­  
duties. The Supervisory Board, the Presiding Board ments and compliance. It also monitors the external  
and committees may call on experts and other suitably audit, auditor independence and any additional work  
informed persons to attend meetings to give advice on  
specific matters.  
performed by the external auditor. It prepares the pro­  
posal for the election of the external auditor at the An­  
nual General Meeting, makes a recommendation re­  
garding the election of the external auditor, issues the  
The Supervisory Board, the Presiding Board and the  
committees also meet without the Board of Management audit engagement letter and agrees on points of audit  
if necessary.  
focus as well as the auditor’s fee. The Audit Committee  
prepares the Supervisory Board’s resolution relating  
to the Company and Group Financial Statements and  
discusses interim reports with the Board of Manage­  
ment before publication. The Audit Committee also  
decides on the Supervisory Board’s agreement to use  
BMWAG ensures that the Supervisory Board and its  
committees are sufficiently equipped to carry out their  
duties. This includes the services provided by a cen­  
tralised secretariat to support the chairmen in coordi­  
nating the work of the Supervisory Board.  
the Authorised Capital 2014 (Article 4 no.5 of the  
Articles of Incorporation) and on amendments to the  
Articles of Incorporation which only affect its wording.  
In accordance with the relevant terms of reference, the  
Presiding Board comprises the Chairman of the Super­  
visory Board and board deputies. The Presiding Board  
prepares Supervisory Board meetings to the extent that  
the subject matter to be discussed does not fall within  
the remit of a committee. This includes, for example,  
preparing the annual Declaration of Compliance with  
In line with the recommendations of the German Cor­  
porate Governance Code, the Chairman of the Audit  
Committee is independent and not a former Chairman  
of the Board of Management and has specific know­how  
and experience in applying financial reporting stand­  
the German Corporate Governance Code and the Super­ ards and internal control procedures. He also fulfils the  
visory Board’s efficiency examination.  
requirements of being an independent financial expert  
as defined by §100 (5) and §107 (4) AktG.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
The Personnel Committee prepares the decisions of the  
Supervisory Board with regard to the appointment and  
revocation of appointment of members of the Board  
of Management and, together with the full Supervisory  
1
The Nomination Committee is charged with the task  
of finding suitable candidates for election to the Super­  
visory Board (as shareholder representatives) and for  
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
Board and the Board of Management, ensures that long­ inclusion in the Supervisory Board’s proposals for elec­  
1
term successor planning is in place. The Personnel  
Committee also prepares the decisions of the Super­  
visory Board with regard to the Board of Management’s  
compensation and the Supervisory Board’s regular  
review of the Board of Management’s compensation  
system. In conjunction with the resolutions taken by  
the Supervisory Board regarding the compensation of  
the Board of Management, the Personnel Committee  
is responsible for drawing up, amending and revoking  
serviceꢀ/ꢀemployment contracts or, when necessary,  
other relevant contracts with members of the Board of  
Management. In specified cases, the Personnel Com­  
mittee also has the authority to give the necessary ap­  
proval for a particular transaction (instead of the Super­  
visory Board). This includes loans to members of the  
Board of Management or Supervisory Board, specified  
contracts with members of the Supervisory Board (in  
tion at the Annual General Meeting. In line with the  
recommendations of the German Corporate Governance  
Code, the Nomination Committee comprises only share­  
holder representatives.  
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
The establishment and composition of a mediation  
committee are required by the German Co­determina­  
tion Act. The Mediation Committee has the task of  
making proposals to the Supervisory Board if a resolu­  
tion for the appointment of a member of the Board of  
Management has not been carried by the necessary  
two­thirds majority of members’ votes. In accordance  
with statutory requirements, the Mediation Commit­  
tee comprises the Chairman and the Deputy Chairman  
of the Supervisory Board and one member each se­  
lected by shareholder representatives and employee  
representatives.  
184 Compliance in the BMW Group  
189 Compensation Report  
1
81 Statement on corporate Governance  
Overview of Supervisory Board Committees, Meetings  
Principal duties,  
Members  
Number  
Average  
basis for activities  
of meetings attendance  
2014  
Presiding Board  
1
–
preparation of Supervisory Board meetings to the extent that the subject  
matter to be discussed does not fall within the remit of a committee  
Joachim Milberg  
Manfred Schoch  
Stefan Quandt  
Stefan Schmid  
4
95%  
97%  
–
activities based on terms of reference  
Karl-Ludwig Kley  
Personnel Committee  
1
–
preparation of decisions relating to the appointment and revocation of appoint- Joachim Milberg  
6
ment of members of the Board of Management, the compensation and the  
regular review of the Board of Management’s compensation system  
Manfred Schoch  
Stefan Quandt  
Stefan Schmid  
Karl-Ludwig Kley  
–
conclusion, amendment and revocation of employment contracts (in conjunc-  
tion with the resolutions taken by the Supervisory Board regarding the com-  
pensation of the Board of Management) and other contracts with members of  
the Board of Management  
–
–
decisions relating to the approval of ancillary activities of Board of Management  
members, including acceptance of non-BMW Group supervisory mandates as  
well as the approval of transactions requiring Supervisory Board approval by dint  
of law (e.g. loans to Board of Management or Supervisory Board members)  
set up in accordance with the recommendation contained in the German  
Corporate Governance Code, activities based on terms of reference  
Audit Committee  
1, 2  
–
supervision of the financial reporting process, effectiveness of the internal  
control system, risk management system, internal audit arrangements and  
compliance  
Karl-Ludwig Kley  
Joachim Milberg  
Manfred Schoch  
Stefan Quandt  
Stefan Schmid  
4
plus  
3 telephone  
conferences  
94%  
–
–
supervision of external audit, in particular auditor independence and addi-  
tional work performed by external auditor  
preparation of proposals for election of external auditor at Annual General Meet-  
ing, engagement of external auditor and compliance of audit engagement, de-  
termination of areas of audit emphasis and fee agreements with external auditor  
–
preparation of Supervisory Board’s resolution on Company and Group Finan-  
cial Statements  
–
–
–
–
discussion of interim reports with Board of Management prior to publication  
decision on approval for utilisation of Authorised Capital 2014  
amendments to Articles of Incorporation only affecting wording  
establishment in accordance with the recommendation contained in the  
German Corporate Governance Code, activities based on terms of reference  
Nomination Committee  
1
–
identification of suitable candidates (male/female) as shareholder representa- Joachim Milberg  
2
88%  
tives on the Supervisory Board to be put forward for inclusion in the Super-  
visory Board’s proposals for election at the Annual General Meeting  
Susanne Klatten  
Karl-Ludwig Kley  
Stefan Quandt  
–
establishment in accordance with the recommendation contained in the  
German Corporate Governance Code, activities based on terms of reference  
(In line with the recommendations of the  
German Corporate Governance Code,  
the Nomination Committee comprises  
only shareholder representatives.)  
Mediation Committee  
–
proposal to Supervisory Board if resolution for appointment of Board of  
Management member has not been carried by the necessary two-thirds  
majority of Supervisory Board members’ votes  
Joachim Milberg  
Manfred Schoch  
Stefan Quandt  
Stefan Schmid  
–
–
–
committee required by law  
(
In accordance with statutory require-  
ments, the Mediation Committee  
comprises the Chairman and Deputy  
Chairman of the Supervisory Board and  
one member each selected by share-  
holder representatives and employee  
representatives.)  
1
2
Chair.  
Independent financial expert within the meaning of §100 (5) AktG and §107 (4) AktG.  
1
82  
Composition objectives of the Supervisory Board  
The Supervisory Board must be composed in such a way  
that its members as a group possess the knowledge, skills  
and experience required to properly complete its tasks.  
To this end, the Supervisory Board has formally speci­  
The Supervisory Board believes it is the joint respon­  
sibility of all persons and groupings participating in  
the nomination and election process to ensure that  
the Supervisory Board includes an appropriate num­  
ber of qualified women.  
fied the following concrete objectives regarding its com­ – At least twelve of the 20 members of the Supervisory  
position, taking into account the recommendations  
contained in the German Corporate Governance Code:  
Board should be independent members within the  
meaning of section of the German Corporate  
5.4.2  
–
If possible four of the members of the Supervisory  
Board should have international experience or spe­  
cialist knowledge with regard to one or more of  
the non­German markets important to the Company.  
Governance Code, including at least six members  
representing the Company’s shareholders. Two inde­  
pendent members of the Supervisory Board should  
have expert knowledge of accounting or auditing.  
–
If possible, the Supervisory Board should include seven – No persons carrying out directorship functions or ad­  
members who have acquired in­depth knowledge and  
experience from within the enterprise. The Super­  
visory Board should not, however, include more than  
two former members of the Board of Management.  
If possible three of the shareholder representatives in  
the Supervisory Board should be entrepreneurs or  
persons who have already gained experience in the  
management or supervision of another medium or  
large­sized company.  
visory tasks for important competitors of the BMW  
Group may belong to the Supervisory Board. In com­  
pliance with prevailing legislation, the members of  
the Supervisory Board will strive to ensure that no  
persons will be nominated for election with whom a  
serious conflict of interests could arise (other than  
temporarily) due to other activities and functions car­  
ried out by them outside the BMW Group; this in­  
cludes in particular advisory activities or directorships  
with customers, suppliers, creditors or other business  
partners.  
–
–
Ideally, three members of the Supervisory Board  
should be figures from the worlds of business, science  
or research who have gained experience in areas rele­ – As a general rule, the age limit for membership of the  
vant to the BMW Group – e.ꢀꢀg. chemistry, energy sup­  
ply, information technology, or who have acquired  
specialist knowledge in subjects relevant for the future  
of the BMW Group e.ꢀg. customer requirements, mo­  
bility, resources or sustainability.  
When seeking suitably qualified individuals for the  
Supervisory Board whose specialist skills and leader­  
ship qualities are most likely to strengthen the Board  
as a whole, consideration should also be given to di­  
versity. When preparing nominations, the extent to  
Supervisory Board should be set at 70 years. In ex­  
ceptional cases, members may be allowed to remain  
on the Board up until the end of the Annual General  
Meeting following their 73rd birthday, in order to ful­  
fil legal requirements or to facilitate smooth succes­  
sion in the case of persons with key roles or specialist  
qualifications.  
–
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
The time schedule set by the Supervisory Board for  
achieving the above­mentioned composition targets is  
(
1
which the work of the Supervisory Board would bene­ the Annual General Meeting in 2016. Future pro­  
1
71 Declaration of the Board of  
fit from diversified professional and personal back­  
grounds (including international aspects) and from  
posals for nomination made by the Supervisory Board  
at the Annual General Meeting – insofar as they apply  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
an appropriate representation of both genders should to shareholder Supervisory Board members – should  
1
also be taken into account. In view of the proportion  
of women in the workforce (BMWAG: 14.8%; BMW  
take account of these objectives in such a way that they  
can be achieved with the support of the appropriate  
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Group 17.8%) and in management positions (BMWAG: resolutions at the Annual General Meeting. The Annual  
%; BMW Group: 14 %) at 31 December 2014 General Meeting is not bound by nominations for elec­  
Board of Management  
1
1
.
4
.
2
,
178 Work Procedures of the  
Supervisory Board  
the Supervisory Board is of the opinion that a propor­ tion proposed by the Supervisory Board. The freedom  
tion of three female members out of a total of 20 mem­ of employees to vote for the employee members of the  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
bers (15%) is satisfactory as far as gender mix is con­  
cerned, but that an increase to at least four female  
members (20%) would be desirable. The Supervisory  
Board therefore considers it appropriate that oppor­  
Supervisory Board is also protected. Under the proce­  
dural rules stipulated by the German Co­Determination  
Act, the Supervisory Board does not have the right to  
nominate employee representatives for election. The ob­  
189 Compensation Report  
tunities available in conjunction with selection proce­ jectives which the Supervisory Board has set itself with  
dures through to the end of the ordinary Annual  
General Meeting in 2016 should be used to maintain  
regard to its composition are therefore not intended to  
be instructions to those entitled to vote or restrictions  
the current proportion of 25% female representation. on their freedom to vote. More to the point, they reflect  
1
83 Statement on corporate Governance  
the composition which the current Supervisory Board  
believes should be striven for in future by those entitled  
to nominate and elect board members, in view of the  
Adaptability  
In order to ensure our long­term success we must adapt  
to new challenges with speed and flexibility. We there­  
advisory and supervisory needs of BMWAG’s Supervisory fore see change as an opportunity – adaptability is essen­  
Board.  
tial to be able to capitalise on it.  
In the Supervisory Board’s opinion, its composition as  
at 31 December 2014 fulfilled the composition objec­  
tives detailed above.  
Frankness  
As we strive to find the best solution, it is each em­  
ployee’s duty to express any opposing opinions they  
may have. The solutions we agree upon will then be  
consistently implemented by all those involved.  
In order to provide shareholders with a profile of the  
individual members of the Supervisory Board and  
to make it easier to assess composition targets, brief  
curricula vitae of the current members of the Super­  
visory Board are available on the Company’s website  
at www.bmwgroup.com.  
Respect, trust, fairness  
We treat each other with respect. Leadership is based on  
mutual trust. Trust is rooted in fairness and reliability.  
Employees  
Information on corporate governance practices  
applied beyond mandatory requirements  
Core principles  
Within the BMW Group, the Board of Management, the  
Supervisory Board and the employees base their actions  
on twelve core principles which are the cornerstone of  
the success of the BMW Group:  
People make companies. Our employees are the strong­  
est factor in our success, which means our personnel  
decisions will be among the most important we ever  
make.  
Leading by example  
Every manager must lead by example.  
Customer focus  
Sustainability  
The success of our Company is determined by our cus­  
tomers. They are at the heart of everything we do.  
The results of all our activities must be valued in terms  
of the benefits they will generate for our customers.  
In our view, sustainability constitutes a lasting contribu­  
tion to the success of the Company. This is the basis upon  
which we assume ecological and social responsibility.  
Society  
Peak performance  
Social responsibility is an integral part of our corporate  
self­image.  
We aim to be the best – a challenge to which all of us  
must rise. Each and every employee must be prepared  
to deliver peak performance. We strive to be among  
the elite, but without being arrogant. It is the Company  
and its products that count – and nothing else.  
Independence  
We secure the corporate independence of the BMW  
Group through sustained profitable growth.  
Responsibility  
The core principles are also available at www.bmwgroup.  
Every BMW Group employee has the personal responsi­ com under the menu items “Responsibility” and “Em­  
bility for the Company’s success. When working in a  
team, each employee must assume personal responsibility  
for his or her actions. We are fully aware that we are  
working to achieve the Company’s goals. For this reason,  
we work together in the best interests of the Company.  
ployees”.  
Social responsibility towards employees and along  
the supplier chain  
The BMW Group stands by its social responsibilities. Our  
corporate culture combines the drive for success with a  
willingness to be open, trustworthy and transparent.  
We are well aware of our responsibility towards society.  
Our models for sustainable social responsibility towards  
employees and for ensuring compliance with interna­  
tional social standards are based on various internationally  
Effectiveness  
The only results that count for the Company are those  
which have a sustainable impact. In assessing leader­  
ship, we must consider the effectiveness of performance  
on results.  
1
84  
recognised guidelines. The BMW Group is committed to  
adhering to the OECD’s guidelines for multinational  
BMW Group not only makes high demands of itself but  
also expects its suppliers and partners to meet the eco­  
companies and the contents of the ICC Business Charter logical and social standards it sets and strives continu­  
for Sustainable Development. Details of the contents  
of these guidelines and other relevant information can  
be found at www.oecd.org and www.iccwbo.org. The  
ally to improve the efficiency of processes, measures  
and activities. For instance, we are successively requir­  
ing our dealers and importers to comply with ecolog­  
Board of Management signed the United Nations Global ical and social standards on a contractual basis. Simi­  
Compact in 2001 and, in 2005, together with employee  
representatives, issued a “Joint Declaration on Human  
Rights and Working Conditions in the BMW Group”.  
This Joint Declaration was reconfirmed in 2010. With  
the signature of these documents, we have given our  
commitment to abide worldwide by internationally rec­  
ognised human rights and with the fundamental work­  
ing standards of the International Labour Organization  
larly, corresponding criteria are embedded in our  
purchasing terms and our evaluation of suppliers with  
a view to ensuring the inclusion of sustainability as­  
pects throughout the purchasing system. The BMW  
Group Sustainability Standard is an integral compo­  
nent of our enquiry documents and of the automotive  
supplier self­assessment questionnaire on sustainabil­  
ity required to be completed sector­wide by new sup­  
pliers. The BMW Group expects suppliers to ensure  
(
ILO). The most important of these are freedom of em­  
ployment, the prohibition of discrimination, the freedom that the BMW Group’s sustainability criteria are also  
of association and the right to collective bargaining,  
the prohibition of child labour, the right to appropriate  
adhered to by sub­suppliers. Purchasing terms and  
conditions and other information relating to purchasing  
remuneration, regulated working times and compliance can be found in the publicly available section of the  
with work and safety regulations. The complete text of  
the UN Global Compact and the recommendations of  
the ILO and other relevant information can be found at  
www.unglobalcompact.org and www.ilo.org. The Joint  
Declaration on Human Rights and Working Conditions  
in the BMW Group can be found at www.bmwgroup.  
com under the menu item “Responsibility” (Servicesꢀ/  
downloadsꢀ/ꢀtopics: “Employees and Society”).  
BMW Group Partner Portal at https:ꢀ/ꢀꢀ/ꢀb2b.bmw.com.  
We also work in close partnership with our suppliers  
and promote their commitment to sustainability.  
Compliance in the BMW Group  
Responsible and lawful conduct is fundamental to the  
success of the BMW Group. It is an integral part of  
our corporate culture and the reason why customers,  
shareholders, business partners and the general public  
place their trust in us. The Board of Management and  
the employees of the BMW Group are obliged to act  
responsibly and in compliance with applicable laws and  
regulations.  
It goes without saying that the BMW Group abides by  
these fundamental principles and rights worldwide.  
Employees have therefore been sensitised to this issue  
since 2005 by means of regular internal communica­  
tions and further training on recent developments in  
this area. Two dedicated helplines – the “Human Rights  
Contact” and the BMW Group SpeakUP Line – are  
available to employees wishing to raise queries or com­  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
This principle has been embedded in BMW’s internal  
rules of conduct for many years. In order to protect  
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
plaints relating to human rights issues. The UN Guiding itself systematically against compliance­related and  
§
161AktG  
72 Members of the Board of  
Management  
Principles for Business and Human Rights provide a  
framework for critical reflection and continuous improve­  
reputational risks, the Board of Management created  
Compliance Committee several years ago, mandated  
1
a
1
73 Members of the Supervisory  
ment in our endeavours to ensure that human rights are to establish a worldwide Compliance Management  
respected throughout the organisation. System throughout the BMW Group.  
Board  
1
76 Work Procedures of the  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
83 Information on Corporate  
Further information on social responsibility to employees The BMW Group Compliance Committee comprises  
1
Governance Practices  
84 Compliance in the BMW Group  
89 Compensation Report  
can be found in the section “Workforce”.  
the heads of the following divisions: Legal Affairs and  
Patents, Corporate and Governmental Affairs, Corpo­  
rate Audit, Group Reporting, Organisational Develop­  
ment and Corporate Human Resources. It manages and  
1
1
Activities can only be sustainable, however, if they en­  
compass the entire value­added chain. That is why the  
1
85 Statement on corporate Governance  
monitors activities necessary to avoid non­compliance  
pliance Committee Office comprises ten employees and  
with the law (Legal Compliance). These activities include is allocated in organisational terms to the Chairman of  
training, information and communication measures,  
compliance controls and following up cases of non­com­  
pliance.  
the Board of Management.  
The Chairman of the BMW Group Compliance Com­  
mittee keeps the Audit Committee (which is part of the  
The BMW Group Compliance Committee reports regu­ Supervisory Board) informed on the current status of  
larly to the Board of Management on all compliance­  
related issues, including the progress made in refining  
the BMW Group Compliance Management System, de­  
tails of investigations performed, known infringements  
of the law, sanctions imposed and correctiveꢀ/ꢀpreventa­  
compliance activities within the BMW Group, both on a  
regular and a case­by­case basis as the need arises.  
The Board of Management keeps track of and analyses  
compliance­related developments and trends on the  
tive measures implemented. This ensures that the Board basis of the Group’s compliance reporting and input  
of Management is immediately notified of any cases of from the BMW Group Compliance Committee. Measures  
particular significance. The decisions taken by the BMW to improve the Compliance Management System are  
Group Compliance Committee are drafted in concept,  
and implemented operationally, by the BMW Group  
Compliance Committee Office. The BMW Group Com­  
initiated on the basis of identified requirements.  
A coordinated set of instruments and measures is em­  
ployed to ensure that the BMW Group, its representative  
bodies, its managers and staff act in a lawful manner.  
Particular emphasis is placed on compliance with anti­  
trust legislation and the avoidance of corruption risks.  
Compliance measures are supplemented by a whole  
range of internal policies, guidelines and instructions,  
which in part reflect applicable legislation. The BMW  
Group Policy “Corruption Prevention” and the BMW  
Group Instruction “Corporate Hospitality and Gifts”,  
which were revised in 2014, deserve particular mention.  
These documents deal with lawful handling of gifts  
and benefits and define appropriate assessment criteria  
and approval procedures for specified actions.  
BMW Group Compliance Management System  
Supervisory Board BMWAG  
Annual  
Report  
Board of Management BMWAG  
Annual  
Report  
BMW Group Compliance Committee  
BMW Group Compliance Committee Office  
Annual  
Compliance  
Reporting  
Compliance Operations Network  
of all BMW Group  
Compliance Responsibles  
Compliance measures are determined and prioritised  
on the basis of a group­wide compliance risk assess­  
ment covering all 331 business units and functions  
worldwide within the BMW Group. The assessment of  
compliance risks is updated annually. Measures are  
realised with the aid of a regionally structured com­  
pliance management team covering all parts of the  
BMW Group, which oversees a network of more than  
Compliance Risk  
Analysis  
Legal Compliance  
Code and Regulations  
Compliance  
Investigations  
and Controls  
Compliance  
Communication  
Compliance  
Instruments and  
Measures of  
1
80 Compliance Responsibles.  
the BMW Group  
The various elements of the BMW Group Compliance  
Management System are shown in the diagram on the  
left and are applicable for all BMW Group entities world­  
wide. To the extent that additional compliance require­  
ments apply to individual countries or specific lines  
of business, these are covered by supplementary com­  
pliance measures.  
Compliance  
Reporting  
Compliance  
Training  
Compliance  
Compliance  
Governance and  
Processes  
Contact and  
SpeakUP Line  
1
86  
The BMW Group Legal Compliance Code is the corner­  
stone of the Group’s Compliance Management System,  
spelling out the Board of Management’s commitment  
to compliance as a joint responsibility (“tone from the  
top”). This document, which was revised and expanded  
in 2014, explains the significance of legal compliance  
and provides an overview of the various areas relevant  
for the BMW Group. It is available both as a printed  
brochure and for download in German and English. In  
addition, translations into eleven other languages are  
available in the BMW Group intranet.  
total of 3,900 employees have already completed this  
training. The relevant divisions also implemented further  
measures and processes to make employees who par­  
ticipate in meetings with competitors sufficiently aware  
of antitrust risks.  
Additional compliance coaching has also been imple­  
mented for international sales and financial service lo­  
cations in local markets. These multi­day classroom  
seminars strengthen the understanding of compliance  
in selected units and enhance cooperation between  
the central BMW Group Compliance Committee Office  
and decentralised compliance offices. In 2014, market  
coaching was conducted in Canada, China and the UK.  
Managers in particular bear a high degree of responsi­  
bility and must set a good example with regard to pre­  
venting infringements. Managers throughout the BMW  
Group acknowledge this principle by signing a written  
declaration, in which they also undertake to inform  
staff working for them of the content and significance  
of the Legal Compliance Code and make them aware  
of legal risks. Managers must, at regular intervals and  
on their own initiative, verify compliance with the law  
and communicate regularly with staff on this issue.  
Any indication of non­compliance with the law must  
be rigorously investigated.  
In order to avoid legal risks, all members of staff are  
expected to discuss compliance matters with their  
managers and with the relevant departments within  
the BMW Group, in particular Legal Affairs, Corporate  
Audit and Corporate Security. The BMW Group Com­  
pliance Contact serves as a further point of contact for  
both employees and non­employees for any questions  
regarding compliance.  
Employees also have the opportunity to submit informa­  
More than 25,400 managers and staff worldwide have re­ tion – anonymously and confidentially – via the BMW  
ceived training in essential compliance matters since the Group SpeakUP Line about possible breaches of the law  
introduction of the BMW Group Compliance Manage­  
within the company. The BMW Group SpeakUP Line  
ment System. The training material is available on an In­ is available in a total of 34 languages and can be reached  
ternet­based training platform in German and English  
and includes a final test. Successful completion of the  
training programme, which is documented by a certificate,  
is mandatory for all BMW Group managers. Appropriate  
processes are in place to ensure that all newly recruited  
managers and promoted staff undergo compliance train­  
ing. In this way, the BMW Group ensures full training  
coverage for its managers in compliance matters.  
via local toll­free numbers in all countries in which BMW  
Group employees are engaged in activities.  
Compliance­related queries and concerns are docu­  
mented and followed up by the BMW Group Compliance  
Committee Office using an electronic Case Management  
System. If necessary, Corporate Audit, Corporate  
Security, the Works Council and legal departments may  
be called upon to assist in the investigation process.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
In addition to this basic training, more in­depth training  
is also provided to certain groups of staff on specific  
compliance issues. In 2014, a total of 1,900 employees at Responsibles throughout the BMW Group report on  
BMWAG branches received further training as anti­  
money laundering measures were upgraded. Antitrust  
law training was also expanded in 2013, targeting em­  
ployees who come into contact with antitrust­related  
issues as a result of their functions within sales and  
marketing, purchasing, production or development. A  
1
Through the group­wide reporting system, Compliance  
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
compliance­relevant issues to the Compliance Commit­  
tee on a regular basis, and, if necessary, on an ad hoc  
basis. This includes reporting on the compliance status  
of the relevant entities, on identified legal risks and  
incidences of non­compliance, as well as on correctiveꢀ/  
preventative measures implemented.  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
1
87 Statement on corporate Governance  
Compliance with and implementation of the Legal Com­  
pliance Code are audited regularly by Corporate Audit  
and subjected to control checks by Corporate Security  
evaluated with a view to identifying potential compliance  
risks. These procedures are particularly relevant for  
relations with sales partners and service providers, such  
and the BMW Group Compliance Committee Office. As as agencies and consultants. Depending on the results  
part of its regular activities, Corporate Audit carries out of the evaluation, appropriate measures – such as com­  
on­site audits. The BMW Group Compliance Committee munication measures, training and possible monitoring –  
also engages Corporate Audit to perform compliance­  
specific checks. In addition, a BMW Group Compliance  
are implemented to manage compliance risks. The  
Business Relations Compliance programme has already  
Spot Check, a sample test specifically designed to identify been introduced in 32 units since its launch and, over  
potential corruption risks, was carried out in 2014. Com­ the coming years, will be rolled out successively through­  
pliance control activities are coordinated by the BMW  
Group Panel Compliance Controls. Any necessary follow  
up measures are organised by the BMW Group Com­  
pliance Committee Office.  
out the BMW Group’s worldwide sales organisation.  
In 2014, the company also continued integrating com­  
pliance clauses to protect contractual relationships into  
dealer and importer contracts.  
­
It is essential that employees are aware of and comply  
with applicable legal regulations. The BMW Group  
does not tolerate violations of the law by its employees.  
Culpable violations of the law result in employment­  
Compliance is also an important factor in safeguarding  
the future of the BMW Group workforce. With this in  
mind, the Board of Management and the national and  
international employee representative bodies of the  
contract sanctions and may involve personal liability con­ BMW Group have agreed on a binding set of Joint Prin­  
sequences for the employee involved.  
ciples for Lawful Conduct. In doing so, all parties in­  
volved made a commitment to the principles contained  
in the BMW Group Legal Compliance Code and to  
To avoid this, BMW Group employees are kept fully up  
­
to­date with the instruments and measures used by the trustful cooperation in all matters relating to compliance.  
Compliance Management System via various internal  
channels. As of 2014, all new staff receive a welcome  
email underscoring the BMW Group’s special commit­  
ment to compliance when they join the company. The  
central means of communication is the Compliance  
website within the BMW Group’s intranet, where em­  
ployees can find compliance­related information and  
access training materials in both German and English.  
Employee representatives are therefore regularly in­  
volved in the process of refining compliance measures  
within the BMW Group.  
In the interest of investor protection and to ensure that  
the BMW Group complies with regulations relating  
to potential insider information, the Board of Manage­  
ment appointed an Ad Hoc Committee back in 1994,  
The website contains a special service area where various consisting of representatives of various specialist de­  
practical tools are made available to employees to help partments, whose members examine the relevance of  
them deal with typical compliance­related matters. BMW issues for ad hoc disclosure purposes. All persons  
Group employees also have access on the website to an working on behalf of the company who have access to  
electronically supported approval process for invitations insider information in accordance with existing rules  
in connection with business partners and an evaluation have been, and continue to be, included in a corre­  
tool for independent assessment of the admissibility of sponding, regularly updated list and informed of the  
incentive schemes to promote sales.  
duties arising from insider rules.  
In the same way that the BMW Group is committed to  
lawful and responsible conduct, it expects no less  
from its business partners. In 2012, the BMW Group  
developed a new Business Relations Compliance pro­  
gramme aimed at ensuring the reliability of its business  
relations. Relevant business partners are checked and  
1
88  
Reportable securities transactions  
“Directors Dealings”)  
Pursuant to §15a of the German Securities Trading Act  
WpHG), members of the Board of Management and  
the Supervisory Board and any persons related to those  
members are required to give notice to BMWAG and  
and to hold the shares so acquired for four years. In re­  
turn for this commitment, BMWAG pays 100% of the  
investment amount as a net subsidy. Once the four­year  
holding period requirement has been fulfilled, the par­  
ticipants receive – for each three common stock shares  
held and at the Company’s option – one further share  
(
(
the Federal Agency for the Supervision of Financial Ser­ of common stock or the equivalent amount in cash.  
vices of transactions with BMW stock or related finan­  
cial instruments if the total sum of such transactions  
equals or exceeds an amount of €ꢀ5,000 during any given  
calendar year. No securities transactions pursuant to  
Under the terms of the Employee Share Programme, em­  
ployees were able in 2014 to acquire packages of be­  
tween four and ten shares of non­voting preferred stock  
with a discount in each case of €ꢀ25 (2013: €ꢀ19.23) per  
share compared to the market price (average closing  
price in Xetra trading during the period from 6 Novem­  
§
15a WpHG were notified to the Company during the  
financial year 2014.  
Shareholdings of members of the Board of Management ber to 12 November 2014: €ꢀ62.08). All employees of  
and the Supervisory Board  
The members of the Supervisory Board of BMWAG  
hold in total 27.61% of the Company’s shares of com­  
BMWAG and its – directly or indirectly – wholly owned  
German subsidiaries (if agreed to by the directors of  
those entities) were entitled to participate in the scheme.  
Employees were required to have been in an uninter­  
rupted employment relationship with BMWAG or the  
relevant subsidiary for at least one year at the date on  
which the allocation for the year was announced. Shares  
of preferred stock acquired in conjunction with the Em­  
ployee Share Scheme are subject to a vesting period of  
four years, starting from 1 January of the year in which  
the employees acquired the shares. A total of 239,777  
(2013: 266,152) shares of preferred stock were acquired  
by employees under the scheme in 2014; 239,757 (2013:  
265,570) of these shares were drawn from the Author­  
ised Capital 2014, the remainder were bought back via  
the stock exchange. Every year the Board of Manage­  
ment of BMWAG decides whether the scheme is to be  
continued. Further information is provided in notes 20  
and 35 to the Group Financial Statements.  
mon and preferred stock (2013  
: 27.62%), of which  
1
6.06% (2013: 16.07%) relates to Stefan Quandt, Ger­  
many, and 11.54% (2013: 11.55%) to Susanne Klatten,  
Germany. The shareholdings of the members of the  
Board of Management total less than 1% of the issued  
shares.  
Share-based remuneration schemes for employees  
and Management Board members  
Three share­based remuneration schemes were in place  
at BMWAG during the year under report, namely the  
Employee Share Programme (under which entitled  
employees of BMWAG have been able to participate in  
the enterprise’s success since 1989 in the form of non­  
voting shares of preferred stock), a share­based remu­  
neration scheme for Board of Management members  
and a share­based remuneration scheme for department  
heads (relating in both cases to shares of common  
stock). The share­based remuneration scheme for Board  
of Management members is described in detail in the  
Compensation Report (see also the “Share­based re­  
muneration” section in the Compensation Report and  
note 20 to the Group Financial Statements).  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
1
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
78 Work Procedures of the  
Supervisory Board  
83 Information on Corporate  
Governance Practices  
84 Compliance in the BMW Group  
89 Compensation Report  
The share­based remuneration scheme for qualifying  
department heads, introduced with effect for financial  
years beginning after 1 January 2012, is closely based  
on the scheme for Board of Management members and  
is aimed at rewarding a long­term, entrepreneurial ap­  
proach to running the business on a sustainable basis.  
1
1
1
1
Under the terms of this scheme, participants give a  
commitment to invest an amount equivalent to 20% of  
their performance­based bonus in BMW common stock  
1
89 Statement on corporate Governance  
Compensation Report  
performance. Targets and other parameters may not be  
changed retrospectively.  
The following section describes the principles relating  
to the compensation of the Board of Management and  
the stipulations set out in the statutes relating to the  
compensation of the Supervisory Board. In addition to  
discussing the compensation system, the components  
of compensation are also disclosed in absolute figures.  
Furthermore, the compensation of each member of the  
Board of Management and the Supervisory Board for  
the financial year 2014 is disclosed by individual and  
analysed in its component parts.  
The Supervisory Board reviews the appropriateness of  
the compensation system annually. The Personnel  
Committee also makes use of remuneration studies. The  
Supervisory Board reviews the appropriateness of the  
compensation system in horizontal terms by comparing  
compensation paid by DAX companies and in vertical  
terms by comparing board compensation with the sala­  
ries of executive managers and with the average salaries  
of employees of BMWAG in Germany, in both cases in  
terms of level and of changes over time. Recommenda­  
tions made by an independent external remuneration  
expert and suggestions made by investors and analysts  
are also considered in the consultative process.  
1
. Board of Management compensation  
Responsibilities  
The Supervisory Board is responsible for determining  
and regularly reviewing the Board of Management’s  
compensation. The Personnel Committee plays a pre­  
paratory role in this process.  
Compensation system, compensation components  
The compensation of the Board of Management com­  
prises both fixed and variable remuneration as well as  
a share­based component. Retirement and surviving  
dependants’ benefit entitlements are also in place.  
Principles of compensation  
The compensation system for the Board of Management  
at BMWAG is designed to encourage a management  
approach focused on sustainable development of the  
BMW Group. One further principle applied when de­  
Fixed compensation  
signing remuneration systems at BMW is that of consist­ Fixed remuneration consists of a base salary (paid  
ency at different levels. In other words, compensation  
systems for the Board of Management, senior manage­  
monthly) and other remuneration elements. Other re­  
muneration elements comprise mainly the use of com­  
ment and employees of BMWAG should all have a simi­ pany and lease cars as well as the payment of insurance  
lar structure and contain similar components. The Super­  
visory Board carries out regular checks to ensure that  
premiums, contributions towards security systems and  
an annual medical check­up. Members of the Board of  
all Board of Management compensation components are Management are also entitled to purchase vehicles and  
appropriate, both individually and in total, and do not  
encourage the Board of Management to take inappro­  
priate risks on behalf of the BMW Group. At the same  
time, the compensation model used for the Board of  
Management should be attractive in the context of the  
other services of the BMW Group at conditions that also  
apply in each relevant case for employees.  
The basic remuneration of members of the Board of  
Management is unchanged from the previous year,  
competitive environment for highly qualified executives. namely €ꢀ0.75 million p.ꢀa. for a board member during  
the first period of office, €ꢀ0.9 million p.ꢀa. for a board  
The compensation of members of the Board of Manage­  
ment is determined by the full Supervisory Board on  
the basis of performance criteria and after taking into  
account any remuneration received from Group com­  
panies. The principal performance criteria are the nature  
of the tasks allocated to each member of the Board of  
Management, the economic situation and the perfor­  
mance and future prospects of the BMW Group. The  
member from the second term of appointment or fourth  
year of office onwards and €ꢀ million p.ꢀa. for the  
Chairman of the Board of Management.  
1.5  
Variable remuneration  
The variable remuneration of Board of Management  
members comprises variable cash remuneration on the  
one hand and a share­based remuneration component  
Supervisory Board sets demanding and relevant parame­ on the other.  
ters as the basis for variable compensation. It also takes  
care to ensure that variable components based on  
Variable cash remuneration, in particular bonuses  
multi­year assessment criteria take account of both posi­ Variable cash remuneration consists of a cash bonus  
tive and negative developments and that the package  
as a whole encourages a long­term approach to business  
and share­based remuneration component equivalent to  
20% of a board member’s total bonus after taxes, which  
1
90  
the board member is required to invest in BMWAG  
common stock. Taxes and social insurance relating to  
the share­based remuneration are also borne by the  
Company. In substantiated cases, the Supervisory  
Board also has the option of paying an additional spe­  
cial bonus.  
The personal performance­related bonus is derived by  
multiplying the target amount set for each member of  
the Board of Management by a performance factor. The  
Supervisory Board sets the performance factor on the  
basis of its assessment of the contribution of the relevant  
Board of Management member to sustainable and long­  
term oriented business development. In setting the  
factor, consideration is given equally to personal perfor­  
mance and decisions taken in previous forecasting pe­  
riods, key decisions affecting the future development  
of the business and the effectiveness of measures taken  
in response to changing external conditions as well as  
other activities aimed at safeguarding the future viability  
of the business to the extent not included directly in  
the basis of measurement. Performance factor criteria  
include innovation (economic and ecological, e.ꢀg. re­  
The bonus is made up of two components, each equally  
weighted, namely a corporate earnings­related bonus  
and a personal performance­related bonus. The target  
bonus (100 %) for a Board of Management member,  
for both components of variable compensation, totals  
€
ꢀ1.5 million p.ꢀa., rising to €ꢀ1.75 million p.ꢀa. from the  
second term of appointment or fourth year of office on­  
wards. The equivalent figure for the Chairman of the  
Board of Management is €ꢀ3 million p.ꢀa. The amount of  
bonus is capped for all Board of Management members. duction of carbon emissions), customer focus, ability to  
With effect from financial years beginning on or after  
January 2014, the upper limits are 200% of the relevant  
target bonus (2013: 250%).  
adapt, leadership accomplishments, contributions to  
the Company’s attractiveness as an employer, progress  
in implementing the diversity concept and activities that  
foster corporate social responsibility. The target bonus  
and the key figures used to determine the corporate  
earnings­related bonus are fixed in advance for a period  
1
The corporate earnings­related bonus is based on the  
BMW Group’s net profit and post­tax return on sales  
(which are combined in a single earnings factor) and the of three financial years, during which time they may not  
level of the dividend (common stock). The corporate  
earnings­related bonus is derived by multiplying the tar­  
get amount fixed for each member of the Board of  
be amended retrospectively.  
Share-based remuneration programme  
Management by the earnings factor and by the dividend The compensation system includes a share­based remu­  
factor. In exceptional circumstances, for instance when  
there have been major acquisitions or disposals, the  
Supervisory Board may adjust the level of the corporate  
earnings­related bonus.  
neration programme, in which the level of share­based  
remuneration is based on the amount of the bonus paid.  
The system is aimed at creating further long­term incen­  
tives to encourage sustainable governance.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
An earnings and dividend factor of 1.00 would give rise  
This programme envisages a share­based remuneration  
(
to an earnings­based bonus of €ꢀ0.75 million for the finan­ component equivalent to 20% of the board member’s  
1
cial year 2014 for a member of the Board of Management total bonus after taxes, which the board member is re­  
1
71 Declaration of the Board of  
during the first period of office and one of €ꢀ0.875 mil­  
quired to invest in BMWAG common stock. Taxes and  
Management and of the  
Supervisory Board pursuant to  
lion during the second term of appointment or from the social insurance relating to the share­based remunera­  
fourth year in office. The equivalent bonus for the Chair­ tion component are also borne by the Company. As a  
§
161AktG  
72 Members of the Board of  
Management  
1
man of the Board of Management is €ꢀ1.5 million. The  
earnings factor is 1.00 in the event of a Group net profit four years. As part of a matching plan, the Board of  
of €ꢀ3.1 billion and a post­tax return on sales of 5.6%. Management members will, at the end of the holding  
general rule, the shares must be held for a minimum of  
1
73 Members of the Supervisory  
Board  
1
76 Work Procedures of the  
Board of Management  
The dividend factor is 1.00 in the event that the dividend period, receive from the Company either one additional  
paid on the shares of common stock is between 101 and share of common stock or an equivalent cash amount  
1
78 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
84 Compliance in the BMW Group  
89 Compensation Report  
110 cents. If the Group net profit is below €ꢀ1 billion or  
if the post­tax return on sales is less than 2%, the earn­  
ings factor for the financial year 2014 would be zero. In  
for three shares of common stock held, to be decided at  
the discretion of the Company (share­based remunera­  
tion componentꢀ/ꢀmatching component), unless the em­  
1
1
this case, no corporate earnings­related bonus would be ployment relationship was ended before expiry of the  
paid. Based on the principle of consistency at all levels, agreed contractual period (except if caused by death or  
this rule is also applicable in determining the corporate invalidity). Special rules apply in the case of death or  
earnings­related variable compensation components of  
all managers and staff of BMWAG.  
invalidity of a Board of Management member before ful­  
filment of the holding period.  
1
91 Statement on corporate Governance  
Retirement and surviving dependants’ benefits  
The provision of retirement and surviving dependants’  
retirement in accordance with a special arrangement.  
In addition, following the death of a retired board  
benefits for Board of Management members was changed member who has elected to receive a lifelong pension,  
to a defined contribution system with a guaranteed  
minimum return with effect from 1 January 2010. How­  
ever, given the fact that board members appointed for  
the first time prior to 1 January 2010 had a legal right to  
receive the benefits already promised to them, these  
60% of that amount is paid as a lifelong widow’s pen­  
sion. Pensions are increased annually by an amount of  
at least 1%.  
The amount of the retirement pension to be paid is  
board members were given the option to choose between determined on the basis of the amount accrued in each  
the previous system and the new one.  
board member’s individual pension savings account.  
The amount on this account arises from annual contri­  
butions paid in, plus interest earned depending on the  
In the event of the termination of mandate, Board of  
Management members appointed for the first time prior type of investment.  
to 1 January 2010 are entitled to receive certain defined  
benefits in accordance with the old pension scheme  
Depending on the length of membership in the Board  
rules. Pensions are paid to former members of the Board of Management and previous activities, the annual con­  
of Management who have either reached the age of 65  
or, if their mandate was terminated earlier and not ex­  
tended, to members who have either reached the age of  
tribution to be paid amounts to between €ꢀ350,000 and  
€ꢀ400,000 for each member of the Board of Management  
and €ꢀ700,000 for the Chairman of the Board of Manage­  
60 or who are unable to work due to ill health or accident, ment. The contributions are credited, along with inter­  
or who have entered into early retirement in accordance est earned, to the personal savings accounts of board  
with a special arrangement. The amount of the pension  
is unchanged from the previous year and comprises a  
members in monthly amounts. The guaranteed minimum  
rate of return p.ꢀa. corresponds to the maximum inter­  
basic monthly amount of €ꢀ10,000 or €ꢀ15,000 (Chairman est rate used to calculate insurance reserves for life in­  
of the Board of Management) plus a fixed amount. The  
fixed amount is made up of approximately €ꢀ75 for each  
surance policies (guaranteed interest on life insurance  
policies). A Board of Management member entering of­  
year of service in the Company before becoming a mem­ fice at 50 years of age and serving as member of the  
ber of the Board of Management and between €ꢀ400 and  
ꢀ600 for each full year of service on the board (up to a  
Board of Management to the age of 60 can expect a re­  
tirement savings capital of €ꢀ4.2 million.  
€
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 when the civil  
servants remuneration level B6 (excluding allowances)  
is increased by more than 5% or in accordance with the  
Company Pension Act.  
In the case of invalidity or death, a minimum contribu­  
tion of the potential annual contributions will be paid  
until the person concerned would have reached the age  
of 60.  
Contributions falling due under the defined contribution  
scheme are paid into an external fund in conjunction  
When a mandate is terminated, the new defined contri­ with a trust model that is also used to fund pension ob­  
bution system provides entitlements which can be paid  
either (a) in the case of death or invalidity as a one­off  
amount or over a maximum of ten years or (b) upon re­  
ligations to employees.  
Income earned on an employed or a self­employed ba­  
tirement – depending on the wish of the ex­board mem­ sis up to the age of 63 is offset against the pension entitle­  
ber concerned – in the form of a lifelong monthly pen­  
sion, as a one­off amount, in a maximum of ten annual  
instalments, or in a combined form (e.ꢀg. a combination  
of a one­off payment and a proportionately reduced  
lifelong monthly pension). Pensions are paid to former  
members of the Board of Management who have either  
reached the statutory retirement age for the state pen­  
ment. In addition, certain circumstances have been  
specified, in the event of which the Company no longer  
has any obligation to pay benefits. In such cases, no  
transitional payments will be made.  
Board of Management members who retire immediately  
after their service on the board and who draw a retire­  
sion scheme in Germany or, if their mandate had termi­ ment pension are entitled to purchase vehicles and  
nated earlier and had not been extended, to members  
who have either reached the age of 60 or are perma­  
nently unable to work, or who have entered into early  
other services of the BMW Group at conditions that also  
apply in each relevant case for pensioners and to lease  
BMW Group vehicles in accordance with the guidelines  
1
92  
Overview of compensation system and compensation components  
Component  
Parameter/measurement base  
Basic compensation p.a.  
Member of the Board of Management:  
–
–
€0.75 million (first term of appointment)  
€0.90 million (from second term of appointment onwards or fourth year in office)  
Chairman of the Board of Management:  
€1.50 million  
–
Variable compensation  
Bonus  
Target bonuses p.a. (if target is 100% achieved):  
–
–
–
€1.50 million (first term of appointment)  
€1.75 million (from second term of appointment onwards or fourth year in office)  
€3.00 million (Chairman of the Board of Management)  
a) Corporate earnings-related bonus  
– Quantitative criteria fixed in advance for a period of three financial years  
– Formula: 50% of target bonus x earnings factor x dividend factor (common stock)  
– The earnings factor is derived from the Group net profit and the Group post-tax return  
on sales  
(corresponds to 50% of target bonus if target is 100%  
achieved)  
b) Performance-related bonus  
– Primarily qualitative criteria, expressed in terms of a performance factor aimed at  
measuring the board members’ contribution to sustainable and long-term performance  
and the future viability of the business  
(corresponds to 50% of target bonus if target is 100%  
achieved)  
–
–
Formula: 50% of target bonus x performance factor  
Criteria for the performance factor also include: innovation (economic and ecological,  
e.g. reduction of CO emissions), customer orientation, ability to adapt, leadership ac-  
2
complishments and attractiveness as employer, progress in implementing the diversity  
concept and activities that foster corporate social responsibility  
Special bonus payments  
May be paid in justified circumstances on an appropriate basis, contractual basis, no  
entitlement  
Share-based remuneration programme  
a) Cash compensation component  
– Requirement for Board of Management members to each invest an amount equivalent  
to 20% of their total bonus (after tax) in BMWAG common stock  
–
Earmarked cash remuneration equivalent to the amount required to be invested in  
BMWAG shares, plus taxes and social insurance contributions  
b) Share-based remuneration component  
– Once the four-year holding period requirement is fulfilled, Board of Management  
members receive for each three common stock shares held either – at the Company’s  
option – one further share of common stock or the equivalent amount in cash, unless  
the employment relationship was ended before expiry of the agreed contractual period  
(matching component)  
(except where caused by death or invalidity).  
Other compensation  
Contractual agreement, main points: use of company cars, insurance premiums,  
contributions towards security systems, medical check-up  
Retirement and surviving dependants’ benefits  
Model  
Principal features  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
a) Defined benefits  
Pension of €120,000 (Chairman: €180,000) p.a. plus fixed amounts based on length of  
Company and board service  
(
(only applies to board members appointed for the first  
1
time before 1 January 2010; based on legal right to  
receive the benefits already promised to them, this group  
of persons is entitled to opt between (a) and (b))  
1
71 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
b) Defined contribution system with guaranteed minimum  
rate of return  
Pension based on amounts credited to individual savings accounts for contributions paid  
and interest earned, various forms of disbursement  
§
161AktG  
72 Members of the Board of  
Management  
1
Pension contributions p.a.:  
1
73 Members of the Supervisory  
Member of the Board of Management: €350,000–€400,000  
Chairman of the Board of Management: €700,000  
Board  
1
76 Work Procedures of the  
Remuneration caps (maximum remuneration)  
Board of Management  
1
78 Work Procedures of the  
*
Total  
in € p.a.  
Bonus  
Share-based compensation programme  
Possible  
special bonus  
Supervisory Board  
Cash compensation  
for share acquisition  
Monetary value  
of matching  
component  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
Member of the Board of Management  
in the first term of appointment  
3,000,000  
700,000  
700,000  
1,000,000  
4,925,000  
Member of the Board of Management  
in the second term of appointment  
or from fourth year in office  
3,500,000  
6,000,000  
800,000  
800,000  
1,200,000  
1,500,000  
5,500,000  
9,850,000  
Chairman of the Board of Management  
1,400,000  
1,400,000  
*
Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the  
individual components.  
1
93 Statement on corporate Governance  
applicable to senior heads of departments. Retired Chair­ benefits from third parties in 2014 on account of their  
men of the Board of Management are entitled, like senior activities as members of the Board of Management of  
heads of departments, to use a BMW Group vehicle as a  
company car and, depending on availability and as part  
BMWAG.  
of an offset arrangement, use the BMW chauffeur services. Remuneration caps  
The Supervisory Board has stipulated caps for all variable  
Termination benefits on premature termination of board  
remuneration components and for the remuneration of  
Board of Management members in total. The caps are  
shown in the overview of the compensation system and  
compensation components.  
activities, benefits paid by third parties  
In conjunction with the amicable early termination of  
Dr Reithofer’s Board of Management mandate with  
effect from the end of the Annual General Meeting 2015,  
the Company also reached agreement with Dr Reithofer Compensation of the Board of Management for the  
concerning the early termination of his service contract financial year 2014 (2013) (total)  
with effect from the end of the Annual General Meeting The total compensation of the current members of the  
2
015. The contract termination agreement envisages  
Board of Management of BMWAG for the financial year  
calculation of variable cash remuneration for prorated  
activities in the financial year 2015 on the basis of the  
target attainment for the financial year 2013, entitling  
Dr Reithofer to an amount of €ꢀ1.9 million, payable in  
2014 amounted to €ꢀ35.4 million (2013: €ꢀ34.5 million),  
of which €ꢀ7.7 million (2013: €ꢀ7.9 million) relates to  
fixed components (including other remuneration).  
Variable components amounted to €ꢀ27.0 million (2013:  
€ꢀ25.9 million) and share­based remuneration compo­  
nents to €ꢀ0.7 million (2013: €ꢀ0.7 million).  
2
015, i.ꢀe. in the period after he has left the Board of  
Management. This arrangement ensures that – in the  
event that Dr Reithofer is elected to the Supervisory  
Board – he will not be involved in deciding on the level  
of his own performance­related remuneration. As  
settlement of the remuneration to which he is entitled  
on the basis of the original term of his service con­  
tract (i.ꢀe. up to 2016), the Company agreed to pay an  
in € million  
2014  
2013  
Amount Proportion  
in %  
Amount Proportion  
in %  
Fixed compensation  
7.7  
21.8  
76.3  
7.9  
22.9  
75.1  
amount of €ꢀ  
Company will make a final pension contribution of  
million on behalf of Dr Reithofer for the financial  
year 2015  
2.5 million to Dr Reithofer in 2015. The  
Variable cash  
compensation  
27.0  
25.9  
€
ꢀ
0.7  
Share-based compen-  
*
sation component  
0.7  
1.9  
0.7  
2.0  
.
Total compensation  
35.4  
100.0  
34.5  
100.0  
After leaving the Board of Management on 9 December  
014, an agreement was reached with Dr Diess for the  
early termination of his service contract with effect from  
0 June 2015. The agreement envisages the continued  
*
Matching component; provisional number or provisional monetary value calculated at  
grant date (date on which the entitlement became binding in law). The final number  
of matching shares is determined in each case when the requirement to invest in  
BMWAG common stock has been fulfilled.  
2
3
payment of fixed remuneration amounting to €ꢀ0.5 mil­  
lion for the period from the termination of Dr Diess’  
mandate to the expiry of the service contract. As settle­  
ment of the variable cash remuneration relating to  
the remainder of the contractual period, a payment of  
In addition, an expense of €ꢀ2.1 million (2013: €ꢀ2.2 mil­  
lion) was recognised in the financial year 2014 for current  
members of the Board of Management for the period af­  
ter the end of their service relationship, which relates to  
the expense for allocations to pension provisions.  
€
ꢀ0.6 million, payable in 2015, was also agreed. A per­  
formance­related bonus is no longer payable for this  
period. The Company will make a final pension contri­  
The amount paid to former members of the Board of  
bution of €ꢀ0.4 million on behalf of Dr Diess for the finan­ Management and their dependants for the financial year  
cial year 2014. 2014 was €ꢀ5.8 million (2013: €ꢀ4.7 million). The figure for  
014 includes continued payment of the fixed remunera­  
Apart from these, there are no contractual commitments tion of Dr Diess after leaving the Board of Management  
2
to pay compensation if a board member’s mandate is  
terminated early. Similarly, there are no commitments  
to pay compensation for early termination in the event  
amounting to €ꢀ0.1 million. Pension obligations to former  
members of the Board of Management, including Dr  
Diess, and their surviving dependants are fully covered  
of a change of control or a takeover offer. No members by pension provisions amounting to €ꢀ68.4 million (2013:  
of the Board of Management received any payments or €ꢀ58.0 million), computed in accordance with IAS 19.  
1
94  
Compensation of the individual members of the Board of Management for the financial year 2014 (2013)  
in € or  
number of  
matching shares  
Fixed compensation  
Other  
Variable  
cash com-  
pensation  
Share-based  
compensation  
component  
(matching  
Com-  
pensation  
Total  
Expense for  
share-based 31.12.2014 for  
compensation share-based  
component compensation  
Provision at  
Basic  
compen- compen-  
Total  
1
sation  
sation  
component)  
in year under  
report in  
accordance with  
HGB and IFRS  
component in  
accordance  
with HGB  
Number Monetary  
value  
2
and IFRS  
Norbert Reithofer 1,500,000  
30,152  
1,530,152  
5,563,800  
1,810  
151,207  
7,245,159  
191,845  
411,815  
(1,500,000) (119,232) (1,619,232)  
(5,270,400)  
(1,886) (143,204)  
(7,032,836)  
(122,700)  
(219,970)  
Milagros Caiña  
Carreiro-Andree  
750,000  
(750,000)  
68,555  
(98,213)  
818,555  
(848,213)  
2,781,900  
(2,635,200)  
971  
(1,012)  
81,117  
(76,841)  
3,681,572  
(3,560,254)  
103,493  
(49,469)  
159,210  
(55,717)  
3
Herbert Diess  
844,355  
20,580  
864,935  
2,749,360  
–
–
3,614,295  
92,633  
254,686  
(
(
(
900,000)  
(19,210)  
(919,210)  
(3,074,400)  
(1,181)  
(89,673)  
(4,083,283)  
(91,437)  
(162,052)  
Klaus Draeger  
900,000  
900,000)  
24,790  
(26,374)  
924,790  
(926,374)  
3,245,550  
(3,074,400)  
1,133  
(1,181)  
94,651  
(89,673)  
4,264,991  
(4,090,447)  
191,814  
(125,097)  
407,415  
(215,602)  
Friedrich Eichiner  
900,000  
900,000)  
21,952  
(24,225)  
921,952  
(924,225)  
3,245,550  
(3,074,400)  
1,133  
(1,181)  
94,651  
(89,673)  
4,262,153  
(4,088,298)  
181,389  
(104,017)  
363,844  
(182,455)  
4
Klaus Fröhlich  
46,371  
394  
46,765  
172,000  
52  
4,623  
223,388  
130  
130  
(–)  
(–)  
(–)  
(–)  
(–)  
(–)  
(–)  
(–)  
(–)  
Harald Krüger  
Ian Robertson  
900,000  
900,000)  
18,071  
(18,588)  
918,071  
(918,588)  
3,245,550  
(3,074,400)  
1,055  
(1,100)  
88,135  
(83,523)  
4,251,756  
(4,076,511)  
94,542  
(60,843)  
202,917  
(108,375)  
(
900,000  
14,161  
914,161  
3,245,550  
1,133  
94,651  
4,254,362  
125,621  
266,831  
(900,000)  
(14,401)  
(914,401)  
(3,074,400)  
(1,181)  
(89,673)  
(4,078,474)  
(79,152)  
(141,210)  
Peter  
750,000  
26,481  
776,481  
2,781,900  
971  
81,117  
3,639,498  
31,055  
41,435  
Schwarzenbauer  
(562,500)  
(13,424)  
(575,924)  
(1,976,400)  
(812)  
(57,603)  
(2,609,927)  
(10,380)  
(10,380)  
5
Total  
7,490,726 225,136 7,715,862 27,031,160  
7,537,500) (344,101) (7,881,601) (25,894,500)  
8,258 690,152 35,437,174  
1,012,523  
2,108,284  
(
(9,534) (719,863) (34,495,964)  
(712,103)  
(1,253,625)  
1
Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is  
determined in each case when the requirement to invest in BMWAG common stock has been fulfilled. See note 20 to the Group Financial Statements for a description of the  
accounting treatment of the share-based compensation component.  
2
3
4
5
Monetary value calculated on the basis of the closing price of BMW common stock in the XETRA trading system on 30 December 2014 (€89.77) (fair value at reporting date).  
Member of the Board of Management until 9 December 2014.  
Member of the Board of Management since 9 December 2014.  
Figures for the previous year include the remuneration of the member of the Board of Management who left office during the financial year 2013.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
161AktG  
72 Members of the Board of  
Management  
1
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
1
95 Statement on corporate Governance  
Pension benefits of the individual members of the Board of Management  
in €  
Service cost  
Service cost  
Present value of  
pension obligations  
(defined benefit plans),  
in accordance  
Present value of  
pension obligations  
(defined benefit plans),  
in accordance  
in accordance with IFRS  
in accordance with HGB  
1
1
for the financial year 2014  
for the financial year 2014  
2
2
with IFRS  
with HGB  
Norbert Reithofer  
281,278  
717,656  
9,600,845  
7,346,081  
(
(
(
(
313,038)  
(233,100)  
(7,234,887)  
(6,036,606)  
Milagros Caiña Carreiro-Andree  
Klaus Draeger  
366,848  
369,827)  
368,968  
(372,277)  
990,507  
(555,874)  
989,277  
(555,190)  
147,483  
162,426)  
409,663  
(407,482)  
5,359,750  
(4,086,628)  
4,485,792  
(3,694,976)  
Friedrich Eichiner  
177,335  
174,279)  
409,663  
(407,482)  
5,599,794  
(4,683,637)  
4,633,694  
(3,827,095)  
3
Klaus Fröhlich  
3,643  
2,747  
2,138,633  
1,286,247  
(–)  
(–)  
(–)  
(–)  
Harald Krüger  
220,609  
359,256  
3,927,671  
3,204,346  
(
(
(
143,734)  
(358,325)  
(2,648,384)  
(2,516,021)  
Ian Robertson  
356,067  
395,507)  
414,827  
(274,357)  
3,029,448  
(2,025,994)  
2,395,377  
(1,771,848)  
Peter Schwarzenbauer  
369,234  
262,500)  
371,398  
(262,500)  
688,271  
(289,681)  
687,570  
(289,308)  
4
Total  
1,922,497  
3,054,178  
31,334,919  
25,028,384  
(2,033,085)  
(2,723,228)  
(24,819,665)  
(21,753,227)  
5
Herbert Diess  
178,809  
383,900  
4,256,732  
3,858,064  
(211,774)  
(407,705)  
(3,294,607)  
(3,062,183)  
1
Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes  
present value of the defined benefit obligation).  
Based on legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 January 2010 were given  
the option of choosing between the old and new models at the time the Company changed from a defined benefit to a defined contribution system.  
Member of the Board of Management since 9 December 2014.  
(
2
3
4
5
The previous year’s figures include amounts relating to Dr Diess.  
Member of the Board of Management until 9 December 2014.  
2
. Supervisory Board compensation  
Compensation principles, compensation components  
Responsibilities, regulation pursuant to Articles  
of Incorporation  
The Supervisory Board of BMWAG receives a fixed  
compensation component as well as a corporate per­  
The compensation of the Supervisory Board is specified formance­related compensation component which is  
by resolution of the shareholders at the Annual General oriented toward sustainable growth, based on a multi­  
Meeting or in the Articles of Incorporation. The com­  
pensation regulation valid for the financial year under  
year assessment. The corporate performance­related  
component is based on average earnings per share of  
report was resolved by shareholders at the Annual Gen­ common stock for the remuneration year and the two  
eral Meeting on 14 May 2013 and is set out in Article 15  
of BMWAG’s Articles of Incorporation, which can be  
viewed andꢀ/ꢀor downloaded at www.bmwgroup.comꢀ/ꢀir  
preceding financial years.  
These two interacting components are intended to  
under the menu items “Corporate Facts” and “Corporate ensure that the compensation of Supervisory Board  
Governance”. members is commensurate overall in relation to the  
1
96  
tasks performed and the Company’s financial condition amount and each member of a committee receives one  
and also takes account of business performance over  
several years.  
and a half times the amount of the remuneration of a  
Supervisory Board member. If a member of the Super­  
visory Board exercises more than one of the functions  
referred to above, the compensation is measured only  
on the basis of the function which is remunerated with  
In accordance with the Articles of Incorporation, each  
member of BMWAG’s Supervisory Board receives, in  
addition to the reimbursement of reasonable expenses, the highest amount.  
a fixed amount of €ꢀ70,000 (payable at the end of the  
year) as well as a corporate performance­related compen­ In addition, each member of the Supervisory Board re­  
sation of €ꢀ170 for each full €ꢀ0.01 by which the average  
amount of (undiluted) earnings per share (EPS) of  
common stock reported in the Group Financial State­  
ments for the remuneration year and the two preceding  
ceives an attendance fee of €ꢀ2,000 for each full meeting  
of the Supervisory Board (Plenum) which the member  
has attended (payable at the end of the financial year).  
Attendance at more than one meeting on the same day  
is not remunerated separately.  
financial years exceeds a minimum amount of €ꢀ2.00  
payable after the Annual General Meeting held in  
(
the following year). An upper limit corresponding to  
twice the amount of the fixed compensation (€ꢀ140,000)  
is in place for the corporate performance­related com­  
pensation.  
The Company also reimburses to each member of the  
Supervisory Board reasonable expenses and any value­  
added tax arising on the member’s remuneration. The  
amounts disclosed below are net amounts.  
With this combination of fixed compensation elements  
and a corporate performance­related compensation  
component oriented toward sustainable growth, the  
compensation structure in place for BMWAG’s Super­  
visory Board complies with the recommendation on  
supervisory board compensation contained in section  
In order to be able to perform his duties, the Chairman  
of the Supervisory Board is provided with secretariat  
and chauffeur services.  
Compensation of the Supervisory Board for the  
financial year 2014 (total)  
5
.4.6 paragraph 2 sentence 2 of the German Corporate  
In accordance with §15 of the Articles of Incorporation,  
the compensation of the Supervisory Board for activities  
during the financial year 2014 amounted to €ꢀ4.8 million  
(2013: €ꢀ4.6 million). This includes fixed compensation  
Governance Code (version dated 24 June 2014).  
The German Corporate Governance Code also recom­  
mends in section  
5
.
4
.
6
paragraph  
1
sentence  
2
that the of €ꢀ2.0 million (2013: €ꢀ2.0 million) and variable compen­  
sation of €ꢀ2.8 million (2013: €ꢀ2.6 million).  
exercising of chair and deputy chair positions in the  
Supervisory Board as well as the chair and membership  
of committees should also be considered when deter­  
mining the level of compensation.  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
in € million  
2014  
2013  
Amount Proportion  
in %  
Amount Proportion  
in %  
(
1
1
71 Declaration of the Board of  
Accordingly, the Articles of Incorporation of BMWAG  
stipulate that the Chairman of the Supervisory Board  
shall receive three times the amount and each Deputy  
Chairman shall receive twice the amount of the remu­  
neration of a Supervisory Board member. Provided the  
relevant committee convened for meetings on at least  
three days during the financial year, each chairman of  
the Supervisory Board’s committees receives twice the  
Management and of the  
Supervisory Board pursuant to  
§
Fixed compensation  
Variable compensation  
Total compensation  
2.0  
2.8  
4.8  
41.7  
58.3  
2.0  
2.6  
4.6  
43.5  
56.5  
161AktG  
72 Members of the Board of  
Management  
1
100.0  
100.0  
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Supervisory Board members did not receive any further  
compensation or benefits from the BMW Group for  
advisory and agency services personally rendered.  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
1
97 Statement on corporate Governance  
Compensation of the individual members of the Supervisory Board for the financial year 2014 (2013)  
in €  
Fixed compensation  
Attendance fee  
Variable  
Total  
Joachim Milberg (Chairman)  
210,000  
10,000  
317,730  
537,730  
(
(
(
(
(
210,000)  
(10,000)  
(294,270)  
(514,270)  
1
Manfred Schoch (Deputy Chairman)  
Stefan Quandt (Deputy Chairman)  
140,000  
140,000)  
10,000  
(10,000)  
211,820  
(196,180)  
361,820  
(346,180)  
140,000  
140,000)  
10,000  
(10,000)  
211,820  
(196,180)  
361,820  
(346,180)  
1
Stefan Schmid (Deputy Chairman)  
140,000  
140,000)  
10,000  
(10,000)  
211,820  
(196,180)  
361,820  
(346,180)  
Karl-Ludwig Kley (Deputy Chairman)  
140,000  
140,000)  
6,000  
(8,000)  
211,820  
(196,180)  
357,820  
(344,180)  
1, 2  
Christiane Benner  
44,301  
8,000  
67,028  
119,329  
(–)  
(–)  
(–)  
(–)  
1
,3  
Bertin Eichler  
Franz Haniel  
25,890  
70,000)  
2,000  
(10,000)  
39,172  
(98,090)  
67,062  
(178,090)  
(
(
(
(
(
(
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
Reinhard Hüttl  
70,000  
70,000)  
8,000  
(10,000)  
105,910  
(98,090)  
183,910  
(178,090)  
Henning Kagermann  
Susanne Klatten  
Renate Köcher  
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
2
Ulrich Kranz  
44,301  
8,000  
67,028  
119,329  
(–)  
(–)  
(–)  
(–)  
Robert W. Lane  
70,000  
8,000  
105,910  
183,910  
(
(
(
(
(
(
(
(
(
70,000)  
(10,000)  
(98,090)  
(178,090)  
1
Horst Lischka  
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
1
Willibald Löw  
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
Wolfgang Mayrhuber  
Dominique Mohabeer  
70,000  
70,000)  
8,000  
(8,000)  
105,910  
(98,090)  
183,910  
(176,090)  
1
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
1
Brigitte Rödig  
70,000  
33,370)  
10,000  
(6,000)  
105,910  
(46,761)  
185,910  
(86,131)  
3
Markus Schramm  
25,890  
52,740)  
2,000  
(8,000)  
39,172  
(73,903)  
67,062  
(134,643)  
1
Jürgen Wechsler  
70,000  
70,000)  
10,000  
(6,000)  
105,910  
(98,090)  
185,910  
(174,090)  
1
Werner Zierer  
70,000  
70,000)  
10,000  
(10,000)  
105,910  
(98,090)  
185,910  
(178,090)  
4
Total  
1,820,382  
1,818,082)  
190,000  
2,754,240  
4,764,622  
(
(192,000)  
(2,547,653)  
(4,557,735)  
1
These employee representatives have – in line with the guidelines of the Deutsche Gewerkschaftsbund – requested that their remuneration be paid into the  
Hans Böckler Foundation.  
Member of the Supervisory Board since 15.05.2014.  
Member of the Supervisory Board until 15.05.2014.  
Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2013.  
2
3
4
3
. Other  
granted by the Company to members of the Board of  
Management and the Supervisory Board, nor were any  
contingent liabilities entered into on their behalf.  
Apart from vehicle lease contracts entered into on cus­  
tomary market conditions, no advances and loans were  
1
98  
Responsibility Statement by the Company’s Legal Representatives  
Statement pursuant to §37y No.1 of the Securities  
Trading Act (WpHG) in conjunction with §297 (2)  
sentence 4 and §315 (1) sentence 6 of the German  
Commercial Code (HGB)  
“
To the best of our knowledge, and in accordance with  
the applicable reporting principles, the Consolidated  
Financial Statements give a true and fair view of the  
assets, liabilities, financial position and profit of the  
Group, and the Group Management Report includes  
a fair review of the development and performance of  
the business and the position of the Group, together  
with a description of the principal opportunities and  
risks associated with the expected development of the  
Group.”  
Munich, 19 February 2015  
Bayerische Motoren Werke  
Aktiengesellschaft  
The Board of Management  
Dr.­Ing. Dr.­Ing. E.h. Norbert Reithofer  
Milagros Caiña Carreiro­Andree  
Dr. Friedrich Eichiner  
Harald Krüger  
Dr.­Ing. Klaus Draeger  
1
70 STATEMENT ON  
CORPORATE GOVERNANCE  
Part of ManagementReport)  
70 Information on the Company’s  
Governing Constitution  
(
1
171 Declaration of the Board of  
Management and of the  
Supervisory Board pursuant to  
§
Klaus Fröhlich  
161AktG  
72 Members of the Board of  
Management  
1
173 Members of the Supervisory  
Board  
176 Work Procedures of the  
Dr. Ian Robertson (HonDSc)  
Board of Management  
178 Work Procedures of the  
Supervisory Board  
183 Information on Corporate  
Governance Practices  
184 Compliance in the BMW Group  
189 Compensation Report  
Peter Schwarzenbauer  
1
99 Statement on corporate Governance  
BMW Group  
Auditor’s Report  
We have audited the consolidated financial statements  
prepared by Bayerische Motoren Werke Aktiengesell­  
schaft, comprising the income statement for group and  
statement of comprehensive income for group, the  
balance sheet for group, cash flow statement for group,  
group statement of changes in equity and the notes to  
the group financial statements and its report on the  
the business activities and the economic and legal  
environment of the Group and expectations as to possi­  
ble misstatements are taken into account in the deter­  
mination of audit procedures. The effectiveness of the  
accounting­related internal control system and the evi­  
dence supporting the disclosures in the consolidated  
financial statements and in the group management  
position of the Company and the Group for the business report are examined primarily on a test basis within the  
year from 1 January to 31 December 2014. The prepara­  
tion of the consolidated financial statements and group  
management report in accordance with IFRSs, as  
adopted by the EU, and the additional requirements of  
German commercial law pursuant to §315ꢀa (1) HGB  
framework of the audit. The audit also includes assess­  
ing the annual financial statements of those entities  
included in consolidation, the determination of entities  
to be included in consolidation, the accounting and  
consolidation principles used and significant estimates  
made by the management, as well as evaluating the  
(Handelsgesetzbuch “German Commercial Code”) are  
the responsibility of the parent company’s management. overall presentation of the consolidated financial state­  
Our responsibility is to express an opinion on the con­ ments and group management report. We believe that  
solidated financial statements and on the group manage­ our audit provides a reasonable basis for our opinion.  
ment report based on our audit.  
Our audit has not led to any reservations.  
We conducted our audit of the consolidated financial  
statements in accordance with §317 HGB and German  
generally accepted standards for the audit of financial  
In our opinion, based on the findings of our audit, the  
consolidated financial statements comply with IFRSs,  
statements promulgated by the Institut der Wirtschafts­ as adopted by the EU, the additional requirements of  
prüfer (Institute of Public Auditors in Germany) (IDW).  
Those standards require that we plan and perform the  
audit such that misstatements materially affecting the  
presentation of the net assets, financial position and  
German commercial law pursuant to §315ꢀa (1) HGB and  
give a true and fair view of the net assets, financial  
position and results of operations of the Group in ac­  
cordance with these requirements. The group manage­  
results of operations in the consolidated financial state­ ment report is consistent with the consolidated finan­  
ments in accordance with the applicable financial report­ cial statements and as a whole provides a suitable  
ing framework and in the group management report  
are detected with reasonable assurance. Knowledge of  
view of the Group’s position and suitably presents the  
opportunities and risks of future development.  
Munich, 5 March 2015  
KPMG AG  
Wirtschaftsprüfungsgesellschaft  
Pastor  
Feege  
Wirtschaftsprüfer  
Wirtschaftsprüfer  
2
00  
OTHER INFORMATION  
BMW Group Ten-year Comparison  
2
014  
2013  
2012  
2011  
Sales volume  
Automobiles  
units  
units  
2,117,965  
123,495  
1,963,798  
115,215  
1,845,186  
106,358  
1,668,982  
104,286  
1
Motorcycles  
Production volume  
Automobiles  
units  
units  
2,165,566  
133,615  
2,006,366  
110,127  
1,861,826  
113,811  
1,738,160  
110,360  
1
Motorcycles  
Financial Services  
Contract portfolio  
contracts  
€ million  
4,359,572  
96,390  
4,130,002  
84,347  
3,846,364  
80,974  
3,592,093  
75,245  
2
Business volume (based on balance sheet carrying amounts)  
Income Statement  
3
Revenues  
€ million  
%
80,401  
21.2  
76,059  
20.1  
76,848  
20.2  
68,821  
21.1  
4
Gross profit margin Group  
3
3
Profit before financial result  
Profit before tax  
€ million  
€ million  
%
9,118  
8,707  
10.8  
7,978  
7,893  
10.4  
8,275  
7,803  
10.2  
8,018  
7,383  
10.7  
Return on sales (earnings before tax/revenues)  
Income taxes  
3
3
€ million  
%
2,890  
33.2  
2,564  
32.5  
2,692  
34.5  
2,476  
33.5  
Effective tax rate  
Net profit for the year  
€ million  
5,817  
5,329  
5,111  
4,907  
Balance Sheet  
3
3
3
3
3
3
3
Non-current assets  
Current assets  
€ million  
€ million  
€ million  
%
97,959  
56,844  
37,437  
24.2  
86,193  
52,184  
35,600  
25.7  
81,305  
50,530  
30,606  
23.2  
74,425  
49,004  
27,103  
22.0  
Equity  
Equity ratio Group  
Non-current provisions and liabilities  
Current provisions and liabilities  
Balance sheet total  
€ million  
€ million  
€ million  
58,288  
59,078  
154,803  
51,643  
51,134  
138,377  
52,834  
48,395  
131,835  
49,113  
47,213  
123,429  
Cash Flow Statement  
3
3
3
Cash and cash equivalents at balance sheet date  
€ million  
€ million  
€ million  
%
7,688  
9,423  
6,100  
7.6  
7,671  
9,964  
6,711  
8.8  
8,370  
9,167  
5,240  
6.8  
7,776  
8,110  
3,692  
5.4  
5
Operating cash flow  
Capital expenditure  
Capital expenditure ratio (capital expenditure/revenues)  
Personnel  
6
Workforce at the end of year  
116,324  
92,337  
110,351  
89,869  
105,876  
89,161  
100,306  
84,887  
3
Personnel cost per employee  
€
Dividend  
Dividend total  
€ million  
€
1,904  
1,707  
1,640  
1,508  
Dividend per share of common stock/preferred stock  
2.90/2.92  
2.60/ 2.62  
2.50/2.52  
2.30/ 2.32  
1
Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.  
2
3
4
5
Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.  
Prior year figures have been adjusted in accordance with IAS 8, see note 9.  
Research and development expenses included in cost of sales with the effect from 2008.  
Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from  
operating activities of the Automotive segment.  
Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.  
2
2
2
2
2
2
2
2
00 OTHER INFORMATION  
00 BMW Group Ten-year Comparison  
02 BMW Group Locations  
04 Glossary  
6
06 Index  
07 Index of Graphs  
08 Financial Calendar  
09 Contacts  
2
01 other inFormation  
2010  
2009  
2008  
2007  
2006  
2005  
Sales volume  
1
,461,166  
1,286,310  
87,306  
1,435,876  
101,685  
1,500,678  
102,467  
1,373,970  
100,064  
1,327,992  
97,474  
Automobiles  
1
98,047  
Motorcycles  
Production volume  
1
,481,253  
1,258,417  
82,631  
1,439,918  
104,220  
1,541,503  
104,396  
1,366,838  
103,759  
1,323,119  
92,012  
Automobiles  
1
99,236  
Motorcycles  
Financial Services  
3
,190,353  
3,085,946  
61,202  
3,031,935  
60,653  
2,629,949  
51,257  
2,270,528  
44,010  
2,087,368  
40,428  
Contract portfolio  
2
66,233  
Business volume (based on balance sheet carrying amounts)  
Income Statement  
6
0,477  
50,681  
10.5  
289  
53,197  
11.4  
921  
351  
0.7  
56,018  
21.8  
48,999  
23.1  
46,656  
22.9  
Revenues  
4
18.1  
Gross profit margin Group  
5
,111  
,853  
4,212  
3,873  
6.9  
4,050  
4,124  
8.4  
3,793  
3,287  
7.0  
Profit before financial result  
Profit before tax  
4
413  
8
.0  
,610  
3.1  
,243  
0.8  
Return on sales (earnings before tax/revenues)  
Income taxes  
1
3
203  
21  
739  
1,250  
30.3  
1,048  
31.9  
3
49.2  
210  
6.0  
19.1  
Effective tax rate  
330  
3,134  
2,874  
2,239  
Net profit for the year  
Balance Sheet  
6
4
2
7,013  
3,151  
3,930  
62,009  
39,944  
19,915  
19.5  
62,416  
38,670  
20,273  
20.1  
56,619  
32,378  
21,744  
24.4  
50,514  
28,543  
19,130  
24.2  
47,556  
27,010  
16,973  
22.8  
Non-current assets  
Current assets  
Equity  
21.7  
Equity ratio Group  
4
6,100  
0,134  
45,119  
36,919  
101,953  
41,526  
39,287  
101,086  
33,469  
33,784  
88,997  
31,372  
28,555  
79,057  
29,509  
28,084  
74,566  
Non-current provisions and liabilities  
Current provisions and liabilities  
Balance sheet total  
4
1
10,164  
Cash Flow Statement  
7
8
3
,432  
,149  
,263  
7,767  
4,921  
3,471  
6.8  
7,454  
4,471  
4,204  
7.9  
2,393  
6,246  
4,267  
7.6  
1,336  
5,373  
4,313  
8.8  
1,621  
6,184  
3,993  
8.6  
Cash and cash equivalents at balance sheet date  
5
Operating cash flow  
Capital expenditure  
5.4  
Capital expenditure ratio (capital expenditure/revenues)  
Personnel  
6
9
5,453  
3,141  
96,230  
72,349  
100,041  
75,612  
107,539  
76,704  
106,575  
76,621  
105,798  
75,238  
Workforce at the end of year  
8
Personnel cost per employee  
Dividend  
852  
197  
197  
694  
458  
419  
Dividend total  
1.30/1.32  
0.30/ 0.32  
0.30/ 0.32  
1.06/1.08  
0.70/ 0.72  
0.64/ 0.66  
Dividend per share of common stock/preferred stock  
2
02  
BMW Group  
Locations  
—
H
Headquarters  
The BMW Group is present in the world markets with  
3
0 production and assembly plants, 42 sales subsidiaries  
—
R
Research and Development  
and a research and development network.  
BMW Group Research and Innovation Centre (FIZ),  
Munich, Germany  
BMW Group Research and Technology, Munich,  
Germany  
BMW Car IT, Munich, Germany  
BMW Innovation and Technology Centre, Landshut,  
Germany  
BMW Diesel Competence Centre, Steyr, Austria  
BMW Group Designworks, Newbury Park, USA  
BMW GroupTechnology Office USA, Mountain View,  
USA  
2
2
2
2
2
2
2
2
00 OTHER INFORMATION  
00 BMW Group Ten-year Comparison  
02 BMW Group Locations  
04 Glossary  
BMW Group Engineering and Emission Test Center,  
Oxnard, USA  
BMW Group ConnectedDrive Lab China, Shanghai,  
and BMW Group Designworks Studio Shanghai, China  
BMW Group Engineering China, Beijing, China  
BMW Group Engineering Japan, Tokyo, Japan  
BMW Group Engineering USA, Woodcliff Lake, USA  
06 Index  
07 Index of Graphs  
08 Financial Calendar  
09 Contacts  
2
03 other inFormation  
—
P
Production  
— C Contract production  
— S Sales subsidiary markets/Locations Financial Services  
Berlin plant  
Dingolfing plant  
Eisenach plant  
Goodwood plant, GB (headquarters of  
Rolls-Royce Motor Cars Limited)  
Hams Hall plant, GB  
Magna Steyr Fahrzeugtechnik, Austria  
VDL Nedcar, Netherlands  
Argentina  
Australia  
Austria  
Ireland  
Italy  
Japan  
South Korea  
Spain  
Sweden  
Switzerland  
Thailand  
USA  
Belgium  
Brazil  
Luxembourg  
Malaysia  
— A Assembly plants  
*
*
Bulgaria  
Malta  
Landshut plant  
Leipzig plant  
Munich plant  
Oxford plant, GB  
CKD production Araquari, Brazil  
CKD production Cairo, Egypt  
China  
Canada  
Czech Republic  
Denmark  
Finland  
Mexico  
Netherlands  
New Zealand  
Norway  
Poland  
Portugal  
Romania  
Russia  
Singapore  
Slovakia  
*
CKD production Chennai, India  
CKD production Jakarta, Indonesia  
CKD production Kaliningrad, Russia  
CKD production Kulim, Malaysia  
CKD production Manaus, Brazil  
CKD production Rayong, Thailand  
Regensburg plant  
Rosslyn plant, South Africa  
BMW Brilliance Automotive Ltd., Shenyang,  
China (joint venture with Brilliance China  
Automotive Holdings – 3 plants)  
Spartanburg plant, USA  
Steyr plant, Austria  
France  
*
Germany  
Great Britain  
Greece  
Hungary  
India  
*
*
*
Slovenia  
South Africa  
*
*
Swindon plant, GB  
Indonesia  
Sales locations only.  
Wackersdorf plant  
BMW – SGL joint venture (2 plants)  
2
04  
Glossary  
CFRP  
DJSI World  
Abbreviation for carbon­fibre reinforced polymer. CFRP Abbreviation for “Dow Jones Sustainability Index World”.  
is a composite material, consisting of carbon­fibres sur­  
rounded by a plastic matrix (resin). On a comparative  
basis, CFRP is approximately 50% lighter than steel and  
A family of indexes created by Dow Jones and the Swiss  
investment agency SAM Sustainability Group for com­  
panies with strategies based on a sustainability concept.  
The BMW Group has been one of the leading companies  
in the DJSI since 1999.  
3
0% lighter than aluminium.  
Combined heat and power  
Combined heat and power (CHP) or cogeneration is  
the simultaneous conversion of energy sources into  
electricity and useful heating. In comparison to separate  
generation of electricity in conventional power plants,  
energy is converted more efficiently and with greater  
flexibility. As a result, this technology helps to reduce  
EBIT  
Abbreviation for “Earnings Before Interest and Taxes”.  
The profit before income taxes, minority interest and  
financial result.  
EBITDA  
CO emissions  
.
Abbreviation for “Earnings Before Interest, Taxes, Depre­  
ciation and Amortisation”. The profit before income  
taxes, minority interest, financial result and depreciation/  
amortisation.  
2
Common stock  
Stock with voting rights (cf. preferred stock).  
Connected Drive  
Effectiveness  
Under the term Connected Drive, the BMW Group  
already unites a unique portfolio of innovative features  
that enhance comfort, raise infotainment to new levels  
and significantly boost safety in BMW Group vehicles.  
The degree to which offsetting changes in fair value or  
cash flows attributable to a hedged risk are achieved by  
the hedging instrument.  
Efficient Dynamics  
Cost of materials  
Comprises all expenditure to purchase raw materials  
and supplies.  
The aim of Efficient Dynamics is to reduce consumption  
and emissions whilst simultaneously increasing dynamics  
and performance. This involves a holistic approach to  
achieving optimum automobile potential, ranging from  
efficient engine technologies and lightweight construc­  
DAX  
Abbreviation for “Deutscher Aktienindex”, the German tion to comprehensive energy and heat management  
Stock Index. The index is based on the weighted market inside the vehicle.  
prices of the 30 largest German stock corporations (by stock  
market capitalisation).  
Equity ratio  
The proportion of equity (= subscribed capital, reserves,  
accumulated other equity and minority interest) to the  
balance sheet total.  
Deferred taxes  
Accounting for deferred taxes is a method of allocating  
tax expense to the appropriate accounting period.  
Free cash flow  
Derivatives  
Free cash flow corresponds to the cash inflow from oper­  
ating activities of the Automotive segment less the cash  
Financial products, whose measurement is derived  
principally from market price, market price fluctuations outflow for investing activities of the Automotive seg­  
and expected market price changes of the underlying  
instrument (e.ꢀg. indices, stocks or bonds).  
ment adjusted for net investments in marketable securities  
and term deposits.  
Gross margin  
Gross profit as a percentage of revenues.  
2
2
2
2
2
2
2
2
00 OTHER INFORMATION  
00 BMW Group Ten-year Comparison  
02 BMW Group Locations  
04 Glossary  
06 Index  
07 Index of Graphs  
08 Financial Calendar  
09 Contacts  
2
05 other inFormation  
IFRSs  
Subsidiaries  
International Financial Reporting Standards, intended  
to ensure global comparability of financial reporting  
and consistent presentation of financial statements.  
The IFRSs are issued by the International Accounting  
Standards Board and include the International  
Accounting Standards (IASs), which are still valid.  
Subsidiaries are those enterprises which, either directly  
or indirectly, are under the uniform control of the  
management of BMWAG or in which BMWAG, either  
directly or indirectly  
– holds the majority of the voting rights  
– has the right to appoint or remove the majority of the  
members of the Board of Management or equivalent  
governing body, and in which BMWAG is at the same  
time (directly or indirectly) a shareholder  
Indicator for water consumption  
The indicators for water consumption refer to the pro­  
duction sites of the BMW Group. The water consumption – has control (directly or indirectly) over another enter­  
includes the process water input for the production  
as well as the general water consumption, e.ꢀg. for sani­  
tation facilities.  
prise on the basis of a control agreement or a provision  
in the statutes of that enterprise.  
Supplier relationship management  
Operating cash flow  
Cash inflow from the operating activities of the Auto­  
motive segment.  
Supplier relationship management (SRM) uses focused  
procurement strategies to organise networked supplier  
relationships, optimise processes for supplier qualifica­  
tion and selection, ensure the application of uniform  
standards throughout the Group and create efficient  
sourcing and procurement processes along the whole value  
added chain.  
Preferred stock  
Stock which receives a higher dividend than common  
stock, but without voting rights.  
Rating  
Sustainability  
Standardised evaluation of a company’s credit standing  
Sustainability, or sustainable development, gives equal  
which is widely accepted on the global capital markets. consideration to ecological, social and economic develop­  
Ratings are published by independent rating agencies, ment. In 1987 the United Nations “World Commission  
e. ꢀg . Standard&Poor’s or Moody’s, based on their analysis on Environment and Development” defined sustainable  
of a company.  
development as development that meets the needs of  
the present without compromising the ability of future  
generations to meet their own needs. The economic  
relevance of corporate sustainability to the BMW Group  
is evident in three areas: resources, reputation and risk.  
Return on sales  
Pre­tax: Profit before tax as a percentage of revenues.  
Post­tax: Profit as a percentage of revenues.  
Risk management  
An integral component of all business processes. Following  
enactment of the German Law on Control and Trans­  
parency within Businesses (KonTraG), all companies  
listed on a stock exchange in Germany are required to  
set up a risk management system. The purpose of this  
system is to identify risks at an early stage which could  
have a significant adverse effect on the assets, liabilities,  
financial position and results of operations, and which  
could endanger the continued existence of the Company.  
This applies in particular to transactions involving risk,  
errors in accounting or financial reporting and violations  
of legal requirements. The Board of Management is  
required to set up an appropriate system, to document  
that system and monitor it regularly with the aid of the  
internal audit department.  
2
06  
Index  
A
G
Accounting policies  
101 et seq.  
29 et seq.  
Group tangible, intangible and investment  
Apprentices  
44  
assets  
124 et seq.  
Automotive segment  
I
B
Income statement  
49, 90 et seq., 116 et seq.  
Balance sheet structure  
56  
Income taxes  
Intangible assets  
50, 63, 106, 118 et seq., 145  
55 et seq., 102, 126  
Bonds  
53 et seq., 145 et seq.  
Inventories  
106, 132  
C
Investments accounted for using the equity method  
Capital expenditure  
4, 50 et seq.  
and other investments  
104, 127 et seq.  
Cash and cash equivalents  
Cash flow 4, 52 et seq., 94 et seq., 112 et seq., 115,  
61 et seq.  
Cash flow statement  
52 et seq., 106, 134  
K
1
Key data per share  
88  
52 et seq., 94 et seq., 161 et seq.  
CFRP  
32, 39, 41  
L
CO emissions  
Compensation Report  
Compliance  
3, 27 et seq., 46 et seq., 68 et seq.  
189 et seq.  
184 et seq.  
Lease business  
Leased products  
36 et seq.  
127  
2
Locations  
202 et seq.  
Connected Drive  
39, 42  
Consolidated companies  
Consolidation principles  
99 et seq.  
100  
M
Mandates of members of the Board of  
Management 172  
Mandates of members of the Supervisory  
Board 173 et seq.  
Contingent liabilities  
Corporate Governance  
149  
170 et seq.  
Cost of materials  
58 et seq.  
Cost of sales  
49, 101 et seq., 116  
Marketable securities  
Motorcycles segment  
104 et seq., 130 et seq.  
35  
D
Dealer organisation/dealerships  
Declaration with respect to the Corporate Governance  
Code 171  
Dividend  
19, 41  
N
Net profit  
New financial reporting rules  
4, 49 et seq.  
109 et seq.  
88, 121  
Dow Jones Sustainability Index World  
45 et seq.  
O
Other financial result  
Other investments  
118  
128  
E
Earnings per share  
Efficient Dynamics  
49, 102, 121  
38  
Other operating income and expenses  
Other provisions 144  
65 et seq.  
117  
Employees  
44 et seq.  
Outlook  
Equity  
57 et seq., 143 et seq.  
Exchange rates  
23 et seq., 66, 78, 101, 159 et seq.  
P
Pension provisions  
Performance indicators  
67 et seq.  
57, 63, 108, 136 et seq.  
F
20 et seq., 26 et seq.,  
Financial assets  
53, 55, 57, 105, 130 et seq.  
Financial instruments  
Financial liabilities  
104, 150 et seq.  
55, 57, 107, 145 et seq.  
Personnel costs  
Production 31 et seq.  
Production network 31 et seq.  
Profit before financial result 4, 49 et seq.  
Profit before tax 4, 26 et seq., 49 et seq., 67, 69  
Property, plant and equipment 102 et seq., 126  
Purchasing 40 et seq.  
121  
Financial result  
Financial Services segment  
Fleet emissions 3, 27 et seq., 47 et seq., 68 et seq.  
50 et seq., 61  
36 et seq.  
2
2
2
2
2
2
2
2
00 OTHER INFORMATION  
00 BMW Group Ten-year Comparison  
02 BMW Group Locations  
04 Glossary  
06 Index  
07 Index of Graphs  
08 Financial Calendar  
09 Contacts  
2
07 other inFormation  
Index of Graphs  
R
Finances  
Rating  
79, 88 et seq., 136  
BMW Group in figures  
5
Receivables from sales financing  
Related party relationships  
55, 105, 129 et seq.  
6 et seq.  
Value drivers  
Exchange rates compared to the euro  
Oil price trend  
Steel price trend  
20  
162 et seq.  
24  
Remuneration system  
189 et seq.  
24  
24  
Report of the Supervisory Board  
Research and development  
Result from equity accounted investments  
38 et seq.  
Precious metals price trend  
BMW Group new vehicles financed by  
Financial Services segment 36  
Contract portfolio of Financial Services segment  
Contract portfolio retail customer financing of  
25  
117  
Return on sales  
Revenue reserves  
20 et seq., 49 et seq.  
134 et seq.  
36  
Revenues  
Risks report  
4, 27 et seq., 49, 59, 61, 68 et seq., 101, 116  
70 et seq.  
Financial Services segment  
37  
Development of credit loss ratio  
Regional mix of purchase volumes  
37  
S
40  
Selling and administrative expenses  
Sales volume 3, 26 et seq., 29, 67 et seq.  
Segment information 165 et seq.  
116  
Change in cash and cash equivalents  
Financial liabilities 54  
Balance sheet structure – Automotive segment  
Balance sheet structure – Group 56  
BMW Group value added 59  
52  
56  
Shareholdings of members of the Board of  
Management and the Supervisory Board  
163  
90, 123  
Statement of Comprehensive Income  
Stock 87 et seq.  
Risk management in the BMW Group  
70  
Sustainability  
45 et seq.  
Production and sales volume  
BMW Group – key automobile markets  
BMW Group sales volume by region  
BMW Group – key motorcycle markets  
29  
T
29  
Tangible, intangible and investment  
assets 102 et seq., 124 et seq.  
35  
BMW sales volume of motorcycles  
35  
Trade payables  
148  
Trade receivables  
57, 133 et seq.  
Workforce  
BMW Group apprentices at 31December  
Employee attrition rate at BMWAG 45  
Proportion of non­tariff female employees  
44  
45  
Environment  
Materiality matrix 46  
CO emissions per vehicle produced  
47  
2
Energy consumed per vehicle produced  
47  
Process wastewater per vehicle produced  
Water consumption per vehicle produced  
47  
47  
Volatile organic compounds per vehicle produced  
48  
Waste for disposal per vehicle produced  
48  
Stock  
Development of BMW stock  
87  
Compliance  
BMWGroup Compliance Management System  
185  
This version of the Annual Report is a translation  
from the German version. Only the original German  
version is binding.  
2
08  
Financial Calendar  
Annual Accounts Press Conference  
Analyst and Investor Conference  
Quarterly Report to 31 March 2015  
Annual General Meeting  
18 March 2015  
19 March 2015  
6 May 2015  
13 May 2015  
Quarterly Report to 30 June 2015  
Quarterly Report to 30 September 2015  
4 August 2015  
3 November 2015  
Annual Report 2015  
16 March 2016  
16 March 2016  
17 March 2016  
3 May 2016  
Annual Accounts Press Conference  
Analyst and Investor Conference  
Quarterly Report to 31 March 2016  
Annual General Meeting  
12 May 2016  
Quarterly Report to 30 June 2016  
Quarterly Report to 30 September 2016  
2 August 2016  
4 November 2016  
2
2
2
2
2
2
2
2
00 OTHER INFORMATION  
00 BMW Group Ten-year Comparison  
02 BMW Group Locations  
04 Glossary  
06 Index  
07 Index of Graphs  
08 Financial Calendar  
09 Contacts  
2
09 other inFormation  
Contacts  
Business and Finance Press  
Telephone  
+49 89 382­2 45 44  
49 89 382­2 41 18  
+
Fax  
+49 89 382­2 44 18  
E­mail  
presse@bmwgroup.com  
Investor Relations  
Telephone  
+49 89 382­2 42 72  
+
49 89 382­2 53 87  
Fax  
E­mail  
+49 89 382­1 46 61  
ir@bmwgroup.com  
The BMW Group on the Internet  
Further information about the BMW Group is available online at www.bmwgroup.com.  
Investor Relations information is available directly at www.bmwgroup.com/ir. Information  
about the various BMW Group brands is available at www.bmw.com, www.mini.com  
and www.rolls­roycemotorcars.com.  
A FURTHER CONTRIBUTION TOWARDS PRESERVING RESOURCES  
The BMW Group Annual Report was printed on paper with the Blue Angel eco-label. The paper used was produced, climate-  
neutrally and without optical brighteners and chlorine bleach, from recycled waste paper.  
The CO emissions generated through print and production were neutralised by the BMW Group. To this end, the corresponding  
2
amount of emissions allowances was erased, with thetransaction identification EU241734 on 6 February 2015.  
flexible  
reliable  
leading  
unique  
PUBLISHED BY  
Bayerische Motoren Werke  
Aktiengesellschaft  
8
0788 Munich  
Germany  
Tel. +49 89 382-0  


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission