Automotive   |   BMW AG
ANNUAL REPORT  
016  
2
A New Era Begins  
CONTENTS  
1
4
CORPORATE  
GOVERNANCE  
Page  
Page  
4
8
BMW Group in Figures  
Report of the Supervisory Board  
Page 16 Statement of the Chairman of the  
Board of Management  
Page 190 Statement on Corporate Governance (§289a HGB)  
(
Part of the Combined Management Report)  
Page 190 Information on the Company’s Governing Constitution  
Page 191 Declaration of the Board of Management and of the  
Supervisory Board pursuant to § 161 AktG  
Page 192 Members of the Board of Management  
Page 193 Members of the Supervisory Board  
2
COMBINED  
Page 196 Composition and Work Procedures of the Board of  
Management of BMW AG and its Committees  
MANAGEMENT REPORT  
Page 198 Composition and Work Procedures of the  
Supervisory Board of BMW AG and its Committees  
Page 22 General Information on the BMW Group  
Page 22 Organisational Structure and Business Model  
Page 24 Locations  
Page 204 Disclosures pursuant to the Act on Equal  
Gender Participation  
Page 205 Information on Corporate Governance Practices Applied  
beyond Mandatory Requirements  
Page 29 Management System  
Page 207 Compliance in the BMW Group  
Page 212 Compensation Report  
Page 34 Report on Economic Position  
Page 34 General and Sector-specific Environment  
Page 38 Overall Assessment by Management  
Page 39 Financial and Non-financial Performance Indicators  
Page 42 Review of Operations  
Page 223 Responsibility Statement by the  
Company’s Legal Representatives  
Page 224 Auditor’s Report  
Page 63 Results of Operations, Financial Position and Net Assets  
Page 76 Comments on Financial Statements of BMW AG  
Page 82 Report on Outlook, Risks and Opportunities  
Page 82 Outlook  
5
Page 88 Risks and Opportunities  
OTHER INFORMATION  
Page 101 Internal Control System and Risk Management  
System Relevant for the Financial Reporting Process  
Page 226 BMW Group Ten-year Comparison  
Page 103 Disclosures Relevant for Takeovers  
Page 228 Glossary  
Page 107 BMW Stock and Capital Markets in 2016  
Page 230 Index  
Page 232 Index of Graphs  
Page 233 Financial Calendar  
Page 234 Contacts  
3
GROUP FINANCIAL  
STATEMENTS  
Page 112 Income Statements for Group and Segments  
Page 112 Statement of Comprehensive Income for Group  
Page 114 Balance Sheets for Group and Segments  
Page 116 Cash Flow Statements for Group and Segments  
Page 118 Group Statement of Changes in Equity  
Page 120 Notes to the Group Financial Statements  
Page 120 Accounting Principles and Policies  
Page 133 Notes to the Income Statement  
Page 139 Notes to the Statement of Comprehensive Income  
Page 140 Notes to the Balance Sheet  
Page 161 Other Disclosures  
Page 175 Segment Information  
Page 180 List of Investments at 31 December 2016  
1
BMW Group  
in Figures  
Page  
Page  
4
8
BMW Group in Figures  
Report of the  
Supervisory Board  
Statement of  
the Chairman of  
the Board of  
Report of the Supervisory Board  
Management  
Page 16 Statement of the Chairman of the Board of Management  
1
4
BMW Group  
in Figures  
BMW GROUP IN FIGURES  
Key non-financial performance indicators  
•
01  
2
012  
2013  
2014  
2015  
2016  
Change in %  
BMW Group  
Workforce at year-end1  
105,876  
110,351  
116,324  
122,244  
124,729  
2.0  
AutoMotive seGMent  
Sales volume2  
1,845,186  
143  
1,963,798  
133  
2,117,965  
130  
2,247,485  
127  
2,367,603  
124  
5.3  
Fleet emissions in g CO  
2
/ km3  
– 2.4  
Motorcycles seGMent  
Sales volume4  
106,358  
115,215  
123,495  
136,963  
145,032  
5.9  
Further non-financial performance figures  
•
02  
2
012  
2013  
2014  
2015  
2016  
Change in %  
AutoMotive seGMent  
Sales volume  
BMW2  
1,540,085  
301,526  
3,575  
1,655,138  
305,030  
3,630  
1,811,719  
302,183  
4,063  
1,905,234  
338,466  
3,785  
2,003,359  
360,233  
4,011  
5.2  
6.4  
6.0  
5.3  
MINI  
Rolls-Royce  
Total2  
1,845,186  
1,963,798  
2,117,965  
2,247,485  
2,367,603  
Production volume  
BMW5  
1,547,057  
311,490  
3,279  
1,699,835  
303,177  
3,354  
1,838,268  
322,803  
4,495  
1,933,647  
342,008  
3,848  
2,002,997  
352,580  
4,179  
3.6  
3.1  
8.6  
3.5  
MINI  
Rolls-Royce  
Total5  
1,861,826  
2,006,366  
2,165,566  
2,279,503  
2,359,756  
Motorcycles seGMent  
Production volume6  
BMW  
113,811  
110,127  
133,615  
151,004  
145,555  
– 3.6  
9.4  
FinAnciAl services seGMent  
New contracts with retail customers  
1,341,296  
1,471,385  
1,509,113  
1,655,961  
1,811,157  
1
Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.  
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units).  
EU-28.  
Excluding Husqvarna, sales volume up to 2013: 59,776 units.  
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units).  
Excluding Husqvarna, production up to 2013: 59,426 units.  
2
3
4
5
6
5
Key financial performance indicators  
•
03  
2
012  
2013  
2014  
2015  
2016  
Change in %  
BMW Group  
Profit before tax in € million  
7,803  
7,893  
8,707  
9,224  
9,665  
4.8  
AutoMotive seGMent  
Revenues in € million  
70,208  
10.8  
70,630  
9.4  
75,173  
9.6  
85,536  
9.2  
86,424  
8.9  
1.0  
– 0.3  
2.1  
EBIT margin in % (change in %pts)  
RoCE in % (change in %pts)  
73.7  
63.0  
61.7  
72.2  
74.3  
Motorcycles seGMent  
RoCE in % (change in %pts)  
1.8  
16.4  
20.0  
21.8  
19.4  
31.6  
20.2  
33.0  
21.2  
1.4  
1.0  
FinAnciAl services seGMent  
RoE in % (change in %pts)  
21.2  
Further financial performance figures  
•
04  
in € million  
2012  
2013  
2014  
2015  
2016  
Change in %  
Capital expenditure  
5,240  
3,541  
9,167  
6,711  
3,741  
9,964  
6,100  
4,170  
9,423  
5,890  
4,659  
5,823  
4,806  
–1.1  
3.2  
Depreciation and amortisation  
Operating cash flow Automotive segment  
11,836  
11,464  
– 3.1  
Revenues  
76,848  
70,208  
1,490  
76,059  
70,630  
1,504  
80,401  
75,173  
1,679  
92,175  
85,536  
1,990  
94,163  
86,424  
2,069  
2.2  
1.0  
Automotive  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
4.0  
19,550  
5
19,874  
6
20,599  
7
23,739  
7
25,681  
6
8.2  
–14.3  
– 4.8  
–14,405  
–15,955  
–17,057  
–19,097  
– 20,017  
Profit before financial result (EBIT)  
Automotive  
8,275  
7,599  
9
7,978  
6,649  
79  
9,118  
7,244  
112  
9,593  
7,836  
182  
9,386  
7,695  
187  
– 2.2  
–1.8  
2.7  
Motorcycles  
Financial Services  
Other Entities  
1,558  
58  
1,643  
44  
1,756  
71  
1,981  
169  
2,184  
–17  
10.2  
–
Eliminations  
– 949  
– 437  
– 65  
– 575  
– 663  
–15.3  
Profit before tax  
Automotive  
7,803  
7,170  
6
7,893  
6,561  
76  
8,707  
6,886  
107  
9,224  
7,523  
179  
9,665  
7,916  
185  
4.8  
5.2  
Motorcycles  
3.4  
Financial Services  
Other Entities  
Eliminations  
1,561  
3
1,619  
164  
1,723  
154  
1,975  
211  
2,166  
170  
9.7  
–19.4  
–16.3  
– 937  
– 527  
–163  
– 664  
– 772  
Income taxes  
– 2,692  
5,111  
– 2,564  
5,329  
– 2,890  
5,817  
– 2,828  
6,396  
– 2,755  
6,910  
2.6  
8.0  
Net profit  
Earnings per share in €  
7.75 / 7.77  
8.08 / 8.10  
8.83 / 8.85  
9.70 / 9.72  
10.45 / 10.47  
7.7 / 7.7  
6
BMW Group  
in Figures  
Sales volume of automobiles*  
Revenues  
• 07  
•
05  
in 1,000 units  
in € billion  
2
,367.6  
94.2  
2
1
0
,500  
2,247.5  
100  
92.2  
2
,118.0  
8
0.4  
1,963.8  
76.8  
7
6.1  
1,845.2  
,250  
50  
0
2
012  
2013  
2014  
2015  
2016  
2012  
2013  
2014  
2015  
2016  
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang  
2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units,  
016: 316,200 units).  
(
2
Profit before financial result  
Profit before tax  
• 08  
•
06  
in € million  
in € million  
9
,593 9,386  
9,665  
1
5
0
0,000  
9,118  
10,000  
9,224  
8
,707  
8
,275  
7,978  
7,803 7,893  
,000  
5,000  
0
2
012  
2013  
2014  
2015  
2016  
2012  
2013  
2014  
2015  
2016  
1
REPORT OF THE  
SUPERVISORY BOARD  
Report of the  
Supervisory Board  
Statement of  
the Chairman of  
the Board of  
Management  
STATEMENT OF THE  
CHAIRMAN OF THE  
BOARD OF MANAGEMENT  
8
Report of the  
Supervisory Board  
Norbert Reithofer  
Chairman of the Supervisory Board  
9
Dear Shareholders,  
In 2016, BMWAG celebrated its 100th anniversary. Quite fittingly, the BMW Group finished its  
centenary year with record earnings. With its Strategy NUMBER ONE  
> NEXT, the BMW Group  
is moving forward with a sense of purpose into the challenging era of digitalisation and  
electrification and fully intends to continue playing an active role in shaping technological  
change within the automobile industry.  
Main emphases of the Supervisory Board’s monitoring and advisory activities  
Throughout the financial year 2016, we performed the duties incumbent on the Supervisory  
Board in accordance with the law and the Articles of Association. We continuously monitored  
the Board of Management’s governance of the business and provided advice on important  
projects and plans.  
One of the main areas of emphasis with regard to reporting and our consultations in 2016 was  
the enhanced development of the BMW Group’s corporate strategy. We also deliberated at length  
on succession planning for the Board of Management. Corporate planning was a further key  
area of focus. We discussed the current performance and financial position of the BMW Group  
at each of our five Supervisory Board meetings.  
We carefully monitored the overall performance of the BMW Group, both at scheduled meetings  
and at other times as the situation required. The Board of Management informed us of all key sales  
and workforce figures on a regular basis. The Chairman of the Board of Management informed  
me personally and in a prompt manner regarding all important transactions and key projects.  
Similarly, Dr Karl-Ludwig Kley, the Chairman of the Audit Committee, and Dr Friedrich Eichiner,  
member of the Board of Management responsible for Finance, consulted on matters directly,  
both at scheduled meetings and as the need arose.  
At the beginning of the year, the Board of Management presented us with a summary of new  
and revised vehicle models scheduled for market launch in 2016.  
The Board of Management reported to us regularly and comprehensively on the BMW Group’s  
financial condition, providing information on sales volume developments, market competition  
issues relevant for the Automotive and Motorcycles segments, and changes in the size of the  
workforce. It also kept us informed of economic developments in the world’s key regions and  
the prospects for business in each of them. The Board of Management provided us with regular  
updates on new business with retail customers and business volumes in the Financial Services  
segment, including explanations of variances against the forecast.  
In its regular business status reports, the Board of Management kept us well informed regarding  
the progress of important current projects and transactions, which we then deliberated upon in  
greater detail. For example, the Board of Management briefed us on the BMW Group’s collabo-  
ration with Mobileye and Intel aimed at developing technologies for highly and fully automated  
driving. It also provided information on the planned joint venture with other automobile  
manufacturers to establish a charging infrastructure for electric vehicles that is compatible with  
every brand. Other items reported on included the complete acquisition of the parking space  
service provider ParkMobile and the enlargement of the group of shareholders for the HERE  
mapping service. The Board of Management also informed us on the impact of an earthquake  
in Japan on security of supply for certain components.  
1
0
Report of the  
Supervisory Board  
We reviewed business developments on various key markets in some depth, particularly those  
in China and the USA. The referendum held in the United Kingdom on the country leaving the  
European Union prompted us to obtain an assessment from the Board of Management regarding  
possible future consequences for the BMW Group.  
The Board of Management kept us up-to-date at all times on the further development of the  
Group’s corporate strategy. Based on a thorough analysis of the changing environment in  
which the BMW Group operates, the Board of Management set out the strategic targets of  
Strategy NUMBER ONE > NEXT, which is designed to reconcile the need to ensure operational  
excellence, invest in forward-looking areas and maintain profitability at a stable level. After the  
various presentations, we discussed individual points of strategy with the Board of Management,  
including digitalisation, electric mobility and lightweight construction.  
One Supervisory Board meeting was held in Goodwood, England, the headquarters and location  
of the Rolls-Royce Motor Cars manufacturing plant. In the course of this meeting we dealt  
with several topics, including a Board of Management report on product quality and customer  
satisfaction. The Board of Management described various existing and planned emissions  
requirements on key markets and presented measures designed to ensure compliance with  
those requirements, including the further electrification of the BMW Group’s fleet of vehicles.  
Furthermore, the Board of Management explained the strategy and risk management measures  
in place for Group financing. While visiting the Rolls-Royce manufacturing plant, we gathered  
information on topics such as the implementation of individual customer requirements as a way  
of optimising customer orientation.  
Corporate strategy and long-term corporate planning were considered in a meeting held over  
two days. In the first part of the meeting we discussed the Strategy NUMBER ONE > NEXT in  
great detail, including the implementation measures developed by the Board of Management.  
The Board of Management elaborated on topics that included the measures adopted for defined  
key areas of technology, such as Efficient Dynamics NEXT.  
Together with the Board of Management, we also debated at length on the topic of digitalisation  
in sales and production and the related requirements. After thorough deliberation, the members  
of the Supervisory Board approved the Strategy NUMBER ONE > NEXT.  
We also took the opportunity to personally test-drive a variety of series vehicles on a test track,  
including the current BMW plug-in hybrid vehicles and other individual models currently  
being developed. In addition, selected vehicle models were presented and explained to us. In  
this context, the new brand strategy, a key element of Strategy NUMBER ONE  
considered at length.  
> NEXT, was  
On the second day of the meeting, we focused on the long-term corporate plan for the years  
017ꢀ 2022. The Board of Management also took the opportunity to point out various risk  
2
–
scenarios, such as a possible further tightening of emissions regulations. The long-term plan  
was approved after exhaustive analysis and consultation. We urged the Board of Management to  
maintain close control over fixed costs and profitability in order to secure the necessary levels  
of future investment.  
The Board of Management reported to us comprehensively on the performance, risk situation  
and business strategies of the Financial Services segment. It also provided information on the  
current status of regulatory proceedings involving a locally based financial services company.  
Towards the end of the year under report, we studied the annual budget for the financial year  
2
017 presented to us by the Board of Management. We carefully reviewed the opportunities and  
risks attached to the budget and discussed them thoroughly with the Board of Management.  
1
1
In both the Personnel Committee and the full Supervisory Board, we examined not only the  
structure, but also the amounts of compensation paid to the various members of the Board of  
Management. In this context, we reviewed trends in business performance and board compen-  
sation over a period of several years. We also gave general consideration to the remuneration  
paid to executive managers and employees of BMWAG within Germany over the course of time.  
A compensation consultant, independent of both the Board of Management and BMWAG, was  
called upon to provide expert advice and assist us in our evaluation of DAX-related compensation  
studies. We concluded that the level of compensation paid to board members, including their  
pension entitlements, is appropriate and in keeping with other DAX-listed companies. The  
Supervisory Board therefore resolved not to propose any changes to the system of Board of  
Management compensation in 2016. Further information on the amounts of compensation  
paid to the members of the Board of Management is provided in the Compensation Report (see  
section “Statement on Corporate Governance”).  
Together with the Board of Management, we undertook an in-depth review of the corporate  
governance standards currently in place within the BMW Group as well as the rules set out  
in the German Corporate Governance Code. The latest Declaration of Compliance, issued in  
December 2016, is included in the Annual Report.  
We also discussed with the Board of Management the probable impact of technological changes  
on future workforce requirements. We were informed about the range of measures implemented  
to incorporate Strategy NUMBER ONE  
> NEXT in the BMW Group’s corporate culture and  
brought up to date on activities aimed at attracting young talent. The Board of Management  
also provided details of actual and planned additions to the workforce in defined growth areas.  
The Board of Management also reported on the latest status of the BMW Group’s diversity concept.  
The report presented figures for the percentage of female executives in the BMW Group, in par-  
ticular the proportions in the two executive management levels below the Board of Management,  
the targets set, and the latest status of these two levels.  
We again decided upon a target for the proportion of female members on the Board of Manage-  
ment, including a time frame for target attainment. As its target for the period from 1 January 2017  
to 31 December 2020, we stipulated that the Board of Management should continue to have at  
least one female member. We consider it a key aim to increase the proportion of women on the  
Board of Management and fully support the Board’s endeavours to increase the percentage of  
women employed at the highest executive management levels within the BMW Group. Moreover,  
we developed a diversity concept for the composition of the Board of Management.  
The composition targets for the Supervisory Board, which represent the basis for a diversity  
concept, were not changed during the financial year 2016. Compliance with the composition  
targets set for 31 December 2016 was determined by way of self-assessment.  
No conflicts of interest arose on the part of members of either of the two boards during the  
year under report. Significant transactions with Supervisory Board members and other related  
parties as defined by IAS 24, including close relatives and intermediary entities, are examined  
on a quarterly basis.  
The Supervisory Board also assessed the efficiency of its own work with the aim of further  
improving its internal procedures and the work of its committees. With this point in mind, I  
also conducted individual discussions with the members of the Supervisory Board. The matter  
was also considered at a meeting of the full Supervisory Board. Additional topics for report were  
identified as part of the overall conclusion reached.  
1
2
Report of the  
Supervisory Board  
Each of the five Supervisory Board meetings during the financial year 2016 was attended on  
average by over 90% of its members, a fact that can be tied in to the analysis of attendance fees  
for individual members disclosed in the Compensation Report. During their term of office in  
the period under report, none of the members of the Supervisory Board took part in only half or  
less than half of the meetings of the Supervisory Board, the Presiding Board or the committees  
to which any given member belongs.  
Description of Presiding Board activities and committee work  
The Supervisory Board has established a Presiding Board and four committees. The chairpersons  
of the various committees reported to the Supervisory Board in depth on any committee meetings  
held since the previous meeting of the full Supervisory Board. I brought the representatives  
of the shareholders up to date regarding the deliberations of the Nomination Committee. A  
detailed description of the duties, composition and work procedures of the various committees  
is provided in the Corporate Governance Report.  
The Presiding Board convened four times during the year under report. Assuming no other  
committee was responsible, the Presiding Board prepared the detailed agenda for the meetings of  
the full Supervisory Board, including the careful preparation of topics on the basis of written and  
oral reports provided by members of the Board of Management and senior heads of department.  
We also stipulated further topics for full Supervisory Board meetings and made suggestions for  
reports submitted to the Supervisory Board.  
The Audit Committee held four meetings and three telephone conference calls during the financial  
year 2016. In the course of those conference calls, together with the Board of Management we  
deliberated on the Quarterly Financial Reports prior to their publication. Representatives of the  
external auditors were present during the telephone conference call held in conjunction with  
the Half-year Financial Report.  
The Audit Committee Meeting held in spring 2016 focused primarily on preparing for the  
Supervisory Board meeting at which the financial statements were to be examined. Before  
recommending to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft  
be elected as Company and Group auditor at the Annual General Meeting 2016, we obtained a  
Declaration of Independence from KPMG AG Wirtschaftsprüfungsgesellschaft. We also consid-  
ered the scope and composition of non-audit services, including tax advisory services provided  
by KPMG entities to the BMW Group. There were no indications of conflicts of interest, grounds  
for exclusion or lack of independence on the part of the auditor.  
The fee proposals for the audit of the year-end Company and Group Financial Statements 2016 and  
the review of the Half-year Financial Report were deemed appropriate. Subsequent to the Annual  
General Meeting 2016, we therefore appointed KPMG AG Wirtschaftsprüfungsgesellschaft for  
the relevant engagements and specified audit focus areas.  
As in previous years, the Head of Group Controlling reported during the financial year 2016  
on the current risk profile of the BMW Group and provided an overview of the changes made  
to the risk management system in view of new internal and external requirements.  
The Head of Group Financial Reporting informed us about the internal control system (ICS  
)
underlying financial reporting and explained measures being taken to develop the system further.  
No material ICS weaknesses were identified which would jeopardise the system’s effectiveness.  
The BMW Group Compliance Committee chairman provided information on the current status of  
compliance within the Group as well as changes in the BMW Group Compliance Organisation aimed  
at strengthening local compliance management, including the next steps to be taken in this area.  
1
3
The Head of Group Internal Audit reported on internal audit matters, including a description  
of the significant internal audit findings and the planned areas of focus on the industrial and  
financial services sides of the business.  
On repeated occasions, the Audit Committee dealt with the new requirements for financial year-  
end audits, particularly the rules applying to non-audit-related services provided by the auditor  
and the procedure for changing the external auditor. In accordance with statutory requirements,  
we approved a list of non-audit-related services that may be provided by the external auditor.  
Furthermore, we performed our statutory duties in connection with the mandatory audit of  
over-the-counter trading with derivatives pursuant to §20 of the Securities Trading Act (WpHG).  
An external auditor confirmed the effectiveness of the system that BMWAG currently employs  
to ensure compliance with regulatory requirements. Furthermore, in the Audit Committee we  
concurred with the decision of the Board of Management to raise the Company’s share capital  
in accordance with §4 (5) of the Articles of Incorporation (Authorised Capital 2014) by €ꢀ305,000  
and, in conjunction with the Employee Share Programme, 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 five times during the financial year 2016. One of the  
principal duties of this committee is to prepare decisions of the full Supervisory Board relating  
to the composition of the Board of Management. In specific cases, we also gave our approval for  
members of the Board of Management to accept non-BMW Group mandates.  
The Nomination Committee convened twice during the financial year 2016. At these meetings, we  
deliberated on succession planning for mandates of the shareholders’ representatives and, taking  
account of the composition targets set, made one recommendation for a proposed nomination  
of a candidate for election at the Annual General Meeting 2017.  
The statutory Mediation Committee was not required to convene during the financial year 2016  
.
Composition and organisation of the Board of Management  
During the period under report, the composition of the Board of Management changed as part  
of the process of amicably agreed succession planning.  
With effect from  
1 October 2016, the Supervisory Board appointed Markus Duesman as member  
of the Board of Management. Mr Duesmann has many years of management experience in the  
automobile industry and has been with BMW AG since 2007. Most recently, he was head of  
powertrain and the related process chain within the development area. Mr Duesmann took over  
board responsibility for the Purchasing and Supplier Network from Dr Klaus Draeger, whose  
mandate ended on 30 September 2016.  
With effect from  
1 January 2017, we appointed Dr Nicolas Peter as member of the Board of  
Management. Dr Peter joined BMWAG in 1991 and most recently worked as head of the European  
sales region. He took over board responsibility for Finances from Dr Friedrich Eichiner, who  
retired from the Board of Management with effect from the end of 2016.  
We would like to extend our special thanks to Dr Draeger and Dr Eichiner for their many years  
of dedicated work in the interests of the BMW Group, both in highly successful years and during  
the challenging period of the global financial and economic crisis. We equally wish to thank  
them for their personal contribution to the BMW Group’s long-term success.  
1
4
Report of the  
Supervisory Board  
Composition of the Supervisory Board, the Presiding Board  
and Supervisory Board Committees  
In 2016, the Annual General Meeting re-elected Simone Menne to the Supervisory Board for  
a term of five years. Ulrich Kranz resigned his mandate as executive staff representative with  
effect from the end of 2016. As elected substitute member, Ralf Hattler became a member of  
the Supervisory Board with effect from  
1 January 2017. We thank Mr Kranz for the trusting and  
constructive working relationship within the Supervisory Board.  
The composition of the Presiding Board and the committees of the Supervisory Board remained  
unchanged during the financial year 2016. The Corporate Governance Report contains a summary  
of the composition of the Supervisory Board and its committees.  
Examination of financial statements and the profit distribution proposal  
KPMG AG Wirtschaftsprüfungsgesellschaft conducted a review of the abridged Interim Group  
Financial Statements and Interim Group Management Report for the six-month period ended  
30 June 2016. The results of the review were presented to the Audit Committee by representatives  
of KPMG AG Wirtschaftsprüfungsgesellschaft. No issues were identified that might indicate  
that the abridged Interim Group Financial Statements and Interim Group Management Report  
had not been prepared, in all material respects, in accordance with the applicable provisions.  
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft  
for the year ended 31 December 2016 and the Combined Management Report – as author-  
ised for issue by the Board of Management on 14 February 2017 – were audited by KPMG AG  
Wirtschaftsprüfungsgesellschaft and given an unqualified audit opinion.  
KPMG AG Wirtschaftsprüfungsgesellschaft is the external auditor for BMW AG and the  
BMW Group. The Auditor’s Report has been signed with effect from the financial year 2016 by  
Christian Sailer, as independent auditor (Wirtschaftsprüfer), and with effect from the financial  
year 2014 by Andreas Feege, as independent auditor (Wirtschaftsprüfer), responsible for the  
performance of the engagement.  
The Financial Statements and the Combined Management Report, the long-form audit reports  
of the external auditors and the Board of Management’s profit distribution proposal were made  
available to all members of the Supervisory Board in a timely manner.  
In a first step, the Audit Committee diligently examined and discussed these documents at a  
meeting held on 24 February 2017. The Supervisory Board subsequently examined the relevant  
drafts of the Board of Management at its meeting on  
9 March 2017, after hearing the committee  
chairman’s report on the meeting of the Audit Committee. In both meetings, the Board of  
Management gave a detailed explanation of the financial reports it had prepared. Representatives  
of the external auditors attended both meetings, reported on significant findings and answered  
any additional questions raised by the members of the Supervisory Board. They confirmed that  
the risk management system established by the Board of Management is capable of identifying  
developments at an early stage that might impair the Company’s going-concern status. They  
also confirmed that no material weaknesses in the internal control system and risk management  
system were found with regard to the financial reporting process. Similarly, they confirmed that  
they had not identified any issues in the course of their audit work that were inconsistent with  
the contents of the Declaration of Compliance issued jointly by the two boards.  
1
5
Based on thorough examination by the Audit Committee and the full Supervisory Board, we  
concurred with the results of the external audit. In accordance with the conclusion reached after  
the examination by the Audit Committee and the full Supervisory Board, no objections were  
raised. The Group and Company Financial Statements of Bayerische Motoren Werke Aktien-  
gesellschaft for the financial year 2016 prepared by the Board of Management were approved at  
the Supervisory Board meeting held on 9 March 2017. The separate financial statements have  
therefore been adopted.  
We also examined the proposal of the Board of Management to use the unappropriated profit to  
pay an increased dividend of €ꢀ3.50 per share of common stock and €ꢀ3.52 per share of non-voting  
preferred stock. We consider the proposal appropriate and therefore concur with it.  
Expression of appreciation by the Supervisory Board  
The Supervisory Board wishes to thank the members of the Board of Management and the entire  
staff of the BMW Group worldwide for their efforts and hard work, which contributed to the  
overall success of the BMW Group in its centenary year.  
Pro-actively shaping change  
The Group corporate culture, the spirit of innovation, and the passionate commitment of our  
workforce provide a strong foundation for taking on the challenges of the future. Building on  
this firm base, the BMW Group will continue to play a formative and leading role in shaping  
technological change, with the clear aim of emerging on the winning side.  
Munich, 9 March 2017  
On behalf of the Supervisory Board  
Norbert Reithofer  
Chairman of the Supervisory Board  
1
6
Statement of the  
Chairman  
of the Board of  
Management  
Harald Krüger  
Chairman of the Board of Management  
1
7
Dear Shareholders,  
A new era has begun for your company: in this, the first year of our “Next 100”, we are embarking  
on a new age of individual mobility. Everything we do is for our customers. For them, we are  
creating a new kind of premium mobility geared entirely towards their individual needs, and  
which will continue to thrill and excite them moving ahead.  
Our Vision Vehicles fascinate people the world over  
2
016 was our centenary year. And you could see the reports everywhere: “The BMW Group is  
not resting on its laurels – it is actively shaping the future.” The response of many people when  
they saw our BMW MINI, Rolls-Royce and BMW Motorrad Vision Vehicles for the first time,  
,
was unequivocally enthusiastic: “The BMW Group’s Vision Vehicles are unlike anything we’ve  
seen before.” I experienced this excitement myself in Munich, Beijing and Los Angeles. With  
our Vision Vehicles, we are providing a glimpse of mobility beyond 2030, when autonomous  
driving, connectivity, electro-mobility and services will be part of everyday life.  
Becoming a tech company for premium mobility and premium services  
with Strategy nuMBer one > neXt  
With its bold, entrepreneurial spirit and ground-breaking innovations, the BMW Group has  
always shaped individual mobility – constantly evolving in the process. Through Strategy  
NUMBER ONE, we grew from a manufacturer of premium automobiles to a provider of premium  
mobility and mobility services. Strategy NUMBER ONE  
> NEXT maps out the company’s  
further evolution towards a tech company for premium mobility and premium services. To  
achieve this, we will continue to expand our mobility services: DriveNow, ReachNow, ParkNow  
and ChargeNow.  
Cooperation for faster technological breakthroughs  
Our aspiration to be a technology leader in mobility is firmly anchored in Strategy  
NUMBER ONE > NEXT. To achieve this, we need to focus even more on a cooperative spirit.  
In the digital age, new players from the IT world are bringing their business model to the  
automotive sector – proving once again that individual mobility is an attractive field for  
future business.  
Our acquisition, together with other German manufacturers, of map service HERE was followed  
by another important strategic decision in 2016: the BMW Group is joining forces with Intel  
and sensor specialist Mobileye to advance highly-automated and autonomous driving.  
Autonomous driving opens up new possibilities for customers  
Autonomous driving will be a key technology for the future of mobility, opening up totally new  
possibilities for our customers. Above all, people will be able to reclaim the time they previously  
spent behind the wheel concentrating on the traffic. With all our products and services, we  
offer various forms of mobility that generate individual excitement, creative space, are intuitive  
to use and, at the same time, fully integrated into our customers’ lives. As the vehicle becomes  
more familiar with its owner, it offers tailored recommendations to make everyday life easier.  
1
8
Statement of the  
Chairman  
of the Board of  
Management  
Semi-automated driving with the new BMW 7 Series and BMW 5 Series  
The transition to fully-autonomous driving, from around 2030, will see responsibility shift from  
driver to machine in five stages. We already have around 8.5 million connected vehicles on the  
road today. Our customers are already benefitting from state-of-the-art driver assistance systems  
in the BMW 7 Series and the new BMW 5 Series. We are directing all our efforts towards the next  
technological leap, which will bring highly-automated driving and further future technologies  
to the road with the iNext in 2021.  
Campus for highly-automated and autonomous vehicles  
We are developing and testing highly-automated and autonomous vehicles at our new Research  
and Development Centre for Autonomous Driving near Munich. This was also decided as part  
of Strategy NUMBER ONE > NEXT.  
Later this year, we will begin testing autonomous driving in city centres with a fleet of 40 com-  
puter-operated vehicles. Customer safety will naturally be our top priority.  
Firmly on course for sustainable mobility  
Alongside digitalisation, emission-free mobility is another huge task for our industry. By 2025,  
we expect around 15 to 25 per cent of BMW Group sales to be electrified vehicles. To achieve  
this, we continue to expand the share of electrified models across all our brands and series.  
Demand will increase with more models and greater range – as shown by the example of our  
BMW  
i
3
with its new 94-amp-hour battery. We delivered a total of more than 62  
,000 BMW i  
vehicles and BMW plug-in hybrids to customers in 2016. The BMW  
i
3
is one of the leading electric  
vehicles available, while the BMW X5 is the top-selling plug-in hybrid. At our car-sharing service  
DriveNow, operated with Sixt SE, BMW i3s already make up 20 per cent of the European fleet.  
We see this as a great opportunity to make people, especially young people, excited about  
electric driving.  
Our goal: to sell 100,000 electrified vehicles in 2017  
i3 in 2013 and 2016, we sold more than 100,000 BMW i models  
Between the launch of the BMW  
and BMW plug-in hybrid models. In 2017, we intend to go one better: this year alone, we aim  
to deliver a further 100  
,
000 electrified vehicles. Our customers can choose between seven  
different models.  
The BMW Group is currently the world’s most successful premium provider of plug-in hybrid  
vehicles. In 2017, we will release two more models: the BMW 5 Series iPerformance and the  
MINI Countryman. These will be followed in 2018 by the BMWi8 Roadster. A year later, we will  
launch an all-electric MINI and in 2020, an all-electric BMW X3.  
We are creating common platforms and architectures for economical industrialisation of com-  
bustion engines with Efficient Dynamics technology and electrification across all brands and  
model series.  
BMW Group remains the world’s leading premium car company in 2016  
In its centenary year 2016, the BMW Group continued its successful business development. For  
the sixth consecutive year, sales reached a new all-time high. With a solid increase of 5.3 per cent  
over the previous year, sales climbed to more than million vehicles. The BMW Group therefore  
remains the leading car company in the global premium segment.  
2.3  
1
9
New all-time highs for BMW, MINI and BMW Motorrad brands  
The BMW brand sold more than two million vehicles for the first time in a single year. Demand  
for the X models, the BMW 2 Series and the new BMW 7 Series was particularly strong. The MINI  
brand also achieved record sales of 360,233 vehicles; as did BMW Motorrad, with 145,032 motor-  
cycles and scooters sold.  
Rolls-Royce delivered  
4
,
011 vehicles to customers and reported the second-best year in its  
13-year history.  
1
The BMW Group continues to benefit from its balanced distribution of sales across the world’s  
three major market regions: Europe, Asia and the Americas. We are making targeted investments  
in our production network of 31 sites in 14 countries on five continents to enhance performance  
and flexibility.  
The desirability of our brands and products is reflected in rankings and awards. The BMW Group  
was once again the highest-ranked automobile manufacturer in Fortune Magazine’s 2017 “World’s  
Most Admired Companies” and is the only German company in the top 50. With the “World  
Car Award” and “Best Car” for the BMW 7 Series and “Golden Steering Wheel” for the BMWi3,  
the BMW Group earned several of the world’s top honours in 2016.  
Targets met for financial year 2016  
We achieved our goals for 2016. We succeeded despite increasing uncertainties in the political  
and economic environment and strong competition on the global auto markets.  
The BMW Group posted record revenues of over 94.1 billion euros in 2016. Profit before tax also  
reached a new high of more than 9.6 billion euros.  
EBT rose slightly – as forecast – by 4.8 per cent year-on-year. Annual net profit increased by  
.0 per cent to more than 6.9 billion euros. The EBIT margin in the Automotive segment stands  
at 8.9 per cent and therefore remains within our target range.  
8
The company is also one of the leading financial services providers in the automotive sector. Our  
Financial Services division concluded more than million new contracts with retail customers  
in 2016. For the first time, the segment Financial Services posted pre-tax earnings of more than  
1.8  
2
.1 billion euros and therefore once again made a major contribution to the Group result.  
Highly motivated associates are the key to our success  
The company employed a total of 124,729 people at the end of 2016. This represents a slight  
year-on-year increase of per cent. In addition to specialists in alternative drivetrains and  
2.0  
automated driving, we are also recruiting experts for our financial services business and expansion  
in mobility services. The BMW Group continues to benefit from its status as a highly attractive  
employer, as shown in numerous rankings amongst engineering, IT and business graduates. This  
helps us attract the young talent we need to implement digitalisation in all our business segments.  
In 2016, we once again invested more than 350 million euros in vocational and professional  
training for associates. The BMW Group is also training more than 4,600 young people. This  
reflects the company’s sense of responsibility towards future generations.  
On behalf of the Board of Management, as well as personally, I would like to thank all our  
associates worldwide for their dedication during the financial year 2016. I would also like to  
thank our business partners and suppliers, as well as the entire retail organisation. You all play  
a direct part in our success!  
2
0
Statement of the  
Chairman  
of the Board of  
Management  
2017 model offensive  
In the 2017 financial year, we will offer customers more than 20 new BMW, MINI and Rolls-Royce  
models. For BMW, a highlight for the current financial year will be the arrival of the most innova-  
tive BMW 5 Series of all time. This status has been confirmed by awards such as “Best Connected  
Car of the Year”. Our 5 Series customers can choose from options ranging from a plug-in hybrid  
variant to the M Performance model. Our current MINI line-up is young and striking, with five  
models full of character that appeal to different target groups. The new MINI Countryman is  
our second spearhead in the fast-growing premium compact segment. Motorcycle fans can also  
look forward to new models this year with 14 market launches from BMW Motorrad.  
Dear Shareholders,  
We firmly believe that the diverse challenges of tomorrow’s mobility open up new opportunities  
for further growth and technological progress which we will pursue in the interest of our  
customers. In doing so, we combine fresh thinking, operational excellence and profitability. For  
the past seven years, the EBIT margin in the Automotive segment has been within or above our  
target range of eight to ten per cent.  
In early 2017, the rating agency Moody’s upgraded our long-term credit rating to A1 – giving the  
BMW Group the best rating of any European automobile manufacturer and the second-highest  
worldwide. This financial stability forms the basis for our investments in the future.  
It is only right that our shareholders share in our success. In the 101st year of BMWAG, the  
Board of Management and Supervisory Board will therefore propose to the Annual General  
Meeting the highest dividend in the history of the company for the financial year 2016, with  
a total payout of 2.3 billion euros. Associates of BMWAG in Germany will also share in the  
company’s positive performance through our profit-sharing programme.  
I would like to thank all of our shareholders and debt investors. You, dear shareholders and  
investors, accompany us as we embark upon a new age of mobility. With our strategy, we have  
shown you our roadmap for the future and we are consistently implementing the measures  
accordingly. Your commitment is a sign of your appreciation and trust. We will do everything  
in our power to ensure that BMWAG remains an attractive investment and a reliable and  
future-oriented company that justifies your trust.  
Harald Krüger  
Chairman of the Board of Management  
COMBINED MANAGEMENT  
REPORT  
Page 22 General Information on the BMW Group  
Page 22 Organisational Structure and Business Model  
Page 24 Locations  
2
Page 29 Management System  
Combined  
Management  
Report  
Page 34 Report on Economic Position  
Page 34 General and Sector-specific Environment  
Page 38 Overall Assessment by Management  
Page 39 Financial and Non-financial Performance Indicators  
Page 42 Review of Operations  
General Information  
Economic Position  
Outlook, Risks and  
Opportunities  
BMW Stock and  
Capital Markets  
Page 42 Automotive Segment  
Page 48 Motorcycles Segment  
Page 49 Financial Services Segment  
Page 51 Research and Development  
Page 54 Purchasing and Supplier Network  
Page 55 Sales and Marketing  
Page 57 Workforce  
Page 59 Sustainability  
Page 63 Results of Operations, Financial Position and Net Assets  
Page 76 Comments on Financial Statements of BMW AG  
Page 82 Report on Outlook, Risks and Opportunities  
Page 82 Outlook  
Page 88 Risks and Opportunities  
Page101 Internal Control System and Risk Management  
System Relevant for the Financial Reporting Process  
Page103 Disclosures Relevant for Takeovers  
Page107 BMW Stock and Capital Markets in 2016  
2
2
2
Combined  
Management  
Report  
ORGANISATIONAL  
STRUCTURE AND  
BUSINESS MODEL  
GENERAL  
General Information  
on the BMW Group  
INFORMATION  
ON THE  
Organisational  
Structure and  
Business Model  
BMW GROUP  
This Combined Management Report incorporates the  
management reports of Bayerische Motorenwerke  
Aktiengesellschaft (BMWAG) and the BMW Group.  
THE NEXT 100 YEARS –  
shaping the future  
Distribution network enlarged  
General information on the BMW Group  
General information on the BMW Group is provided  
below. There have been no significant changes com-  
pared to the previous year.  
Digitalisation and connectedness  
consistently increased  
www.bmwgroup.com/company  
Organisational Structure and Business Model  
Bayerische Motoren Werke Aktiengesellschaft  
(
BMWAG), based in Munich, Germany, is the parent  
company of the BMW Group. The general purpose  
of the Corporation is the development, production  
and sale of engines, engine-equipped vehicles, related  
accessories and products of the machinery and metal-  
working industry as well as the rendering of services  
related to the aforementioned items. The BMW Group  
is sub-divided into the Automotive, Motorcycles,  
Financial Services and Other Entities segments (the  
latter primarily comprising holding companies and  
Group financing companies). The BMW Group oper-  
ates on a global scale and is represented in more than  
1
50 countries worldwide. At the end of the reporting  
period, the BMW Group employed a workforce of  
24,729 people.  
1
Originally founded in 1916 as Bayerische Flugzeug-  
werke AG (BFW), it emerged as Bayerische Motoren  
Werke G.ꢀm.ꢀb.ꢀH. in 1917, before finally becoming Bay-  
erische Motoren Werke Aktiengesellschaft (BMWAG  
)
in 1918. The BMW Group comprises BMWAG itself  
and all subsidiaries over which BMWAG has either  
direct or indirect control. BMWAG is also responsible  
for managing the BMW Group as a whole.  
Under the motto “THE NEXT 100 YEARS”, the  
BMW Group celebrated its centenary in March  
2
016, showcased by a major centenary event held  
in Munich. The four concept vehicles unveiled over  
the course of the year for the brands BMW, MINI,  
Rolls-Royce and BMW Motorrad provided visionary  
insights into the future of individual mobility. At  
the same time, the BMW Group also presented its  
Strategy NUMBER ONE > NEXT, which builds on  
the existing strategy and expands its contents on the  
basis of recent developments. At the heart of Strategy  
2
3
NUMBER ONE  
>
NEXT is a commitment to consistent  
The MINI brand is a veritable icon in the premium  
small car segment, offering unrivalled driving pleasure  
in its class. Rolls-Royce has a tradition in the ultra-lux-  
ury segment stretching back over more than 100 years.  
future-oriented activity, focusing on developing prod-  
ucts, brands and services for individual mobility in the  
premium segment. New technologies, digitalisation  
and connectedness as well as social responsibility are  
further areas of strategic focus.  
The Automotive segment’s worldwide distribution net-  
work currently consists of around 3,400 BMW, 1,580  
MINI and 140 Rolls-Royce dealerships. In Germany,  
products and services are sold through BMW Group  
branches and by independent authorised dealers.  
Sales outside Germany are handled primarily by  
subsidiary companies and by independent import  
companies in a number of markets. The BMWi deal-  
ership and agency network currently covers more  
than 1,300 locations.  
The BMW Group is one of the most successful makers  
of passenger cars and motorcycles worldwide and  
among the largest industrial companies in Germany.  
With BMW, MINI and Rolls-Royce, the BMW Group  
owns three of the strongest premium brands in the  
automotive industry. The vehicles manufactured by  
the BMW Group set exceptionally high standards in  
terms of aesthetics, dynamics, technology and quality,  
and are the culmination of expertise in engineering  
and innovation. Its research and innovation network  
spans 13 locations in five countries. In addition to its  
strong position on international motorcycle markets,  
the BMW Group also offers its customers a successful  
range of financial services. In recent years, it has also  
established itself as a leading provider of premium  
services in the field of individual mobility.  
see section  
Motorcycles  
segment  
The motorcycles business is also focused on the  
premium segment, with the model range currently  
comprising motorcycles for the Sport, Tour, Roadster,  
Heritage, Adventure and Urban Mobility segments.  
BMW Motorrad also offers a broad range of equip-  
ment options designed to enhance rider safety and  
comfort. The motorcycles business sales network is  
organised similarly to that of the automobile business.  
Long-term thinking and responsible action have  
long been the cornerstones of the BMW Group’s  
success. Ecological and social sustainability along  
the entire value-added chain, full responsibility for  
its products and a clear commitment to preserving  
resources are prime objectives firmly embedded in  
the BMW Group’s corporate strategy. The BMW Group  
has ranked among the most sustainable companies in  
the automotive industry for many years.  
see sections Currently, around 1,180 BMW Motorrad dealerships  
Workforce and  
operate worldwide.  
Sustainability  
see section  
Financial  
Services  
The BMW Group is also among the leading pro-  
viders of financial services in the automobile sector,  
segment operating more than 50 entities and cooperation  
arrangements with local financial services providers  
and importers worldwide. Credit financing and the  
leasing of BMW Group brand cars and motorcycles  
to retail customers represent the segment’s main line  
BMW Group is also working on an integrated digital  
concept, Connected Drive, to bring together driver  
and vehicle. Through this service, the vehicle becomes  
an intelligent companion, digitally integrated and  
adapted to the individual needs of each user. The  
BMW iNEXT is scheduled to enter the market in 2021,  
electrically powered, autonomously driven and fully  
connected.  
see section  
Research and  
Development  
of business. It also provides customers with access  
to a wide range of insurance and banking products.  
Operating under the brand name “Alphabet”, the  
BMW Group’s international multi-brand fleet business  
provides fleet financing products and comprehensive  
management services for corporate car fleets in 19  
countries. Within the multi-brand financing line of  
business, credit financing, leasing and other services  
are marketed to retail customers under the brand  
The core BMW brand caters to a broad array of  
customer wishes, ranging from fuel-efficient and  
see sections name “Alphera”. Providing support to the dealership  
Automotive  
segment and  
organisation, such as by financing dealership vehicle  
inventories, rounds off the segment’s product range.  
innovative models equipped with Efficient Dynam- Sales and  
Marketing  
ics through to efficient, high-performance BMW  
M
vehicles, which help bring a touch of the flair of motor-  
sport to the roads. At the same time, the BMW Group  
continues to push the boundaries of “premium” to  
new levels with its BMWi models. Designed to the core  
for even greater sustainability, the BMWi embodies  
the vehicle of the future – with its electric drivetrain,  
intelligent lightweight construction, exceptional  
design and newly developed range of mobility services.  
2
4
Combined  
Management  
Report  
BMW Group locations worldwide  
• 09  
General Information  
on the BMW Group  
Organisational  
Structure and  
Business Model  
Locations  
4
3
31  
13  
Sales subsidiaries and  
Financial Services  
Production and  
assembly plants  
Research and  
development  
locations  
locations worldwide  
Headquarters  
Russia  
India  
China  
Canada  
South Korea  
Japan  
usA  
Hong Kongꢀ2  
Mexico  
Thailand  
Malaysia  
United Arab  
Emiratesꢀ  
Singaporeꢀ1  
Brazil  
Indonesiaꢀ1  
Australia  
Argentinaꢀ1  
South Africa  
New Zealand  
Research and development  
network outside Europe  
BMW Group Designworks, Newbury  
Park, USA  
BMW Group Technology Office USA,  
Mountain View, USA  
Production  
outside Europe  
BMW Group Engineering and  
Emission Test Center,  
Oxnard, USA  
BMW Group plant Araquari, Brazil  
BMW Group plant Chennai, India  
BMW Group plant Manaus, Brazil  
BMW Group plant Rayong, Thailand  
BMWGroupplant Rosslyn, South Africa  
BMW Group plant Spartanburg, USA  
BMW Brilliance Automotive, China  
BMW Group ConnectedDrive Lab  
China, Shanghai, and BMW Group  
Designworks Studio Shanghai, China  
Partner plants  
outside Europe  
BMW Group Engineering China,  
Beijing, China  
Partner plant, Hosur, India  
Partner plant, Jakarta, Indonesia  
Partner plant, Cairo, Egypt  
Partner plant, Kaliningrad, Russia  
Partner plant, Kulim, Malaysia  
BMW Group Engineering Japan,  
Tokyo, Japan  
(
joint venture – 3 plants)  
SGL Automotive Carbon Fibers  
joint operation – 2 plants)  
BMW Group Engineering USA,  
Woodcliff Lake, USA  
Sales subsidiaries and  
Financial Services  
locations worldwide  
(
BMW Technology, Chicago, USA  
1
2
Sales locations only.  
Financial Services only.  
2
5
BMW Group locations in Europe  
•
10  
Norway  
Sweden  
Finlandꢀ1  
Germany  
Netherlands  
Great Britain  
Ireland  
Denmark  
Czech  
1
Republicꢀ  
Polandꢀ1  
Austria  
Slovakiaꢀ1  
Hungaryꢀ1  
Belgium  
France  
Romaniaꢀ1  
Bulgariaꢀ1  
Switzerland  
Spain  
Portugal  
Italy  
Sloveniaꢀ1  
Malta  
Greece  
Production in Europe  
BMW Group plant Berlin  
BMW Group plant Dingolfing  
BMW Group plant Eisenach  
BMW Group plant Landshut  
BMW Group plant Leipzig  
Research and development  
network in Europe  
BMW Group plant Munich  
BMW Group Research and Innovation  
Centre (FIZ), Munich, Germany  
BMW Group plant Regensburg  
BMW Group plant Wackersdorf  
BMW Group plant Steyr, Austria  
BMW Group plant Hams Hall, GB  
BMW Group plant Oxford, GB  
BMW Group plant Swindon, GB  
BMW Group Research and  
Technology, Munich, Germany  
Partner plants  
in Europe  
Partner plant, Born,  
Netherlands  
BMW Car IT, Munich, Germany  
BMW Innovation and Technology  
Centre, Landshut, Germany  
Sales subsidiaries and  
Financial Services  
locations Europe  
Rolls-Royce Manufacturing Plant,  
Goodwood, GB  
Partner plant, Graz,  
Austria  
BMW Diesel Competence Centre,  
Steyr, Austria  
2
6
Combined  
Management  
Report  
At the end of the reporting period, the Group’s pro-  
duction network comprised a total of 31 locations in 14  
countries. The 31 locations comprise 19 BMW Group  
manufacturing facilities, five plants belonging to joint  
venturesꢀ/ꢀoperations, five partner plants and two con-  
tract production plants. The same quality, safety and  
sustainability standards are applicable for all plants  
throughout the BMW Group production network  
worldwide.  
General Information  
on the BMW Group  
The 19 BMW Group plants comprise 13 automobile  
and engine plants, two plants for BMW motorcycles,  
three sites for the production of components, pressed  
parts and tools and one supply centre.  
Organisational  
Structure and  
Business Model  
Locations  
Country  
Products  
BMW Group plAnts  
Araquari  
Berlin  
Brazil  
Germany  
India  
BMW 3 Series, BMW X1, BMW X3, BMW X4  
BMW motorcycles, Maxi–Scooter, car brake discs  
Chennai  
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,  
BMW X1, BMW X3, BMW X5  
Dingolfing  
Germany  
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series  
M-models: BMW M5, BMW M6  
Plug-in-hybrid vehicles: BMW 5 Series, BMW 7 Series  
Chassis and drivetrain components  
Components for electric mobility  
Rolls-Royce bodywork, pressed parts  
Eisenach  
Germany  
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad  
Hams Hall  
United Kingdom  
Petrol engines for BMW, MINI  
BMW i8 Plug-in-hybrid engines  
Production of core engine parts  
Landshut  
Leipzig  
Germany  
Germany  
Components and electric drive systems  
BMW 1 Series, BMW 2 Series  
M-models: BMW M2  
Plug-in-hybrid vehicles: BMW 2 Series, BMW i8  
Electric vehicles: BMW i3  
Manaus  
Munich  
Brazil  
Motorcycles  
Germany  
BMW 3 Series, BMW 4 Series  
M-models: BMW M4  
Plug-in-hybrid vehicles: BMW 3 Series  
Petrol and diesel engines, high-performance engines for M-models  
Production of core engine parts  
Oxford  
United Kingdom  
Thailand  
MINI Hatch, MINI Clubman  
Rayong  
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,  
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman  
Motorcycles  
Regensburg  
Germany  
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,  
BMW X1, BMW Z4  
M-models: BMW M3, BMW M4  
Rosslyn  
South Africa  
USA  
BMW 3 Series  
Spartanburg  
BMW X3, BMW X4, BMW X5, BMW X6  
M-models: BMW X5 M, BMW X6 M  
Plug-in-hybrid vehicles: BMW X5  
Steyr  
Austria  
Petrol and diesel engines for BMW and MINI,  
Production of core engine parts  
High performance engines for M-models  
Swindon  
United Kingdom  
Germany  
Pressed parts and bodywork components  
Wackersdorf  
Distribution center for parts and components  
Cockpit assembly  
Processing of carbon fibre components  
Rolls-Royce Manufacturing Plant Goodwood  
United Kingdom  
Rolls-Royce Phantom, Ghost, Wraith, Dawn  
2
7
The plants in Shenyang (China) are operated together  
with the joint venture partner, Brilliance China Auto-  
motive Holdings Ltd., manufacturing exclusively for  
the Chinese market. The Shenyang site comprises  
the Dadong and Tiexi automobile plants as well as  
an engine plant complete with foundry.  
Locations  
Country  
Products  
Joint venture BMW BrilliAnce  
AutoMotive HoldinGs ltd.  
Dadong (Shenyang)  
China  
China  
BMW 5 Series Extended-Wheelbase Version  
Plug-in-hybrid vehicles: BMW 5 Series Extended-Wheelbase Version  
Tiexi (Shenyang)  
BMW 2 Series, BMW 3 Series (+Extended-Wheelbase Version),  
BMW X1 Extended-Wheelbase Version  
Plug-in-hybrid vehicles: BMW X1 Extended-Wheelbase Version  
Tiexi (Shenyang)  
China  
Petrol engines, production of core engine parts  
SGL Automotive Carbon Fibers (SGL ACF) is a joint  
operation of the BMW Group with the SGL Group.  
At the Moses Lake site in the US State of Washington,  
carbon fibres are produced for subsequent use in the  
production of carbon fibre fabrics in Wackersdorf.  
Locations  
Country  
Products  
Joint operAtion  
sGl AutoMotive cArBon FiBers  
Moses Lake  
Wackersdorf  
USA  
Carbon fibres  
Germany  
Carbon fibre fabrics  
2
8
Combined  
Management  
Report  
The primary function of the four partner plants of  
the BMW Group is to serve nearby regional markets.  
During the year under report, BMW and MINI vehicles  
were also manufactured in Kaliningrad (Russia), Cairo  
(Egypt), Jakarta (Indonesia) and Kulim (Malaysia). In  
addition, BMW motorcycles were manufactured by the  
cooperation partner, TVS Motor Company, in Hosur  
(India).  
General Information  
on the BMW Group  
Organisational  
Structure and  
Business Model  
Locations  
Country  
Products  
Management System  
PARTNER PꢁANTSꢂ  
Hosur  
India  
Indonesia  
Egypt  
Motorcycles  
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5  
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X3, BMW X4, BMW X5, BMW X6  
BMW 3 Series, BMW 5 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6  
Jakarta  
Cairo  
Kaliningrad  
Kulim  
Russia  
Malaysia  
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,  
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, MINI Countryman  
The BMW Group also awards production contracts to  
external partners for specific vehicle types. During  
the period under report, various MINI models were  
produced by Magna Steyr Fahrzeugtechnik in Graz  
(Austria) and VDL Nedcar in Born (Netherlands).  
Locations  
Country  
Products  
contrAct production  
Born  
Graz  
Netherlands  
Austria  
MINI Hatch, MINI Convertible, MINI Countryman  
MINI Countryman, MINI Paceman  
2
9
MANAGEMENT SYSTEM  
degrees of detail, depending on the level of aggre-  
gation. Operating performance, for instance, is  
managed primarily at segment level. In order to  
manage long-term performance and assess strate-  
gic issues, additional key performance figures are  
taken into account at Group level. In this context,  
with effect from the beginning of the 2017 financial  
year, the pre-tax return on sales will be used as an  
additional indicator of earnings quality throughout  
The business management system applied by the  
BMW Group follows a value-based approach, with  
a clear focus on achieving profitability, consistent  
growth, increasing the value of the business for cap-  
ital providers and safeguarding jobs. Achieving the  
desired degree of corporate autonomy can only be  
ensured in the long term if available capital is prof-  
itably employed. The prerequisite for this is that the  
amount of profit generated sustainably exceeds the  
cost of equity and debt capital.  
the BMW Group. The contribution made to enter  
-
prise value during the financial year continues to be  
measured in terms of value added. This approach is  
translated into operational processes at both Group  
and segment level in the form of key financial and  
non-financial performance indicators (value drivers).  
The link between value added and the relevant value  
drivers is shown in a simplified form in the following  
diagram.  
The BMW Group’s internal management system is  
based on a multi-layered structure, with varying  
BMW Group – value drivers  
•
11  
Expenses  
Profit  
–
Return on sales  
Capital turnover  
Cost of capital  
÷
÷
×
Return on capital  
rꢀce/rꢀe)  
Revenues  
Value added  
–
×
(
Capital employed  
Average weighted  
cost of capital rate  
3
0
Combined  
Management  
Report  
Due to the high level of aggregation involved, it is  
impractical to manage the business on the basis of  
value added. This key indicator therefore only serves  
for reporting purposes. Relevant value drivers which  
could have a significant impact on business perfor-  
mance and enterprise value are defined for each  
controlling level. The financial and non-financial  
value drivers are reflected in the key performance  
indicators used to manage the business. In the case  
of project-related decisions, the system incorporates a  
project-oriented control logic focused on value-based  
and return-based performance indicators, which  
therefore provide a sound basis for decision-making.  
Financial Services segment. As an overall reflection  
of profitability (return on sales) and capital efficiency  
(capital turnover), these key performance indicators  
provide a wide range of information into the factors  
driving segment performance and changes in the  
value of the business.  
General Information  
on the BMW Group  
Management System  
Automotive segment  
The most comprehensive key performance indica-  
tor used for the Automotive segment is RoCE. This  
indicator provides information on profitability of  
capital employed and on operational business. RoCE  
is measured on the basis of segment profit before  
financial result and the average amount of capital  
employed in segment operations. The strategic target  
for the Automotive segment’s RoCE is 26%.  
Management of operating performance  
at segment level  
Operating performance at segment level is managed  
at its highest level on the basis of return on capital.  
see sections  
Performance  
Indicators and  
Profit before  
Depending on the business model, the segments are Outlook  
financial result  
measured on the basis of return on total capital or  
equity. Specifically, the return on capital employed  
RoCE Automotive  
=
Average capital  
employed  
(
RoCE) is used for the Automotive and Motorcycles  
segments and the return on equity (RoE) for the  
Return on Capital Employed  
•
12  
Average  
Profit before financial result in € million  
capital employed in € million  
Return on capital employed in %  
2
016  
2015  
2016  
2015  
2016  
2015  
Automotive  
7,695  
7,836  
10,361  
10,854  
74.3  
72.2  
Capital employed corresponds to the sum of all cur-  
rent and non-current operational assets, less liabilities  
that do not incur interest (e.ꢀg. trade payables and  
other provisions).  
Managing the business on the basis of key value  
drivers makes it easier to identify the reasons for  
changes in RoCE and define suitable measures to  
drive its development.  
Due to its key importance for the Group as a whole,  
the Automotive segment is managed on the basis of  
additional key performance indicators with varying  
degrees of detail, which have a significant impact on  
RoCE and hence on segment performance. These  
value drivers are sales volume, segment revenues and  
the operating return on sales (EBIT margin: profitꢀ/ꢀloss  
before financial result as a percentage of revenues) as  
the key performance indicator for segment profitabil-  
ity. Average CO2 emissions for the fleet are also taken  
into account, due to its impact on ongoing develop-  
ment expenses and the significant long-term impact  
of regulatory requirements on Group performance.  
Fleet emissions corresponds to average CO2 emissions  
of new cars sold in the EU-28 countries.  
3
1
Motorcycles segment  
Profit before  
As with the Automotive segment, operating perfor-  
mance for the Motorcycles segment is managed on the  
basis of RoCE. Capital employed is measured on the  
same basis as in the Automotive segment. The strategic  
RoCE target for the Motorcycles segment is 26%.  
financial result  
rꢀce  
Motorcycles  
=
Average capital  
employed  
Return on Capital Employed  
•
13  
Average  
Profit before financial result in € million  
capital employed in € million  
Return on capital employed in %  
2
016  
2015  
2016  
566  
2015  
2016  
2015  
Motorcycles  
187  
182  
576  
33.0  
31.6  
In view of the increasing strategic importance of the  
Motorcycles segment, the EBIT margin will be added  
as a key performance indicator with effect from the  
beginning of the 2017 financial year. In conjunction  
with the non-financial value driver sales volume, this  
will enable RoCE development to be understood in  
greater detail.  
Financial Services segment  
As is common practice in the banking sector, the  
performance of the Financial Services segment is  
measured on the basis of return on equity. RoE is  
defined as segment profit before taxes, divided by the  
average amount of equity capital attributable to the  
Financial Services segment. The strategic RoE target  
for the Financial Services segment is at least 18%.  
Profit before tax  
RoE Financial  
=
Services  
Average equity capital  
Return on Equity  
•
14  
Profit before tax in € million  
016  
Average equity capital in € million  
Return on equity in %  
2016  
2
2015  
2016  
2015  
2015  
Financial Services  
2,166  
1,975  
10,236  
9,756  
21.2  
20.2  
3
2
Combined  
Management  
Report  
Strategic management at Group level  
added, as a 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 generating more additional value  
than the cost of capital.  
Strategic management and quantification of the  
financial impacts as part of the long-term corporate  
planning are performed primarily at Group level. The  
most significant performance indicators for these  
purposes are Group profit before tax and the size of  
the Group’s workforce at the year-end. Group profit  
before tax provides a comprehensive measure of the  
Group’s overall performance after consolidation  
effects and a transparent basis for comparing perfor-  
mance, particularly over time. The size of the Group’s  
workforce is monitored as an additional non-financial  
performance indicator.  
General Information  
on the BMW Group  
Management System  
Value added  
Group  
earnings amount  
cost of capital  
–
–
=
=
Information provided by these two key performance  
indicators is reported with the performance indi-  
cators, pre-tax return on sales and value added. Value  
earnings amount  
(cost of capital rate  
capital employed)  
×
Earnings amount  
2016  
Cost of capital  
2016  
Value added Group  
2016  
in € million  
2015  
2015  
2015  
BMW Group  
10,000  
9,723  
6,407  
6,040  
3,593  
3,683  
Capital employed comprises the average amount of  
Group equity employed during the year as a whole, the  
financial liabilities of the Automotive and Motorcycles  
segments, and pension provisions. The earnings meas-  
ure for these purposes corresponds to Group profit  
before tax, adjusted for interest expense incurred in  
conjunction with the pension provision and on the  
financial liabilities of the Automotive and Motorcycles  
segments (earnings before interest expense and taxes).  
The cost of capital is the minimum rate of return  
expected by capital providers in return for the capital  
employed. Since capital employed comprises an equity  
capital element (e.ꢀg. share capital) and a debt capital  
element (e.ꢀg. bonds), the overall cost of capital rate is  
determined on the basis of the weighted average rates  
for equity and debt capital, measured using standard  
market procedures. The pre-tax average weighted  
cost of capital for the BMW Group in 2016 was 12%,  
unchanged from the previous year.  
3
3
Value-based project management  
Operational business in the Automotive and Motor-  
cycles segments is largely shaped by its life-cycle-  
dependent project character. Projects have a sub-  
stantial influence on future business performance.  
Project decisions are therefore a crucial component  
of financial management for the BMW Group.  
Project decisions are taken on the basis of calculations  
measured in terms of the cash flows each individual  
project is expected to generate. Calculations are made  
for the full term of a project, incorporating all future  
years in which the project is expected to generate cash  
flows. Project decisions are taken on the basis of net  
present value and internal rate of return calculated  
for the project.  
The net present value of a project indicates the extent  
to which a project will be able to generate a positive  
contribution to earnings over and above the cost of  
capital. A project with a positive net present value  
enhances value added and therefore results in an  
increase in the value of the business. The internal  
rate of return of the project corresponds to the aver-  
age return on capital employed in the project and, in  
terms of significance, is equivalent to the multi-year  
average RoCE for an individual project. It is therefore  
consistent with one of the key performance indicators.  
The criteria used for taking decisions as well as the  
long-term impact on periodic earnings is document-  
ed for all project decisions and incorporated in the  
long-term Group forecast. This approach enables an  
analysis of the periodic reporting impact of project  
decisions on earnings and rates of return over the  
term of each project. The overall result is a cohesive  
controlling model.  
3
4
Combined  
Management  
Report  
GENERAL AND  
SECTOR-SPECIFIC  
ENVIRONMENT  
REPORT  
Report on  
Economic Position  
ON ECONOMIC  
POSITION  
General and Sector-  
specific Environment  
Centenary year sees best Company  
performance  
General economic environment  
The global economy grew at a relatively stable pace  
in the face of external influences at a rate of 3.1%  
Record sales volumes for automobiles  
and motorcycles – expectations  
exceeded  
in 2016. Against a background of multiple political  
uncertainties, global growth seems relatively robust.  
The eurozone continued to record moderate economic  
growth, helped among other factors by favourable  
conditions on the job market. Although the pace of  
the economy in China slowed, the decrease was only  
marginal. The USA recorded slight growth in 2016. By  
contrast, the emerging economies of Russia and Brazil  
contracted again in 2016, despite Russia benefiting  
from rising raw materials prices.  
Record results in operational  
segments  
€
9,665 million  
+
4.8 %  
Group profit before tax  
at record level  
Gross domestic product (GDP) in the eurozone grew  
by 1.7% year-on-year. The European Central Bank  
ECB) continued to pursue its expansive monetary  
(
policies. Boosted by strong exports and robust domes-  
tic demand, the German economy grew by 1.8%, its  
fastest rate for five years. France (+ꢀ1.2%) and Italy  
+0.9%) saw growth at similar levels to the previous  
(
year. In both countries, structural reforms designed to  
stimulate the economy remain in the implementation  
phase.  
In the UK, the year 2016 was marked by the Brexit  
decision, the economic impact of which is expected to  
be felt from 2017 onwards. For the year under report,  
a robust GDP growth rate of 2.0% was recorded. Polit-  
ical uncertainty did not have an adverse impact on  
household spending. The growth rate also benefited  
from falling unemployment. The increase in invest-  
ments by companies was significantly lower than in  
previous years, while the rise in government spending  
was below average. Despite the massive devaluation  
of the British pound after the referendum, exports fell  
far short of matching the high growth rate recorded  
one year earlier.  
The new strategic direction adopted for China’s econ-  
omy presented significant challenges for the country’s  
government. In response to the stock market slump  
at the beginning of the year and fears that econom-  
ic growth was set to slow down, the government  
imposed measures to stimulate the economy. The  
6
.7% GDP growth rate in China for the full year was  
slightly down on the previous year, though within the  
pursued target range.  
3
5
The US economy continued to show a solid perfor-  
mance, growing year-on-year by 1.6%. The unem-  
ployment rate fell by 0.4 percentage points to 4.9%.  
Currency markets  
The British pound weakened significantly in the wake  
of the Brexit decision. Compared to its average rate  
At the same time, however, domestic spending rose  
at a slightly lower rate than one year earlier. Exports  
only grew slightly as a result of the strong US dollar.  
In view of these developments and in anticipation of  
a rising inflation rate, the US Federal Reserve (Fed)  
raised its benchmark interest rate in December 2016.  
of 0.78 to the euro during the first half of the year,  
it fell sharply during the second half of the year to  
0.86 to the euro. The Bank of England reacted to  
increasing post-referendum uncertainty by lowering  
interest rates, thus contributing to the weakening of  
the pound.  
The domestic economy in Japan was held down in  
particular by high debt levels and the appreciation  
of the yen in 2016. After a two-year downward trend,  
household spending increased, albeit at a moderate  
rate, while exports remained weak. Ultimately, only  
economic stimulus programmes prevented Japan from  
stagnating in 2016, with the GDP growth rate finishing  
at a modest 0.9%.  
The Chinese renminbi lost in value compared to the  
previous year, finishing with an average exchange rate  
for the year of 7.35 renminbi to the euro.  
Despite volatility during the course of the year, the  
US dollar remained unchanged compared to the pre-  
vious year at an average exchange rate of 1.11 to the  
euro in 2016. The Fed shifted only moderately from  
its expansionary monetary policies during the year  
under report.  
Thanks to its economic reforms, India posted a GDP  
growth rate of 7.0%, achieving growth of at least 7.0%  
for the third year in succession. By contrast, Russia  
and Brazil failed once again to pull out of recession.  
Although industrial production picked up in Russia,  
domestic consumption fell sharply, causing economic  
The Japanese yen appreciated by approximately 10%  
in 2016, despite the expansion of money supply by  
the Bank of Japan. The average exchange rate for the  
year was 120.25 yen to the euro.  
output to fall overall (–  
its second consecutive year of deep recession (–  
0
.
6
%). Brazil, however, recorded  
%).  
3
.
4
Currencies in emerging economies reflected a mixed  
picture. While the Brazilian real was down by approx-  
imately 4% against the euro, the Russian rouble was  
Figures for consumption expenditure (household and  
public sector) and business investments dropped to  
new lows.  
up by approximately  
rally.  
9
% against the euro after a strong  
Exchange rates compared to the euro  
•
15  
Index: December 2011 = 100  
200  
150  
100  
50  
200  
150  
Russian Rouble  
Japanese Yen  
British Pound  
Chinese Renminbi  
US Dollar  
100  
50  
2
012  
2013  
2014  
2015  
2016  
2017  
Source: Reuters.  
3
6
Combined  
Management  
Report  
Oil price trend  
• 16  
Report on  
Economic Position  
Price per barrel of Brent Crude  
General and Sector-  
specific Environment  
1
9
6
3
20  
120  
0
90  
Price in US Dollar  
Price in €  
0
60  
0
30  
2
012  
2013  
2014  
2015  
2016  
2017  
Source: Reuters.  
Precious metals price trend  
•
17  
Index: December 2011 = 100  
150  
100  
50  
0
150  
100  
50  
Palladium  
Gold  
Platinum  
0
2
012  
2013  
2014  
2015  
2016  
2017  
Source: Reuters.  
3
7
Raw materials prices  
Automobile markets  
The price of Brent crude oil – the most relevant bench-  
mark for Europe – fell at the beginning of the year for a  
short time to below the level of 30 US dollars per barrel.  
A subsequent volatile upward trend saw the price rise  
to a high of 57 US dollars per barrel, bolstered by the  
agreement reached by the Organisation of Petroleum  
Exporting Countries (OPEC) and Russia to cut back oil  
production. Despite these developments, the average  
price of Brent crude oil fell to 44 US dollars per barrel,  
compared to 52 US dollars per barrel in the previous  
The positive trend on international automobile mar-  
kets seen in the previous year continued in 2016.  
Worldwide registrations of passenger cars and light  
commercial vehicles grew by 5.9% to 87.4 million  
units. Strong momentum from China (24  
.
1
million  
%)  
units; +ꢀ17 %) and Europe (15 million units; +6.6  
.
4
.
2
made significant contributions to growth. By contrast,  
the USA recorded only a slight increase (17.6 million  
units; +0.4%).  
year. WTI, the benchmark for crude oil in the USA  
followed a similar trend.  
,
Europe’s automobile markets presented a mixed  
picture. After a strong performance in the previous  
year, the UK saw only comparatively low growth in  
the number of new registrations in 2016 (2.7 million  
units; +2.3%). The French automobile market was in  
even better shape than one year earlier, recording a  
After dropping to new lows at the turn of 2015ꢀ/ꢀ2016,  
precious metals prices stabilised in the course of 2016  
at higher levels. The lower prices seen in preced-  
ing years have resulted in manufacturers reducing  
over-capacities, while at the same time demand has  
recovered.  
5
.
3
% increase to  
Germany’s growth rate of  
Italy ( million units; +ꢀ16  
units; +ꢀ10 %) both recorded double-digit percentage  
increases.  
2
.
0
million registrations, ahead of  
% ( million units).  
%) and Spain ( million  
4
2
.
5
3.4  
1
.
8
.
1.1  
.
9
Steel markets saw at times sharp price rises. During  
the course of the year, the USA and the EU imposed  
anti-dumping duties on Asian steel products, while  
the USA did likewise on European steel products.  
The situation was further exacerbated by the Chinese  
government’s decision to cut working hours in coal-  
mines. The price of coal, an important cost factor in  
the production of steel, rose accordingly.  
Japan was unable to turn around the previous year’s  
negative trend, with the market contracting by a  
further 1.6% to 4.8 million units.  
Automobile markets in major emerging economies  
continued to suffer from recession in 2016. Russia saw  
a 4.7% drop to 1.2 million units, while registrations  
in Brazil slumped by nearly one third (–32.2%) to  
1.7 million units.  
Steel price trend  
•
18  
Index: January 2012 = 100  
Motorcycle markets  
Since the beginning of the financial year 2016, market  
analysis has been expanded from the half-litre class  
110  
(
500 cc) to cover the entire 250 cc plus class. This fol-  
lows BMW Motorrad’s entrance with the entry-level  
310 R model into a new market segment within the  
50 cc plus class.  
G
2
8
6
5
0
Global motorcycle markets in the 250 cc plus class  
were flat year-on-year, mainly reflecting weaker per-  
formance in some overseas regions (+ꢀ/ꢀ–  
0.0%). The  
European market grew by 12 % overall, benefiting  
.
4
2
012  
2013  
2014  
2015  
2016  
2017  
primarily from the significant recovery in Southern  
Europe. While the French market grew by an encour-  
aging 6.7%, markets in Germany, Italy and Spain all  
Source: Working Group for the Iron and Metal Processing Industry.  
recorded double-digit increases, expanding by 13.9%,  
% and 23 % respectively. The US market finished  
.8% down year-on-year.  
1
2
.
8
.5  
3
3
8
Combined  
Management  
Report  
Financial services markets  
OVERALL ASSESSMENT  
BY MANAGEMENT  
The global economy grew at a moderate pace in 2016,  
with conditions for financial services business gener-  
ally tending to be favourable.  
Report on  
Economic Position  
General and Sector-  
specific Environment  
Interest levels remained low in the world’s indus-  
trialised countries. The US Federal Reserve initially  
refrained from tightening its monetary policies, before  
finally deciding to raise the benchmark interest rate  
by 0.25% in December.  
Overall Assessment  
by Management  
Financial and Non-  
financial Perfor-  
mance Indicators  
Overall assessment of business performance  
The BMW Group can look back on a successful  
business performance in 2016, despite increased  
competition and growing uncertainties in the inter-  
national environment. The overall picture was positive  
in terms of results of operations, financial position  
and net assets. Overall, management expectations  
for the period were therefore met. This assessment  
also takes into account events after the end of the  
reporting period.  
In March 2016, the European Central Bank (ECB)  
resolved to broaden the scope of its expansionary  
monetary policies with a comprehensive package of  
measures to generate economic growth through more  
favourable lending conditions.  
In a bid to prevent a severe economic downturn after  
the Brexit decision, the Bank of England lowered its  
reference interest rate in August and announced addi-  
tional expansionary measures, including extending its  
bond purchasing programme.  
High public-sector spending and expansionary mon-  
etary policies adopted by the Chinese central bank  
only partially absorbed the slowdown of the Chinese  
economy, resulting in a further normalisation of GDP  
growth over the course of the year. The Japanese cen-  
tral bank broadened the scope of its expansionary  
monetary policies in 2016 in order to stimulate the  
economy and reverse deflationary tendencies.  
Prices in the premium segment of mainland Europe’s  
pre-owned car markets rose slightly at the beginning  
of 2016, before settling at a similar level to the previous  
year in the course of the year. Pre-owned car market  
prices in the UK were slightly down year-on-year. Price  
levels remained stable on Asian markets. The slight  
downward trend continued in North America, despite  
a stronger performance during the summer months.  
3
9
FINANCIAL AND NON-  
FINANCIAL PERFORMANCE  
INDICATORS  
Automotive segment  
Deliveries to customers: solid increase  
In 2016, the Automotive segment sold a record number  
of vehicles for the sixth year in succession. Dynamic  
market conditions, particularly in Europe, influenced  
automobile sales volumes more strongly than expect-  
ed. Consumer spending in the UK in 2016 remained  
stable, despite the Brexit decision. The upward trend  
from the previous year in southern European coun-  
tries also continued unbroken. Despite growing polit-  
ical and economic uncertainties in the international  
The following section provides information on the key  
financial and non-financial performance indicators  
used as the basis for managing the BMW Group and  
its segments. As part of the analysis of operations and  
the financial condition of the BMW Group, forecasts  
made the previous year for the financial year 2016 are  
compared with actual outcomes in 2016.  
environment, deliveries to customers increased by a  
1
1
Including the solid  
5
.
3
% to a total of  
2
,
367  
,
603ꢀ BMW  
,
MINI and  
joint venture  
1
Rolls Royce brand vehicles (2015: 2,247,485ꢀ units).  
BMW Brilliance  
Automotive Ltd.,  
Shenyang  
2016: 316,200  
units, 2015:  
BMW, the Group’s core brand, reported a solid 5.2%  
(
1
234ꢀ1 units),  
increase to  
2
,
003  
,
359ꢀ units (2015  
:
1
,
905  
,
2
82,000 units).  
taking it over the two-million-unit threshold for the  
first time in a single year. MINI also recorded solid  
BMW Group  
Profit before tax: slight increase  
growth, with deliveries to customers up by  
6.4% to  
During the financial year 2016, the BMW Group  
continued to invest in innovative technologies and  
its production network to ensure future sustainabil-  
ity. The Group nevertheless remained on course in  
terms of earnings. With a Group profit before tax of  
360 233 units (2015 338 466 units). Rolls-Royce Motor  
Cars sold 4,011 units (2015: 3,785 units; +6.0%).  
,
:
,
In the Annual Report 2015, the outlook for the full year  
2016 had foreseen a slight increase in sales volume.  
The generally positive sentiment among consumers,  
especially in Europe, but also in Asia, helped the  
BMW Group to exceed its original forecast.  
€ꢀ9,665 million (2015: €ꢀ9,224 million; +4.8%), earn-  
ings reached a new high, despite the continuation  
of intensive competition on the world’s automobile  
markets. In addition to an excellent sales volume  
performance, Group earnings also benefited from  
an improved financial result.  
2
2
EU-28. Fleet carbon dioxide (CO ) emissionsꢀ :  
2
slight decrease  
The fleet-wide deployment of Efficient Dynamics  
technologies – including drivetrain electrification –  
contributes to the efficient reduction of carbon dioxide  
emissions. CO2 emissions produced by the vehicle  
fleet sold in Europe (EU-28) decreased slightly to  
As foreseen in the outlook for the financial year 2016,  
the Group’s profit before tax was slightly higher than  
one year earlier and therefore in line with expectations.  
Workforce at year-end: slight increase  
124 grams CO2 /ꢀkm (2015: 127 grams CO2 /ꢀkm; –2.4%)  
in the year under report.  
As at 31 December 2016, the BMW Group employed  
a workforce of 124,729 (2015: 122,244; +2.0%) world-  
wide. The slight company-wide increase was due to  
the need for additional qualified staff for the develop-  
ment of electric mobility and other technology fields  
and the growth of the financial services business.  
The systematic expansion of mobility services also  
contributed to the increase in the workforce size.  
As foreseen in the outlook for the full year 2016, fleet  
carbon emissions fell slightly and were therefore in  
line with forecast.  
As foreseen in the outlook for the financial year  
2
016, there was a slight increase in the size of the  
BMW Group’s workforce, in line with expectations.  
4
0
Combined  
Management  
Report  
Revenues: slight increase  
Motorcycles segment  
Automotive segment revenues edged up by 1.0 %  
to a new record figure of €ꢀ86,424 million (2015:  
€ꢀ85,536 million), with currency exchange effects  
holding down the scale of the increase. The forecast  
of a slight rise in Automotive segment revenues made  
in the Annual Report 2015 therefore was confirmed.  
Deliveries to customers: solid increase  
In a highly favourable market environment, most nota-  
bly in Europe, BMW Motorrad reported a solid 5.9%  
increase, with 145,032 units sold (2015: 136,963 units).  
These figures benefited from unexpectedly good sales  
figures for Europe and Latin America.  
Report on  
Economic Position  
Financial and Non-  
financial Perfor-  
mance Indicators  
EBIT margin in target range of between 8 and 10%  
The EBIT margin in the Automotive segment (profit  
before financial result divided by revenues) came  
in at 8.9% (2015: 9.2%; –0.3 percentage points). As  
foreseen for the financial year 2016, the EBIT mar-  
gin from automobile business was within the target  
The forecast increase, upgraded in the Quarterly  
Report to 30 June 2016 from slight to solid, was  
therefore realised. In the Annual Report 2015, only  
a slight increase in deliveries to customers had been  
foreseen for the Motorcycles segment.  
range of between  
with expectations.  
8
and 10% and therefore in line  
Return on capital employed: slight increase  
The Motorcycles segment generated a return on capital  
employed (RoCE) of 33.0% in the year under report  
(2015: 31.6%; +ꢀ1.4 percentage points), slightly above  
the previous year, mainly reflecting effective working  
capital management and the improvement in earnings.  
The reported figures also benefited from the trend  
towards high-value models and the new brand strategy  
initiated in 2014.  
Return on capital employed (RoCE): slight increase  
The return on capital employed (RoCE) amounted to  
74.3% (2015: 72.2%; +2.1 percentage points). Amongst  
other factors, transactions with other segments and  
the expansion of business with service and Connected  
Drive contracts made positive contributions to RoCE  
for the Automotive segment.  
The forecast RoCE, which had already been changed  
from a slight decrease to “at the previous year’s level”  
in the Quarterly Report to 30 June 2016, was therefore  
once again exceeded. In the Annual Report 2015, a  
slight decrease in RoCE had been foreseen.  
The outlook for RoCE, which was already raised in  
the Quarterly Report to 30 June 2016 from a mod-  
erate decrease to a slight decrease, was once more  
exceeded. In the Annual Report 2015, a moderate  
decrease in RoCE was foreseen. The rate achieved by  
the Automotive segment in 2016 was therefore once  
again well above the minimum target of 26%.  
4
1
Financial Services segment  
In the Annual Report 2015, RoE was forecast to be  
Return on equity: slight increase  
Growth in business volumes and an improved risk  
profile in the Financial Services segment had a posi-  
at the previous year’s level. As expected, it remained  
ahead of the long-term target of 18%.  
tive impact on segment return on equity (RoE) in 2016  
At 21.2%, the RoE was slightly higher than expected  
2015: 20.2%; +ꢀ1.0 percentage point).  
.
The following overall picture arises for the key per-  
formance indicators used by the BMW Group and its  
segments:  
(
Comparison of 2016 forecasts with actual outcomes 2016  
•
19  
Forecast for 2016  
in 2015 Annual Report  
Forecast revision  
during the year  
Actual outcome  
in 2016  
BMW Group  
Profit before tax  
slight increase  
slight increase  
€ million  
9,665 (+ 4.8 %)  
Workforce at year-end  
124,729 (+ 2.0 %)  
AutoMotive seGMent  
Sales volume1  
slight increase  
slight decrease  
slight increase  
units  
2,367,603 (+ 5.3%)  
124 (– 2.4 %)  
Fleet emissions2  
2
g CO / km  
Revenues  
€ million  
86,424 (+1.0 %)  
target range  
between 8 and 10  
EBIT margin  
%
%
8.9 (– 0.3 %pts)  
74.3 (+2.1 %pts)  
Return on capital employed  
moderate decrease  
Q2: slight decrease  
Q2: solid increase  
Motorcycles seGMent  
Sales volume  
slight increase  
slight decrease  
units  
%
145,032 (+ 5.9%)  
33.0 (+1.4 %pts)  
Q2: in line with last  
year’s level  
Return on capital employed  
FinAnciAl services seGMent  
Return on equity  
in line with last year’s level  
%
21.2 (+1.0 %pts)  
1
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units).  
EU-28.  
2
4
2
Combined  
Management  
Report  
REVIEW OF OPERATIONS  
also developed positively during the year under report,  
with sales rising to a total of 252,205 units (2015:  
2
30,982 units; +9.2%). Sales volume growth was again  
Report on  
Economic Position  
recorded in Asia. Overall, sales of the Group’s three  
Review of Operations  
Automotive segment  
brands in the region totalled 747  
685 792* units; + %), including 516  
in China, 11 % more than one year earlier (2015  
,
291* units (2015  
:
:
Automotive segment  
,
9
.
0
,
785* units sold  
.
4
4
64,086* units). Total sales of BMW, MINI and Rolls-  
Solid growth in deliveries to customers  
The BMW Group sold 2,367,603* BMW, MINI and  
Rolls-Royce brand vehicles worldwide in 2016, thereby  
setting a new record for the sixth year in succession  
Royce brand vehicles on the American continent were  
down year-on-year within a highly competitive market  
environment, falling by 7.2% to 460,398 units (2015:  
495,897 units). Sales in the USA fell by 9.7% to 366,493  
units (2015: 405,715 units).  
(
2015: 2,247,485* units; +5.3%). The BMW brand  
recorded a solid % increase to 003 359* units,  
5
.
2
2
,
,
thereby exceeding the two-million threshold for  
the first time (2015: 1,905,234* units). MINI also  
BMW Group – key automobile markets 2016  
achieved a solid  
6
.
4
% increase to 360  
38,466 units). Rolls-Royce Motor Cars delivered  
011 luxury automobiles to customers during the  
,
233 units (2015  
:
• 20  
3
4
as a percentage of sales volume  
,
year under report (2015: 3,785 units; +6.0%). A new  
all-time high was therefore not only recorded at Group  
level, but also for the BMW and MINI brands.  
2
1.8 China  
Other 29.1  
Dynamic growth in Europe and Asia, challenges on  
the US market  
Within a generally favourable market environment,  
the BMW Group surpassed the one-million mark for  
1
5.5 USA  
Japan 3.2  
Italy 3.5  
sales of BMW  
Europe for the second year in succession in 2016 with  
092 155 units sold (2015 000 427 units; + %).  
Sales figures for Germany were up % year-on-year  
to 298 928 units (2015 286 098 units). Despite the  
, MINI and Rolls-Royce brand vehicles in  
France 3.6  
1
2.6 Germany  
1
,
,
:
1
,
,
9
.
2
Great Britain 10.7  
4.5  
,
:
,
Brexit decision, automobile business in Great Britain  
BMW Group sales volume of vehicles by region and market  
•
21  
in 1,000 units  
2016  
2015  
2014  
2013  
2012  
Europe  
1,092.2  
298.9  
252.2  
460.4  
366.5  
747.3  
516.8  
67.7  
1,000.4  
286.1  
231.0  
495.9  
405.7  
685.8  
464.1  
65.4  
914.6  
272.3  
205.1  
482.3  
397.0  
658.4  
456.7  
62.7  
859.5  
259.2  
189.1  
463.8  
376.6  
578.7  
391.7  
61.8  
865.4  
287.4  
174.5  
425.3  
348.5  
493.4  
327.3  
61.1  
thereof Germany  
thereof Great Britain  
Americas  
thereof USA  
Asia*  
thereof China*  
Other markets  
Total*  
2,367.6  
2,247.5  
2,118.0  
1,963.8  
1,845.2  
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units, 2013: 198,542 units, 2012: 141,165 units).  
4
3
BMW* brand exceeds the two-million threshold,  
again taking a top position in the premium  
segment  
sales of the new BMW 7 Series were over two thirds up  
on the previous year (61,514 units; 2015: 36,364 units;  
+69.2%).  
The BMW brand exceeded the two-million threshold  
for the first time in 2016, selling 2,003,359 units.  
The BMW X family remained extremely popular in  
016, with sales rising by more than one fifth world-  
2
The BMW 1 Series fell just short of its previous year’s  
performance with a sales volume of 176,032 units in  
wide to 644,992 units (2015: 527,319 units; +22.3%).  
Sales volume growth of the BMW X1 was particularly  
the year under report (2015  
:
182  
,
158 units; –  
3
.
4
%). By  
pronounced with a jump of 83.6% to 220,378 units  
contrast, at 196,183 units, sales of the BMW 2 Series  
were nearly a quarter higher (2015: 157,144 units;  
(2015: 120,011 units). The BMW X3 also saw a sig-  
nificant year-on-year rise in deliveries to customers  
(157,017 units; 2015: 137,810 units; +ꢀ13.9 %). At  
166,219 units, sales of the BMW X5 were only slight-  
+
24.8%). Sales figures for the BMW 3 Series fell year-  
on-year to 411 844 units (2015 444 338; – %). Near-  
,
:
,
7.3  
ing the end of its life cycle, sales of the BMW 5 Series  
at 331,410 units narrowly missed the previous year’s  
high figure (2015: 347,096 units; –4.5%). Worldwide  
ly lower than one year earlier (2015  
–ꢀ1.1%).  
:
168  
,
143 units;  
Sales volume of BMW vehicles by model variant*  
•
22  
Proportion of  
BMW sales volume  
2016 in %  
in units  
2016  
2015  
Change in %  
BMW 1 Series  
BMW 2 Series  
BMW 3 Series  
BMW 4 Series  
BMW 5 Series  
BMW 6 Series  
BMW 7 Series  
BMW X1  
176,032  
196,183  
411,844  
133,272  
331,410  
13,400  
182,158  
157,144  
444,338  
152,390  
347,096  
20,962  
– 3.4  
24.8  
– 7.3  
–12.5  
– 4.5  
– 36.1  
69.2  
83.6  
13.9  
5.5  
8.8  
9.8  
20.5  
6.6  
16.5  
0.7  
61,514  
36,364  
3.1  
220,378  
157,017  
58,055  
120,011  
137,810  
55,050  
11.0  
7.8  
BMW X3  
BMW X4  
2.9  
BMW X5  
166,219  
43,323  
168,143  
46,305  
–1.1  
– 6.4  
– 31.7  
– 0.8  
5.2  
8.3  
BMW X6  
2.2  
BMW Z4  
5,432  
7,950  
0.3  
BMW i  
29,280  
29,513  
1.5  
BMW total  
2,003,359  
1,905,234  
100.0  
*
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units, 2015: 282,000 units).  
4
4
Combined  
Management  
Report  
MINI sets new sales volume record  
2015: 14,145 units) and the new Clubman (63,509 units;  
2015: 8,003 units). With 198,373 units sold, the MINI  
Hatch 3- and 5-door models fell short of the previous  
year’s high level (2015: 221,982 units; –ꢀ10.6%).  
The MINI brand also set a new sales volume record  
in 2016 with a total of 360,233 units sold (2015:  
338,466 units; +6.4%). Positive contributions to this per-  
formance came from the new Convertible (29,758 units;  
Report on  
Economic Position  
Review of Operations  
Automotive segment  
Sales volume of MINI vehicles by model variant  
•
23  
Proportion of  
MINI sales volume  
in units  
2016  
2015  
Change in %  
2016 in %  
MINI Hatch (3- and 5-door)  
MINI Convertible / Coupé / Roadster  
MINI Clubman  
198,373  
30,050  
63,509  
68,301  
360,233  
221,982  
20,004  
8,003  
–10.6  
50.2  
–
55.1  
8.3  
17.6  
19.0  
100.0  
MINI Countryman / Paceman  
MINI total  
88,477  
338,466  
– 22.8  
6.4  
Strong performance by Rolls-Royce  
Rolls-Royce Motor Cars enjoyed the second-best year  
in its history, with 4,011 luxury automobiles delivered  
Sales volume of Rolls-Royce vehicles  
by model variant  
•
24  
to customers (2015: 3,785 units; +6.0%). This perfor-  
mance includes an all-time quarterly high contribution  
in units  
2016  
2015  
Change in %  
of 1,386 units in the fourth quarter (2015: 1,181 units;  
ꢀ17.4%). A high proportion of these sales related to  
the new Rolls-Royce Dawn, of which 283 units were  
Phantom (incl. Coupé,  
Drophead Coupé,  
Extended Wheelbase)  
+
1
,
389  
1,175  
2,447  
4,011  
488  
1,609  
1,688  
3,785  
– 20.3  
– 27.0  
45.0  
sold worldwide after its mid-year launch.  
Ghost  
Wraith / Dawn  
Rolls-Royce total  
6.0  
High capacity utilisation throughout  
production network  
In 2016, buoyant customer demand and various new  
model start-ups resulted in high capacity utilisation  
throughout the BMW Group production network. At  
the same time, rapid progress was made in expanding  
the Group’s international manufacturing locations.  
The production network currently comprises 31 loca-  
tions in 14 countries worldwide.  
New production records were set in 2016, with a  
* Including the total of 2,359,756* BMW, MINI and Rolls-Royce  
joint venture  
brand vehicles manufactured (2015  
:
2
,
279  
,
:
503* units;  
933 647*  
BMW Brilliance  
Automotive Ltd.,  
Shenyang  
2016: 305,833  
units, 2015:  
+
3
.
5
%), comprising 002 997 BMW  
2
,
,
*
(
2015  
1
,
,
units; +3.6%), 352,580 MINI (2015: 342,008 units;  
%) and 179 Rolls-Royce brand vehicles (2015:  
3,848 units; +8.6%).  
(
+
3
.
1
4
,
2
87,755 units).  
4
5
Vehicle production of the BMW Group by plant  
•
25  
Proportion of  
in units  
2016  
2015  
Change in %  
production in %  
Spartanburg  
411,171  
346,291  
339,769  
246,550  
216,769  
210,971  
161,901  
143,825  
63,117  
400,904  
304,509  
360,804  
233,656  
221,998  
201,206  
144,988  
142,767  
71,353  
8,928  
2.6  
13.7  
– 5.8  
5.5  
17.4  
14.7  
14.4  
10.4  
9.2  
Regensburg  
Dingolfing  
Leipzig  
Munich  
– 2.4  
4.9  
Oxford  
8.9  
Tiexi1  
11.7  
0.7  
6.9  
Dadong1  
6.1  
Rosslyn  
–11.5  
99.9  
55.1  
11.0  
8.6  
2.7  
Rayong  
17,844  
0.7  
Araquari  
15,408  
9,936  
0.6  
Chennai  
8,568  
7,716  
0.4  
Goodwood  
4,179  
3,848  
0.2  
Born (VDL Nedcar)2  
87,609  
57,019  
82,655  
27,216  
2,279,503  
53.6  
– 35.2  
18.5  
3.5  
3.7  
Graz (Magna Steyr)2  
53,528  
2.3  
Partner plants (Jakarta, Cairo, Kaliningrad, Kulim)  
BMW Group  
32,256  
1.4  
2,359,756  
100.0  
1
Joint Venture BMW Brilliance Automotive Ltd., Shenyang.  
Contract production.  
2
Flexibility, quality and efficiency are key characteris-  
tics of the Group’s production system. Its great ability  
to adapt enables the BMW Group to respond rapidly  
to changing market situations and fluctuations in  
regional sales volumes by adapting production plans.  
Digitalisation, standardised modules and intelligent  
composite construction methods demonstrate the  
high performance of the Group’s production net-  
work. At the same time, the production system offers  
customers an impressive level of individualisation,  
allowing changes in order specifications up to six days  
prior to delivery. The production expertise within  
the BMW Group thus gives it a crucial competitive  
advantage that contributes to the profitability and  
sustainable success of the Company.  
Strong production base in Germany  
The German plants play a leading role within the  
Group’s international network. For the sixth year  
in succession, the BMW Group produced over one  
million vehicles at its German plants in Munich,  
Dingolfing, Regensburg and Leipzig.  
In November 2016, the BMW Group began manufactur-  
ing the seventh generation of the BMW 5 Series at its  
Dingolfing assembly plant, which underwent numerous  
conversion and building measures to prepare for the  
new model. Dingolfing therefore remains the centre of  
competence for producing the top BMW model series.  
Extensive expansion work is also progressing at the  
main plant in Munich. By mid-2017, a state-of-the-art  
painting line will be completed that meets the very  
highest standards in efficiency and economical use of  
resources. The new building is part of an extensive  
investment project that also includes the enlargement  
of the body-making section and vehicle assembly as  
well as parts of the logistics system.  
4
6
Combined  
Management  
Report  
In 2016, the BMW Group plant in Regensburg cele  
-
Four engine production plants worldwide  
brated its 30th anniversary. The highly flexible plant  
manufactures eight different models on one line.  
During the reporting period, production volume was  
boosted to over 346,000 units, approximately 14% up  
on the previous year.  
In 2016, the joint venture BBA opened a new engine  
plant in Shenyang (China) to produce the latest gen-  
eration of BMW TwinPower Turbo 3- and 4-cylinder  
petrol engines. The new light metal foundry, which  
was opened at the same time, is designed for sus-  
tainable production. Both the engine plant and the  
light metal foundry meet state-of-the-art production  
standards and supply the BMW Brilliance manufac-  
turing plants in Dadong and Tiexi. The BMW Group  
now manufactures engines at a total of four locations:  
Munich (Germany), Hams Hall (UK), Steyr (Austria)  
and Shenyang (China).  
Report on  
Economic Position  
Review of Operations  
Automotive segment  
The BMW Group plant in Leipzig produced over 29,000  
BMWi model vehicles during the period under report.  
The BMW is one of the three best-selling electric  
i
3
vehicles worldwide. In addition to the Munich plant,  
Leipzig is now the second BMW Group site to utilise  
electric trucks, powered exclusively by electricity gen-  
erated via renewable sources, to transport its materials  
on public roads. In 2016, a total of 246,550 vehicles  
rolled off production lines in Leipzig, the highest  
figure to date for the plant.  
The BMW Group’s largest engine plant, located in  
Steyr, produces 3-, 4- and 6-cylinder diesel engines as  
well as 3-, 4- and 6-cylinder petrol engines. Engines  
made in Steyr are installed in more than half of  
all BMW vehicles and in over one third of all MINI  
vehicles. In September 2016, the development centre  
for diesel engines, which adjoins the manufacturing  
plant, took the first new, state-of-the-art engine testing  
facilities into service. The Steyr plant established a  
new production record of 1,261,449 engines in 2016.  
Since its opening, some 160 engineers have been  
engaged in research at the Lightweight and Engineer-  
ing Center in Landshut, designing innovative hi-tech  
materials and composite concepts for the vehicles of  
the future. The think tank, built near the production  
facilities, concentrates lightweight construction know-  
how at the Landshut plant.  
The BMW Group develops and manufactures battery  
cell modules, high-voltage storage systems and electric  
motors at a total of five locations. The most important  
electric drivetrain technologies and components are  
developed at the prototype construction facility in  
Munich and produced at the Dingolfing and Landshut  
plants. The Dingolfing plant manufactures battery  
cell modules and installs them in high-voltage storage  
systems for the BMWi3, the BMWi8 and the Group’s  
plug-in hybrid models. The electric motors and range  
extenders for the BMWi models are made at the  
Landshut plant. The Spartanburg plant in the USA  
produces and installs high-voltage storage systems  
for the BMW X5 iPerformance. The BBA joint venture  
plant in Shenyang is currently building a new centre  
for high-voltage storage systems.  
The Wackersdorf Innovation Park is the logistical hub  
for materials management and just-in-sequence deliv-  
ery to BMW Group assembly plants in ten different  
countries. For the first time, a fleet of ten self-driving  
Smart Transport robots is being used in Wackersdorf  
to transport components within the logistics centre.  
These self-driving transport robots are capable of driv-  
ing freely within the logistics centre and transporting  
loads of up to 500 kilograms.  
SGL Automotive Carbon Fibers (SGL ACF), the joint  
operation between the BMW Group and the SGL  
Group, is also based in Wackersdorf. In Moses Lake  
(
USA), SGL ACF operates a carbon fibre production  
plant that is powered by hydroelectricity and supplies  
carbon fibres to the SGL ACF plant in Wackersdorf,  
where they are processed into textile cores.  
During the year under report, the BMW Group plant  
in Eisenach commissioned a state-of-the-art servo  
tryout press. Eisenach is one of three BMW Group  
plants worldwide specialised in making pressing  
tools. Moreover, some 250 employees at the plant  
manufacture the majority of the outer body parts from  
sheet metal, aluminium and stainless steel for the  
Rolls-Royce plant in Goodwood (UK) as well as parts  
for BMW motorcycle production in Berlin.  
4
7
Internationalisation of BMW production network  
progresses  
By expanding its international production network,  
the BMW Group follows global market developments  
with the aim of ensuring a balanced distribution of  
added value.  
The manufacturing sites in Chennai (India) and Ray-  
ong (Thailand) complete the BMW Group’s interna-  
tional production network. In 2016, the plant in India  
produced the 50,000th BMW for the local market. The  
BMW plant in Thailand is the only facility within the  
production network that manufactures not only BMW  
and MINI automobiles, but also BMW motorcycles.  
In North America, expansion work has been con-  
tinued at the BMW plant in Spartanburg (USA). In  
During the period under report, a total of 32,256 auto-  
2
016, the plant set a new annual record, turning out  
mobiles were produced at the Group’s various partner  
plants, which mainly serve their regional markets.  
over 411 000 units. In terms of production volume,  
,
the Spartanburg plant is therefore the largest in the  
BMW Group’s network.  
In San Luis Potosí (Mexico), preparations for construct-  
ing the new plant are running on schedule and a local  
training centre has already been opened at the site. The  
plant is due to commence operations in 2019.  
In Europe, the British production cluster comprising  
the MINI assembly facility in Oxford, the pressing  
plant in Swindon and the engine manufacturing plant  
in Hams Hall is a key element in the BMW Group’s  
production network. In order to secure greater capac-  
ity for forecast growth, the MINI 3-door model, the  
MINI Convertible and the MINI Countryman are also  
being produced for the BMW Group at the automotive  
manufacturer VDL NedCar in Born, the Netherlands.  
Important work was carried out to convert and expand  
the Rolls-Royce manufacturing plant in Goodwood  
(
UK) during the period under report. For future mod-  
els, the BMW Group is investing in a new production  
system on one line at the plant. The new Technology  
and Logistics Centre in Bognor Regis, near Goodwood,  
was opened in January 2016.  
In Rosslyn (South Africa), preparations are already  
underway for producing the next generation of the  
BMW X3. In May 2016, work began on the body-mak-  
ing facility, which is being enlarged by 50%.  
In Shenyang (China), the BBA plants in Dadong and  
Tiexi produced over 305,000 units, setting a new record  
in the process. Comprehensive expansion work at the  
Dadong plant has been continued. The extension will  
improve the flexibility of the plant and prepare it for  
the manufacture of future models.  
4
8
Combined  
Management  
Report  
Motorcycles segment  
BMW Group sales volume of motorcycles*  
• 26  
Report on  
Economic Position  
in 1,000 units  
Solid sales volume growth for BMW Motorrad  
Review of Operations  
The Motorcycles segment profited from a favourable  
market environment during the period under report,  
particularly in Europe and Latin America, thereby  
achieving a record sales volume performance for the  
sixth year in succession. Deliveries of BMW motor-  
Motorcycles  
segment  
145.0  
150  
137.0  
Financial Services  
segment  
123.5  
115.2  
106.4  
cycles to customers worldwide rose by a solid 5.9%  
to 145,032 units (2015: 136,963 units).  
7
0
5
Dynamic growth in Europe  
Sales of motorcycles in Europe grew by 7.5 % to  
7,983 units (2015: 81,834 units) year-on-year. These  
figures include 24,894 units sold in Germany (2015:  
3,823 units; +4.5 %), 12,300 units in Italy (2015:  
150 units; +ꢀ10 %) and 13 350 units in France (2015  
550 units; + %). Market conditions in the USA  
2
012  
2013  
2014  
2015  
2016  
8
*
Excluding Husqvarna, sales volume up to 5 March 2013: 59,776 units.  
2
1
1
,
,
.
3
,
:
1
2
6.4  
remained very difficult. The number of motorcycles  
sold dropped significantly to 13,730 units (2015:  
BMW Group – key motorcycle markets 2016  
• 27  
1
6,501 units; –ꢀ16.8%).  
as a percentage of sales volume  
Internationalisation continues  
17.2 Germany  
Production of the G 310 R commenced at the  
Group’s cooperation partner TVS Motor Company  
in India during the year under report. Operations  
at the Group’s partner plant in Thailand were also  
ramped up. Following the takeover of production in  
Manaus (Brazil) in October 2016, for the first time,  
BMW Motorrad now operates its own manufacturing  
facilities at a location outside Europe.  
Other 43.2  
9.5 USA  
9.2 France  
8
.5 Italy  
Great Britain 5.8  
6.6 Spain  
Motorcycle production slightly down on  
previous year  
A total of 145,555 motorcycles rolled off production  
lines during the year under report (2015: 151,004 units;  
%). The slight drop was largely attributable to the  
–3.6  
higher number of new model production start-ups in  
the second half of 2016 compared to one year earlier.  
Started in 2015, expansion work on the BMW Group  
plant in Berlin continued during the year under report.  
In addition to measures to increase production capac-  
ity, a state-of the-art logistics centre is being built near  
the Berlin plant and scheduled to begin operations  
from the end of 2017.  
4
9
Financial Services segment  
Growth in new business volumes  
Credit financing and leasing business with retail  
customers remain a major factor for the success of  
the Financial Services segment. During the period  
from January to December 2016, 1,811,157 new cred-  
it financing and leasing contracts were concluded  
with customers, 9.4% up on the previous year (2015:  
1,655,961 contracts). This increase reflected a signif-  
icant 11.1% rise in credit financing and a solid 6.2%  
rise in leasing contracts. Overall, leasing accounted  
for 34.2% of new business (2015: 35.3%), with credit  
financing at 65.8% (2015: 64.7%).  
Financial services business continues to grow  
As in the previous year, the Financial Services segment  
continued to perform well in 2016, despite the volatile  
market environment. In balance sheet terms, business  
volume grew by 11.0% to €ꢀ123,394 million (2015:  
€
ꢀ111,191 million). The contract portfolio under man-  
agement at 31 December 2016 comprised 114 906  
contracts and therefore grew % year-on-year (2015  
,718,970 contracts).  
5
,
,
8
.
4
:
4
Almost every second new BMW Group vehicle (49  
was leased or financed by the Financial Services seg-  
ment in the financial year 2016 percentage points  
.6%)  
Contract portfolio of  
Financial Services segment  
, 3.3  
•
28  
*
The calculation more than one year earlier (2015: 46.3%).*  
only includes  
automobile  
markets, in which  
the Financial  
in 1,000 units  
In the BMW and MINI pre-owned vehicle financing  
Services segment and leasing lines of business, the number of new con-  
is represented by  
a consolidated  
tracts signed by the segment increased significantly  
6
3
0
,000  
,000  
5
,115  
entity. in 2016 (+ꢀ10.5%) to 361,928 contracts (2015: 327,391  
4
,719  
4
,360  
4
,130  
contracts).  
3
,846  
The total volume of new credit and leasing contracts  
concluded with retail customers during the twelve-  
month period under report grew by 9.3% year-on-year  
to €ꢀ55,327 million (2015: €ꢀ50,606 million).  
2
012  
2013  
2014  
2015  
2016  
BMW Group new vehicles financed or  
leased by Financial Services segment*  
•
29  
in %  
4
9.6  
5
2
0
0
5
46.3  
4
4.0  
4
1.7  
4
0.4  
2
2.3  
2
2.1  
2
1.5  
Leasing 19.7  
20.9  
2
7.3  
2
4.2  
2
2.5  
Financing 20.7  
20.8  
2
012  
2013  
2014  
2015  
2016  
*
Until 2015 excluding Rolls-Royce.  
5
0
Combined  
Management  
Report  
The increase in credit financing and leasing business  
with retail customers is reflected in the overall contract  
portfolio. A total of 4,703,417 contracts were in place  
with retail customers at 31 December 2016 (2015:  
Decrease in multi-brand financing  
Multi-brand financing saw a moderate decrease  
(–5.9%) in the number of new contracts signed in  
2016, which fell to 153,297 (2015: 162,870 contracts).  
At 31 December 2016, the total portfolio comprised  
Report on  
Economic Position  
Review of Operations  
4
,326,631 contracts; +8.7%). By region, Asiaꢀ/ꢀPacific  
Financial Services  
segment  
continued to enjoy significant growth, recording an  
18.0% increase in the contract portfolio, mainly driv-  
en by greater demand in China. The Europeꢀ/ꢀMiddle  
Eastꢀ/ꢀAfrica region (+8.6 %), the Americas region  
466,436 contracts, in line with the previous year (2015:  
470,150 contracts; –0.8%).  
Research and  
Development  
(
+
7
.
1
%) and the EU Bank* region (+5.3%) also record- * EU Bank compris- Dealer financing up year-on-year  
es BMW Bank  
ed year-on-year growth.  
The total volume of dealer financing increased in 2016  
,
GmbH, its branch-  
es in Italy, Spain  
and Portugal, and  
its subsidiary in  
France.  
growing by 6.7% to €ꢀ18,307 million at the end of the  
reporting period (2015: €ꢀ17,156 million).  
Contract portfolio retail customer financing  
of Financial Services segment 2016  
•
30  
Deposit business volume at previous year’s level  
Customer deposits provide an important source of  
refinancing for the Financial Services segment. The  
volume of deposits at the end of the reporting period  
in % per region  
stood at €ꢀ13,512 million, in line with the previous  
Asia / Pacific 17.7  
year’s level (2015: €ꢀ13,509 million; +ꢀ/ꢀ–0.0%).  
2
9.9 Americas  
Growth in insurance business  
Demand for insurance products remained high in  
Europe /  
Middle East /  
Africa 24.8  
2
016, with the number of new insurance contracts  
signed rising by % to 262 973 2015 207 196  
4
.
6
1
,
,
(
:
1
,
,
contracts). At 31 December 2016, the contract port-  
folio comprised 3,411,872 contracts (2015: 3,200,742  
contracts; +6.6%).  
2
7.6 EU Bank*  
*
EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its  
subsidiary in France.  
Fleet business expanded  
The BMW Group is one of Europe’s foremost leasing  
and full-service providers. The Financial Services  
segment’s fleet management line of business offers  
leasing and financing arrangements as well as other  
fleet-related services to commercial customers under  
the brand name “Alphabet”. The number of new con-  
tracts signed rose by 7.0% during the financial year  
2
016. At 31 December 2016, the segment was thus  
managing a portfolio of 644,420 fleet contracts (2015:  
02,303 contracts).  
6
5
1
Risk profile improved  
Research and Development  
Despite ongoing political and economic uncertain-  
ties, including the UK’s decision to leave the EU, the  
stable trend in the global economy during the year  
under report contributed to an improvement in the  
risk situation of the Financial Services segment’s total  
portfolio. The risk profile for the segment’s credit  
financing portfolio also improved slightly. The credit  
loss ratio on the total credit portfolio for the twelve-  
month period decreased to 0.32%, slightly down on  
the previous year’s level (2015: 0.37%).  
www.bmwgroup.com/innovation  
Research and development are of central importance  
for the BMW Group as a premium manufacturer. As  
part of the Efficient Dynamics strategy, continual  
efforts are undertaken to improve energy efficiency  
and reduce emissions across the full range of auto-  
mobiles and motorcycles. In line with its Connected  
Drive strategy, the BMW Group is engaged in work on  
the connectedness of driver, vehicle and the outside  
world. The Group seeks to take a leading position in  
Development of credit loss ratio  
the field of autonomous driving. At 31 December 2016  
,
•
31  
a total of 13 103 people at 13 locations in five coun-  
,
tries worldwide were employed in the BMW Group’s  
research and innovation network.  
in %  
0
.50  
0
.48  
Research and development expenditure totalled  
0
0
0
.5  
0.46  
€
ꢀ5,164 million during the year under report, in  
line with the previous twelve-month period (2015  
169 million; – %). At %, the research and  
development expenditure ratio was also practically  
identical to that of the preceding year (2015 %).  
0
.37  
:
0
.32  
€
ꢀ
5
,
0
.
0
5.5  
.25  
: 5.6  
The ratio of capitalised development costs to total  
research and development expenditure for the period  
(
capitalisation ratio) was 40.5% (2015: 39.9%). Amor-  
tisation of capitalised development costs totalled  
222 million (2015: €ꢀ 166 million; + %). Further  
2
012  
2013  
2014  
2015  
2016  
€
ꢀ
1
,
1
,
4.8  
information on research and development expendi-  
ture is provided in the “Report on Economic Position  
Average sales proceeds per vehicle, generated from  
remarketing pre-owned BMW and MINI brand vehi-  
cles, reflected the marginally less favourable situation  
on international pre-owned markets, and were there-  
fore slightly down on the previous year. Residual value  
losses on such vehicles rose moderately year-on-year,  
mainly due to greater competition in North America.  
Further information on the risk profile is provided in  
the section “Risks and Opportunities”.  
see (Results of Operations)” and in note 7 to the Group  
note 7  
Financial Statements.  
Given the pace of technological change, collaboration  
in the field of research and development is customary  
in the automotive industry. The BMW Group also  
enters into collaboration arrangements with selected  
partners. The aim of these research and development  
activities, which may also include cross-sector cooper  
ation, is to help find innovative solutions for individual  
mobility. The focus is on future-oriented technologies  
such as digitalisation and alternative drive systems.  
-
5
2
Combined  
Management  
Report  
Expertise in drivetrain technology  
The BMW Group is consistently extending its portfolio  
of electrically powered vehicles. At the end of 2016,  
Driver assistance systems, highly and fully  
automated driving  
The new BMW 5 Series offers drivers extensive sup-  
port with a variety of assistance systems. It is fitted  
with a stereo camera as standard, which monitors  
the vehicle’s environment together with optionally  
available radar and ultrasound sensors. New features  
in the BMW 5 Series include an avoidance assistant,  
a crossing-traffic warning, a lane-change assistant  
and a lane control assistant with active side collision  
protection, which monitors the driving lanes and  
developments next to the vehicle and actively supports  
the driver in the event of imminent collision with a  
corrective steering intervention.  
Report on  
Economic Position  
it included the BMWi3 all-electric, battery-powered  
Review of Operations  
vehicle, six plug-in hybrid vehicles for the global  
market, and an additional plug-in hybrid exclusively  
developed for the Chinese market.  
Research and  
Development  
In 2016, an additional version of the BMWi3 was  
launched, featuring significantly greater battery  
capacity. The vehicle is also available with or without  
a range extender. During the reporting year, plans  
were laid for both the first all-electric MINI and for  
an electrically powered BMW X3. In 2017, the new  
BMW 5 Series and the MINI Countryman are both due  
to be launched as plug-in hybrid versions. A roadster  
With extended functions built into the optionally avail-  
able Active Cruise Control (ACC) and the steering and  
lane control assistant, the BMW 5 Series represents  
a further step towards automated driving, including  
recognition of speed limits, which the optional Speed  
Limit Assist shows the driver. The assistance system  
supports the driver in keeping a correct distance at  
speeds up to 210 kmꢀ/ꢀh as well as at accelerating and  
version of the BMWi8 has also been announced for  
018.  
2
With its C-evolution, BMW Motorrad presented in  
016 the second edition of an all-electric “Maxi Scoot-  
2
er” with greatly improved range and higher top speed.  
For the medium and long term, the BMW Group is also  
developing a fuel cell electric vehicle (FCEV). The fuel  
cell electric drive system, which converts hydrogen to  
electricity and steam, combines locally emission-free,  
electrically powered driving with the dynamic flair  
typical of the BMW brand, capability for covering long  
distances, and short refuelling times. Battery and fuel  
cell technology can be combined in one vehicle.  
braking. These features offer drivers a significant ben-  
efit in terms of convenience, particularly at low speeds  
and in slow-moving traffic. The optional Remote  
Parking feature of the BMW 5 Series Sedan enables  
drivers to manoeuvre the vehicle into the tightest of  
parking spaces using a remote-control car key.  
At the same time, the BMW Group is conducting  
research into highly automated systems that do not  
need to be permanently monitored by the driver and  
fully automated systems that no longer require the  
driver to monitor them at all. At the end of 2016,  
some 600 BMW Group employees were engaged in  
the development of highly automated driving tech-  
nologies. Beginning in 2017, the BMW Group plans  
to concentrate its expertise in the field of vehicle  
connectivity and automated driving at one location.  
At the same time, the BMW Group continues to work  
on enhancing its existing range of highly efficient  
combustion engines. 2016 saw the launch of the new  
BMW 7 Series, featuring a newly developed inline  
6
-cylinder diesel engine that combines high perfor-  
mance with low fuel consumption. The BMW 1 and 2  
Series M Performance models were presented with a  
new, powerful inline 6-cylinder petrol engine in 2016.  
5
3
BMW Connected digital platform presented  
Numerous awards for innovations  
With BMW Connected, the BMW Group presented  
a comprehensive digital concept that facilitates  
individual mobility. Based on a flexible platform,  
BMW Connected seamlessly combines the vehicle  
with the digital life of the user through user devices  
such as smartphones. The functions of existing BMW  
ConnectedDrive apps will be integrated in BMW  
Connected. The security and anonymisation of data  
have the highest priority for the BMW Group, both  
internally and for its customers.  
The BMW Group won over 50 national and interna-  
tional awards during the year under report. Among  
other honours, the BMW 7 Series was named World  
Luxury Car at the renowned World Car Awards.  
At the “International Engine of the Year Award”, the  
most prestigious engine competition worldwide, the  
drivetrain of the BMWi8 was winner in the 1.4- to  
1.8-litre category. At the Automotive Innovations  
Award, jointly awarded by the Center of Automotive  
Management and the auditing and consulting firm  
PricewaterhouseCoopers, BMW drivetrains were  
adjudged to be the most innovative conventional  
systems across all models.  
Digital connectivity has also become a key topic for  
the Group’s motorcycles. With its optionally avail-  
able “Intelligent Emergency Call”, BMW Motorrad  
has announced that eCall for urgent help in case of  
emergency or accidents will also be added as a feature  
of its motorcycles as from 2017.  
The BMWi3 won the “Golden Steering Wheel” award  
in the “Alternative drives” category. In 2016, the  
BMW Group won numerous design awards, includ-  
ing the International Forum Design Awards for its  
Rolls-Royce Dawn, MINI Clubman, MINI Convertible,  
BMW M2, BMW X1 and BMW 7 Series.  
Next generation of the AirTouch virtual  
touchscreen  
The BMW Group made further progress in the field  
of interaction between the driver and the vehicle  
during the year under report. Following up on BMW  
Gesture Control, which is already available for the  
new BMW 5 and 7 Series, in 2016 the Group pre-  
sented its enhanced AirTouch system, which enables  
drivers to use simple gestures with an open hand to  
activate command fields on a large panorama screen  
on the dashboard. At the beginning of 2017, the BMW  
HoloActive Touch system was presented to the public  
for the first time. The innovative interface between  
driver and vehicle is similar to a virtual touchscreen,  
which is operated using finger gestures on a screen  
that appears to float freely in space.  
Extreme lightweight construction in the BMW HP4  
BMW Motorrad demonstrated with the exclusive BMW  
HP4 RACE experimental motorcycle how extreme  
lightweight construction can be realised based on  
carbon fibre technology. Among other features, this  
motorcycle, which is fit for racing, is equipped with a  
highly innovative frame structure made of pure carbon  
as well as carbon wheel-rims.  
5
4
Combined  
Management  
Report  
Purchasing and Supplier Network  
Regional mix of BMW Group  
purchase volumes 2016  
•
32  
Report on  
Economic Position  
Charting a course in a volatile environment  
in %, basis: production material  
Review of Operations  
Despite the increasingly volatile environment, the Pur-  
chasing and Supplier Network ensures that the Group  
is capable of flexibly responding to fluctuations in  
demand when purchasing production materials, raw  
materials, capital goods and services. The main focus  
is on high quality standards, innovation, a flexible  
and reliable supply structure and competitive costs.  
Purchasing and  
Supplier Network  
1.3 Africa  
Asia / Australia 5.7  
Sales and Marketing  
Rest of Western  
Europe 15.4  
39.8 Germany  
NAF TA 17.2  
Connecting procurement markets  
Continually rising vehicle sales and production vol-  
umes outside Europe are also changing the regional  
distribution of purchasing volumes, for example due to  
the expansion of production capacities in the Group’s  
plant in Spartanburg, USA, or the construction of  
the BMW Group plant in San Luis Potosí, Mexico,  
which is scheduled to begin production in 2019. The  
BMW Group remains committed to its strategy of  
maintaining a regionally balanced growth in sales  
volume, production and purchasing volumes. This  
strategy also makes an important contribution to  
natural hedging against currency risks.  
20.6 Eastern Europe  
Investments ensure expertise in productivity  
and technology  
A further important area is the production of key  
components for BMW Group vehicles. Investments in  
state-of-the-art manufacturing facilities and efficient  
structures ensure the competitiveness of in-house  
component production.  
During the period under report, the new Lightweight  
and Engineering Center was opened in Landshut,  
the Group’s most important components plant. In  
future, research will be conducted at the centre on  
new materials, composite material concepts and  
production processes for future vehicle generations,  
encompassing a wide range of technologies.  
5
5
Sales and Marketing  
BMW i becoming further established  
www.bmwgroup.com/brands  
Under the brand name BMW i, the BMW Group offers  
a range of electric mobility solutions that include not  
only the vehicles, but also services such as journey  
planning using different modes of transport and  
The BMW Group’s sales and distribution network  
comprises some 3,400 BMW, 1,580 MINI and 140  
Rolls-Royce dealerships worldwide. Products and  
services are sold by independent authorised dealer  
ships, BMW Group branches and subsidiaries, as well  
as independent importers in certain markets. The  
dealership and agency network for BMWi currently  
covers over 1,300 locations.  
charging of electric vehicles. Over 100,000 electric  
and electrified vehicles have been sold to customers  
since the BMWi brand was launched. BMWi vehicles  
are meanwhile available in 52 countries worldwide.  
-
Since first going on sale in 2013, the BMWi3 has  
established itself as the front runner in its segment.  
Over 80% of BMWi3 buyers are first-time customers  
for the BMW Group. Since summer 2016, the BMWi3  
1
00th anniversary of BMW  
has been optionally available with a battery that pro-  
vides 50% more capacity and a range of around 300  
kilometres in the European driving cycle.  
In March 2016 the company celebrated its 100th anni-  
,
versary with the slogan THE NEXT 100 YEARS. The  
anniversary year kicked off with a major centenary  
event in Munich for employees and the general public.  
The four vision vehicles of BMW, MINI, Rolls-Royce  
and BMW Motorrad, presented over the course of the  
year, provided the international public with a visionary  
glimpse into the future of individual mobility.  
The BMW  
be the best-selling vehicle in its class since its market  
launch in 2014. The eDrive technology of the BMW  
i8 plug-in hybrid sports car continues to  
i
8
is also integrated in the new BMW iPerformance mod-  
els of the 2, 3 and 7 Series as well as in the X5.  
The BMW VISION NEXT 100 demonstrates how  
driving pleasure could look in the future. The MINI  
VISION NEXT 100 offers an individualised, continu-  
ally available form of urban mobility. The Rolls-Royce  
VISION NEXT 100 provides an insight into the future  
world of highly customised automotive luxury. Future  
motorcycling pleasure with the BMW Motorrad  
VISION NEXT 100 promises unlimited freedom.  
The global dealership and agency network for BMWi  
currently covers over 1,300 locations. In addition,  
BMWi models are offered via new channels, such  
as the Customer Interaction Center. Moreover, the  
Mobile Sales Advisor is now established as a core  
element of the sales model in six markets. The BMW  
i
online store gives customers in the Netherlands, Bel-  
gium, Luxembourg, Austria and Italy the opportunity  
to order their BMWi3 via the Internet.  
Digitalisation continued  
Under the name 360° ELECTRIC, BMWi provides a  
In 2016, the BMW Group continued to digitalise its  
processes in both sales and marketing. The aim is to  
make customer contact possible at an earlier stage  
and provide individualised offers for vehicle sales and  
services. Moreover, online sales help to attract new  
customer groups. For example, at the end of 2015 a  
nationwide online pilot project began across the UK.  
Over the course of the year under report, the sale  
of new vehicles via the Internet established itself as  
a further sales channel to supplement on-location  
dealership sales. This method enables customers to  
purchase any BMW model online. The service covers  
all aspects of the purchase, including selecting the  
right model, fully customised vehicle configuration,  
financing and payment. It is even possible to trade in  
a used vehicle online. If required, customers can also  
receive personal advice from a vehicle specialist (BMW  
Product Genius) or take up direct contact with a dealer.  
comprehensive range of products and services for both  
all-electric vehicles and plug-in hybrids worldwide.  
A new generation of the BMWi wallbox has been  
launched for quick, easy charging at home. It can  
now charge vehicles at up to three times the previous  
speed. While on the road, drivers can now use the  
BMWi service ChargeNow with over 65,000 charging  
points in 29 different countries.  
5
6
Combined  
Management  
Report  
Premium services for individual mobility  
With ChargeNow, the BMW Group provides easy  
access to a constantly growing network of public  
charging stations that currently includes over 65,000  
charging points in 29 countries. Customers can locate  
the BMWi partner charging stations directly via the  
navigation system integrated in the vehicle, via the  
ChargeNow app or via the website. ChargeNow inte-  
grates the charging stations of various operators to  
form one large, expanding network.  
The BMW Group has been developing its range of  
mobility services under the brand NOW since 2011.  
In Europe, the USA and China, the BMW Group now  
offers its customers individually tailored solutions  
for urban mobility. The range includes car sharing,  
on-demand mobility such as DriveNow and Reach-  
Now as well as parking and charging solutions such  
as ParkNow and ChargeNow.  
Report on  
Economic Position  
Review of Operations  
Sales and Marketing  
Workforce  
The DriveNow premium car-sharing service, a joint  
venture between BMWAG and Sixt SE, now has over  
BMW continues electrification strategy with  
iPerformance  
7
50,000 customers in seven countries and is repre-  
sented in eleven European cities. Around 20% of  
DriveNow vehicles in Europe are electrically powered  
and the number is scheduled to grow. With Alphacity,  
the BMW Group also provides car-sharing services  
for companies.  
In early 2016, BMW presented the first iPerformance  
model, the plug-in version of the 3 Series. With emis-  
sions of only 44g CO2 /ꢀkm and an electric range of  
up to 40 km, the iPerformance Sedan combines the  
driving dynamics of the 3 Series with the advantages  
of an electric drive system. A plug-in hybrid version  
In April 2016, the BMW Group launched ReachNow  
in Seattle (USA), a further development of car sharing.  
The ReachNow fleet in Seattle and Portland now com-  
prises 800 BMW and MINI brand vehicles. Electrically  
of the current 7 Series was launched in July. With  
only 45g CO /ꢀkm, the efficient, powerful 4-cylinder  
2
engine sets new standards in the luxury segment. The  
BMW 2 Series Active Tourer is also available as an  
iPerformance model. With its 3-cylinder combustion  
engine and 100 kWꢀ/ꢀ136 hp of power output and a  
powered BMWi3 vehicles make up 20% of the fleet. In  
addition to Seattle and Portland, in November 2016  
Brooklynꢀ/ꢀNew York became the third US city to  
launch ReachNow. Currently, membership amounts  
65kWꢀ/ꢀ88 hp electric motor, it emits 46g CO /ꢀkm.  
2
to more than 32  
,
000 in the three cities. In Decem-  
The revised model of the BMW 3 Series Gran Turismo  
has been available since July 2016. The new modular  
engines and Connected Drive range of services com-  
bine the sporting flair typical of BMW with superb  
efficiency and a high level of connectedness. The  
ber 2016, ReachNow began offering Ride in Seattle,  
its new mobility service, which enables members to  
order a vehicle optionally with a driver. In residential  
areas, Fleet Solutions offers the exclusive use of a fleet  
of premium vehicles that are permanently available  
on location. The ReachNow Reserve service makes it  
possible to book a specific vehicle for longer periods  
of between two and five days and have it delivered  
at the time and place of the customer’s choice. Via  
ReachNow Share, MINI owners will be able in the  
future to rent out their vehicle when they do not need  
it themselves.  
BMW 1 Series and the 2 Series Convertible and Coupé  
models have also been available as M Performance  
versions since July 2016. In the course of the year, both  
the BMW X1 and the BMW 1 Series were launched  
in China. Since autumn 2016, the BMW  
M2 Coupé  
has been on sale in the compact high-performance  
sports car segment.  
The first official information on the seventh generation  
of the new BMW 5 Series was published in mid-Octo-  
ber 2016. The new 5 Series Sedan had its worldwide  
debut in Detroit in January 2017 and has been on sale  
since mid-February 2017. The success story of the  
BMW 5 Series in the sporty business class is being  
continued with this dynamic, efficient, innovative  
vehicle.  
ParkNow is a comprehensive parking solution for Web,  
app and navigation systems. When parking on the  
street, payment is made cash-free via smartphone.  
When parking in multi-storey car parks, ParkNow  
provides support in finding, reserving, booking and  
paying for parking spaces. ParkNow was launched in  
Germany, Austria and France during the year under  
report.  
5
7
As the first concrete steps in implementing the Strat-  
egy NUMBER ONE NEXT, numerous new concepts  
and innovations have been presented to the public,  
such as the BMW Spyder, which celebrated its world  
Workforce  
>
www.bmwgroup.com/careers  
i
8
premiere at the Consumer Electronics Show (CES) in  
Las Vegas, followed by the M Performance model of  
the BMW 7 Series at the Geneva International Motor  
Show. The China version of the BMW X1 was present-  
ed at the show in Beijing and the BMW Concept X2  
at the Paris Motor Show (Mondial de l’Automobile).  
Slight increase in workforce  
At 31 December 2016, the BMW Group employed a  
workforce of 124,729 worldwide, 2.0% more than one  
year earlier (2015: 122,244 employees). The increase  
was primarily due to the expansion of the internation-  
al production network and financial services business.  
Moreover, skilled workers and IT specialists were  
increasingly recruited for future-oriented areas, such  
as software architecture and development, artificial  
intelligence and autonomous driving.  
MINI launches new convertible  
The new MINI Convertible has been on the market  
since March 2016. The new model was launched fea-  
turing five different versions of the new generation  
of engines with MINI TwinPower Turbo technology.  
The sports version, the MINI John Cooper Works  
Convertible, became available in May. The new MINI  
Convertible keeps up the tradition of highly dynamic  
driving pleasure and continues to offer its owners the  
typical MINI go-kart feeling.  
BMW Group employees  
• 33  
3
1.12. 2016  
31.12. 2015  
Change in %  
Automotive  
Motorcycles  
Financial Services  
Other  
112,869  
3,351  
111,410  
3,021  
1.3  
10.9  
9.1  
8,394  
7,697  
Rolls-Royce Dawn launched  
115  
116  
– 0.9  
2.0  
The new Rolls-Royce Dawn has been available since  
mid-2016. The Dawn was first presented to the media  
in March 2016 amid high acclaim. The luxury con-  
vertible boasts a special in-house designed roof that  
reduces interior noise levels to a minimum. During  
the year under report and to celebrate the end of the  
vehicle’s life cycle, a special edition of 50 Rolls-Royce  
Phantoms was built – the Phantom Zenith Collection.  
BMW Group  
124,729  
122,244  
Dual vocational training expanded worldwide  
The BMW Group increased its international appren-  
ticeship activities during the year under report, due  
amongst others to the higher number of apprentices  
employed at plants, for example in the USA and  
Thailand. The number of new entrants at German  
sites remained constant at 1,200 apprentices. At the  
end of the reporting period, 4,613 young people were  
engaged in vocational training and other training pro-  
grammes designed to promote young talent within  
the BMW Group (2015: 4,700).  
BMW Group apprentices at 31 December  
•
34  
4
,700  
5
2
0
,000  
,500  
4,595  
4,613  
4
,445  
4
,266  
2
012  
2013  
2014  
2015  
2016  
5
8
Combined  
Management  
Report  
High level of investment to bolster  
employee skill sets  
Diversity as a competitive factor  
Diversity represents a key factor in ensuring the  
BMW Group’s continued competitiveness going forward,  
focusing on the three aspects of gender, cultural back-  
ground, and ageꢀ/ꢀexperience. The aim is to ensure equal  
opportunities for all employees. A variety of measures  
were implemented in 2016 to promote and benefit from  
diversity in the workforce.  
At €ꢀ352 million, expenditure on basic and further  
training remained unchanged at a high level. By  
improving the skill sets of its workforce for example  
in electric mobility, hydrogen and fuel cell technology,  
lightweight construction and robot technology, the  
BMW Group is creating a solid foundation for future  
activities.  
Report on  
Economic Position  
Review of Operations  
Workforce  
Sustainability  
The proportion of women in the workforce, management  
functions and young talent programmes continued to  
increase during the year under report. The percentage of  
Highly attractive employer  
The BMW Group retained its status as one of world’s  
most attractive employers in 2016. In the latest  
women in the total BMW Group workforce rose to 18.7%  
BMWAG 15 %), above the internal target range of 15 to  
(
:
.8  
“
World’s Most Attractive Employers” rankings pub-  
17%. The proportion of women in management positions  
rose to 15.3% for the BMW Group as a whole and 13.3%  
for BMWAG. Female representation in programmes for  
young employees and interns in the year under report  
lished by the agency Universum, the BMW Group was  
once again named best German employer across all  
sectors and the most attractive automotive company  
in the world.  
was approximately 44% for trainee programmes and 29  
for student training programmes.  
%
The BMW Group came top in Trendence’s “Young  
Professional Barometer Germany” for the fifth year  
in succession. It also improved its position again in  
the Trendence “Graduate Barometer Germany – IT  
Edition” for highly sought-after IT specialists, taking  
second place in 2016. In Universum’s “Young Profes-  
sionals Study Germany”, the BMW Group took top  
spot in both the “Engineering” and “Business” cate-  
gories and came third in the “IT” category, confirming  
the excellent results of the previous year. Overall, the  
BMW Group finished as the best-placed company in  
the study.  
Proportion of female employees in manage-  
ment functions at BMW AG / BMW Group*  
•
35  
in %  
15.3  
4.3  
13.3  
1
8
0
6
1
1
3.5  
13.0  
0.6  
BMW Group 12.1  
BMW AG 10.0  
12.5  
11.3  
1
BMW supplementary benefit plan  
and centenary bonus  
Demographic and economic conditions relevant for  
the provision of pension benefits are changing at an  
increasingly rapid pace. In 2016, the BMW Group there-  
fore enhanced the Company pension plan to make it  
more sustainable and viable for the future. To mark the  
occasion of its centenary, nearly all employees of the  
BMW Group were awarded a one-time centenary bonus.  
BMWAG employees received the bonus mainly in the  
form of a starting contribution to the new BMW sup-  
plementary benefit plan, which serves as an additional  
component in the Company pension plan.  
2012  
2013  
2014  
2015  
2016  
*
Reporting on the proportion of women in management was changed in 2016 and is now  
based on the criterion “management function” rather than individual employee  
classification. Prior year figures have been adjusted accordingly.  
5
9
At the same time, the workforce in Germany is becoming  
more international. Employees from over 100 countries  
work together successfully at the Munich site alone.  
Moreover, a balanced age structure in the workforce  
encourages an exchange between generations and plays  
a role in reducing the loss of know-how when employees  
retire.  
Sustainability  
www.bmwgroup.com/responsibility  
Economic success, the responsible use of resources  
and the assumption of social responsibilities form the  
basis for long-term growth within the BMW Group.  
The Group secures the future of its business model  
through sustainable activity. In promoting sustaina-  
bility, the BMW Group concentrates on three areas:  
Employee attrition rate at BMW AG*  
•
36  
the development of products and services for  
—
as a percentage of workforce  
sustainable individual mobility (for example  
electric mobility and services such as DriveNow  
and ReachNow)  
7.0  
the efficient use of resources along the entire  
value chain  
—
3
.87  
3
.47  
3
0
.5  
2
.70  
responsibility towards employees and society in  
general  
2
.08  
—
1
.41  
Through its sustainability policy, the BMW Group is  
supporting the achievement of the UN’s Sustainable  
Development Goals (SDG), which were adopted in  
September 2015.  
2
012  
2013  
2014  
2015  
2016  
*
Number of employees on unlimited employment contracts leaving the Company.  
Further information on the subject of sustainability  
within the BMW Group and related topics is provided  
in the Sustainable Value Report 2016, published online  
at www.bmwgroup.com. The Sustainable Value Report is  
drawn up in accordance with the Guidelines of the  
Global Reporting Initiative (GRI G4), the most wide-  
ly used set of guidelines for sustainability reporting  
worldwide. The Sustainable Value Report corresponds  
to the “comprehensive” option, in which all relevant  
information and indicators of the aspects identified  
as essential are reported on. It will be published at  
the same time as the Annual Report 2016.  
6
0
Combined  
Management  
Report  
Social dialogue and materiality analysis as a basis  
for sustainability management  
In order to identify important sustainability topics at  
an early stage, the BMW Group also conducts mate-  
riality analyses on a regular basis. Moreover, social  
challenges are continually monitored and analysed  
in order to gauge their significance, from the point  
of view of both external and internal stakeholders.  
The materiality analysis is used to create a materi-  
ality matrix, which is used as a basis to check the  
strategic direction of sustainability management. The  
materiality matrix is described in greater detail in the  
Sustainable Value Report 2016.  
The BMW Group is in continual dialogue with a large  
number of stakeholders, both in Germany and abroad.  
Dialogue helps the Company to recognise global trends  
at an early stage, achieve sustainability objectives  
more effectively and strengthen social commitment.  
In the course of this dialogue, the BMW Group gains  
a clear picture of how current trends are changing the  
business environment and what role the BMW Group  
can play. For example, stakeholder dialogue events  
on the topic of urban mobility were held in Seattle,  
Boston, Madrid, Tokyo and Barcelona during the  
period under report.  
Report on  
Economic Position  
Review of Operations  
Sustainability  
Materiality matrix  
•
37  
Absolutely  
crucial  
High  
materiality  
Vehicle efficiency and CO2 emissions  
Energy use and GHG emissions  
of operations and supply chain  
Air emissions of vehicles  
Alternative drivetrain technologies  
Occupational health and safety  
Product safety  
Connected and autonomous driving  
Environmental and social standards  
in the supply chain / sustainable sourcing  
Mobility concepts  
and services  
Human rights  
Data protection  
Medium  
materiality  
Prevention of corruption and  
anticompetitive behaviour  
Air emissions of operations  
and supply chain  
Attractive workplace, talent attraction and retention  
Diversity and equal opportunity  
Customer satisfaction  
Employee development and training  
Socio-economic impacts in society  
Design for recycling and resource efficiency  
Water consumption  
Waste and water pollution  
Use of urban space  
Responsible marketing and product communication  
Responsible financial services  
Low  
materiality  
Efficient use of materials in operations  
and supply chain  
Employee-management relations  
Involvement with local communities  
Biodiversity  
Political involvement  
Corporate volunteering  
Donations and philanthropy  
Corporate Citizenship  
Less  
important  
Less  
important  
Importance for the BMW Group  
Absolutely  
crucial  
6
1
Top rankings in sustainability ratings  
Clean production  
The BMW Group again achieved top rankings in  
prestigious ratings on the topic of sustainability in  
Integrated sustainability management in production  
processes ensures the efficient use of resources. Since  
2006, the consumption of resources and emissions per  
vehicle produced has been reduced by an average of  
50.0%. The individual figures are as follows:  
2
016, thus maintaining its leading position as a sus-  
tainable automotive manufacturer. In the 2016 rating  
for the Dow Jones Sustainability Indices (DJSI), the  
BMW Group again headed the Automobiles sector  
and is therefore the only carmaker to have been listed  
consecutively since the inception of the index.  
in %  
2016  
Energy consumption  
Water consumption  
Process wastewater  
Non-recyclable waste  
Solvent emissions  
– 35.4 %  
– 31.0 %  
– 48.8 %  
– 81.5 %  
– 54.6 %  
– 48.6 %  
In the Carbon Disclosure Project (CDP), the Group  
achieved the best evaluation for its efforts in the field  
of climate protection. The BMW Group is therefore  
one of only two companies worldwide to have reached  
the highest category seven times in a row. Moreover,  
the BMW Group was again included in the British  
FTSE4Good Index in 2016.  
2
CO emissions  
In 2016, at 2.21 MWh per vehicle produced, the  
amount of energy consumed rose slightly compared  
with the previous year (2015: 2.19 MWh; +0.9%). The  
higher figure is due amongst others to the start-up of  
the new engine plant in Shenyang, China. In addition,  
the construction of a new, more efficient painting line  
in Munich made it necessary to run two painting lines  
in parallel for a certain period.  
Fleet carbon dioxide emissions reduced  
The development of sustainable products and services  
is an integral part of the BMW Group’s business model.  
The fleet-wide deployment of Efficient Dynamics tech-  
nologies is helping to continually reduce CO2 emission  
levels. The electrification of the fleet continued to  
progress in 2016. Due to the expansion of the mod-  
el range, annual sales of electrified BMW vehicles  
increased strongly, surpassing the 62  
,
000-unit mark  
Despite the slight increase in the average amount  
of energy consumed per vehicle, the use of highly  
efficient, ecologically sustainable combined heat and  
power plants and electricity generated from renewable  
sources at production sites enabled the Company to  
in the course of 2016. These measures form the basis  
for complying with the legally stipulated CO2 and fuel  
consumption limits going forward. Between 1995 and  
2
016, the average CO emissions of the three brands  
2
sold by the BMW Group in Europe fell by 41.0%.  
reduce production-related CO emissions per vehicle  
2
by a further 5.3% year-on-year to 0.54 tonnes during  
the period under report (2015: 0.57 tonnes).  
In 2016, the BMW Group’s fleet of new vehicles sold  
in Europe (EU-28) consumed an average of 4.6 litres of  
diesel and 5.6 litres of petrol per 100 km respectively.  
Despite record temperatures and long, hot periods at  
some assembly plants in 2016, at 2.25 m³ per vehicle  
produced, water consumption was in line with the  
previous year (2015: 2.24 m³; +0.4%). At 0.42 m³, the  
volume of process wastewater generated per vehicle  
produced fell by 6.7% (2015: 0.45 m³). The volume of  
non-recyclable production waste was further reduced  
CO emissions averaged 124 grams per km.  
2
to  
report (2015  
cut by % to  
016 (2015: 1.22 kg).  
3
.
51 kg per vehicle produced during the year under  
00 kg; –ꢀ12 %). Solvent emissions were  
14 kg per vehicle produced during  
:
4
.
.3  
6
.
6
1.  
2
6
2
Combined  
Management  
Report  
Although energy and water consumption per vehicle  
produced rose slightly, both the use of resources and  
the production-related emissions fell by an average of  
4.9% in 2016. However, the slight increase in energy  
and water consumption per vehicle produced gave rise  
Social engagement  
In 2016, the BMW Group contributed a total of  
€ꢀ87.8 million for social engagement (2015: €ꢀ39.1 mil-  
lion), including €ꢀ70.4 million for donations (2015:  
€ꢀ17.1 million). The significant increase in the Com-  
pany’s centenary year was mainly due to a donation  
to a BMW foundation.  
Report on  
Economic Position  
Review of Operations  
Sustainability  
to additional costs totalling €ꢀ  
2
.
8
million. The reduction  
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
in resource consumption and production-related emis-  
sions per vehicle produced since 2006 corresponds to  
a cost saving of €ꢀ155.3 million.  
Sustainability along the value chain  
Sustainability criteria also play a key role when select-  
ing and assessing suppliers as well as in the field of  
transport logistics. The BMW Group has therefore  
integrated a comprehensive sustainability manage-  
ment strategy in its purchasing processes. The positive  
business performance in recent years has also caused a  
significant rise in the Group’s transportation require-  
ments worldwide. The principle adhered to by the  
BMW Group that “production follows the market” is  
an effective method of significantly reducing the need  
for transportation, therefore keeping CO emissions  
2
as low as possible.  
Sustainability in human resources policies  
In 2016, the BMW Group continued to consolidate  
its position as one of the most attractive employers  
worldwide. Its leading role in terms of sustainability  
is a key reason for the high degree of employee loyalty  
within the BMW Group and one of the reasons for  
the low staff attrition rate, enabling the BMW Group  
to maintain a low level of personnel recruitment  
expenditure. Further information on the attrition rate  
is provided in the section “Workforce”.  
A key reason for the BMW Group’s long-term suc-  
cess and an example for the high level of employee  
identification with it are the personal engagement  
and the ideas brought forward by staff members,  
demonstrated by the €ꢀ25.1 million saved in 2016 in  
conjunction with the idea management programme  
CREATE.  
6
3
RESULTS OF OPERATIONS,  
FINANCIAL POSITION AND  
NET ASSETS  
Results of operations  
Once again, the BMW Group achieved year-on-year  
growth in revenues, sales volume and profit before  
tax in the financial year 2016. The number of BMW,  
MINI and Rolls-Royce brand cars sold rose by a solid  
5.3% to 2,367,603* units.  
BMW Group Income Statement  
•
38  
in € million  
2016  
2015  
Change in %  
Revenues  
94,163  
– 75,442  
18,721  
92,175  
– 74,043  
18,132  
2.2  
–1.9  
3.2  
Cost of sales  
Gross profit  
Selling and administrative expenses  
Other operating income  
– 9,158  
670  
– 8,633  
914  
– 6.1  
– 26.7  
– 3.3  
Other operating expenses  
– 847  
9,386  
– 820  
9,593  
Profit before financial result  
– 2.2  
Result from equity accounted investments  
Interest and similar income  
Interest and similar expenses  
Other financial result  
441  
196  
518  
185  
–14.9  
5.9  
20.9  
–
– 489  
131  
– 618  
– 454  
– 369  
9,224  
Financial result  
279  
–
Profit before tax  
9,665  
4.8  
Income taxes  
– 2,755  
6,910  
– 2,828  
2.6  
Net profit  
6,396  
8.0  
Profit before tax for the financial year 2016 was slightly  
up year-on-year. At 10.3%, the pre-tax return on sales  
was similar to one year earlier (2015: 10.0%).  
African rand against the euro. Group revenues by  
region were as follows:  
BMW Group revenues increased slightly by  
on-year to reach €ꢀ94 163 million (2015: €ꢀ92  
lion). The primary drivers of this performance were  
the higher volume of BMW MINI and Rolls-Royce  
2
.
,
2
% year-  
BMW Group revenues by region  
,
175 mil-  
• 39  
in %  
2016  
2015  
,
brand vehicles sold and the growth in size of the  
Financial Services segment’s contract portfolio.  
Continued fierce competition and negative currency  
factors held down the scale of revenue growth. The  
negative currency impact on revenues was mainly  
attributable to changes in the average exchange rates  
of the British pound, Chinese renminbi and South  
Europe (including Germany)  
Asia (including China)  
Americas (including USA)  
Other regions  
47.1  
28.8  
20.7  
3.4  
45.6  
27.6  
23.3  
3.5  
Group  
100.0  
100.0  
*
Includes the joint venture BMW Brilliance Automotive, Shenyang Ltd. (2016:  
16,200 units, 2015: 282,000 units).  
3
6
4
Combined  
Management  
Report  
BMW Group cost of sales  
• 40  
Report on  
Economic Position  
in € million  
2016  
2015  
Change in %  
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
Manufacturing costs  
43,175  
20,723  
1,638  
43,685  
19,449  
1,495  
4,271  
1,166  
1,891  
1,771  
2,976  
74,043  
–1.2  
6.6  
Cost of sales relating to financial services business  
thereof interest expense relating to financial services business  
Research and development expenses  
thereof amortisation of capitalised development costs  
Warranty expenses  
9.6  
4,294  
1,222  
0.5  
4.8  
2,165  
2,018  
3,067  
75,442  
14.5  
13.9  
3.1  
Service contracts, telematics and roadside assistance  
Other cost of sales  
Cost of sales  
1.9  
The Group’s cost of sales was slightly higher than in the  
previous year, due to sales volume and portfolio factors.  
Cost of sales relating to financial services business rose  
by €ꢀ1,274 million to €ꢀ20,723 million, reflecting the  
increased portfolio size. Research and development  
expenses were at a similar level to the previous year  
in absolute terms and, with an expense ratio of 4.6%,  
also in relative terms. Total research and development  
expenditure – comprising research costs, non-capital-  
ised development costs and capitalised development  
costs (excluding systematic amortisation thereon),  
amounted to €ꢀ5,164 million in the year under report  
Warranty expenses include the accrued expense for  
vehicle recall actions, the cost of which is expected to  
exceed amounts previously recognised. Accordingly,  
a further amount of €ꢀ678 million was allocated to the  
warranty provision for various issues, including airbags  
supplied by the Takata group of companies, the ISOFIX  
attachment system used for child car seats, and costs  
relating to the provision of the network service for  
telematics (2G). Expenses relating to telematics and  
roadside assistance have increased, primarily due to  
the greater volume of service contracts and Connected  
Drive products.  
(2015: €ꢀ5,169 million). As a result of the continuous  
expansion and revision of the BMW Group’s various  
model series, research and development expenditure  
remains at a generally constant level. These factors  
resulted in a research and development expenditure  
ratio of 5.5% (2015: 5.6%) and a capitalisation ratio of  
Gross profit came in slightly higher (+ 3.2 %) at  
€ꢀ18,721 million, reflecting sales volume growth in the  
Automotive segment and increased business volumes  
in the Financial Services segment. The gross profit  
margin was 19.9% (2015: 19.7%).  
40.5% (2015: 39.9%).  
6
5
Sales and administrative expenses rose by €ꢀ525 million  
year-on-year to €ꢀ 158 million, resulting in an expense  
ratio of 9.7% (2015: 9.4%). The increase was due to a  
number of factors, including the larger workforce and  
higher expenses for IT projects.  
The result on investments for the year under report  
includes impairment losses on other investments  
totalling €ꢀ192 million (2015: €ꢀ25 million).  
9
,
Profit before tax increased to €ꢀ  
224 million), helped by a number of factors, includ-  
ing higher volumes and the improved financial result.  
9,665 million (2015:  
€ꢀ9,  
Depreciation and amortisation on property, plant  
and equipment and intangible assets recorded in cost  
of sales and in selling and administrative expenses  
Income tax expense amounted to €ꢀ2,755 million (2015:  
€ꢀ 828 million), corresponding to an effective tax rate  
of 28 % (2015 30 %). The lower income tax expense  
totalled €ꢀ4,806 million (2015: €ꢀ4,659 million). The slight  
2,  
increase compared to the previous year was mainly  
attributable to investments and capitalised develop-  
ment costs recorded in previous accounting periods.  
.
5
:
.7  
was partly attributable to transfer pricing and the  
revaluation of tax-related items.  
The net amount of other operating income and  
expenses deteriorated from a net positive amount  
of €ꢀ94 million to a negative amount of €ꢀ177 million,  
mainly due to lower gains on the disposal of assets and  
higher expenses for provisions. A donation to a BMW  
foundation also increased other operating expenses.  
The post-tax return on sales was 7.3% (2015: 6.9%).  
Profit before financial result (EBIT) amounted  
to €ꢀ9,386 million in the year under report (2015:  
€ꢀ9,593 million), slightly down on the previous year,  
with the positive effect of greater volumes offset by  
higher expenses and lower other operating income.  
The financial result was a net positive amount of  
€ꢀ279 million, an improvement of €ꢀ648 million com-  
pared to the previous year, mainly thanks to net gains  
on commodity derivatives on the one hand and lower  
losses on currency derivatives on the other. Interest  
and similar expenses improved by €ꢀ129 million to  
a net negative amount of €ꢀ489 million year-on-year,  
mainly reflecting lower interest expense on pension  
obligations and lower other refinancing costs. The  
result from equity accounted investments includes the  
Group’s share of the results of the joint ventures BMW  
Brilliance Automotive Ltd. and the two DriveNow enti-  
ties, DriveNow GmbH & Co. KG and DriveNow Ver-  
waltungs GmbH. The figure also includes the Group’s  
share of the result of the associated company THERE  
Holding B.ꢀV. Compared to the previous year, the result  
from equity accounted investments fell by €ꢀ77 mil-  
lion to €ꢀ441 million. This deterioration was primarily  
attributable to the inclusion of THERE Holding B.ꢀV.,  
with a negative impact of €ꢀ56 million, largely reflecting  
scheduled depreciation and amortisation on purchase  
price allocations on the one hand and transaction costs  
on the other. At €ꢀ507 million, the contribution made  
by BMW Brilliance Automotive Ltd. was slightly down  
on the previous year (2015: €ꢀ522 million), partly due  
to currency factors, including the fact that costs were  
incurred for model revisions of vehicles already adapt-  
ed for the local market (BMW X1 and BMW 5 Series) as  
well as for the localisation of further products.  
6
6
Combined  
Management  
Report  
Results of operations by segment  
Revenues by segment  
• 41  
Report on  
Economic Position  
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
Currency adjusted  
change* in %  
in € million  
2016  
2015  
Change in %  
Automotive  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
Group  
86,424  
2,069  
85,536  
1,990  
1.0  
4.0  
3.1  
5.6  
25,681  
6
23,739  
7
8.2  
9.9  
–14.3  
– 4.8  
2.2  
–14.3  
–
– 20,017  
94,163  
–19,097  
92,175  
4.3  
*
The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year’s figures.  
Profit / loss before tax by segment  
•
42  
in € million  
2016  
2015  
Change in %  
Automotive  
Motorcycles  
Financial Services  
Other Entities  
Eliminations  
Group  
7,916  
185  
7,523  
179  
5.2  
3.4  
2,166  
170  
1,975  
211  
9.7  
–19.4  
–16.3  
4.8  
– 772  
9,665  
– 664  
9,224  
Automotive segment  
Due to the various factors described above, at  
€ꢀ 695 million (2015: €ꢀ 836 million), profit before  
Automotive segment revenues grew slightly on the  
back of higher sales volumes, with currency factors  
holding revenue growth down. The gross profit mar-  
7
,
7,  
financial result was slightly down on the previous  
year. The EBIT margin came in at 8.9% (2015: 9.2%).  
The main factors for the decrease were tougher com-  
petition and increased costs, partially countered by  
the positive impact of sales volume growth.  
gin increased slightly to 17.9% year-on-year (2015:  
7.7%).  
1
At €ꢀ7,604 million, selling and administrative expens-  
es were €ꢀ385 million higher than the previous year.  
Administrative expenses increased due to a number  
of factors, including the larger workforce, a new  
allocation of expenses relating to internal activities,  
and higher expenses for IT projects. Overall, as a  
percentage of revenues, the expense ratio was 8.8%  
Overall, the Automotive segment reported a solid  
increase in pre-tax profit. This outcome was largely  
due to the improved financial result, which benefited  
from net gains on commodity derivatives, reduced  
refinancing costs and lower interest expense on pen-  
sion obligations.  
(
2015: 8.4%).  
The net negative amount of other operating income  
and expenses deteriorated by €ꢀ70 million to €ꢀ152 mil-  
lion, mainly due to lower gains on the disposal of  
assets and higher expenses for provisions. A donation  
to a BMW foundation also increased other operating  
expenses.  
6
7
Motorcycles segment  
Financial position  
Motorcycles segment revenues increased slightly  
compared to the previous year. The gross profit  
margin dropped from 22.5% to 20.8%, mainly due  
to higher expenses incurred in conjunction with the  
implementation of the segment’s new strategy and the  
expansion of its model range. The increased workforce  
size is reflected in higher selling and administrative  
expenses. As a result of income from the reversal of  
write-downs, the Motorcycles segment recorded a  
slightly higher profit before tax than one year earlier.  
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 2016 and 2015, classified into cash  
flows from operating, investing and financing activities.  
Cash and cash equivalents in the cash flow statements  
correspond to the amounts disclosed in the balance  
sheet.  
Cash flows from operating activities are determined  
indirectly, starting with Group and segment net profit.  
By contrast, cash flows from investing and financing  
activities are based on actual payments and receipts.  
Financial Services segment  
The Financial Services segment revenues showed  
a solid growth on the back of a dynamic operating  
performance, clearly reflected in the upward trend  
of its contract portfolio.  
BMW Group financial position  
• 43  
Selling and administrative expenses in the segment  
went up by €ꢀ130 million to €ꢀ1,294 million, mainly  
due to the increased size of the workforce and greater  
expense for new IT projects.  
in € million  
2016  
2015  
Change  
Cash inflow from operating  
activities  
3,173  
– 5,863  
4,393  
55  
960  
– 7,603  
5,004  
73  
2,213  
1,740  
– 611  
–18  
Higher business volumes and a slightly improved  
credit risk situation contributed to the solid increase  
in the Financial Services segment’s profit before tax.  
Cash outflow from invest-  
ing activities  
Cash inflow from financing  
activities  
Other Entities segmentꢀ/ꢀEliminations  
Effects of exchange rate  
and composition of Group  
Profit before tax in the Other Entities segment was sig-  
nificantly lower than one year earlier. The net positive  
result from other operating income and expenses fell  
from €ꢀ192 million to €ꢀ7 million year-on-year, mainly  
due to lower income from the reversal of provisions  
in 2016. The decrease was cushioned by the improve-  
ment in the net interest result, which was due to lower  
refinancing costs.  
Change in cash and cash  
equivalents  
1,758  
–1,566  
3,324  
The increase in cash flows from the Group’s operating  
activities was primarily attributable to the higher net  
profit for the year (€ꢀ514 million), higher depreciation  
and amortisation (€ꢀ312 million), provisions (€ꢀ587 mil-  
lion) and the change in other operating assets and  
liabilities (€ꢀ679 million).  
Inter-segment eliminations reduced Group profit  
before tax, partly reflecting higher eliminations trig-  
gered by the growth in new leasing business and the  
ensuing increase in leased products.  
The decrease in cash outflows from the Group’s  
investing activities primarily reflects lower net  
investments in marketable securities and investment  
funds in connection with the Group’s liquidity reserve  
(
€ꢀ1,369 million). The net outflow for these items  
comprises investments in marketable securities and  
investment funds on the one hand, and proceeds from  
the sale of marketable securities and investment funds  
on the other.  
6
8
Combined  
Management  
Report  
The Group’s financing activities resulted in inflows  
and outflows in conjunction with bonds amounting  
to €ꢀ967 million and €ꢀ1,466 million respectively.  
After adjustment for the effects of exchange rate  
fluctuations and changes in the composition of the  
BMW Group totalling a positive amount of €ꢀ55 million  
Report on  
Economic Position  
(2015: €ꢀ73 million), the various cash flows resulted in  
an increase in cash and cash equivalents of €ꢀ1,758 mil-  
lion (2015: decrease of €ꢀ1,566 million).  
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
The cash outflow from investing activities exceeded the  
cash inflow from operating activities by €ꢀ2,690 million  
in the financial year 2016. A similar constellation arose  
in the previous year, when the shortfall amounted to  
€
ꢀ6,643 million.  
BMW Group Change in cash and cash equivalents  
•
44  
in € million  
12,000  
8,000  
4,000  
0
12,000  
+
3,173  
+
4,393  
+ 55  
7,880  
8,000  
4,000  
0
6
,122  
–
5,863  
Cash and  
cash  
equivalents  
Cash inflow  
from  
operating  
activities  
Cash outflow  
from  
investing  
activities  
Cash inflow  
from  
financing  
activities  
Currency  
translation,  
changes in  
Cash and  
cash  
equivalents  
31.12. 2016  
3
1.12. 2015  
Group composition  
Free cash flow for the Automotive segment was as  
follows:  
in € million  
2016  
2015  
Change  
Cash inflow from operating activities  
11,464  
– 5,432  
– 240  
11,836  
– 372  
2,092  
–1,332  
388  
Cash outflow from investing activities  
– 7,524  
1,092  
Net investment in marketable securities and investment funds  
Free cash flow Automotive segment  
5,792  
5,404  
6
9
Cash outflows from operating activities in the Finan-  
cial Services segment are driven primarily by cash  
flows relating to leased products and receivables from  
sales financing and totalled €ꢀ9,844 million (2015:  
Refinancing  
A broadly based range of instruments transacted on  
international money and capital markets is used to  
refinance worldwide operations. Close to all of the  
funds raised are used to finance the BMW Group’s  
Financial Services business.  
€
ꢀ10,351 million). The cash outflow from investing  
activities totalled €ꢀ102 million (2015: €ꢀ140 million).  
Cash inflows from financing activities went up by  
€
ꢀ1,573 million to €ꢀ11,601 million, mainly influenced  
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:  
by the change in other financial liabilities.  
Net financial assets of the Automotive segment com-  
prise the following:  
1. The ability to act at all times by assuring perma-  
nent access to strategically important capital mar-  
kets  
in € million  
2016  
2015  
Change  
2
. Autonomy through the diversification of refi-  
nancing instruments and investors  
Cash and cash equivalents  
4,794  
4,147  
3,952  
4,326  
842  
Marketable securities and  
investment funds  
–179  
3
. Focus on value by optimising financing costs  
Intragroup net financial  
assets  
12,077  
21,018  
11,278  
799  
Financing measures undertaken centrally ensure  
access to liquidity for the Group’s operating subsidiar-  
ies at market-based, consistent conditions. Funds are  
acquired with a view to achieving a desired structure  
for the composition of liabilities, comprising a finely  
tuned mix of financing instruments. The use of longer-  
term financing instruments to finance the Group’s  
financial services business and the maintenance of  
a sufficiently high liquidity reserve serves to avoid  
the liquidity risk intrinsic to any large portfolio of  
contracts. This prudent approach to financing also  
bolsters BMWAG’s ratings. Further information is  
provided in the section “Liquidity risks” within the  
Financial assets  
19,556  
1,462  
Less: external financial  
liabilities*  
–1,498  
19,520  
– 2,645  
1,147  
Net financial assets  
Automotive segment  
16,911  
2,609  
*
Excluding derivative financial instruments.  
“
Report on Outlook, Risks and Opportunities”.  
Apart from issuing commercial paper on the money  
market, the BMW Group’s financing companies also  
issue bearer bonds. In addition, retail customer and  
dealer financing receivables on the one hand and leas-  
ing rights and obligations on the other are securitised  
in the form of asset-backed securities (ABS) financing  
arrangements. Financing instruments employed by  
the Group’s in-house banks in Germany and the USA  
(
e.ꢀg. customer deposits) are also used as a supplemen-  
tary source of financing. Loans are also taken out with  
international banks.  
7
0
Combined  
Management  
Report  
Thanks to its excellent ratings and the high level  
of acceptance it receives on capital markets, the  
BMW Group was again able to refinance operations  
In the course of 2016, the BMW Group issued four euro  
benchmark bonds on the European capital market  
with a total issue volume of €ꢀ2.75 billion. For the first  
time, it also issued bonds on the US capital market  
with a total issue volume of US Dollar 6.25 billion.  
Bonds were also issued in British pounds, Chinese  
renminbi, Canadian and Australian dollars and Nor-  
wegian krone for a total amount €ꢀ1.9 billion. Private  
placements totalling €ꢀ4.3 billion were also issued.  
Report on  
Economic Position  
on debt capital markets during the financial year 2016  
In addition to the issue of bonds and loan notes and  
private placements, commercial paper was also issued.  
Additional funds were raised via new securitised  
instruments and the prolongation of existing instru-  
ments. As in previous years, all issues were highly  
sought after by private and institutional investors alike.  
.
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
Twelve public ABS transactions were executed in 2016  
,
including three in the USA, two each in Germany,  
South Africa and China, and one each in Canada,  
South Korea and France, with a total volume equiv-  
BMW Group financial liabilities  
•
45  
alent to €ꢀ7.3 billion. Further funds were also raised  
via new ABS conduit transactions in Japan and the  
USA totalling €ꢀ billion. Other existing transactions  
remained in place in various countries, including  
Germany, Switzerland, the UK, South Korea, South  
Africa and Australia.  
in € million  
1.4  
Derivate instruments 3,331  
Commercial paper 3,852  
Other 1,249  
Liabilities  
from customer  
deposits (banking)  
Bonds  
44,421  
* Measured at ex- The following table provides an overview of amounts*  
13,512  
change rates at  
utilised at 31 December 2016 in connection with the  
3
1.12.2016.  
BMW Group’s money and capital market programmes:  
Liabilities to banks  
Asset-backed  
financing  
transactions  
14,892  
Programme  
framework  
Amount  
utilised  
Programme  
16,474  
in € billion  
Euro Medium Term Notes  
Australian Medium Term Notes  
Commercial Paper  
50.0  
1.7  
34.4  
0.3  
13.8  
3.9  
BMW Group financial liabilities  
•
46  
in € million  
At 31 December 2016, liquid funds stood at a solid  
level of €ꢀ13 billion. The BMW Group also has access  
.
2
to a syndicated credit line of €ꢀ6 billion, with a term  
up to October 2018. This credit line, provided by a  
consortium of 38 international banks, was not being  
utilised at the end of the reporting period.  
5
2
0
0,000  
5,000  
4
2,326  
4,144  
4
Further information with respect to financial liabili-  
see ties is provided in notes 29, 33 and 37 to the Group  
11,261  
notes 29, 33  
and 37  
Financial Statements.  
Maturity (years)  
within between  
1–5  
later  
than 5  
1
7
1
Net assets  
BMW Group condensed balance sheet at 31 December  
•
47  
Group  
Proportion of  
balance sheet  
total in %  
Currency adjusted  
change in %  
in € million  
2016  
2015  
Change in %  
Assets  
Intangible assets  
8,157  
17,960  
37,789  
2,546  
7,372  
17,759  
34,965  
2,233  
10.6  
1.1  
11.4  
1.1  
4.3  
9.5  
Property, plant and equipment  
Leased products  
8.1  
7.3  
20.0  
1.4  
Investments accounted for using the equity method  
Other investments  
14.0  
30.8  
11.7  
10.5  
–1.4  
7.0  
14.0  
30.5  
12.3  
9.9  
560  
428  
0.3  
Receivables from sales financing  
Financial assets  
78,260  
9,770  
70,043  
8,843  
41.5  
5.2  
Deferred and current tax  
Inventories  
4,265  
4,326  
– 3.2  
7.0  
2.3  
11,841  
2,825  
11,071  
2,751  
6.3  
Trade receivables  
2.7  
5.4  
1.5  
Other assets  
6,682  
6,261  
6.7  
6.2  
3.5  
Cash and cash equivalents  
Total assets  
7,880  
6,122  
28.7  
9.5  
27.6  
9.5  
4.2  
188,535  
172,174  
100.0  
equity And liABilities  
Equity  
47,363  
4,587  
42,764  
3,000  
10.8  
52.9  
13.4  
8.8  
13.6  
60.9  
13.0  
3.9  
25.1  
2.4  
Pension provisions  
Other provisions  
10,918  
3,869  
9,630  
5.8  
Deferred and current tax  
Financial liabilities  
Trade payables  
3,557  
2.1  
97,731  
8,512  
91,683  
7,773  
6.6  
5.5  
51.8  
4.5  
9.5  
10.5  
12.1  
9.5  
Other liabilities  
15,555  
188,535  
13,767  
172,174  
13.0  
9.5  
8.3  
Total equity and liabilities  
100.0  
The balance sheet total of the BMW Group increased  
by a solid 9.5% compared to 31 December 2015. The  
changes in individual balance sheet items caused by  
currency factors relate primarily to changes in the  
exchange rates of the US dollar, British pound, South  
African rand and Chinese renminbi against the euro.  
Inventories went up by a solid 7.0% compared to the  
end of 2015, with most of the increase relating to fin-  
ished goods, reflecting general business growth and  
stocking up in the various markets.  
Cash and cash equivalents went up by €ꢀ1,758 million,  
thus ensuring a solid level of liquid funds at 31 Decem-  
ber 2016.  
The growth in business reported by the Financial Ser-  
vices segment is reflected in the significant increase  
in receivables from sales financing and a solid rise in  
the volume of leased products. A total of 1,811,157 new  
contracts were concluded with retail customers (leasing  
and credit financing) in 2016 % more than one year  
, 9.4  
earlier. The credit financing contract portfolio grew  
by 9.5% to 3,022,904 contracts, with growth reported  
primarily in China and the USA. The lease contract  
portfolio increased by 7.3% to stand at 1,680,513 con-  
tracts at 31 December 2016.  
7
2
Combined  
Management  
Report  
Balance sheet structure – Group  
• 48  
Report on  
Economic Position  
Total equity and liabilities in € billion  
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
200  
133  
66  
0
189  
189  
200  
133  
66  
172  
172  
2
3
5 %  
9 %  
2
3
5 % Equity  
Non-current assets 65 %  
6
3
4 %  
6 %  
7 % Non-current provisions and liabilities  
Current assets 35 %  
36 %  
38 % Current provisions and liabilities  
thereof cash and cash equivalents 4 %  
4 %  
0
2
016  
2015  
2016  
2015  
Balance sheet structure – Automotive segment  
•
49  
Total equity and liabilities in € billion  
1
6
3
0
00  
100  
66  
33  
0
8
9
89  
8
3
83  
41 %  
19 %  
40 %  
Non-current assets 48 %  
6
40 % Equity  
4
5
8 %  
17 % Non-current provisions and liabilities  
3
Current assets 52 %  
2 %  
5 %  
43 % Current provisions and liabilities  
thereof cash and cash equivalents 5 %  
2
016  
2015  
2016  
2015  
7
3
Group equity rose by €ꢀ  
Equity increased year-on-year as a result of the net prof-  
it attributable to shareholders of BMWAG amounting  
4
,
599 million to €ꢀ47  
,
363 million.  
The sharp rise in other liabilities reflects the increased  
scale of service contracts and Connected Drive prod-  
ucts, advance payments received from leasing custom-  
ers, and the expected higher level of payments due to  
dealerships and importers for bonuses, rebates and  
other price deductions.  
to €ꢀ6,863 million and fair value gains on derivative  
financial instruments amounting to €ꢀ2,008 million.  
Decreases in equity arose in particular in connection  
with the dividend payment of €ꢀ2,102 million and  
the negative impact of remeasurements of the net  
defined benefit liability for pension plans amounting to  
The increase in trade payables mainly reflects higher  
production volumes.  
€ꢀ1,858 million, the latter due mainly to lower discount  
rates applied in Germany and the UK.  
Overall, the results of operations, financial position  
and net assets position of the BMW Group continued  
to develop positively during the year under report.  
The Group equity ratio at the end of the reporting  
period was 25  
equity ratio for the Automotive segment was 41.3%  
31 December 2015: 40.1%) and that for the Financial  
Services segment stood at % (31 December 2015  
.2%).  
.1% (31 December 2015: 24.8%). The  
(
8
.
0
:
8
Pension provisions increased significantly compared  
to the end of the financial year 2015, mainly due to the  
lower discount factors applied in Germany and the UK  
.
Other provisions also increased significantly compared  
to 31 December 2015, mostly reflecting the higher level  
of warranty provisions for vehicle recall actions, the  
cost of which is expected to exceed amounts previously  
recognised. Accordingly, a further amount of €ꢀ678 mil-  
lion was allocated to the warranty provision for various  
issues, including airbags supplied by the Takata group  
of companies, the ISOFIX attachment system used for  
child car seats, and costs relating to the provision of  
the network service for telematics (2G).  
The year-on-year increase in financial liabilities was  
primarily attributable to the issue of bonds and higher  
liabilities to banks, in both cases securing favourable  
refinancing conditions on a long-term basis. In addition,  
new ABS transactions were concluded including the  
USA and Germany. Lower commercial paper volumes  
and the more favourable development of derivatives  
kept the increase in financial liabilities down.  
7
4
Combined  
Management  
Report  
Value added statement  
applied to employees. The remaining portion will be  
retained in the Group to finance future operations. It  
should be noted that the gross value added amount  
treats depreciation as a component of value added  
which, in the allocation statement, is treated as inter-  
nal financing.  
The value added statement shows the value of work  
performed, less the value of work bought in by the  
BMW Group during the financial year. Depreciation  
and amortisation, cost of materials, and other expens-  
es are treated as bought-in costs in the net value added  
calculation. The allocation statement applies value  
added to each of the participants involved in the value  
added process. The bulk of the net value added is  
Report on  
Economic Position  
Results of Opera-  
tions, Financial Posi-  
tion and Net Assets  
Net valued added by the BMW Group in the financial  
year 2016 remained at a high level.  
BMW Group value added statement  
•
50  
2
016  
2016  
in %  
2015  
in € million  
2015  
in %  
in € million  
Change in %  
Work perForMed  
Revenues  
94,163  
875  
98.4  
0.9  
92,175  
200  
98.8  
0.2  
Financial income  
Other income  
670  
0.7  
914  
1.0  
Total output  
95,708  
100.0  
93,289  
100.0  
2.6  
Cost of materials*  
Other expenses  
Bought-in costs  
50,279  
13,502  
63,781  
52.5  
14.1  
66.6  
51,145  
11,398  
62,543  
54.8  
12.2  
67.0  
2.0  
3.8  
Gross value added  
31,927  
33.4  
30,746  
33.0  
Depreciation and amortisation of total tangible,  
intangible and investment assets  
8,304  
8.7  
8,222  
8.8  
Net value added  
23,623  
24.7  
22,524  
24.2  
4.9  
Applied to  
Employees  
11,535  
1,965  
3,213  
2,300  
4,563  
47  
48.8  
8.3  
10,870  
1,918  
3,340  
2,102  
4,267  
27  
48.3  
8.5  
6.1  
2.5  
Providers of finance  
Government / public sector  
Shareholders  
13.7  
9.7  
14.8  
9.3  
– 3.8  
9.4  
Group  
19.3  
0.2  
19.0  
0.1  
6.9  
Minority interest  
Net value added  
74.1  
4.9  
23,623  
100.0  
22,524  
100.0  
*
Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).  
7
5
BMW Group value added 2016  
•
51  
in %  
Depreciation and  
amortisation 8.7  
14.1 Other expenses  
4
8.8 % Employees  
2
4.7 Net value added  
8.3 % Providers of finance  
13.7 % Government / public sector  
9
.7 % Shareholders  
1
9.3 % Group  
Cost of materials 52.5  
0
.2 % Minority interest  
7
6
Combined  
Management  
Report  
COMMENTS ON FINANCIAL  
STATEMENTS OF BMW AG  
Business environment and review of operations  
The general and sector-specific environment in  
which BMWAG operates is the same as that for the  
BMW Group and is described in the “Report on Eco-  
nomic Position” section of the Combined Management  
Report.  
Report on  
Economic Position  
Comments on  
Financial Statements  
of BMW AG  
Bayerische Motoren Werke Aktiengesellschaft  
BMWAG develops, manufactures and sells cars and  
motorcycles as well as spare parts and accessories  
manufactured in-house, by foreign subsidiaries and  
by external suppliers, and performs services related to  
these products. Sales activities are carried out primarily  
through branches, subsidiaries, independent dealer-  
ships and importers. In 2016, BMWAG increased auto-  
mobile sales volume by 80,359 units to 2,355,726 units.  
This figure includes 305,726 units relating to series sets  
supplied to the joint venture BMW Brilliance Automo-  
tive Ltd., Shenyang, an increase of 17,971 units over  
the previous year. At 31 December 2016, BMWAG  
employed a workforce of 85,754 people, 894 more than  
one year earlier.  
(
BMWAG), based in Munich, Germany, is the parent  
company of the BMW Group. The comments on the  
BMW Group and Automotive segment provided in  
earlier sections are also relevant for BMWAG, unless  
presented differently in the following section. The  
Financial Statements of BMWAG are drawn up in  
accordance with the provisions of the German Com-  
mercial Code (HGB) and the relevant supplementary  
provisions contained in the German Stock Corpora-  
tion Act (AktG).  
The key financial and non-financial performance  
indicators relevant for BMWAG are largely identical  
and synchronous with those of the Automotive seg-  
ment of the BMW Group and are described in detail  
in the “Report on Economic Position” section of the  
Combined Management Report.  
Differences between the accounting policies used  
in the BMWAG financial statements (prepared in  
accordance with HGB) and the BMW Group Finan-  
cial Statements (prepared in accordance with IFRS  
)
arise primarily in connection with the capitalisation  
of intangible assets, the creation of valuation units,  
the recognition and measurement of financial instru-  
ments and provisions and the recognition of deferred  
tax assets. Differences also arise in the presentation  
of assets and liabilities in the balance sheet and of  
income and expense items in the income statement.  
The German Accounting Directive Implementation Act  
(
BilRUG) was applied for the first time with effect from  
the beginning of the 2016 financial year. Comparative  
figures have not been restated where this gave rise to  
changes in the presentation of items in the balance  
sheet or income statement. Further information  
regarding the impact of BilRUG and the comparabil-  
ity of individual income statement line items for the  
financial year 2016 with those of the previous year  
is provided in the notes to the Financial Statements  
of BMWAG.  
7
7
Results of operations  
BMW AG Income Statement  
•
52  
in € million  
2016*  
2015  
Revenues  
75,350  
– 60,946  
14,404  
72,384  
– 57,764  
14,620  
Cost of sales  
Gross profit  
Selling expenses  
– 3,635  
– 2,504  
– 4,504  
–137  
– 3,427  
– 2,610  
– 4,758  
184  
Administrative expenses  
Research and development expenses  
Other operating income and expenses  
Result on investments  
Financial result  
1,015  
– 35  
1,606  
–1,043  
–1,782  
2,790  
Income taxes  
–1,308  
3,296  
Profit after income tax  
Other taxes  
–19  
– 49  
Net profit  
3,277  
2,741  
Transfer to revenue reserves  
– 977  
2,300  
– 639  
Unappropriated profit available for distribution  
2,102  
*
German Accounting Directive Implementation Act (BilRUG) applied with effect from the beginning of the financial year 2016. Comparative figures for 2015 have not been adjusted.  
7
8
Combined  
Management  
Report  
As a consequence of the first-time application of the  
Financial Reporting Implementation Act (BilRUG) in  
The result on investments was down on the previous  
year due to lower profit transfers from Group com-  
panies. By contrast, the financial result improved by  
2
016, the previous year’s figures are only comparable  
Report on  
Economic Position  
to a limited extent with those of the financial year  
under report. In particular, the amounts reported for  
revenues, cost of sales, expenses by function, other  
operating income and expenses are affected by the  
new, extended definition of “revenues” and the nec-  
essary reclassification of expenses related to revenues.  
€ꢀ1,008 million, mainly due to the higher gains arising  
Comments on  
Financial Statements  
of BMW AG  
on the fair value measurement of designated plan  
assets and lower interest expenses for pensions. In  
the latter case, the improvement was attributable to  
a change in legislation concerning the methodology  
required to be applied to determine the discount factor  
for pension provisions.  
Revenues increased by 4.1% year-on-year, mainly  
reflecting higher sales volumes of the BMW X1 and  
BMW 7 Series. In geographical terms, most of the  
increase related to Asia and Europe. Sales to Group  
The expense for income taxes relates primarily to  
current tax for the financial year 2016.  
entities accounted for €ꢀ56  
,
412 million or 74  
.
9
% of  
After deducting the expense for taxes, the Company  
total revenues of €ꢀ75,350 million.  
reports a net profit of €ꢀ3,277 million, compared to  
ꢀ2,741 million in the previous year.  
€
Cost of sales increased by  
5.5% to €ꢀ60,946 million,  
mostly due to the higher cost of materials. As a result,  
gross profit decreased by €ꢀ216 million to €ꢀ14,404 mil-  
lion.  
Selling and administrative expenses increased overall  
year-on-year, partly reflecting the cost of the larger  
workforce and IT projects.  
Research and development expenses related mainly  
to new vehicle models (including relevant expenses  
relating to the start-up of the new BMW 5 Series),  
the development of drive systems and work on other  
innovations. Compared to the previous year, research  
and development expenses decreased by 5.3%.  
The net amount of other operating income and expens  
-
es deteriorated by €ꢀ321 million to a negative amount  
of €ꢀ137 million, whereby the year-on-year decrease  
mainly reflected the reclassification of income from  
other services to the line item “Revenues” in conjunc  
tion with the first-time application of BilRUG. Higher  
income from the reversal of provisions and the lower  
expense for allocations to provisions, in particular  
for commodity and currency contract risks, worked  
in the opposite direction.  
-
7
9
Financial and net assets position  
BMW AG Balance Sheet at 31 December  
•
53  
in € million  
2016*  
2015  
Assets  
Intangible assets  
310  
11,163  
3,238  
353  
11,016  
3,250  
Property, plant and equipment  
Investments  
Tangible, intangible and investment assets  
14,711  
14,619  
Inventories  
4,260  
667  
4,267  
628  
Trade receivables  
Receivables from subsidiaries  
Other receivables and other assets  
Marketable securities  
Cash and cash equivalents  
Current assets  
6,001  
2,525  
3,846  
2,676  
19,975  
6,229  
1,820  
3,911  
2,478  
19,333  
Prepayments  
430  
1,183  
303  
722  
Surplus of pension and similar plan assets over liabilities  
Total assets  
36,299  
34,977  
equity And liABilities  
Subscribed capital  
657  
2,127  
9,038  
2,300  
14,122  
657  
2,107  
Capital reserves  
Revenue reserves  
8,061  
Unappropriated profit available for distribution  
Equity  
2,102  
12,927  
Registered profit-sharing certificates  
30  
30  
Pension provisions  
Other provisions  
Provisions  
93  
7,606  
7,699  
82  
7,617  
7,699  
Liabilities to banks  
Trade payables  
995  
5,030  
5,951  
406  
1,343  
4,500  
6,690  
239  
Liabilities to subsidiaries  
Other liabilities  
Liabilities  
12,382  
12,772  
Deferred income  
2,066  
1,549  
Total equity and liabilities  
36,299  
34,977  
*
German Accounting Directive Implementation Act (BilRUG) applied with effect from the beginning of the financial year 2016. Comparative figures for 2015 have not been adjusted.  
8
0
Combined  
Management  
Report  
Capital expenditure on intangible assets and prop-  
erty, plant and equipment in the year under report  
totalled €ꢀ2,346 million (2015: €ꢀ2,748 million), down  
by 14.6% compared to the previous year. Depreciation  
and amortisation amounted to €ꢀ2,233 million (2015:  
€ꢀ2,072 million).  
In order to secure obligations resulting from pre-re-  
tirement part-time work arrangements and pension  
obligations, investments in fund assets totalling  
€ꢀ490 million were transferred to BMW Trust e.ꢀV.,  
Munich, in conjunction with a Contractual Trust  
Arrangement (CTA). Fund assets are offset against the  
related guaranteed obligations. The resulting surplus  
of assets over liabilities is reported in the BMWAG  
balance sheet on the line “Surplus of pension and  
similar plan assets over liabilities”.  
Report on  
Economic Position  
Comments on  
Financial Statements  
of BMW AG  
At €ꢀ3,238 million, the carrying amount of investments  
was similar to one year earlier (2015: €ꢀ3,250 mil-  
lion). Further shares in SGL Carbon SE, Wiesbaden,  
were purchased during the financial year 2016. An  
impairment loss of €ꢀ64 million (2015: €ꢀ13 million)  
was recognised in the year under report, reflecting  
the decreased fair value in the investment in SGL  
Carbon SE at 31 December 2016.  
Under the motto “THE NEXT 100 YEARS”, almost all  
of the workforce received a special bonus in conjunc-  
tion with the BMWAG’s centenary anniversary. For  
the most part, the bonus was paid in the form of a  
starting contribution to a new defined contribution  
component of the BMW pension plan. In future, 10%  
of the annual profit share payable by BMWAG will  
be paid into the plan, for which a minimum rate of  
return is guaranteed.  
At €ꢀ  
4
,
260 million, inventories were practically identical  
267 million).  
to the end of the previous year (2015: €ꢀ  
4
,
Receivables from subsidiaries, most of which relate  
to intragroup financing receivables, decreased slightly  
by €ꢀ228 million to €ꢀ6,001 million.  
Pension provisions, net of designated plan assets,  
increased from €ꢀ82 million to €ꢀ93 million.  
The increase in other receivables and other assets  
to €ꢀ  
2
,
525 million (2015: €ꢀ  
1
,
820 million) was mainly  
Other provisions were at a similar level to the previous  
year and comprise mainly obligations for person-  
nel-related expenses, warranties, selling activities,  
litigation and liability risks as well as risks relating  
to commodity and currency contracts.  
attributable to higher receivables from companies with  
which an investment relationship exists. Tax receiv-  
ables and genuine repurchase (repo) transactions in  
place at the end of the reporting period also increased  
year-on-year.  
Liabilities to banks decreased as a result of the repay-  
ment of project-related loans.  
Liquidity within the BMW Group is managed centrally  
by BMWAG on the basis of a group-wide liquidity  
concept, which revolves around the strategy of con-  
centrating a significant part of the Group’s liquidity  
at the level of BMWAG. An important instrument  
used to achieve this aim is the cash pool headed by  
BMWAG. The liquidity position reported by BMWAG  
therefore reflects the global activities of BMWAG and  
other Group companies.  
Deferred income went up by €ꢀ517 million to  
€ꢀ2,066 million and comprised mainly amounts relat-  
ing to services still to be performed for service and  
maintenance contracts.  
Cash and cash equivalents went up by €ꢀ198 million  
to €ꢀ2,676 million. At the same time, intragroup refi-  
nancing volumes at the level of BMWAG were reduced.  
Equity rose by €ꢀ1,195 million to €ꢀ14,122 million, tak-  
ing the equity ratio from 37.0% to 38.9%.  
8
1
Risks and opportunities  
BMWAG’s performance is highly dependent on the  
same set of risks and opportunities that affect the  
BMW Group and which are described in detail in the  
“
Report on Outlook, Risks and Opportunities” section  
of the Combined Management Report. As a general  
rule, BMWAG participates in the risks entered into by  
Group entities on the basis of the relevant shareholding  
percentage.  
BMWAG is integrated in the group-wide risk man-  
agement system and internal control system of the  
BMW Group. Further information is provided in the  
“
Internal Control System and Risk Management System  
Relevant for the Financial Reporting Process” section  
of the Combined Management Report.  
Outlook  
Due to its dominant role in the Group and its close ties  
with Group entities, expectations for 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  
Management Report.  
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has  
issued an unqualified audit opinion on the financial  
statements of BMW AG, of which the balance sheet and  
the income statement are presented here. The BMW AG  
financial statements for the financial year 2016 will  
be submitted to the operator of the electronic version  
of the German Federal Gazette and can be obtained  
via the Company Register website. These financial  
statements are available from BMW AG, 80788 Munich,  
Germany.  
8
2
Combined  
Management  
Report  
OUTLOOK  
REPORT ON OUT-  
LOOK, RISKS AND  
OPPORTUNITIES  
Report on Outlook,  
Risks and  
Opportunities  
Outlook  
Thereportonoutlook, risksandopportunitiesdescribes  
the expected development of the BMW Group, includ-  
ing the associated material risks and opportunities,  
from a Group management perspective. In line with  
the Group’s internal management system, the out-  
look covers a period of one year. However, risks and  
opportunities are managed on the basis of a two-year  
assessment. The report on risks and opportunities  
therefore covers a period of two years.  
Positive Company performance  
expected to continue in 2017  
Automobile and motorcycle sales  
expected to reach new record levels  
Outlook foresees increase in  
revenues and profit  
The report on outlook, risks and opportunities  
contains forward-looking assertions based on the  
BMW Group’s expectations and assessments, which  
are subject to uncertainty. As a result, actual outcomes  
can deviate, for example on account of political and  
economic developments – either positively or nega-  
tively – from the expectations described below. Further  
information can be found in the section “Risks and  
Opportunities”.  
World economy expected to grow  
despite risks  
Assumptions used in the outlook  
The following outlook relates to a forecast period  
of one year and is based on the composition of the  
BMW Group during that period. The outlook takes  
account of all information known up to the date on  
which the financial statements were prepared for issue  
and which could have an effect on the overall perfor-  
mance of the Group. The expectations contained in  
the outlook are based on the BMW Group’s forecasts  
for 2017 and reflect its most recent status. The basis  
for the preparation of and the principal assumptions  
used in the forecasts – which consider the consensus  
opinions of leading organisations, such as economic  
research institutes and banks – are set out below. The  
BMW Group’s forecast is based on these assumptions.  
The continuous forecasting process ensures that the  
BMW Group is ready to take advantage of oppor-  
tunities as they arise and to react appropriately to  
unexpected risks. The principal risks and opportuni-  
ties are described in detail in the section “Risks and  
Opportunities”. The risks and opportunities discussed  
in that section are relevant for all of the BMW Group’s  
performance indicators and could result in variances  
between the outlook and actual outcomes.  
8
3
Economic outlook  
Despite uncertainty regarding the country’s future  
political and economic course, GDP in the USA is  
expected to grow faster in 2017 than in the preced-  
ing year (+2.3%). The US Federal Reserve is likely to  
continue its policy of moderate interest rate rises in  
2017. After decreasing in 2016, industrial production is  
predicted to grow significantly in 2017, with a positive  
impact on GDP growth.  
Despite greater political uncertainty, the global  
economy is forecast to grow by around 3.4% in 2017,  
slightly faster than in the preceding year. A number of  
factors make uncertainty likely to persist with regard  
to future economic and political developments. These  
include the negotiations between the UK and the EU  
following the Brexit vote and the future course of the  
new US administration. Moreover, the existing risks to  
financial stability due to high sovereign debt levels in  
Europe and Japan, more restrictive monetary policies  
in the USA and high levels of corporate debt in China  
have not diminished compared to the previous year.  
Further information on political and global economic  
risks can be found in the section “Risks and Oppor-  
tunities”.  
According to forecasts, Japan can expect a GDP growth  
rate of 1.0% in 2017, with rising exports potentially  
providing renewed economic momentum. An expect-  
ed increase in domestic consumer spending could also  
help revive the Japanese economy.  
The Indian economy is forecast to expand by 7.4%  
in 2017, boosted by the gradual implementation of  
business-friendly structural reforms. After a number  
of years of deep recession, Russia (+ꢀ1.2%) and Brazil  
(+0.6%) could return to growth in 2017, helped by  
rising raw materials prices.  
Economic growth in the eurozone is forecast to slow  
down slightly to  
largest economy, is expected to grow at a similar rate  
+ꢀ %). In macroeconomic terms, the prospects of the  
other eurozone countries are also expected to develop  
positively. GDP growth rates in France (+ꢀ %) and  
1.5% in 2017. Germany, Europe’s  
(
1.5  
1.3  
Italy (+0.8%) in 2017 are expected to be similar to the  
preceding year. The Spanish economy is forecast to  
grow by 2.4% and therefore faster than the eurozone  
average. Greece also is expected to achieve growth  
of 1.7%.  
It is currently assumed that the UK government will  
give notice of its intention to leave the EU during the  
first half of 2017, thus triggering the start of official  
negotiations. Uncertainty regarding the future rela-  
tionship is currently influencing both investment  
and consumer spending levels in the UK. As a result  
of the current situation, it is expected that the UK  
economy will see a distinct loss of momentum, with  
a significantly lower year-on-year growth rate of 1.2%.  
In China, economic growth is again predicted to  
weaken slightly in the current year, resulting in a  
growth rate of around 6.4%. Reducing over-capaci-  
ties in various industrial sectors and the controlled  
reduction of high debt levels will present the Chinese  
government with significant challenges in 2017. The  
risk of a significant economic downturn in China  
therefore cannot be ruled out.  
8
4
Combined  
Management  
Report  
Currency markets  
Automobile markets  
Currencies of particular importance for the interna-  
tional operations of the BMW Group are the Chinese  
renminbi, the US dollar, the British pound and the  
Japanese yen. These major currencies could be subject  
to a significant degree of fluctuation again in 2017.  
Overall, the world’s automobile markets are forecast  
to grow by around 1.8% to an estimated 89.0 mil-  
lion units in 2017. The US market is expected to  
grow by 0.3% to 17.6 million units. The forecast for  
China points to an increase of around 5.7% to some  
Report on Outlook,  
Risks and  
Opportunities  
Outlook  
25.5 million units. The country’s interior provinces  
Given that the Chinese renminbi is likely to continue  
to move in the same direction as the US dollar in the  
short term, it is likely to appreciate slightly against the  
euro in 2017. If, however, the Chinese central bank  
decides to intervene in the currency markets, it could  
result in a relatively narrow fluctuation range.  
are expected to contribute significantly to growth as  
they catch up.  
Despite the region’s continued economic revival,  
automobile markets in Europe are not expected to  
grow significantly. The trend in Germany is expected  
to remain flat (  
forecast to fall slightly (–ꢀ  
3
.
4
million). Registrations in France are  
%) to around 95 million  
A more restrictive monetary policy in the USA would  
boost the value of the US dollar against the euro.  
Continued economic recovery in the eurozone, com-  
bined with rising inflation, could prompt the ECB to  
implement a gradual reduction in government bond  
purchases. In that case, the loss in value of the euro  
against the US dollar would be less pronounced.  
1
.
7
1.  
units. After its strong performance in 2016, the Italian  
automobile market is expected to grow at a modest  
0.7% to around 1.86 million units.  
The automobile market in Japan is likely to contract  
further in 2017. Registrations are forecast to be in the  
region of 4.7 million units and hence 1.6% down on  
the previous year.  
The uncertain political situation in the UK following  
the Brexit vote could lead to capital exports and  
encourage the Bank of England to retain its expan-  
sionary monetary policy. If the UK economy slows  
down at a more pronounced rate than expected in  
After dropping back in 2016, the automobile markets  
in the world’s major emerging economies are expected  
to recover in 2017, with registrations predicted to grow  
by 4.1% to 1.3 million units in Russia and by 3.0% to  
1.7 million units in Brazil.  
2
017, the Bank of England could adopt additional  
measures to increase the money supply. As a result,  
the British pound could either stabilise at its current  
level or continue to lose value in the short term.  
Motorcycle markets  
The central bank in Japan could continue to pursue its  
highly expansionary monetary policy for the foresee-  
able future. This policy could result in the yen hardly  
changing in value against the euro or even losing in  
value, given that monetary policy in the eurozone is  
currently not expected to be expanded.  
The world’s motorcycle markets in the 250 cc plus class  
are forecast to grow slightly in 2017. In Europe, the  
positive trend is set to continue in the major markets  
of Germany, France, Italy and Spain. The BMW Group  
expects the US market to remain at the previous year’s  
level during the current financial year.  
As US monetary policies continue to normalise, the  
currencies of numerous emerging economies are  
likely to remain under pressure in the short term.  
Countries that export raw materials and have current  
account and fiscal deficits, such as South Africa or  
Brazil, are most likely to be affected. Any increase in  
raw materials prices would generally have a positive  
impact on these economies.  
8
5
Financial Services markets  
Outlook for the BMW Group  
The pace of global economic growth is expected to pick  
BMW Group  
up slightly in 2017. With the exception of the USA  
central banks in industrialised countries are likely to  
maintain their expansionary course.  
,
Profit before tax: slight increase expected  
Competition on international automobile markets  
is set to remain intense during the current year. The  
situation is likely to be exacerbated by political and  
macroeconomic uncertainties in Europe as well as the  
unforeseeable consequences of the Brexit decision in  
the UK. Moreover, the strategy of the new US admin-  
istration regarding economic policy remains unclear.  
Further information is provided in the sections on  
political and economic risks in the section “Risks and  
Opportunities”.  
The Fed is expected to continue raising interest rates in  
the course of 2017. The expansionary monetary poli-  
cies of the ECB are likely to be continued in 2017, with  
a slightly reduced volume of monthly bond purchases.  
The UK economy is expected to come under more  
pressure as a consequence of the Brexit vote. The Bank  
of England has already announced its intention to  
take appropriate measures as necessary.  
Nevertheless, the BMW Group intends to continue its  
growth course in 2017. New vehicles such as the new  
BMW 5 Series and the new MINI Countryman and  
new motorcycles such as the two R NineT models as  
well as services are expected to make a contribution  
to earnings growth. Investments in future-oriented  
projects, including vehicle electrification, digitalisa-  
tion and the expansion of the production network,  
will, however, counteract the general upward trend.  
Overall, Group profit before tax is expected to increase  
slightly year-on-year (2016: €ꢀ9,665 million).  
Growth in China is set to cool further in 2017, with  
the Chinese central bank expected to implement a raft  
of measures to accompany the transformation process  
for the domestic economy.  
Japan’s central bank may have few tools left to stimu-  
late the country’s economy and rate of inflation. Public  
sector spending is therefore expected to increase as a  
means to kick-start growth.  
Workforce size at year-end: slight increase expected  
Based on current forecasts, the BMW Group’s work-  
force is again expected to grow slightly in 2017 (2016:  
124,729 employees). The main factors driving the  
expected increase will be projects aimed at securing  
the Group’s future, growth of automobile and motor-  
cycles business and the expansion of financial and  
mobility services.  
Expected consequences for the BMW Group  
Future developments on international automobile  
markets also have a direct impact on the BMW Group.  
Whereas competition is likely to intensify in con-  
tracting markets, new opportunities appear in  
growth regions. Sales volumes in some countries  
are likely to be significantly affected by challenges  
in the competitive environment. Europe’s markets  
are not expected to maintain the pace of growth  
seen in 2016. Demand in the Americas region is  
likely to remain flat. Asia is expected to continue  
its upward trend.  
Due to its global business model, the BMW Group  
is well placed at all times to exploit opportunities,  
including those arising at short notice. Coordination  
between the Group’s sales and production networks  
also helps cushion the impact of unforeseeable  
developments in the various regions. Investments  
in markets important for the future are also a basis  
for further growth, while simultaneously expanding  
the global presence of the BMW Group. Thanks to  
its three strong brands – BMW, MINI and Rolls-  
Royce – the BMW Group is expected to remain on  
course for success during the current year.  
8
6
Combined  
Management  
Report  
Automotive segment  
Deliveries to customers: slight increase expected  
The BMW Group expects a further year-on-year  
Return on capital employed:  
slight decrease expected  
Segment RoCE is forecast to decrease slightly (2016:  
74.3%). However, the long-term target RoCE of at  
least 26% for the Automotive segment will be easily  
surpassed.  
Report on Outlook,  
Risks and  
Opportunities  
increase in sales of BMW, MINI and Rolls-Royce brand  
vehicles and aims to achieve again in 2017 a leading  
position in the global premium segment. Balanced  
growth in major sales regions will help to even out  
volatilities in individual markets. Assuming economic  
conditions do not deteriorate, deliveries to custom-  
Outlook  
Motorcycles segment  
ers are forecast to rise slightly to a new high (2016  
:
Deliveries to customers:  
significant increase expected  
The BMW Group expects the upward trend in the  
Motorcycles segment to continue. New models, includ-  
ing the R NineT Pure, the R NineT Racer, the K 1600  
1
1
Includes the  
2
,367,603 units) in 2017.  
joint venture  
BMW Brilliance  
Automotive,  
Shenyang Ltd.  
Important contributions to continued growth will  
come in particular from new models. The all-new  
BMW 5 Series Sedan has been available since mid-Feb  
ruary 2017. The BMW 5 Series iPerformance and M  
Performance models followed in March. The BMW  
B
(
2016: 316,200  
units).  
-
and the G 310 GS were unveiled at international trade  
fairs held in autumn 2016. Together with updated  
versions of the R 1200 GS, the S 1000 R, the S 1000 RR  
the K 1600 GT and the luxury GTL, the new models  
will expand the product portfolio significantly and  
appeal to new customer groups. Overall, deliveries of  
BMW motorcycles to customers are forecast to increase  
significantly year-on-year (2016: 145,032 units).  
,
5
Series iPerformance model as a plug-in hybrid  
is now available worldwide. The model revisions  
of the BMW 4 Series and the BMW Coupé and  
M
4
Convertible were also launched in March. The new  
BMW 5 Series Touring is scheduled for launch in mid-  
June. The second generation of its highly successful  
MINI Countryman model was introduced in February.  
Towards the middle of year, a John Cooper Works and  
a plug-in hybrid will be added to the MINI Country-  
man range. Further new models are planned for the  
second half of 2017.  
EBIT margin in target range between 8 and 10%  
expected  
With effect from the beginning of the financial  
year 2017, the EBIT margin will also serve as a key  
performance indicator for the Motorcycles segment.  
Accordingly, segment performance will also be man-  
aged based on the operating return on sales (EBIT  
margin) in future. Further information can be found  
in the description of the Group management system in  
the section “General Information on the BMW Group”.  
Fleet carbon dioxide emissionsꢀ2:  
slight decrease expected  
The BMW Group is continuing its efforts to reduce  
fuel consumption and carbon dioxide emissions.  
According to forecasts, carbon dioxide emissions  
for the vehicle fleet will decrease slightly during the  
outlook period, thus continuing the trend seen in  
2
EU-28.  
In this context, a target range of 8 to 10% has also been  
set for the Motorcycles segment. The EBIT margin for  
the Motorcycles segment is expected to lie within this  
range in 2017 (2016: 9.0%).  
previous years (2016: 124 grams CO /ꢀkm).  
2
Revenues: slight increase expected  
Automotive segment revenues are expected to rise  
slightly in line with sales volume. The Company  
expects that segment revenues will increase slightly  
in 2017 (2016: €ꢀ86,424 million).  
Return on capital employed expected at previous  
year’s level  
Segment RoCE in 2017 is forecast to be in line with  
the previous year (2016: 33.0%). The long-term target  
RoCE of 26% for the Motorcycles segment will there-  
fore be surpassed.  
EBIT margin in target range between 8 and 10%  
expected  
An EBIT margin within a range of  
8 to 10% (2016:  
8.9  
%) remains the target for the Automotive segment.  
8
7
Financial Services segment  
Return on equity: slight decrease expected  
in deliveries to customers, Automotive segment rev-  
enues are also expected to increase slightly in 2017.  
At the same time, a slight decrease in fleet carbon  
dioxide emissions is expected. The Group’s targets are  
to be met with a slight rise in the workforce size. The  
Automotive segment’s EBIT margin in 2017 is set to  
According to forecasts, the Financial Services segment  
is likely to continue performing well in 2017. However,  
it is expected that regulatory requirements for equity  
capital will be tightened and the risk situation will  
normalise in the forecast period. The segment RoE is  
therefore expected to decrease slightly year-on-year  
remain within the target range of between 8 and 10%,  
while its RoCE is forecast to decrease slightly. A slight  
fall is also forecast for the RoE in the Financial Services  
segment. Both performance indicators will be above  
their long-term targets of 26% (RoCE) and 18% (RoE)  
respectively. Deliveries to customers in the Motor-  
cycles segment are forecast to rise significantly, with  
an EBIT margin within the target range of between 8  
and 10% and RoCE at the previous year’s level.  
(
2016: 21.2%). The target of at least 18% is neverthe-  
less likely to be exceeded again.  
Overall assessment by Group management  
Business is expected to develop positively in the  
financial year 2017. The introduction of numerous  
new automobile and motorcycle models as well as the  
expansion of individual mobility-related services give  
reason to expect that profitable growth will contin-  
ue in the current year. Despite the many challenges  
described above, Group profit before tax is forecast to  
grow slightly. Based on the forecast of a slight increase  
Depending on the political and economic situation  
and the outcomes of the risks and opportunities  
described below, actual business performance could,  
however, differ from current expectations.  
Key performance indicators  
•
54  
2
016  
2017 Outlook  
BMW Group  
Profit before tax  
€ million  
9,665  
slight increase  
slight increase  
Workforce at year-end  
124,729  
AutoMotive seGMent  
Sales volume1  
units  
2,367,603  
124  
slight increase  
slight decrease  
slight increase  
Fleet emissions2  
2
g CO / km  
Revenues  
€ million  
86,424  
8.9  
EBIT margin  
%
%
between 8 and 10  
slight decrease  
Return on capital employed  
74.3  
Motorcycles seGMent  
Sales volume  
units  
%
145,032  
9.0  
significant increase  
between 8 and 10  
EBIT margin  
Return on capital employed  
%
33.0  
in line with last year’s level  
FinAnciAl services seGMent  
Return on equity  
%
21.2  
slight decrease  
1
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units).  
EU-28.  
2
8
8
Combined  
Management  
Report  
RISKS AND  
OPPORTUNITIES  
Opportunities and risks are assessed as a general rule  
over a medium-term period of two years. As part of  
the risk management process, all potential risks of  
loss (individual and accumulated risks) that represent  
a threat to the company are monitored and managed.  
As a matter of principle, any risks capable of posing a  
threat to the going-concern status of the BMW Group  
are avoided. If there is no specific reference to a seg-  
ment, opportunities and risks relate to the Automotive  
segment. The scope of entities covered by the report  
on risks and opportunities corresponds to the scope  
of consolidated entities included in the BMW Group  
Financial Statements.  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
As a worldwide-leading manufacturer of premium cars  
and motorcycles and provider of premium financing  
and mobility services, the BMW Group is exposed  
to numerous uncertainties and changes. Making full  
use of the opportunities arising out of change is a  
fundamental aspect of the Group’s corporate success.  
In order to achieve growth, drive profitability, boost  
efficiency and maintain sustainable levels of business  
going forward, the BMW Group consciously takes  
certain risks.  
Risk management system  
The objective of the risk management system, and one  
of the key functions of risk reporting, is to identify,  
record and actively manage any internal or external  
risks that could pose a threat to the attainment of  
the Group’s corporate targets. The risk management  
system covers all significant risks to the Group and  
any which could pose a threat to its going-concern  
status. In terms of structure, the responsibility for  
risk reporting lies with each individual employee  
and manager in their specific roles – and not with  
a centralised unit. Every employee and manager is  
required to report any risks identified via the relevant  
reporting channels. This requirement is set out in  
guidelines that apply throughout the Group.  
Management of opportunities and risks is a funda-  
mental prerequisite for the Group’s ability to react  
appropriately to changes in political, legal, technical  
or economic conditions. All identified opportunities  
and risks are addressed in the Outlook Report, if  
likely to materialise. The following sections focus  
on potential future developments or events, which  
could result in a positive deviation (opportunities)  
or a negative deviation (risk) from the BMW Group’s  
outlook. As a general rule, the earnings impact of  
risks and opportunities is assessed separately, i.ꢀe.  
without off-setting.  
Risk management in the BMW Group  
•
55  
Group-wide  
risk management  
Analysis and  
Measurement  
Identification  
Effectiveness  
Usefulness  
Supervisory  
Board  
Risk  
Compliance  
Committee  
Management  
Steering  
Reporting /  
Monitoring  
Controlling  
Committee  
Board of  
Management  
Completeness  
Group  
Audit  
Measures  
Internal Control System  
8
9
The Group risk management system comprises  
a decentralised network covering all parts of the  
business and is steered by a centralised risk manage-  
ment function. Each of the BMW Group’s divisions  
is represented within the risk management network  
by so-called Network Representatives. The network is  
embedded within the formal organisational structure.  
This promotes its visibility and underlines the impor-  
tance of risk management within the BMW Group. The  
duties, responsibilities and tasks of the centralised risk  
management unit and the Network Representatives  
are clearly described, documented and understood.  
Group risk management is geared towards meeting  
the following three criteria: effectiveness, usefulness  
and completeness.  
Risk management process  
The risk management process applies throughout the  
Group and comprises the early identification and  
assessment of risks, comprehensive analysis and risk  
measurement, the coordinated use of suitable man-  
agement tools and also the monitoring and evaluation  
of any measures taken.  
Risks reported from within the network are firstly  
presented for review to the Risk Management  
Steering Committee, chaired by Group Controlling.  
After review, the risks are reported to the Board  
of Management and the Supervisory Board. Risks  
which are significant or which threaten the Group’s  
going-concern status are classified according to their  
potential to impact the Group’s results of operations,  
financial position and net assets. The level of risk is  
then quantified in each case according to its proba-  
bility of occurrence and the respective risk mitigation  
measures.  
In view of the dynamic growth of business of the  
BMW Group and the increasingly volatile environ-  
ment in which it operates, one of the key areas con-  
sidered in developing the risk management system  
has been the ability to assess the overall risk situation  
of the BMW Group. A risk-bearing capacity model has  
been developed for the BMW Group, based on the  
established controlling models used in the Financial  
Services segment as in the banking sector to ensure  
risk-bearing capacity. Using a limit control system  
to manage significant financial risks on a month-by-  
month basis, measures are in place to ensure that  
the asset cover, in the form of equity and forecast  
Group earnings for the next twelve months, always  
exceeds the prevailing risk situation and the risk level  
associated with the business strategy currently being  
pursued. These controls facilitate the early identifica-  
tion of developments which could pose a threat to the  
BMW Group’s going-concern status. The results of the  
calculations of risk bearing capacity are incorporated  
in the assessment of the overall risk situation. The  
processes and methodologies used to report risks are  
The risk management system is regularly examined by  
the Internal Audit. By sharing experiences with other  
companies on an ongoing basis, the BMW Group  
endeavours to incorporate new insights in the  
risk management system, thus ensuring continual  
improvement. Regular training and further develop-  
ment programmes as well as information events at  
the BMW Group, particularly within the risk man-  
agement network, are invaluable ways of preparing  
those involved in the process for new or additional  
challenges.  
In addition to comprehensive risk management, man-  
aging the business on a sustainable basis also consti-  
tutes one of the Group’s core corporate principles.  
Any risks or opportunities relating to sustainability  
issues are examined and discussed by the Sustain-  
ability Committee. Resulting strategic options and  
measures for the BMW Group are put forward to  
the Sustainability Board, which includes the entire  
Board of Management. Risk aspects discussed are  
integrated within the Group-wide risk network. The  
overall composition of the Risk Management Steering  
Committee and the Sustainability Committee ensures  
that risk and sustainability management are closely  
coordinated.  
regularly reviewed. During the financial year 2016  
,
the risk catalogue introduced three years earlier was  
tested for effectiveness and revised as appropriate.  
Identified risks are aggregated into risk categories on  
the basis of the risk catalogue. Improved reporting  
channels ensure effective systematic risk control and  
earlier reporting of risks. Transparency of external  
reporting has also been increased, including the  
introduction of an additional sub-category “Market  
development” to the category “Sales and marketing”,  
which enables a distinction to be made between mar-  
ket risks typical for the sector and operational risks  
relating to the BMW Group’s specific sales network  
structure.  
Risk management for the Group as a whole falls under  
the remit of the Risk Management Steering Commit-  
tee, the Compliance Committee, the Internal Control  
System and the Group Internal Audit.  
9
0
Combined  
Management  
Report  
Risk management procedures in place in the Financial  
Services segment also address regulatory issues and  
requirements, such as Basel III. Internal methods used  
to identify, measure, manage and monitor risks within  
the Financial Services segment comply with national  
and international standards. The adopted risk strategy,  
in combination with a set of strategic principles and  
guidelines, 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-office activities and a compre-  
hensive internal control system. The main instrument  
of risk management within the Financial Services  
segment is ensuring that the Group’s risk-bearing  
capacity is not exceeded. All risks (defined as unex-  
pected losses) must be covered at all times in line  
with risk appetite by an asset cushion in the form  
of equity capital. Unexpected losses are measured  
according to various value-at-risk models, which are  
validated at regular intervals. Risks are aggregated  
after taking account of correlation effects. In addition  
to assessing the Group’s ability to bear risk under nor-  
mal circumstances, stress scenarios are also taken into  
consideration. The segment’s risk-bearing capacity is  
monitored regularly with the aid of an integrated limit  
system that also differentiates between the various  
risk categories.  
of occurrence. The risk level is approximated in the  
case of risks measured on the basis of “value at risk”  
and “cash flow at risk” models. These approximations  
flow into the assessment of the significance of the  
risks, resulting in increased comparability between  
risk categories compared to the previous year.  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
Overall, the following criteria apply for the purposes  
of classifying the risk level:  
Class  
Risk amount  
Low  
> €0 – 50 million  
> €50 – 400 million  
> €400 million  
Medium  
High  
Opportunity management system and  
opportunity identification  
New opportunities regularly present themselves in  
the dynamic business environment in which the  
BMW Group operates. Macroeconomic trends and  
sector-specific and general business environment,  
including external regulations, suppliers, customers  
and competitors, are monitored on a continual basis.  
Identifying opportunities is an integral part of the  
process of developing strategies and drawing up  
forecasts for the BMW Group. The Group’s product  
and service portfolio is continually reviewed on the  
strength of these analyses and new product projects,  
for example, presented to the Board of Management  
for consideration.  
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 performance indica-  
tors of the BMW Group, risks are classified as high,  
medium or low. The impact of risks is measured and  
reported net of risk mitigation measures (net basis).  
The continuous optimisation of important business  
processes and strict cost controls are essential to  
ensuring profitability and a high return on capital  
employed. Probable measures to increase profitability  
are incorporated in the outlook. One example is the  
implementation of modular-based production and  
common architectures, which enable a greater com-  
monality between different models and product lines.  
This strategy contributes to improved profitability by  
reducing development costs and other investment on  
the series development of new vehicles. This supports  
economies of scale in production costs and increases  
production flexibility. Moreover, a more competitive  
cost basis opens up opportunities to engage in new  
market segments.  
When a risk materialises, the overall impact on the  
results of operations, financial position and net assets  
is measured for the two-year assessment period and  
allocated according to the following categories:  
Class  
Earnings impact  
Low  
> €0 – 500 million  
> €500 – 2,000 million  
> €2,000 million  
Medium  
High  
In the following sections, the term “earnings impact”  
is used consistently to cover the overall impact on the  
results of operations, financial position and net assets.  
The implementation of identified opportunities is  
undertaken on a decentralised basis within the rel-  
evant functions. The significance of opportunities  
for the BMW Group is classified in the categories  
“significant” and “insignificant”.  
The significance of risks for the BMW Group is deter-  
mined on the basis of risk level. The measurement of  
risk level takes account of both earnings impact (net  
of appropriate countermeasures) and the likelihood  
9
1
Risks and opportunities  
Risks and opportunities which could, from today’s  
perspective, have a significant impact on the results  
of operations, financial position and net assets of the  
BMW Group are described in the following sections.  
The following table provides an overview of all risks  
and opportunities and illustrates their significance  
for the BMW Group.  
Overall, neither at the balance sheet date nor at the  
date on which the Group Financial Statements were  
prepared were any risks identified that could pose a  
threat to the going-concern status of the BMW Group.  
Change compared  
to prior year*  
Change compared  
to prior year  
Risk level  
Opportunities  
risks And opportunities  
Macroeconomic risks and opportunities  
Strategic and sector risks and opportunities  
Changes in legislation and regulatory requirements  
Market developments  
ꢃ
High  
Stable  
Insignificant  
Stable  
Medium  
High  
Stable  
Stable  
Insignificant  
Insignificant  
Stable  
Stable  
Risks and opportunities relating to operations  
Production and technology  
Purchasing  
High  
Medium  
Low  
Stable  
Stable  
Insignificant  
Insignificant  
Insignificant  
Insignificant  
Stable  
Stable  
Stable  
Stable  
Sales and marketing  
Stable  
Information, data protection and IT  
Financial risks and opportunities  
Foreign currencies  
High  
Increased  
Medium  
Low  
Stable  
Stable  
Stable  
Stable  
Significant  
Significant  
–
Stable  
Stable  
–
Raw materials  
Liquidity  
Low  
Pension obligations  
Medium  
Significant  
Stable  
Risks and opportunities relating to the provision of financial services  
Credit risk  
Medium  
Medium  
Low  
Stable  
Stable  
Stable  
Stable  
Stable  
Significant  
Stable  
Stable  
Stable  
–
Residual value  
Significant  
Interest rate changes  
Significant  
Operational risks  
Low  
–
–
Legal risks  
Medium  
–
*
Prior-year classifications have been amended in line with the revision of the risk catalogue described in the section “Risk Management System” and the measurement of risk amount described in the section  
Risk measurement”.  
“
Macroeconomic risks and opportunities  
Given the political events that have occurred during  
the financial year under report, future global economic  
developments are currently subject to a high degree  
of uncertainty, in particular with respect to potential  
barriers that could affect global trade. The outcome  
of the elections in the USA in November 2016, the  
planned exit of the UK from the EU and possible  
election wins for anti-globalisation parties in the EU  
in the coming years could result in higher tariff and  
non-tariff barriers to trade.  
Economic conditions influence business performance  
and hence the results of operations, financial posi-  
tion and net assets of the BMW Group. Unforeseen  
disruptions in global economic ties can have highly  
unpredictable effects. Macroeconomic risks can lead  
to reduced purchasing power in the countries and  
regions involved and lead to reduced demand for the  
products and services offered by the BMW Group.  
If macroeconomic risks were to materialise, they  
could – due to sales volume fluctuations – have a  
high earnings impact over the two-year assessment  
period. Overall, the risk level attached to macroeco-  
nomic risks is classified as high. Macroeconomic risks  
are evaluated on the basis of historical data and by  
means of a cash-flow-at-risk approach, supplemented  
by scenario analyses.  
9
2
Combined  
Management  
Report  
The possible introduction of trade barriers by the new  
US administration could have an adverse impact on the  
BMW Group’s operations in the form of less favourable  
conditions for importing vehicles. Moreover, counter-  
measures by the USA’s trading partners could slow  
down global economic growth and consequently have  
an adverse impact on the export of vehicles produced  
in the USA. The BMW Group’s production strategy  
involves local production both in the USA and in other  
important trading regions. The strategy of regional  
production reduces the existing risk of trade barriers.  
Nevertheless, any increase in trade barriers would  
have an adverse impact on the BMW Group.  
Should the global economy develop significantly  
better than reflected in the outlook, macroeco-  
nomic opportunities could arise with a potentially  
favourable impact on the revenues and earnings of  
the BMW Group. Stronger Chinese growth, econo-  
my-boosting structural reforms within the eurozone,  
growth stimulus through infrastructure investment  
in the USA or more robust consumer spending by  
US households despite rising financing costs, could  
result in significantly stronger sales volume growth,  
reduced competitive pressures and improved pricing.  
Macroeconomic opportunities that could generate a  
sustainable impact on earnings are currently classified  
by the BMW Group as insignificant.  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
The Brexit plan could have a long-term adverse  
impact on the BMW Group, particularly as a result of  
increased trade barriers in relation to the European  
single market. In the short and medium term, too,  
uncertainty regarding the outcome of the negotiations  
with the EU could lead to reduced customer spending  
and trigger further unfavourable currency effects.  
Unresolved structural problems in the eurozone, a  
potential increase in anti-globalisation political sen-  
timent and a possible renewed economic downturn  
could potentially hold down growth prospects for the  
BMW Group. European integration with a unified  
economic and currency area remains an important  
pillar of economic stability in Europe.  
Strategic and sector risks and opportunities  
Changes in legislation and regulatory requirements  
Abrupt introduction of tightened new laws and regu-  
lations represents a significant risk for the automobile  
industry, particularly in relation to emissions, safety  
and consumer protection, as well as taxes on vehicle  
purchases and use. Country- and sector-specific trade  
barriers can also change at short notice. Unfavourable  
developments in any of these areas can necessitate  
significantly higher levels of investment and ongoing  
expenses or influence customer behaviour. Risks from  
changes in legislation and regulatory requirements  
could have a low impact on earnings over the two-year  
assessment period. The risk level attached to these  
risks is classified as medium.  
The transition of the Chinese economy from an invest-  
ment-driven to a consumer-driven market is likely to  
entail slower growth rates and greater instability on  
financial markets. If the Chinese economy were to  
grow at a significantly slower pace than expected, the  
consequence could be not only a decline in automo-  
bile sales, but also, potentially, lower demand for raw  
materials, which would have a negative impact above  
all on emerging economies such as Brazil or Russia.  
Any renewed drop in raw material prices could result  
in lower demand from these countries. The threat of  
turmoil on the Chinese property, stock and banking  
markets and an overly rapid hike in interest rates by  
the US Federal Reserve pose considerable risks for  
global financial market stability.  
The BMW Group sees a clear move towards increasing-  
ly stringent vehicle emissions regulations, particularly  
for conventional drive systems, not only in the devel-  
oped markets of Europe and North America, but also  
in emerging markets such as China. The introduction  
of new measurement procedures to represent stand-  
ard driving cycles, combined with significantly lower  
emissions thresholds, represents a major challenge for  
the automotive sector. The BMW Group counters this  
risk with its Efficient Dynamics concept and continues  
to play a pioneering role within the premium segment  
in reducing both fuel consumption and emissions.  
Electric drive systems are being built into a growing  
number of models, namely in BMWi vehicles since  
2013 and – following the introduction of the X5 in  
2015 – in models using plug-in-hybrid technologies,  
thus contributing to the BMW Group’s effort to comply  
with statutory carbon emissions requirements.  
Furthermore, increasing political unrest, military  
conflicts, terrorist activities, natural disasters or  
pandemics could have a lasting negative impact on  
the global economy and international capital markets.  
The BMW Group counters macroeconomic risks pri-  
marily by internationalising its sales and production  
structures, in order to minimise the extent to which  
earnings depend on risks in individual countries and  
regions. Flexible sales and production processes across  
the BMW Group increase the ability to react quickly  
to regional economic developments.  
9
3
Further risks can result from the tightening of existing  
import and export regulations. These lead primarily to  
additional expenses, but can also restrict the import  
and export of vehicles or parts. Increased taxes on  
high-value consumer goods have also been proposed  
in a number of regions. Taxes of this kind in major  
markets of the BMW Group, such as China, could have  
a negative impact on regional demand and margins  
on BMW Group vehicles in the automobile segments  
concerned.  
Market development  
In addition to the potential impact of macroeconomic  
factors and sector-specific political framework condi-  
tions, it is also extremely difficult to predict the impact  
of increasingly fierce competition among established  
manufacturers and the emergence of new competitors.  
Unforeseen consumer preferences and changes in how  
brands are perceived can give rise to opportunities  
and risks. If market risks were to materialise, they  
could have a high earnings impact over the two-year  
assessment period. The risk level is classified as high.  
Setting the regulatory framework for innovative mobil  
ity solutions and providing state-funded incentives  
are important prerequisites for developing mobility  
services and introducing product innovations, such  
as autonomous driving. If the necessary public meas-  
ures are implemented globally at a faster pace than  
expected, opportunities will arise for the BMW Group  
to expand new business segments more quickly.  
Alternative mobility services, such as DriveNow,  
ChargeNow and ParkNow, could benefit from sup-  
portive regulatory measures, for example through  
systematic application in German cities of car-sharing  
legislation that comes into force in September 2017.  
Access restrictions for inefficient vehicles with lower  
environmental standards could provide a competitive  
advantage and hence an opportunity for BMW Group  
vehicles equipped with Efficient Dynamics technol-  
ogies and for BMWi and iPerformance vehicles with  
alternative drive systems. The market acceptance and  
sales volumes of product innovations that are either  
planned for the future or have recently been launched  
could turn out to be greater than predicted in the  
outlook. Good examples of such opportunities are  
-
Fierce competition, particularly in Western Europe,  
the USA and China, is a potential reason for lower  
demand and for fluctuations in the regional distri-  
bution and composition of demand for vehicles and  
mobility services. Greater competition could potential-  
ly put pressure on selling prices and margins. Changes  
in customer behaviour can also be brought about by  
changes in public opinion, values, environmental  
issues and fuel or energy prices. Selling price and  
margin risks are measured using a scenario approach,  
based on a bottom-up survey of the key sales markets  
and an analysis of historical data. The BMW Group’s  
flexible selling and production processes enable risks  
to be reduced and opportunities in market and prod-  
uct segments to be taken.  
Local restrictions affecting product usage in specific  
sectors may limit BMW Group sales volumes in indi-  
vidual markets. In some urban areas, for instance,  
local measures have been or are being introduced  
which impose entry restrictions, road use charges  
or, in some situations, highly restrictive registration  
rules. These restrictions may affect local demand for  
the BMW Group vehicles affected and hence have  
negative repercussions on sales volume and margins.  
The BMW Group’s endeavours to counter this risk  
include offering locally emission-free vehicles (such  
implementation of the 360° ELECTRIC portfolio in the  
field of electric mobility, achieving growth in the field  
of mobility services, and collaborating with Toyota on  
developing a hydrogen fuel cell system.  
The BMW Group’s earnings could also be positively  
affected in the short to medium term by changes in  
trading policies. A possible reduction in tariff barriers,  
import restrictions or direct excise duties could lower  
the cost of materials for the BMW Group, also enabling  
products and services to be offered to customers at  
lower prices. Further opportunities from changes in  
legislation and regulatory requirements compared  
to the outlook for the earnings performance of the  
BMW Group are classified as insignificant.  
as the BMWi3), which benefit from state subsidies  
and exemption rules.  
New opportunities are continuously being sought to  
create even greater added value for customers than  
currently expected, and thereby realise significant  
opportunities with respect to sales volumes and pric-  
ing. Further development of the product and mobility  
portfolio and expansion in growth regions are seen  
as the most important growth opportunities for the  
BMW Group in the medium to long term. Continued  
growth depends above all on the ability to develop  
innovative products and bring them to market. The  
range of services on offer was further expanded in  
2
016, including the establishment of new mobility ser-  
vices by ReachNow in North America and the expan-  
sion of the DriveNow offering introduced in additional  
European cities. Furthermore, vehicle-related services  
were brought onto the market. The new BMW 5 and  
9
4
Combined  
Management  
Report  
7
Series models, for instance, include the optional  
BMW Group also recognises appropriate accounting  
provisions for statutory and non-statutory warranty  
obligations. Such provisions reduce the risk to earn-  
ings, as they are already included in the outlook.  
Further information on risks in conjunction with  
provisions for statutory and non-statutory warranty  
see obligations is provided in note 31 to the Group  
Driving Assistant Plus which, as a future-oriented  
product innovation, offers the comfort of partially  
autonomous driving. The BMW Group does not expect  
these opportunities to have a material earnings impact  
over the two-year assessment period compared to the  
assumptions made in the outlook.  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
note 31  
Financial Statements.  
Risks and opportunities relating to operations  
Risks and opportunities relating to  
production and technology  
The BMW Group sees opportunities relating to produc-  
tion and technology primarily in the competitive edge  
accruing from mastering new and complex technolo-  
gies. Opportunities could arise as a result of product-  
or process-related technological innovations, as well  
as from organisational changes designed to improve  
efficiency and increase competitiveness. In the field of  
lightweight construction, for example, carbon is being  
utilised in high volumes for the first time in the auto-  
mobile industry for the production of the BMWi3. In  
2015, the BMW Group then introduced carbon for the  
BMW 7 Series. This has generated competitive bene-  
fits in the form of lower fuel consumption and better  
driving dynamics through reduced vehicle weight.  
Given the long lead times involved in developing new  
products and processes, additional opportunities are  
expected to have insignificant impact on earnings  
during the forecast period.  
Risks relating to production and technology often  
manifest themselves in the form of potential sources  
of production interruptions or additional expenses  
necessary to comply with quality standards under  
changed environmental conditions. If risks from the  
production and technology category were to materi-  
alise, they could have a high earnings impact over the  
two-year assessment period. The risk level attached  
to production and technology is classified as high.  
Production stoppages and downtimes, in particular  
due to fire, but also to machinery and tooling-related  
breakdowns, IT disruptions, power failures, transpor-  
tation and logistical disruptions, pose risks, against  
which the BMW Group has put suitable measures  
in place. Production structures and processes are  
designed from the outset with a view to minimising  
any potential damage and the probability of occur-  
rence. The broad array of measures taken include  
technical fire protection solutions, land development  
measures including contingencies against flooding  
when facilities are expanded or new buildings added,  
the interchangeability of production facilities, pre-  
ventative maintenance, the ability to manage spare  
parts across sites, and predictive planning of trans-  
portation alternatives. The risk level is also reduced by  
deploying flexible working hour models and working  
time accounts, but also as appropriate through split  
arrangements or by building engine types at addition-  
al sites. This makes it possible to recover quickly any  
backlog arising from production interruptions. More-  
over, risks arising from interruptions and production  
downtime due to fire are also appropriately insured  
with insurance companies of good credit standing.  
Risks and opportunities relating to purchasing  
Purchasing risks relate primarily to supply risks  
caused by the failure of a supplier to deliver as well  
as risks associated with the quality of bought-in parts.  
Production problems incurred by suppliers could have  
adverse consequences for the BMW Group, ranging  
from increased expenditure through to production  
interruptions and a corresponding reduction in sales  
volume. The increasingly complex nature of the  
supplier network, especially at the level of lower tier  
suppliers, whose operations can only be indirectly  
influenced by the BMW Group, is a further potential  
cause of downtimes at supplier locations. Purchas-  
ing risks, if materialised, could have a high earnings  
impact over the two-year assessment period. The  
risk level attached to purchasing risks is classified  
as medium.  
Close cooperation between carmakers and automotive  
suppliers in the development and production of vehi-  
cles and the provision of services generates economic  
benefits, but also raises levels of dependency. Potential  
reasons for the failure of individual suppliers could  
include non-compliance with sustainability or quality  
standards, lack of financial strength on the part of a  
supplier, the occurrence of natural hazards, IT-related  
risks, fires or insufficient supply of raw materials.  
As part of the supplier pre-selection process, the  
BMW Group is careful to ensure compliance with the  
sustainability standards stipulated for the supplier  
In order to attain the outstanding level of quality  
expected of the BMW Group’s products and corre-  
spondingly high external ratings (e.ꢀg. for product  
safety) and reduce statutory and non-statutory  
warranty obligations, it may be necessary to incur a  
higher level of expenditure than originally forecast.  
In addition, availability of products may be limited,  
particularly at the start of production of new vehicles.  
These risks are mitigated through regular audits and  
the continual improvement of the quality management  
system, which ensures a high standard of quality. The  
9
5
network, including the requirement to comply with  
internationally recognised human rights and appli-  
cable labour and social standards. The principal tool  
for ensuring compliance with the BMW Group Sus-  
tainability Standard is a three-stage risk management  
system for sustainability. In addition, the technical  
and financial capabilities of suppliers – especially  
those supplying for modular-based production – are  
monitored. Supplier sites are assessed for exposure  
to natural hazards, such as floods or earthquakes, in  
order to identify supply risks at an early stage and  
implement appropriate safeguards. Fire risks at series  
suppliers are evaluated by means of questionnaires  
and selective site inspections. In order to minimise  
supply risks, the BMW Group works hard to reduce  
the input of raw materials or to use alternative raw  
materials as a substitute.  
Risks and opportunities relating to  
sales and marketing  
The BMW Group employs a global sales network,  
primarily comprising independent dealers, branches,  
subsidiaries and importers to sell its products and  
services. Any threat to the continued activities of  
parts of the sales network would entail risks for the  
BMW Group. If sales and marketing risks were to  
materialise, they are likely to have low earnings impact  
over the two-year assessment period. The risk level  
is classified as low.  
New opportunities for the BMW Group’s brands are  
opening up in particular as a result of developments  
in the field of digital communication and connectivity.  
Additional opportunities could also arise if new sales  
channels contribute to greater brand reach to addi-  
tional customer groups than currently envisaged in  
the forecast. Digital communication and connectivity  
enables consumers to be reached on a more targeted  
and individualised basis, thus strengthening long-term  
relationships and brand loyalty. The outcome is often  
a more intense product and brand experience for cus-  
tomers, which could lead to higher sales volume and  
have a positive impact on revenues and earnings. The  
BMW Group invests in advanced marketing concepts  
in order to intensify customer relationships. In 2016,  
for example, customers in the United Kingdom were  
able to access an online sales platform, enabling them  
to select, finance and buy their vehicle online. The  
BMW Group’s brands are also present on numerous  
platforms, such as Facebook, YouTube and Twitter.  
The BMW Group estimates the earnings impact as  
insignificant over the two-year assessment period as  
compared to the assumptions made in the outlook.  
The BMW Group pays particular attention to the qual-  
ity of the parts built into its vehicles. In order to attain  
a very high level of quality, it may become necessary  
to invest in new technological concepts or discontinue  
planned innovations, with the consequence that the  
cost of materials could exceed levels accounted for in  
the outlook. By monitoring and developing global sup-  
plier markets, the BMW Group continuously strives  
to increase its competitiveness by working together  
with the world’s best product and service providers.  
Within the Purchasing and Supplier Network  
opportunities emerge above all in the area of global  
sourcing through increased efficiency and the use  
of innovations developed by suppliers, which can  
lead to a broader range of products. Introduction  
of new and innovative production technologies and  
location-specific cost factors, in particular through  
local supplier structures in close proximity to new  
and existing BMW Group production plants, can lead  
to lower cost of materials for the BMW Group. The  
integration of previously unidentified innovations  
from the supplier market into the product range is  
a further source of opportunities. The BMW Group  
offers innovative suppliers numerous possibilities for  
creating specific contractual arrangements which are  
attractive for those developing innovative solutions.  
At regular intervals, the BMW Group honours its  
most inventive suppliers with the Supplier Innova-  
tion Award. The BMW Group does not expect these  
opportunities to have a significant earnings impact  
over the two-year assessment period as compared to  
the assumptions made in the outlook.  
9
6
Combined  
Management  
Report  
Information, data protection and IT  
requirements and in-house rules. The BMW Group  
protects its intellectual property as well as customer  
and employee data in cooperations and business  
partnerships by stipulating clear instructions with  
regard to data protection and the use of information  
technology. Information pertaining to key areas of  
expertise as well as sensitive personal data are subject  
to particularly strict security measures. Technical data  
protection incorporates industry-wide standards and  
best practices. Responsibility for data and information  
protection lies for each Group entity with the Board  
of Management or relevant management team.  
The advance of digitalisation across all areas of the  
business raises the need for increasingly stringent  
requirements for the confidentiality, integrity and  
availability of electronically processed data and in  
information technology (IT) in general. The increased  
threat of cybercrime has changed the risk exposure  
of the BMW Group. In addition to intellectual prop-  
erty theft, BMW Group must protect itself against  
attacks on data integrity and availability. At the same  
time, regulations covering the handling of personal  
data are also becoming more stringent, for example  
with the adoption of the EU General Data Protection  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
Regulation by the European Parliament in April 2016  
.
The use of information technology in new products  
and services, production or communication with  
customers opens up new opportunities. Under the  
If information, data protection and IT risks were to  
materialise, they could have a high earnings impact  
over the two-year assessment period. Risk levels  
attached to these risks are classified as high.  
slogan Industry 4.0, new approaches to production are  
being tested which could generate significant improve-  
ments in process and energy efficiency. The range  
of services and apps on offer to customers via BMW  
ConnectedDrive is constantly being expanded and  
updated. The purchase together with other companies  
of the firm HERE lays the foundation for the next  
generation of mobility and location-based services.  
For the automobile sector, it serves as the basis for  
new customer-oriented functions, such as innovative  
assistance systems through to fully automated driving.  
The BMW Group expects these opportunities to have  
an insignificant earnings impact over the two-year  
assessment period compared to the assumptions made  
in the outlook.  
In addition to IT attacks and direct physical inter-  
vention, lack of knowledge or misconduct on the  
part of employees may also represent a danger to the  
confidentiality, integrity and availability of data and  
systems. Direct consequences of information, data  
protection and IT risks include expenses required  
for rapid data, information and systems recovery.  
Negative impacts on operational performance due  
to the non-availability of products and services or  
disruptions in spare-part or vehicle production could  
also be possible. A further indirect result could be  
reputational damage.  
Great importance is attached to protecting the  
confidentiality, integrity and availability of business  
information and employee and customer data, for  
instance against unauthorised access and misuse. Data  
security based on the International Standard ISOꢀ/ꢀIEC  
2
7001 is an integral component of all business pro-  
cesses. As part of risk management procedures, data  
protection, information and IT risks are systematically  
documented, allocated appropriate measures by the  
departments responsible and regularly monitored in  
terms of threat level and risk mitigation. Regular anal-  
yses and controls and rigorous security management  
ensure an appropriate level of security. Despite regular  
testing and preventative security measures, it is impos-  
sible to eliminate risks completely in this area. All  
employees are required to treat carefully information  
such as confidential business, customer and employee  
data, to use securely information systems and handle  
risks with transparency. Group-wide requirements  
are documented in a comprehensive set of principles,  
guidelines and instructions, such as, for example, the  
Binding Corporate Rules for handling of employee  
data. Regular communication and information activ-  
ities create a high degree of security and risk aware-  
ness among employees involved. Employees receive  
training to ensure compliance with the applicable  
9
7
Financial risks and risks relating to  
ꢁiquidity risks  
the use of financial instruments  
Currency risks and opportunities  
The major part of the Financial Services segment’s  
credit financing and lease business is refinanced on  
capital markets. Liquidity risks may be reflected in  
rising refinancing costs. They may also manifest them-  
selves in restricted access to funds as a consequence of  
the general market situation or the failure of individual  
banks. If liquidity risks were to materialise, they would  
be likely to have a low earnings impact over the two-  
year assessment period. The risk of incurring liquidity  
risk, including the risk of the BMW Group’s rating  
being downgraded and any ensuing deterioration in  
financing conditions, is classified as low.  
As an internationally operating enterprise, the  
BMW Group conducts business in a variety of  
currencies, thus giving rise to currency risks and  
opportunities. A substantial portion of Group revenue  
generation, purchasing and funding occur outside  
the eurozone (particularly in China and the USA).  
Cash-flow-at-risk models and scenario analyses are  
used to measure currency risks and opportunities. If  
currency risks were to materialise, they could have a  
high earnings impact over the two-year assessment  
period. The risk level attached to currency risks is  
medium. Significant opportunities can arise if curren-  
cy developments are favourable for the BMW Group.  
Based on the experience of the financial crisis, a  
minimum liquidity concept has been developed and  
is rigorously adhered to. Use of the “matched funding  
principle” to finance the Financial Services segment’s  
operations eliminates liquidity risks to a large extent.  
Solvency is assured at all times throughout the  
BMW Group by maintaining a liquidity reserve and  
by the broad diversification of refinancing sources.  
Regular measurement and monitoring ensure that  
cash inflows and outflows from transactions in  
varying maturity cycles and currencies offset each  
other. The relevant procedures are incorporated in the  
BMW Group’s target liquidity concept. The liquidity  
position is monitored continuously and managed  
by means of a cash flow requirement and sourcing  
forecast system in place throughout the Group. A  
diversified refinancing strategy reduces dependency  
on any specific type of instrument. Moreover, the  
BMW Group’s solid financial and earnings position  
results in the high creditworthiness ratings issued by  
internationally recognised rating agencies.  
Operational currency management is based on the  
results of currency risk analyses. The BMW Group  
manages currency risk at both the strategic (medium  
and long term) and operational level (short and medi-  
um term). Medium- and long-term measures include  
increasing production volumes and purchase volumes  
in foreign currency regions (natural hedging). Cur-  
rency risks are managed in the short to medium term  
and for operational purposes by means of hedging on  
financial markets. Hedging transactions are entered  
into only with financial partners of good credit stand-  
ing. Opportunities are also secured through the use  
of options during specific market phases.  
Risks and opportunities relating to raw materials  
As a large-scale manufacturing company, the  
BMW Group is exposed to purchase price risks, par-  
ticularly in relation to raw materials used in vehicle  
production. Basis for the analysis of raw material  
price risk are planned purchases of raw materials and  
components containing those raw materials. If risks  
relating to raw material prices were to materialise, they  
would likely have a low earnings impact over the two-  
year assessment period. A low risk level is attached  
to these risks. Significant opportunities could arise  
if raw material prices developed favourably for the  
BMW Group.  
A description of the methods applied for risk measure-  
ment and hedging in conjunction with currency and  
see commodity risks is provided in note 37 to the Group  
Financial Statements. If the relevant recognition crite-  
ria are fulfilled, derivatives used by the BMW Group  
as hedges are accounted for as hedging relationships.  
Further information on risks in conjunction with  
see financial instruments is provided in note 37 to the  
note 37  
note 37  
Group Financial Statements.  
Changes in commodity prices are monitored on the  
basis of a well-defined management process. The  
principal objective is to increase planning reliability  
for the BMW Group. Price fluctuations for precious  
metals (platinum, palladium, rhodium) and non-fer-  
rous metals (aluminium, copper, lead), and, to some  
extent, on steel and steel ingredients (iron ore, coke-  
coal) and energy (gas, electricity) are hedged using  
financial derivatives and supply contracts with fixed  
pricing arrangements.  
9
8
Combined  
Management  
Report  
Risks and opportunities relating to  
pension obligations  
Risks and opportunities relating to  
the Financial Services segment  
Pension obligations are influenced in particular by  
fluctuations of market yields on corporate bonds, as  
well as by other economic and demographic parame-  
ters. Opportunities and risks arise depending on the  
nature and scale of changes in these parameters. If  
risks relating to pension obligations materialised, they  
could have a high earnings impact over the two-year  
assessment period. The risk level relating to pension  
obligations is classified as medium. Within a favoura-  
ble capital market environment, the return generated  
by pension assets may exceed expectations and reduce  
the deficit of the relevant pension plans. This could  
have a significantly favourable impact on the net asset  
position of the BMW Group.  
The categories of risk relating to the provision of  
financial services comprise credit and counterparty  
risk, residual value risk, interest rate risk, operational  
risks and liquidity risk. Evaluation of liquidity risk  
for the Financial Services segment is included in  
the liquidity risk category for the Group as a whole.  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
The segment’s total risk exposure was covered at all  
times during the 2016 financial year by the available  
risk-covering assets, thus ensuring the Financial  
Services segment’s risk-bearing capacity.  
Credit and counterparty risks and opportunities  
Credit and counterparty default risk arises with-  
in the Financial Services segment if a contractual  
partner (i.ꢀe. a customer or dealer) either becomes  
unable or only partially able to fulfil its contractual  
obligations, such that lower income is generated or  
losses incurred. If credit and counterparty risks were  
to materialise, they could have a medium earnings  
impact over the two-year assessment period. The risk  
level is classified as medium. The BMW Group classi-  
fies potential opportunities in this area as significant.  
Future pension payments are discounted by reference  
to market yields on high-quality corporate bonds.  
These yields are subject to market fluctuation and  
therefore influence the level of pension obligations.  
Changes in other parameters, such as rises in infla-  
tion and longer life expectancy, also impact pension  
obligations and payments. Most of the BMW Group’s  
pension obligations are managed in external pension  
funds or trust arrangements and the related assets are  
kept separate from those of the Group. The amount  
of funds required to finance pension payments out  
of operations in the future is therefore substantially  
reduced, since most of the Group’s pension obli-  
gations are settled out of pension fund assets. The  
pension assets of the BMW Group comprise inter-  
est-bearing securities, equities, real estate and other  
investment classes. Assets held by pension funds and  
trust arrangements are monitored continuously and  
managed on a risk-and-yield basis. Diversification  
of investments also helps to mitigate risk. In order  
to reduce fluctuations in pension funding shortfalls,  
investments are structured to match the timing of  
pension payments and the expected pattern of pen-  
sion obligations. Remeasurements on the liability and  
fund asset sides are recognised, net of deferred taxes,  
in “Other comprehensive income” and hence directly  
in equity (within revenue reserves).  
As part of its credit and counterparty risk manage-  
ment system, the Financial Services segment uses  
a variety of rating systems in order to assess the  
creditworthiness of its contractual partners. Credit  
risks are managed at the time of the initial credit  
decision on the basis of a calculation of the pres-  
ent value of standard risk costs and subsequently,  
during the term of the credit, by using a range of  
risk provisioning techniques to cover risks resulting  
from changes in customer creditworthiness. In this  
context, individual customers are classified by cate-  
gory 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, credit losses may be reduced, leading  
to a positive earnings impact.  
Further information on risks in conjunction with  
pension provisions is provided in note 30 to the  
Group Financial Statements.  
see  
note 30  
9
9
Residual value risks and opportunities  
Operational risks in the Financial Services  
Risks and opportunities arise in conjunction with  
lease contracts if the market value of a leased vehicle  
at the end of the contractual term of a lease differs  
from the residual value estimated at the inception  
of the lease and factored into the lease payments. A  
residual value risk exists if the expected market value  
of the vehicle at the end of the contractual term is  
lower than its estimated residual value at the date the  
contract is entered into. If residual value risks were to  
materialise, they could have a high earnings impact  
over the two-year assessment period. A high and  
medium earnings impact would then arise for the  
affected Financial Services and Automotive segments,  
respectively. The risk level is classified as medium for  
the Group as a whole. Opportunities can arise out of  
a positive deviation between the actual market and  
the original residual value forecast. The BMW Group  
classifies potential residual value opportunities as  
significant.  
segment  
Operational risks are defined in the Financial Ser-  
vices segment as the risk of losses arising as a conse-  
quence of the inappropriateness or failure of internal  
procedures (process risks), people (personnel-related  
risks), systems (infrastructure and IT risks) and exter-  
nal events (external risks). These four categories of  
risk also include related legal and reputation risks.  
The comprehensive recording and measurement of  
risk scenarios, loss events and countermeasures in  
the operational risk management system provides  
the basis for a systematic analysis and management  
of potential or materialised operational risks. Annual  
self-assessments are also carried out. If operational  
risks were to materialise, they would be likely to have  
a low earnings impact over the two-year assessment  
period. The risk level is classified as low.  
Legal risks  
Each vehicle’s estimated residual value is calculated  
on the basis of historical external and internal data  
and used to estimate the expected market value of  
the vehicle at the end of the contractual period. As  
part of the process of managing residual value risks,  
a calculation is performed at the inception of each  
contract to determine the net present value of risk  
costs. Market developments are observed through-  
out the contractual period and the risk assessment  
updated.  
Compliance with the law is a basic prerequisite for the  
success of the BMW Group. Current legislation pro-  
vides the binding framework for the BMW Group’s  
various business activities around the world. As a  
result of its worldwide operations, the BMW Group  
is exposed to a wide range of legal risks. If legal risks  
were to materialise, they could have a high earnings  
impact over the two-year assessment period. The risk  
level attached to significant identified legal risks is  
classified as medium. However, it cannot be ruled  
out that new legal risks, as yet unforeseen, could  
materialise that could have a high earnings impact  
for the BMW Group.  
Interest rate risks and opportunities  
Interest rate risks in the Financial Services segment  
relate to potential losses caused by changes in market  
interest rates. They can arise when fixed interest  
rate periods for assets and liabilities recognised in  
the balance sheet do not match. If risks relating to  
interest rate risk were to materialise, they could  
have a medium earnings impact over the two-year  
assessment period. The risk level is classified as  
low. The BMW Group classifies potential interest  
rate opportunities as material.  
The growing international scope of the BMW Group’s  
operations and of business interdependencies in  
general, combined with the variety and complexity  
of legal provisions, including increasingly import and  
export regulations, give rise to an increased risk that  
laws may be violated simply through lack of aware-  
ness. The BMW Group has established a Compliance  
Organisation aimed at ensuring that its represen-  
tative bodies, managers and staff act lawfully at all  
times. Further information on the BMW Group’s  
Compliance Organisation can be found in the section  
“Corporate Governance”.  
Interest rate risks in the Financial Services line of  
business are managed by raising refinancing funds  
with matching maturities and by employing inter-  
est-rate derivatives.  
If the relevant recognition criteria are fulfilled, deriv-  
atives used by the BMW Group are accounted for as  
hedging instruments. Further information on risks in  
conjunction with financial instruments is provided in  
note 37 to the Group Financial Statements.  
see  
note 37  
1
00  
Combined  
Management  
Report  
Like all internationally operating entities, the  
BMW Group is confronted with legal disputes relat-  
ing in particular to warranty claims, product liability,  
infringements of protected rights and proceedings  
initiated by government agencies. Any of these mat-  
ters could, amongst others, have an adverse impact  
on the Group’s reputation. Such proceedings are  
typical for the sector and can arise as a consequence  
of realigning product or purchasing strategies to suit  
changed market conditions. Particularly in the US  
market, class action lawsuits and product liability  
risks can have substantial financial consequences  
and cause damage to the Group’s public image. The  
application of more rigorous consumer regulations  
or the stricter interpretation of existing regulations  
could result in a greater number of recalls. The high  
quality of the Group’s products, which is ensured  
by regular quality audits and ongoing improvement  
measures, helps reduce this risk.  
Overall assessment of the risk and  
opportunities situation  
The overall risk assessment is based on a consolidated  
view of all significant individual risks and opportu-  
nities. The exposure to risks in the individual risk  
categories is essentially stable. In view of the growing  
importance of data and IT systems for its business, the  
BMW Group sees an increased need for protection in  
the area of information, data protection and IT systems.  
In view of these changes, the overall risk level for the  
BMW Group has increased slightly compared to the  
previous year. Overall, there has been no significant  
change in the opportunities situation compared to  
the previous year.  
Report on Outlook,  
Risks and  
Opportunities  
Risks and  
Opportunities  
Internal Control  
System and Risk  
Management System  
Relevant for the  
Financial Reporting  
Process  
In addition to the risk categories described above,  
unforeseen events could have a negative impact on  
business operations and hence on the BMW Group’s  
results of operations, financial position and net assets,  
and on its reputation. A comprehensive risk manage-  
ment system is in place to ensure that the BMW Group  
successfully manages these risks.  
The BMW Group recognises appropriate levels  
of provision for lawsuits. A part of these risks is  
insured where this makes business sense. Some  
risks, however, either cannot be estimated or only  
to a limited extent. In other cases, the incurrence  
of expenses or losses may be considered unlikely.  
Such items are reported as contingent liabilities.  
It cannot be ruled out, however, that losses from  
damages could arise that are either not covered or  
not fully covered by insurance policies or provisions,  
or as contingent liabilities. In accordance with IAS 37  
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 – like the opportuni-  
ties – have an impact on the BMW Group’s forecasts if  
they were to materialise. The BMW Group’s financial  
position is stable and cash needs are currently covered  
by available liquidity and credit lines.  
(
Provisions, Contingent Liabilities and Contingent  
Assets), the required information is not provided if  
the BMW Group concludes that disclosure of the  
information could seriously prejudice the outcome of  
the relevant legal proceedings. Further information  
on contingent liabilities is provided in note 36 to  
the Group Financial Statements.  
see  
note 36  
1
01  
INTERNAL CONTROL  
SYSTEM AND RISK  
MANAGEMENT SYSTEM  
RELEVANT FOR THE  
FINANCIAL REPORTING  
PROCESS  
reporting. Moreover, the internal audit department,  
in its capacity as a process-independent function,  
tests and assesses the effectiveness of the internal  
control system and proposes improvements where  
appropriate.  
*
Disclosures  
pursuant to  
*
§
289 (5) HGB  
and § 315 (2)  
no. 5 HGB.  
Controls  
Extensive controls are carried out by managers and  
staff in all financial reporting processes at an individ-  
ual entity and Group level, thus ensuring that legal  
requirements and internal guidelines are complied  
with and that all business transactions are properly  
executed. Controls are also carried out with the aid  
of IT applications, thus reducing the incidence of  
process risks. Moreover, the performance of controls  
on accounts deemed to be exposed to risk are subject  
to additional monitoring.  
The internal control system in place throughout the  
BMW Group is aimed at ensuring the effectiveness  
of operations. It makes an important contribution  
towards ensuring compliance with the laws that apply  
to the BMW Group as well as providing assurance on  
the propriety and reliability of internal and external  
financial reporting. The internal control system is  
therefore a significant factor in the management of  
process risks. The principal features of the internal  
control system and the risk management system, as far  
as they relate to individual entity and Group financial  
reporting processes, are described below.  
IT authorisations  
All IT applications used in financial reporting pro-  
cesses throughout the BMW Group are subject to  
access restrictions, allowing only authorised persons  
to gain access to systems and data in a controlled envi-  
ronment. Access authorisations are allocated on the  
basis of the nature of the duties to be performed. In  
addition, IT processes are designed and authorisations  
allocated using the dual control principle, as a result of  
which, for instance, requests cannot be submitted and  
approved by the same person. Technical monitoring  
procedures and internal audits are also in place to  
ensure appropriate authorisation security throughout  
all IT systems.  
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. Information relevant for the various finan-  
cial reporting processes – at BMWAG, other consol-  
idated Group entities and for the BMW Group as a  
whole – is set out primarily in organisational manuals,  
internal and external financial reporting guidelines,  
accounting manuals and training documentation. This  
information, which can be accessed at all levels via the  
BMW Group’s intranet system, provide the framework  
for ensuring that the relevant rules are applied consist-  
ently throughout the Group. The quality and relevance  
of these instructions are ensured by regular review as  
well as by continuous communication between the  
relevant departments.  
Organisational measures  
All financial reporting processes (including Group  
financial reporting processes) are structured in  
organisational terms in accordance with the principle  
of segregation of duties, thus making an important  
contribution to the early identification of errors and  
the prevention of potential wrongdoing. Regular com-  
parison of internal forecasts and external financial  
reports, for example, improves the quality of financial  
1
02  
Combined  
Management  
Report  
Internal control training for employees  
All employees are appropriately trained to carry out  
their duties and kept informed of any changes in  
regulations or processes that affect them. Managers  
and staff also have access to detailed best-practice  
descriptions relating to risks and controls in the var-  
ious processes, thus increasing risk awareness at all  
levels. As a consequence, the internal control system  
can be evaluated regularly and further improved  
as necessary. Employees can, at any time and inde-  
pendently, deepen their understanding of control  
methods and design using an information platform  
that is accessible throughout the entire Group.  
Internal Control  
System and Risk  
Management System  
Relevant for the  
Financial Reporting  
Process  
Disclosures Relevant  
for Takeovers  
and Explanatory  
Comments  
Evaluating the effectiveness of the internal  
control system  
Responsibilities for ensuring the effectiveness of  
the internal control system in relation to individual  
entity and Group financial reporting processes are  
clearly defined and allocated to the relevant managers  
and are subject to internal audits (e.ꢀg. management  
self-audits, internal audit department findings). Data  
analysis tools are also employed to identify risks relat-  
ing to business transactions. Continuous revision and  
further development ensures the effectiveness of the  
internal control system. Group entities are required  
to confirm regularly as part of their reporting duties  
that the internal control system is functioning prop-  
erly. Effective measures are implemented whenever  
weaknesses are identified and reported.  
1
03  
DISCLOSURES RELEVANT  
FOR TAKEOVERS AND  
EXPLANATORY COMMENTS HGB.  
The Company’s shares of preferred stock are shares  
within the meaning of §139 et seq. AktG, which  
carry a cumulative preferential right in terms of the  
allocation of profit and for which voting rights are  
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 arrears are not paid  
in the subsequent year alongside the full preference  
amount due for that year. With the exception of voting  
rights, holders of shares of preferred stock are entitled  
to the same rights as holders of shares of common  
stock. Article 24 of the Articles of Incorporation con-  
fers preferential treatment to the non-voting shares of  
preferred stock with regard to the appropriation of the  
Company’s unappropriated profit. Accordingly, the  
unappropriated profit is required to be appropriated  
in the following order:  
*
Disclosures  
pursuant to  
*
§
289 (4) HGB  
and § 315 (4)  
Composition of subscribed capital  
The subscribed capital (share capital) of BMW AG  
amounted to €ꢀ657,109,600 at 31 December 2016  
(
2015: €ꢀ656  
no. 1 of the Articles of Incorporation, is sub-divided  
into 601 995 196 shares of common stock (91 61 %)  
2015 601 995 196 91 66 %) and 55 114 404 shares of  
non-voting preferred stock ( 39%) (2015 54 809 404  
.34 %), each with a par value of €ꢀ1. The Company’s  
shares are issued to bearer.  
,804,600) and, in accordance with Article 4  
,
,
.
(
:
,
,
;
.
,
,
8
.
:
,
,
;
8
(
a) subsequent payment of any arrears on dividends  
on non-voting preferred shares in the order of  
accruement  
The rights and duties of shareholders derive from the  
German Stock Corporation Act (AktG) in conjunction  
with the Company’s Articles of Incorporation, the  
full text of which is available at  
www.bmwgroup.com. The  
(b) payment of an additional dividend of €ꢀ0.02 per  
€ꢀ1 par value on non-voting preferred shares  
right of shareholders to have their shares evidenced  
is excluded in accordance with the Articles of Incor-  
poration. The voting power attached to each share  
corresponds to its par value. Each €ꢀ1 of par value  
of share capital represented in a vote entitles the  
holder to one vote (Article 18 no.1 of the Articles of  
Incorporation).  
(c) uniform payment of any other dividends on  
shares on common and preferred stock, provid-  
ed the shareholders do not resolve otherwise  
at the Annual General Meeting  
Restrictions on voting rights or the transfer  
of shares  
As well as shares of common stock, the Company has  
also issued non-voting shares of preferred stock. Fur-  
ther information relating to this can be found above  
in the section “Composition of subscribed capital”.  
When the Company issues non-voting shares of  
preferred stock to employees in conjunction with its  
Employee Share Programme, these shares are subject  
as a general rule to a company-imposed blocking peri-  
od of four years, measured from the beginning of the  
calendar year in which the shares are issued.  
Contractual holding period arrangements also apply to  
shares of common stock acquired by Board of Manage-  
ment members and certain senior department heads  
in conjunction with the share-based remuneration  
programmes (Compensation Report of the Corporate  
see Governance section; note 39 to the Group Financial  
note 39  
Statements).  
1
04  
Combined  
Management  
Report  
Direct or indirect investments in capital exceeding  
the following direct or indirect holdings exceeding  
10% of the voting rights at the end of the reporting  
period were held at the stated reporting date:ꢀ  
1
0 % of voting rights  
1
Based on the information available to the Company,  
Disclosures Relevant  
for Takeovers  
and Explanatory  
Comments  
Direct share of  
voting rights  
Indirect share of  
voting rights  
in %  
Stefan Quandt, Germany  
0.2  
17.42  
16.43  
12.64  
AQTON SE, Bad Homburg v.d. Höhe, Germany  
17.4  
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  
0.2  
Susanne Klatten Beteiligungs GmbH, Bad Homburg v.d. Höhe, Germany  
12.6  
1
Based on voluntary notifications provided by the listed shareholders as at 31 December 2016.  
Controlled entities, of which 3 % or more are attributed: AQTON SE.  
Controlled entities, of which 3 % or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.  
Controlled entities, of which 3 % or more are attributed: Susanne Klatten Beteiligungs GmbH.  
2
3
4
The voting power percentages disclosed above may  
have changed subsequent to the stated date if these  
changes were not required to be reported to the  
Company. Due to the fact that the Company’s shares  
are issued to bearer, the Company is generally only  
aware of changes in shareholdings if such changes are  
subject to mandatory notification rules.  
General Meeting (§119 (1) no.5, §179 (1) AktG). The  
Supervisory Board is authorised to approve amend-  
ments to the Articles of Incorporation which only  
affect its wording (Article 14 no.3 of the Articles of  
Incorporation). 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).  
Shares with special rights which confer control  
rights  
There are no shares with special rights which confer  
control rights.  
Authorisations given to the Board of Management  
in particular with respect to the issuing or buying  
back of shares  
System of control over voting rights when  
employees participate in capital and do not  
exercise their control rights directly  
Like all other shareholders, employees exercise their  
control rights pertaining to shares they have acquired  
in conjunction with the Employee Share Programme  
and/or the share-based remuneration programme  
directly on the basis of relevant legal provisions and  
the Company’s Articles of Incorporation.  
The Board of Management is authorised to buy back  
shares and sell repurchased shares in situations spec-  
ified in §71 AktG, e.ꢀg. to avert serious and imminent  
damage to the Company andꢀ/ꢀor to offer shares to  
persons employed or previously employed by BMWAG  
or one of its affiliated companies.  
In accordance with the resolution passed at the  
Annual General Meeting on 15 May 2014, the Board of  
Management is also authorised – up to 14 May 2019  
–
to acquire shares of non-voting preferred stock of the  
Company via the stock exchange, up to a maximum  
of 1% of the share capital existing at the date of the  
resolution. The consideration paid by the Company  
per share of non-voting preferred stock (excluding  
transaction costs) may not be more than 10% above  
or below the market price determined by the opening  
auction on the date of trading of the stock in the  
Xetra trading system (or a successor system having a  
comparable function). Moreover, the Board of Man-  
agement is authorised to use the acquired Company’s  
own shares of non-voting preferred stock for all legally  
admissible purposes, specifically including the right  
Statutory regulations and Articles of Incorporation  
provisions with regard to the appointment and  
removal of members of the Board of Management  
and changes to the Articles of Incorporation  
The appointment or removal of members of the Board  
of Management is based on the rules contained in §84  
et seq. AktG in conjunction with §31 of the German  
Co-Determination Act (MitbestG).  
Amendments to the Articles of Incorporation must  
comply with §179 et seq. AktG. All amendments must  
be decided upon by the shareholders at the Annual  
1
05  
to offer and transfer shares to persons employed by  
the Company or one of its affiliated companies up to  
a proportionate amount of €ꢀ5 million of share capital.  
The subscription rights of existing shareholders to the  
new shares of preferred stock used for the purpose  
stated above are excluded. The authorisations may  
also be exercised in parts on more than one occasion.  
BMWꢁAG acts as guarantor for all obligations aris-  
ing from the joint venture agreement relating to  
BMW Brilliance Automotive Ltd. in China. The  
agreement grants an extraordinary right of termi-  
nation to either joint venture partner in the event  
that, either directly or indirectly, more than 25ꢁ%  
of the shares of the other party are acquired by a  
third party, or if the other party is merged with  
another legal entity. The termination of the joint  
venture agreement may result in either the sale of  
the shares to the other joint venture partner or in  
the liquidation of the joint venture entity.  
—
—
In accordance with Article  
4 no.5 of the Articles of  
Incorporation, the Board of Management is author-  
ised – with the approval of the Supervisory Board – to  
increase BMWAG’s share capital during the period  
until 14 May 2019 by up to €ꢀ4,145,383 for the pur-  
poses of an Employee Share Scheme 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  
Framework agreements are in place with finan-  
cial institutions and banks (ISDA Master Agree-  
ments) with respect to trading activities with  
derivative financial instruments. Each of these  
agreements includes an extraordinary right of  
termination, which triggers the immediate settle-  
ment of all current transactions in the event that  
the creditworthiness of the party involved is  
materially weaker following a direct or indirect  
acquisition of beneficially owned equity capital  
that confers the power to elect a majority of the  
Supervisory Board of a contractual party or any  
other ownership interest that enables the acquir-  
er to exercise control over a contractual party, or  
which constitutes a merger or a transfer of net  
assets.  
2
014). Subscription rights of existing shareholders to  
the new shares are excluded. No conditional capital  
is in place at the reporting date.  
Significant agreements entered into by the  
Company subject to control change clauses in the  
event of a takeover bid  
BMWAG is party to the following major agreements,  
which contain provisions that would apply in the event  
of a change in control or the acquisition of control as  
a result of a takeover bid:  
An agreement concluded with an international  
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 BMWꢁAG (partially in the capacity of guarantor  
and partially in the capacity of borrower), if the  
EIB has reason to assume – after the change in  
control has taken place or 30 days after it has  
made a request to discuss the situation – that the  
change in control could have a significantly  
adverse impact, or if the borrower refuses to hold  
any such discussions. A change in control of  
BMWꢁAG arises if one or more individuals take  
over or lose control of BMWꢁAG, with control  
being defined in the above-mentioned financing  
agreements as (i) holding or having control over  
more than 50ꢁ% 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 50ꢁ% of dividends  
payable or (iv) any other comparable controlling  
influence over BMWꢁAG.  
—
—
consortium of banks relating to a syndicated  
credit line (which was not being utilised at the  
balance sheet date) entitles the lending banks to  
give extraordinary notice to terminate the credit  
line (such that all outstanding amounts, includ-  
ing interest, would fall due immediately) if one  
or more parties jointly acquire direct or indirect  
control of BMWꢁAG. The term “control” is  
defined as the acquisition of more than 50ꢁ% of  
the share capital of BMWꢁAG, or the right to  
receive more than 50ꢁ% of the dividend or the  
right to direct the affairs of the Company, or  
appoint the majority of the members of the  
Supervisory Board.  
A cooperation agreement concluded with Peu-  
geot SA relating to the joint development and  
production of a new family of small (1- to  
—
1
.6-litre) petrol engines entitles each of the  
cooperation partners to give extraordinary noti-  
fication of termination in the event of a compet-  
itor acquiring control over the other contractual  
party and if any concerns of the other contrac-  
tual party concerning the impact of the change  
of control on the cooperation arrangements are  
not allayed during the subsequent discussion  
process.  
1
06  
Combined  
Management  
Report  
BMWꢁAG is party to an agreement with SGL Car-  
bon 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 –  
50ꢁ% or more of the voting rights relating to the rel-  
evant other shareholder of the joint operations are  
acquired by a third party, or if 25ꢁ% of such voting  
rights have been acquired by a third party if that  
third party is a competitor of the party that has not  
been affected by the acquisition of the voting  
rights. In the event of such acquisitions of voting  
rights by a third party, the non-affected sharehold-  
er has the right to purchase the shares of the joint  
operations from the affected shareholder or to  
require the affected party to acquire the other  
shareholder’s shares.  
In accordance with the agreement between  
BMWꢁAG, Daimler AG and AUDI AG pertaining  
to the acquisition of entities of the HERE Group  
and the related foundation of There Holding  
B.ꢀV., each contractual party is required to offer  
its shares in There Holding B.ꢀV. for sale to the  
other shareholders in the event of a change in  
control. If neither of the other two parties  
acquires these shares, these other parties are  
entitled to resolve that There Holding B.ꢀV. be  
dissolved.  
—
—
—
Disclosures Relevant  
for Takeovers  
and Explanatory  
Comments  
BMW Stock and  
Capital Markets in  
2
016  
The development cooperation agreement  
between BMWꢁAG, Intel Corporation and Mobil-  
eye Vision Technologies Ltd., relating to the  
development of technologies deployed in highly  
and fully automated vehicles, may be terminat-  
ed by any of the contractual parties if a competi-  
tor of one of the parties acquires and  
The framework cooperation agreement entered  
into by BMWꢁAG and Sixt SE amongst others,  
relating to the foundation and operation of the  
car-sharing joint venture DriveNow, may be ter-  
minated by Sixt SE if a car hire company  
acquires more than 50ꢁ% of the shares of com-  
mon stock of BMWꢁAG. In the event of such a  
termination, Sixt SE may, at its own discretion,  
stipulate the sale of BMW’s interest in the joint  
venture to Sixt SE or the purchase of Sixt’s  
interest in the joint venture by BMWꢁAG or one  
its subsidiaries.  
subsequently holds at least 30ꢁ% of the voting  
shares of one of the contractual parties.  
—
—
Compensation agreements with members of the  
Board of Management or with employees in the  
event of a takeover bid  
The BMW Group has not concluded any compensation  
agreements with members of the Board of Manage  
ment or with employees for situations involving a  
takeover offer.  
-
Several supply and development contracts  
between BMWꢁAG and various industrial cus-  
tomers, all relating to the sale of components for  
drivetrain systems, grant an extraordinary right  
of termination to the relevant industrial custom-  
er in specified cases of a change in control at  
BMWꢁAG (e.ꢀg. BMWꢁAG merges with a third  
party or is taken over by a third party; an auto-  
mobile manufacturer acquires more than 50ꢁ% of  
the voting rights or share capital of BMWꢁAG).  
1
07  
BMW STOCK  
AND CAPITAL MARKETS  
Development of BMW stock compared to stock  
market indices since 30 December 2011  
• 56  
IN 2016  
in %  
www.bmwgroup.com/ir  
2
19.1  
2
1
0
40  
198.9  
194.6  
171.5  
20  
Capital markets and BMW stock were both impacted by  
major political and economic uncertainties during the  
past year. Thanks to its consistent focus on the future  
and solid financials, the BMW Group continues to enjoy  
the best ratings in the European automobile sector and  
a high standing on international capital markets.  
BMW  
preferred  
stock  
BMW  
common  
stock  
Prime  
Auto-  
mobile  
DAX  
Political uncertainties weigh on stock markets  
The stock market year 2016 was dominated by con-  
cerns relating to political developments. During the  
first half of the year, the approaching Brexit vote had  
a negative impact on international financial markets.  
At the beginning of the year, speculation about the  
cooling of the Chinese economy had a negative impact  
on stock market indices worldwide. At 8,753 points,  
the German stock exchange (DAX) reached its low for  
Additionally, the US election on  
8
November unsettled  
the year on 11 February, 18.5% down on its closing  
markets towards the year-end. Uncertainties regard-  
ing the economic situation in China also dampened  
investor sentiment. The active role of central banks  
over the course of the year tended to counteract these  
influences, so that many stock exchanges closed – at  
the end of a volatile year – higher than their previous  
year’s level.  
level on 31 December 2015. The ECB’s decision to con-  
tinue its expansionary monetary policies and, starting  
8
June, to buy euro-denominated investment-grade  
corporate bonds, had a positive impact on investor  
sentiment. However, following the Brexit vote on  
23 June and the uncertainties it triggered, indices  
around the world slumped again. During the summer  
months, stock markets proceeded to recover after the  
difficult first half year. The active role of the Bank  
of England was well received by investors. Reducing  
the reference interest rate to a record low of 0.25%  
and the bank’s decision to purchase GBP 60 billion  
worth of UK government bonds were interpreted as  
positive signals. Good labour market figures coming  
from the USA and the UK generated further gains  
over the summer. During the last three months of  
the year, the focus was on the US elections and the  
ECB’s decision to extend its bond-buying programme  
until December 2017. Stock markets generally tended  
positively during this phase, with the consequence  
that the DAX – despite a turbulent start to the year –  
recorded a  
closing at 11  
6
.
,
9
% gain for the twelve-month period,  
481 points on 30 December 2016. The  
EURO STOXX 50 recorded a gain of 0.7% in 2016,  
closing at 3,291 points on 30 December.  
1
08  
Combined  
Management  
Report  
Development of BMW stock compared to stock market indices  
• 57  
BMW Stock and  
Capital Markets in  
Index: December 2011 = 100  
2
016  
200  
150  
100  
50  
200  
150  
100  
50  
Prime Automobile  
BMW preferred stock  
DAX  
BMW common stock  
2
012  
2013  
2014  
2015  
2016  
2017  
Source: Reuters.  
The Prime Automobile Index lost about one third of  
its value towards the middle of the year, with subdued  
demand for automobile stocks. The index recovered  
during the second half of the year, finishing the report-  
Employee Share Programme  
BMWAG has enabled its employees to participate in  
its success for more than 40 years. Since 1989, this  
participation has taken the form of an Employee Share  
ing period at  
1
,
506 points,  
5
.
6
% below its closing level  
Programme. A total of 305,029 shares of preferred  
on 30 December 2015.  
stock were issued to employees as part of this pro-  
gramme in 2016.  
BMW common stock followed the downward trend for  
the sector index during the first half of the year, at one  
stage falling 33% below its previous year’s closing level.  
It performed significantly better during the second  
half of the year, closing at €ꢀ88.75 (–9.1%) thanks to  
In this context, and with the approval of the Super-  
visory Board, the Board of Management increased  
BMWAG’s share capital by €ꢀ305  
,
000 from €ꢀ656  
,804,600  
to €ꢀ657 109 600 by issuing 305,  
,
,
000 new non-voting  
strong gains. BMW preferred stock fell by  
value compared to its closing price at the end of the  
previous year and stood at €ꢀ72 70 at the end of the  
stock market year 2016. With a market capitalisation  
of approximately €ꢀ57 billion, the BMW Group was  
among the ten most valuable German enterprises  
listed on the stock market.  
6
.
1
% in  
shares of preferred stock. This increase was executed  
on the basis of Authorised Capital 2014 in Article 4  
(5) of the Articles of Incorporation. The new shares  
of preferred stock carry the same rights as existing  
shares of preferred stock. The newly issued shares of  
preferred stock for employees are entitled to receive  
dividends with effect from the financial year 2017. In  
addition, 29 shares of preferred stock were bought  
back via the stock market.  
.
1
09  
Dividend increase proposed  
(2015: €ꢀ2,102 million) to pay a dividend of €ꢀ3.50 for  
each share of common stock (2015: €ꢀ3.20) and a divi-  
Reflecting the strong earnings performance, the  
Board of Management and the Supervisory Board  
will propose to the Annual General Meeting to use  
dend of €ꢀ3.52 for each share of preferred stock (2015:  
€ꢀ 22), a pay-out ratio of 33  
3
.
.
3
% for 2016 (2015: 32.9%).  
BMWAG’s unappropriated profit of €ꢀ2,300 million  
BMW stock  
•
58  
2
016  
2015  
2014  
2013  
2012  
coMMon stock  
Number of shares in 1,000  
Stock exchange price in €1  
Year-end closing price  
High  
601,995  
601,995  
601,995  
601,995  
601,995  
88.75  
92.25  
65.10  
97.63  
122.60  
75.68  
89.77  
95.51  
77.41  
85.22  
85.42  
63.93  
72.93  
73.76  
53.16  
Low  
preFerred stock  
Number of shares in 1,000  
Stock exchange price in €1  
Year-end closing price  
High  
55,114  
54,809  
54,500  
54,260  
53,994  
72.70  
74.15  
56.53  
77.41  
92.19  
58.96  
67.84  
74.60  
59.08  
62.09  
64.65  
48.69  
48.76  
49.23  
35.70  
Low  
key dAtA per sHAre in €  
Dividend  
Common stock  
3.502  
3.522  
10.45  
10.47  
17.45  
72.08  
3.20  
3.22  
2.90  
2.92  
2.60  
2.62  
2.50  
2.52  
Preferred stock  
Earnings per share of common stock3  
Earnings per share of preferred stock4  
Operating cash flow Automotive segment  
Equity  
9.70  
8.83  
8.08  
7.77  
9.72  
8.85  
8.10  
7.79  
18.02  
65.11  
14.35  
57.03  
15.19  
54.25  
13.98  
46.66  
1
Xetra closing prices.  
Proposed by management.  
Annual average weighted amount.  
Stock weighted according to dividend entitlements.  
2
3
4
1
10  
Combined  
Management  
Report  
Ratings remain at top level  
Intensive communication with capital markets  
continued  
The BMW Group continues to have the best ratings  
in the European automobile sector. Since Decem-  
ber 2013, BMWAG has had a long-term rating of A+  
The BMW Group continued to inform analysts, inves-  
tors, and rating agencies throughout 2016 with regular  
quarterly and year-end financial reports. The compre-  
hensive information programme provided for relevant  
capital market participants also included numerous  
one-on-one and group meetings, dedicated socially  
responsible investment (SRI) roadshows for investors  
using sustainability criteria in their investment deci-  
sions, and debt roadshows for fixed-income investors  
and credit analysts. Communication focused on the  
BMW Stock and  
Capital Markets in  
2
016  
(
stable outlook) and a short-term rating of A-1 from  
the rating agency Standard & Poor’s, currently the  
highest rating given by Standard & Poor’s to a Euro-  
pean car manufacturer.  
Standard &  
Company rating  
Moody’s  
Poor’s  
Non-current financial liabilities  
Current financial liabilities  
Outlook  
A1  
P–1  
A+  
A–1  
new Strategy NUMBER ONE > NEXT, the profitability  
of future business models, digitalisation and other  
technological trends in the automobile industry, and  
the relevance of alternative drive systems. In addition  
to participating in various conferences and roadshows,  
a series of product presentations and a technology  
workshop were held for analysts and investors.  
stable  
stable  
On 25 January 2017, Moody’s raised its long-term  
rating for BMWAG from A2 (positive outlook) to  
A1 (stable outlook). The P-1 short-term rating was  
reaffirmed. The main reasons for the improved ratings  
were the forthcoming launches of attractive products,  
the good position of the BMW Group with regard  
to the challenges faced by the automobile industry,  
a consistently strong operating performance and a  
robust financing and capital structure.  
The ratings underline the BMW Group’s robust  
financial condition and excellent creditworthiness.  
Thanks to these attributes, it not only has good access  
to international capital markets, but also benefits from  
attractive refinancing conditions.  
GROUP FINANCIAL  
STATEMENTS  
Page 112 Income Statements for Group and Segments  
Page 112 Statement of Comprehensive Income for Group  
Page 114 Balance Sheets for Group and Segments  
Page 116 Cash Flow Statements for Group and Segments  
Page 118 Group Statement of Changes in Equity  
Page 120 Notes to the Group Financial Statements  
Page 120 Accounting Principles and Policies  
Page 133 Notes to the Income Statement  
Page 139 Notes to the Statement of Comprehensive Income  
Page 140 Notes to the Balance Sheet  
3
Group Financial  
Statements  
Page 161 Other Disclosures  
Income Statements  
Page 175 Segment Information  
Statement of  
Comprehensive  
Income  
Page 180 List of Investments at 31 December 2016  
Balance Sheets  
Cash Flow  
Statements  
Notes  
3
1
12  
Group  
Financial  
Statements  
BMW GROUP  
INCOME STATEMENTS FOR GROUP AND SEGMENTS  
STATEMENT OF COMPREHENSIVE INCOME FOR GROUP  
BMW Group  
Income Statements  
for Group and  
Segments  
Statement of Com-  
prehensive Income  
for Group  
Income Statements for Group and Segments  
•
59  
Automotive  
unaudited supplementary  
information)  
Motorcycles  
(unaudited supplementary  
information)  
(
Group  
2016  
in € million  
Note  
2015  
2016  
2015  
2016  
2015  
Revenues  
6
7
94,163  
– 75,442  
18,721  
– 9,158  
670  
92,175  
– 74,043  
18,132  
– 8,633  
914  
86,424  
– 70,973  
15,451  
– 7,604  
616  
85,536  
– 70,399  
15,137  
– 7,219  
689  
2,069  
–1,639  
430  
– 256  
27  
1,990  
–1,542  
448  
– 239  
–
Cost of sales  
Gross profit  
Selling and administrative expenses  
Other operating income  
8
9
9
Other operating expenses  
– 847  
9,386  
441  
– 820  
9,593  
518  
– 768  
7,695  
441  
– 771  
7,836  
518  
–14  
187  
–
– 27  
182  
–
Profit / loss before financial result  
Result from equity accounted investments  
Interest and similar income  
Interest and similar expenses  
Other financial result  
22  
10  
10  
11  
196  
185  
260  
327  
–
–
– 489  
131  
– 618  
– 454  
– 369  
9,224  
– 2,828  
6,396  
27  
– 673  
193  
– 762  
– 396  
– 313  
7,523  
– 2,376  
5,147  
5
– 2  
– 3  
–
–
Financial result  
279  
221  
– 2  
– 3  
Profit / loss before tax  
9,665  
– 2,755  
6,910  
47  
7,916  
– 2,475  
5,441  
10  
185  
– 53  
132  
–
179  
– 55  
124  
–
Income taxes  
12  
Net profit / loss  
Attributable to minority interest  
Attributable to shareholders of BMW AG  
Basic earnings per share of common stock in €  
Basic earnings per share of preferred stock in €  
Dilutive effects  
29  
13  
13  
6,863  
10.45  
10.47  
–
6,369  
9.70  
5,431  
5,142  
132  
124  
9.72  
–
Diluted earnings per share of common stock in €  
Diluted earnings per share of preferred stock in €  
13  
13  
10.45  
10.47  
9.70  
9.72  
Statement of Comprehensive Income for Group  
•
60  
in € million  
Note  
2016  
2015  
Net profit  
6,910  
–1,858  
529  
6,396  
1,413  
– 401  
1,012  
–170  
–1,301  
71  
Remeasurement of the net defined benefit liability for pension plans  
Deferred taxes  
30  
Items not expected to be reclassified to the income statement in the future  
Available-for-sale securities  
–1,329  
40  
Financial instruments used for hedging purposes  
Other comprehensive income from equity accounted investments  
Deferred taxes  
2,008  
43  
– 721  
– 230  
1,140  
–189  
6,721  
47  
516  
Currency translation foreign operations  
765  
Items expected to be reclassified to the income statement in the future  
Other comprehensive income for the period after tax  
Total comprehensive income  
–119  
893  
17  
29  
7,289  
27  
Total comprehensive income attributable to minority interests  
Total comprehensive income attributable to shareholders of BMW AG  
6,674  
7,262  
1
13  
Financial Services  
unaudited supplementary  
information)  
Other Entities  
(unaudited supplementary  
information)  
Eliminations  
(unaudited supplementary  
information)  
(
2
016  
2015  
2016  
2015  
2016  
2015  
2
5,681  
22,135  
,546  
1,294  
23,739  
– 20,586  
3,153  
–1,164  
46  
6
–
7
–
– 20,017  
19,305  
– 712  
26  
–19,097  
18,484  
– 613  
19  
Revenues  
Cost of sales  
–
3
6
7
Gross profit  
–
– 30  
110  
–103  
–17  
–
– 30  
238  
– 46  
169  
–
Selling and administrative expenses  
Other operating income  
3
5
–118  
141  
– 59  
78  
–
103  
– 54  
Other operating expenses  
2
,184  
–
1,981  
–
– 663  
–
– 575  
–
Profit / loss before financial result  
Result from equity accounted investments  
Interest and similar income  
1
1
4
1,250  
–1,006  
– 57  
187  
170  
– 49  
121  
–
1,177  
–1,080  
– 55  
42  
–1,325  
1,216  
–
–1,323  
1,234  
–
–
24  
– 7  
Interest and similar expenses  
Other financial result  
–
5
– 3  
–
18  
,166  
– 6  
–109  
– 772  
211  
– 89  
– 664  
204  
Financial result  
2
1
1
1,975  
– 528  
1,447  
21  
211  
– 73  
138  
1
Profit / loss before tax  
–
389  
Income taxes  
,777  
– 561  
–
– 460  
–
Net profit / loss  
3
7
Attributable to minority interest  
Attributable to shareholders of BMW AG  
Basic earnings per share of common stock in €  
Basic earnings per share of preferred stock in €  
Dilutive effects  
,740  
1,426  
121  
137  
– 561  
– 460  
Diluted earnings per share of common stock in €  
Diluted earnings per share of preferred stock in €  
1
14  
Group  
Financial  
Statements  
BMW GROUP  
BALANCE SHEETS FOR GROUP AND  
SEGMENTS AT 31 DECEMBER 2016  
BMW Group  
Balance Sheets for  
Group and Segments  
at 31 December  
Automotive  
unaudited supplementary  
information)  
Motorcycles  
(unaudited supplementary  
information)  
(
Group  
in € million  
Note  
2016  
2015  
2016  
2015  
2016  
2015  
ASSꢀꢁS  
Intangible assets  
19  
20  
21  
22  
8,157  
17,960  
37,789  
2,546  
7,372  
17,759  
34,965  
2,233  
7,705  
17,566  
–
6,899  
17,416  
–
46  
365  
–
48  
313  
–
Property, plant and equipment  
Leased products  
Investments accounted for using the equity method  
Other investments  
2,546  
5,195  
–
2,233  
5,147  
–
–
–
560  
428  
–
–
Receivables from sales financing  
Financial assets  
23  
24  
12  
26  
48,032  
2,705  
41,865  
2,208  
–
–
1,287  
4,310  
4,043  
42,652  
586  
–
–
Deferred tax  
2,327  
1,945  
4,114  
3,935  
40,330  
–
–
Other assets  
1,595  
1,568  
28  
439  
25  
386  
Non-current assets  
121,671  
110,343  
Inventories  
27  
28  
23  
24  
25  
26  
11,841  
2,825  
30,228  
7,065  
1,938  
5,087  
7,880  
66,864  
11,071  
2,751  
11,344  
2,502  
–
10,611  
2,453  
–
492  
144  
–
453  
139  
–
Trade receivables  
Receivables from sales financing  
Financial assets  
28,178  
6,635  
4,862  
1,000  
21,561  
4,794  
46,063  
4,859  
1,240  
19,907  
3,952  
43,022  
–
–
Current tax  
2,381  
–
–
Other assets  
4,693  
2
–
Cash and cash equivalents  
Current assets  
6,122  
–
–
61,831  
638  
592  
Total assets  
188,535  
172,174  
88,715  
83,352  
1,077  
978  
ꢀ
qꢂIꢁy Aꢃꢄ lIAbIlIꢁIꢀS  
Subscribed capital  
29  
29  
29  
29  
29  
657  
2,047  
44,445  
– 41  
657  
2,027  
Capital reserves  
Revenue reserves  
41,027  
–1,181  
42,530  
Accumulated other equity  
Equity attributable to shareholders of BMW AG  
47,108  
Minority interest  
255  
234  
Equity  
47,363  
42,764  
36,624  
33,460  
–
–
Pension provisions  
Other provisions  
30  
31  
12  
33  
34  
4,587  
5,039  
3,000  
4,621  
2,911  
4,570  
740  
1,770  
4,141  
429  
83  
103  
–
45  
136  
–
Deferred tax  
2,795  
2,116  
Financial liabilities  
Other liabilities  
55,405  
5,357  
49,523  
4,559  
1,942  
6,530  
16,693  
2,621  
5,545  
14,506  
–
–
442  
628  
401  
582  
Non-current provisions and liabilities  
73,183  
63,819  
Other provisions  
31  
32  
33  
35  
34  
5,879  
1,074  
5,009  
1,441  
5,187  
770  
4,398  
810  
90  
–
85  
–
Current tax  
Financial liabilities  
Trade payables  
42,326  
8,512  
42,160  
7,773  
1,481  
7,483  
20,477  
35,398  
3,211  
6,856  
20,111  
35,386  
–
–
303  
56  
449  
263  
48  
Other liabilities  
10,198  
67,989  
9,208  
Current provisions and liabilities  
65,591  
396  
Total equity and liabilities  
188,535  
172,174  
88,715  
83,352  
1,077  
978  
1
15  
Financial Services  
unaudited supplementary  
information)  
Other Entities  
(unaudited supplementary  
information)  
Eliminations  
(unaudited supplementary  
information)  
(
2
016  
2015  
2016  
2015  
2016  
2015  
ASSꢀꢁS  
Intangible assets  
4
05  
424  
30  
1
–
1
–
–
–
–
–
2
9
Property, plant and equipment  
Leased products  
4
4
5,134  
41,148  
–
–
–
– 7,345  
–
– 6,183  
–
–
3
–
–
Investments accounted for using the equity method  
Other investments  
2
6,585  
–
5,966  
–
–11,223  
–
–10,687  
–
8,032  
41,865  
236  
Receivables from sales financing  
Financial assets  
2
3
21  
89  
1,780  
263  
27,120  
35,749  
1,985  
205  
– 583  
– 2,635  
– 32,689  
– 54,475  
– 599  
– 2,596  
– 27,129  
– 47,194  
222  
Deferred tax  
3
,093  
2,469  
86,396  
22,268  
30,425  
Other assets  
9
3
7,306  
Non-current assets  
5
7
158  
–
1
–
1
–
–
Inventories  
Trade receivables  
1
78  
–
–
0,228  
28,178  
1,354  
37  
–
–
–
– 630  
–
–
– 699  
–
Receivables from sales financing  
Financial assets  
1
,504  
1,329  
894  
1,121  
1,104  
45,379  
811  
4
4
Current tax  
5
3
,417  
,046  
4,540  
1,359  
35,633  
44,782  
40  
– 66,675  
–
– 65,133  
–
Other assets  
Cash and cash equivalents  
Current assets  
4
0,422  
47,046  
48,416  
– 67,305  
– 65,832  
1
37,728  
122,029  
82,795  
78,841  
–121,780  
–113,026  
Total assets  
ꢀ
qꢂIꢁy Aꢃꢄ lIAbIlIꢁIꢀS  
Subscribed capital  
Capital reserves  
Revenue reserves  
Accumulated other equity  
Equity attributable to shareholders of BMW AG  
Minority interest  
1
1,049  
9,948  
16,744  
15,225  
–17,054  
–15,869  
Equity  
7
7
55  
313  
1,516  
13  
1,130  
31  
–
–
–
–
Pension provisions  
Other provisions  
3
53  
6
,755  
6,158  
48  
28  
– 4,748  
– 583  
– 4,499  
– 599  
Deferred tax  
1
2
5
7,718  
9,413  
4,316  
16,030  
23,613  
46,169  
36,328  
601  
31,471  
835  
Financial liabilities  
– 31,629  
– 36,960  
– 25,835  
– 30,933  
Other liabilities  
38,506  
33,495  
Non-current provisions and liabilities  
5
2
99  
55  
518  
223  
3
49  
8
408  
–
–
–
–
Other provisions  
Current tax  
2
7,368  
02  
23,038  
630  
14,107  
24  
16,610  
24  
– 630  
–
– 699  
–
Financial liabilities  
7
Trade payables  
4
7
3,439  
2,363  
41,503  
65,912  
13,362  
27,545  
13,071  
30,121  
– 67,136  
– 67,766  
– 65,525  
– 66,224  
Other liabilities  
Current provisions and liabilities  
1
37,728  
122,029  
82,795  
78,841  
–121,780  
–113,026  
Total equity and liabilities  
1
16  
Group  
Financial  
Statements  
BMW GROUP  
CASH FLOW STATEMENTS FOR GROUP AND SEGMENTS  
BMW Group  
Cash Flow  
Statements for Group  
and Segments  
Group  
2016  
in € million  
2015  
Net profit  
6,910  
6,396  
Reconciliation between net profit and cash inflow / outflow from operating activities  
Current tax  
2,670  
131  
2,751  
239  
Other interest and similar income / expenses  
Depreciation and amortisation of other tangible, intangible and investment assets  
Change in provisions  
4,998  
883  
4,686  
296  
Change in leased products  
– 2,526  
– 8,368  
85  
– 3,299  
– 6,637  
77  
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  
–15  
47  
– 4  
–144  
– 518  
– 293  
298  
– 441  
–104  
– 749  
– 93  
Change in inventories  
Change in trade receivables  
– 566  
– 25  
Change in trade payables  
738  
Change in other operating assets and liabilities  
Income taxes paid  
1,229  
– 2,417  
142  
550  
– 3,323  
132  
Interest received  
Cash inflow /outflow from operating activities  
3,173  
960  
Investment in intangible assets and property, plant and equipment  
Proceeds from the disposal of intangible assets and property, plant and equipment  
Expenditure for investments  
– 5,823  
10  
– 5,889  
38  
– 338  
140  
– 746  
215  
Proceeds from the disposal of investments  
Investments in marketable securities and investment funds  
Proceeds from the sale of marketable securities and investment funds  
Cash inflow /outflow from investing activities  
– 3,592  
3,740  
– 5,863  
– 6,880  
5,659  
– 7,603  
Issue / buy-back of treasury shares  
Payments into equity  
–
20  
–
23  
Payment of dividend for the previous year  
Intragroup financing and equity transactions  
Interest paid  
– 2,121  
–
–1,917  
–
–118  
– 264  
13,007  
– 8,908  
9,715  
– 8,802  
2,648  
– 498  
5,004  
Proceeds from the issue of bonds  
Repayment of bonds  
13,974  
–10,374  
8,952  
– 8,443  
4,135  
–1,632  
4,393  
Proceeds from new non-current other financial liabilities  
Repayment of non-current other financial liabilities  
Change in current other financial liabilities  
Change in commercial paper  
Cash inflow /outflow from financing activities  
Effect of exchange rate on cash and cash equivalents  
Effect of changes in composition of Group on cash and cash equivalents  
Change in cash and cash equivalents  
17  
38  
73  
–
1,758  
–1,566  
Cash and cash equivalents as at 1 January  
6,122  
7,880  
7,688  
Cash and cash equivalents as at 31 December  
6,122  
1
Interest relating to financial services business is classified as revenues / cost of sales.  
1
17  
Automotive  
unaudited supplementary  
information)  
Financial Services  
(unaudited supplementary  
information)  
(
2
016  
2015  
2016  
1,777  
–117  
2015  
5
2
4
,441  
,787  
5,147  
1,447  
–125  
Net profit  
Reconciliation between net profit and cash inflow / outflow from operating activities  
Current tax  
2,893  
302  
2
83  
121  
11  
Other interest and similar income / expenses  
Depreciation and amortisation of other tangible, intangible and investment assets  
Change in provisions  
,876  
4,577  
128  
29  
139  
– 3,532  
– 8,368  
275  
11  
31  
172  
– 4,026  
– 6,637  
579  
5
9
70  
–
3
Change in leased products  
–
–
Change in receivables from sales financing  
Change in deferred taxes  
–
187  
– 369  
316  
1
–
1
3
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  
–138  
– 518  
– 337  
367  
–1  
– 5  
–
–
–
441  
172  
758  
–
–
50  
46  
2
1
Change in inventories  
–
43  
29  
– 541  
–163  
2,295  
– 2,595  
132  
–12  
60  
–15  
60  
Change in trade receivables  
6
Change in trade payables  
–
246  
– 283  
–1,706  
–133  
Change in other operating assets and liabilities  
Income taxes paid  
–
1,997  
42  
164  
–1  
1
–1  
Interest received  
1
–
1,464  
11,836  
– 9,844  
–10,351  
Cash inflow /outflow from operating activities  
5,699  
9
– 5,791  
38  
–10  
–
– 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  
–
122  
40  
3,196  
,436  
– 823  
144  
–
–
1
–
–
Proceeds from the disposal of investments  
–
–
– 6,498  
5,406  
– 7,524  
– 396  
304  
–102  
– 387  
253  
–140  
Investments in marketable securities and investment funds  
Proceeds from the sale of marketable securities and investment funds  
Cash inflow /outflow from investing activities  
3
5,432  
–
–
23  
–
–
–
Issue / buy-back of treasury shares  
Payments into equity  
2
0
–
–
–
–
2,121  
1,833  
–1,917  
– 2,840  
– 264  
–
–
Payment of dividend for the previous year  
Intragroup financing and equity transactions  
Interest paid  
6,191  
5,913  
–
118  
–
–1  
–1  
870  
–1,160  
8,295  
– 7,215  
4,425  
195  
429  
– 773  
8,787  
– 7,671  
3,343  
–
Proceeds from the issue of bonds  
–
–
Repayment of bonds  
6
7
108  
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  
–
–
520  
720  
–
– 521  
– 719  
–
–
5,225  
– 6,130  
11,601  
10,028  
Cash inflow /outflow from financing activities  
1
2
0
5
18  
–
21  
11  
39  
–
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  
8
42  
–1,800  
1,687  
– 424  
3
4
,952  
,794  
5,752  
1,359  
3,046  
1,783  
Cash and cash equivalents as at 1 January  
3,952  
1,359  
Cash and cash equivalents as at 31 December  
1
18  
Group  
Financial  
Statements  
BMW GROUP  
GROUP STATEMENT OF CHANGES IN EQUITY  
BMW Group  
Group Statement of  
Changes in Equity  
Subscribed  
capital  
Capital  
reserves  
Revenue  
reserves  
in € million  
Note  
1
January 2016  
29  
657  
2,027  
41,027  
Dividends paid  
–
–
– 2,102  
Net profit  
–
–
–
–
–
–
6,863  
–1,329  
5,534  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2016  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
20  
–
–
–
–
–14  
3
1 December 2016  
29  
657  
2,047  
44,445  
Subscribed  
capital  
Capital  
reserves  
Revenue  
reserves  
in € million  
Note  
1
January 2015  
29  
656  
2,005  
35,621  
Dividends paid  
–
–
–1,904  
Net profit  
–
–
–
–
–
–
6,369  
1,012  
7,381  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2015  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
1
–
–
22  
–
–
–
–
– 71  
3
1 December 2015  
29  
657  
2,027  
41,027  
1
19  
Accumulated other equity  
Equity  
Currency  
Derivative attributable to  
translation  
differences  
financial  
instruments  
shareholders  
of BMW AG  
Minority  
interest  
Securities  
Total  
42,764  
– 2,102  
1
32  
–
24  
–1,337  
42,530  
234  
1 January 2016  
–
–
– 2,102  
–
Dividends paid  
–
–
28  
28  
–
1,415  
1,415  
6,863  
–189  
47  
–
6,910  
–189  
6,721  
Net profit  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2016  
–
303  
–
303  
6,674  
47  
–
–
–
–
–
–
–
20  
–
–
–
20  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
–14  
– 26  
255  
– 40  
–
171  
52  
78  
47,108  
47,363  
31 December 2016  
Accumulated other equity  
Equity  
Currency  
translation  
differences  
Derivative attributable to  
financial  
instruments  
shareholders  
of BMW AG  
Minority  
interest  
Securities  
Total  
37,437  
–1,904  
–
723  
–
141  
– 480  
37,220  
217  
1 January 2015  
–
–
–1,904  
–
Dividends paid  
–
–
–117  
–117  
–
– 857  
– 857  
6,369  
893  
27  
–
6,396  
893  
Net profit  
Other comprehensive income for the period after tax  
Comprehensive income 31 December 2015  
8
55  
8
55  
7,262  
27  
7,289  
–
–
–
–
–
1
22  
–
–
1
22  
Subscribed share capital increase out of Authorised Capital  
Premium arising on capital increase relating to preferred stock  
Other changes  
–
–
–
–
– 71  
–10  
234  
– 81  
1
32  
24  
–1,337  
42,530  
42,764  
31 December 2015  
1
20  
Group  
Financial  
Statements  
ACCOUNTING PRINCIPLES  
AND POLICIES  
BMW GROUP  
NOTES TO  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
THE GROUP  
FINANCIAL  
STATEMENTS  
01  
Basis of preparation  
The consolidated financial statements of Bayerische  
Motoren Werke Aktiengesellschaft (BMW AG Group  
Financial Statements or Group Financial Statements)  
at 31 December 2016 have been drawn up in accord-  
ance with International Financial Reporting Standards  
(
IFRS), as endorsed by the European Union (EU), and  
the supplementary requirements of § 315a (1) of the  
German Commercial Code (HGB). The Group Finan-  
cial Statements will be submitted to the operator of  
the electronic version of the German Federal Gazette  
and can be obtained via the Company Register website.  
Bayerische Motoren Werke Aktiengesellschaft, which  
has its seat at Petuelring 130, Munich, is registered  
in the Commercial Register of the District Court of  
Munich under the number HRB 42243.  
The Group currency is the euro. All amounts are dis-  
closed in millions of euros (€ million) unless stated  
otherwise.  
The BMW Group and segment income statements are  
presented using the cost of sales method.  
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 (Operating 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 Automotive and Financial Ser-  
vices segments. This supplementary information is  
unaudited. Inter-segment transactions relate primarily  
to internal sales of products, the provision of funds  
for Group companies and the related interest. These  
items are eliminated in the relevant “Eliminations”  
columns. A description of the nature of the BMW  
Group’s business and operating activities of segments  
see is provided in note 44 (“Explanatory notes to seg-  
note 44  
ment information”).  
The Board of Management authorised the Group  
Financial Statements for issue on 14 February 2017.  
1
21  
0
2
In the case of a joint operation, the parties that have  
joint control of the arrangement have rights to the  
assets and obligations for the liabilities, relating to the  
arrangement. Assets, liabilities, revenues and expens-  
es of a joint operation are recognised proportionately  
in the Group Financial Statements on the basis of the  
BMW Group entity’s rights and obligations (propor-  
Group reporting entity and  
consolidation principles  
The BMW Group Financial Statements include  
BMWAG, all material subsidiaries including one spe-  
cial purpose securities fund and 40 structured entities,  
over which BMWAG – either directly or indirectly –  
exercises control. The structured entities are used  
exclusively in conjunction with the BMW Group’s  
asset-backed financing arrangements.  
tionate consolidation). Together with SGL Carbon SE  
,
Wiesbaden, companies of the BMW Group are party to  
three joint operations that manufacture carbon fibres  
and carbon fibre cores used in vehicle production.  
All consolidated subsidiaries have the same year-end as  
BMWAG with the exception of BMW India Private Ltd.  
and BMW India Financial Services Private Ltd., whose  
year-ends are 31 March in accordance with local legal  
requirements.  
The BMW Group is also collaborating with Toyota  
Motor Corporation, Toyota City, to develop a sports  
car. This collaboration is accounted for as a joint  
operation.  
When assessing whether an investment gives rise to  
a controlled entity, an associated company, a joint  
operation or a joint venture, the BMW Group consid-  
ers all relevant contractual arrangements and other  
circumstances, and not just the structure and legal  
form of the entity. The ultimate classification may  
require the use of judgement. A new assessment is  
made whenever there is an indication of a change  
in the previous assessment regarding (joint) control.  
In the case of a joint venture, the parties which have  
joint control only have rights to the net assets of the  
arrangement.  
As a general rule, associated companies and joint  
ventures are accounted for using the equity method,  
with measurement on initial recognition based on  
acquisition cost.  
The following changes took place in the Group report-  
ing entity in the financial year 2016:  
An entity is deemed to be controlled if BMWAG  
–
either directly or indirectly – has power over it, is  
exposed or has rights to variable returns from its  
involvement with the entity and has the ability to  
influence those returns through its power over the  
entity.  
Germany  
Foreign  
Total  
Included at  
1 December 2015  
3
21  
–
157  
28  
178  
28  
Included for the  
first time in 2016  
An entity is classified as an associated company if  
BMWAG – either directly or indirectly – has the  
ability to exert significant influence over the entity’s  
operating and financial policies. As a general rule,  
there is a rebuttable assumption that the Group has  
No longer included  
in 2016  
–
7
7
Included at  
3
1 December 2016  
21  
178  
199  
significant influence if it holds between 20% and 50  
of the associated company’s voting power.  
%
Joint operations and joint ventures are forms of joint  
arrangements. Such an arrangement exists when a  
BMW Group entity jointly carries out activities on the  
basis of a contractual agreement with a third party.  
1
22  
Group  
Financial  
Statements  
03  
rate prevailing at the date of first-time recognition.  
At the end of the reporting period, foreign currency  
receivables and payables are measured using the clos-  
ing exchange rate. The resulting unrealised gains and  
losses, as well as the subsequent realised gains and  
losses arising on settlement, are recognised in the  
income statement in accordance with the underlying  
substance of the relevant transactions.  
Foreign currency translation  
The financial statements of consolidated companies  
which are drawn up in a foreign currency are trans-  
lated using the modified closing rate method. Under  
this method, assets and liabilities are translated at the  
closing exchange rate, whilst income and expenses are  
translated at the average exchange rate. Differences  
arising on foreign currency translation are presented  
in “Accumulated other equity”.  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
The exchange rates of currencies which have a material  
impact on the Group Financial Statements were as  
follows:  
Foreign currency receivables and payables in the sin-  
gle entity accounts of BMWAG and subsidiaries are  
measured on initial recognition using the exchange  
Closing rate  
1.12. 2016  
Average rate  
2016  
3
31.12. 2015  
2015  
US Dollar  
1.06  
0.85  
1.09  
0.74  
1.11  
0.82  
7.35  
1.11  
0.73  
British Pound  
Chinese Renminbi  
Japanese Yen  
Korean Won  
7.34  
7.07  
6.97  
123.34  
130.74  
1,278.92  
120.25  
1,283.86  
134.28  
1,255.38  
1,274.34  
0
4
on retail customerꢀ/ꢀdealership financing is recognised  
using the effective interest method.  
Accounting policies; assumptions, judgements  
and estimations  
Revenues from the sale of products are recognised  
when the risks and rewards of ownership of the goods  
are transferred to the dealership or customer, provided  
that the amount of revenue can be measured reliably,  
it is probable that the economic benefits associated  
with the transaction will flow to the entity and costs  
incurred or to be incurred in respect of the sale can  
be measured reliably. Revenues are stated net of set-  
tlement discount, bonuses and rebates.  
Public sector grants are not recognised until there is  
reasonable assurance that the conditions attaching  
to them have been complied with and the grants  
will be received. The resulting income is recognised  
in cost of sales over the periods necessary to match  
them with the related costs which they are intended  
to compensate.  
Earnings per share are calculated as follows: Basic  
earnings per share are calculated for common and  
preferred stock by dividing the net profit after minor-  
ity interests, as attributable to each category of stock,  
by the average number of outstanding shares. The net  
profit is accordingly allocated to the different catego-  
ries of stock. The portion of the Group net profit for  
the year which is not being distributed is allocated  
to each category of stock based on the number of  
outstanding shares. Profits available for distribution  
are determined directly on the basis of the dividend  
resolutions passed for common and preferred stock.  
Diluted earnings per share are calculated and sepa-  
rately disclosed in accordance with IAS 33.  
If the sale of products includes a determinable amount  
for services (“multiple-component contracts”), the  
related revenues are deferred and recognised as  
income over the service period. Amounts are normally  
recognised as income by reference to the pattern of  
related expenditure.  
Profits arising on the sale of vehicles, for which a  
Group company retains a repurchase commitment  
(
buyback contracts), are not immediately recognised.  
The difference between the sales and buyback price is  
accounted for as deferred income and recognised in  
instalments as revenue over the contract term.  
Purchased and internally-generated intangible assets  
are recognised as assets where it is probable that the  
use of the asset will generate future economic benefits  
and where the costs of the asset can be determined  
Revenues relating to operating lease arrangements  
are recognised on a straight-line basis over the lease  
term. Interest income arising on finance leases and  
1
23  
reliably. Such assets are measured at acquisition  
and/ꢀor manufacturing cost, as a general rule without  
borrowing costs, and, to the extent that they have a  
finite useful life, amortised on a straight-line basis  
over their estimated useful lives. With the exception  
of capitalised development costs, intangible assets  
are amortised as a general rule over their estimated  
useful lives of between three and 20 years.  
If the reason for a previously recognised impairment  
loss no longer exists, the impairment loss is reversed  
up to the level of the recoverable amount, capped at  
the level of rolled-forward amortised cost. Impairment  
losses on goodwill are not reversed.  
As part of the process of assessing recoverability, it is  
generally necessary to apply estimations and assump-  
tions – in particular regarding future cash inflows and  
outflows and the length of the forecast period – which  
could differ from actual amounts. Actual amounts  
may differ from the assumptions and estimations  
used if business conditions develop differently to the  
BMW Group’s expectations.  
Development costs for vehicle and engine projects are  
capitalised at manufacturing cost, to the extent that  
attributable costs (including development-related  
overhead costs) can be measured reliably and both  
technical feasibility and successful marketing are  
assured. It must also be probable that the development  
expenditure will generate future economic benefits.  
Capitalised development costs are amortised system-  
atically over the estimated product life (usually four to  
eleven years) following the start of production.  
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 from long-term forecasts  
approved by management. The long-term forecasts  
themselves are based on detailed forecasts drawn up  
at an operational level and, based on a planning period  
of six years, correspond roughly to a typical product’s  
life cycle. For the purposes of calculating cash flows  
beyond the planning period, the asset’s assumed  
residual value does not take growth into account.  
Forecasting assumptions are continually brought up  
to date and regularly compared with external sources  
of information. The assumptions used take account  
in particular of expectations of the profitability of the  
product portfolio, future market share developments,  
macroeconomic developments (such as currency,  
interest rate and raw materials prices) as well as the  
legal environment and past experience.  
Goodwill arises on first-time consolidation of an  
acquired business when the cost of acquisition  
exceeds the Group’s share of the fair value of the  
individually identifiable assets acquired and liabilities  
and contingent liabilities assumed.  
If there is any indication of impairment of intangible  
assets, or if an annual impairment test is required to  
be carried out (i.ꢀe. intangible assets with an indef-  
inite useful life, intangible assets during the devel-  
opment phase and goodwill), an impairment test is  
performed. Each individual asset is tested separately  
unless the cash flows generated by the asset cannot  
be distinguished to a large degree from the cash flows  
generated by other assets or other groups of assets.  
In this case, impairment is tested at the level of a  
cash-generating unit.  
For the purposes of the impairment test, the carrying  
amount of an asset (or a cash-generating unit) is com-  
pared with the recoverable amount. The first step of  
the impairment test is to determine the value in use.  
If the value in use is lower than the carrying amount,  
the next step is to determine the fair value less costs to  
sell and compare the amount so determined with the  
asset’s carrying amount. If the fair value is lower than  
the carrying amount, an impairment loss is recognised,  
reducing the carrying amount to the higher of the  
asset’s value in use or fair value less costs to sell.  
1
24  
Group  
Financial  
Statements  
Cash flows of the Automotive and Motorcycles  
cash-generating units are discounted using a risk-ad-  
justed pre-tax cost of capital (WACC). In the case of  
the Financial Services cash-generating unit, a sec-  
tor-compatible pre-tax cost of equity capital is used.  
Calculations were based on the following discount  
factors:  
For machinery used in multiple-shift operations,  
depreciation rates are increased to account for the  
additional utilisation. If there is any indication of  
impairment of property, plant and equipment, an  
impairment test is performed as described above for  
intangible assets.  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
The use of judgement is required when the BMW Group  
enters into lease arrangements, in particular when  
assessing the transfer of economic ownership of a  
leased item.  
in %  
2016  
2015  
Automotive  
12.0  
12.0  
13.4  
12.0  
12.0  
13.4  
Motorcycles  
Leased items of property, plant and equipment that are allo-  
cated to the BMW Group on the grounds of economic  
ownership (finance leases) are measured on initial rec-  
ognition at their fair value or at the net present value  
of the minimum lease payments, if lower. The assets  
are depreciated using the straight-line method over  
their estimated useful lives or over the lease period, if  
shorter. The obligations for future lease instalments  
are recognised as other financial liabilities, measured  
at their net present value.  
Financial Services  
The risk-adjusted interest rates, calculated using a  
CAPM model, also take into account specific peer-  
group information relating to beta-factors, capital  
structure data and borrowing costs. In conjunction  
with the impairment tests for cash-generating units,  
sensitivity analyses are performed for the main  
assumptions in order to rule out that conceivable  
changes to the assumptions used to determine the  
recoverable amount would result in the requirement  
to recognise an impairment loss.  
Where Group products are recognised by BMW Group  
entities as leased products under operating leases,  
they are measured at manufacturing cost, plus any  
initial direct costs. All other leased products are  
measured at acquisition cost. All leased products are  
depreciated over the period of the lease using the  
straight-line method down to their expected residual  
value. Changes in residual value expectations are rec-  
ognised – in situations where the recoverable amount  
of the lease exceeds the asset’s carrying amount – by  
adjusting scheduled depreciation prospectively over  
the remaining term of the lease. If the recoverable  
amount is lower than the asset’s carrying amount,  
an impairment loss is recognised for the shortfall.  
A test is carried out at each balance sheet date to deter-  
mine whether an impairment loss recognised in prior  
years no longer exists or has decreased. In these cases,  
the carrying amount of the asset is increased to the  
recoverable amount, at a maximum up to the amount  
of the asset’s amortised cost. Assumptions need to  
be made regarding future residual values, given that  
they represent a significant portion of future cash  
inflows. In this context, internally available historical  
data, current market data and forecasts of external  
institutions are taken into account. The assumptions  
applied are regularly validated by comparison with  
external data.  
All items of property, plant and equipment are measured  
at acquisition or manufacturing cost less accumulated  
depreciation and accumulated impairment losses. The  
cost of internally constructed plant and equipment  
comprises all costs which are directly attributable  
to the manufacturing process as well as an appro-  
priate proportion of production-related overheads.  
This includes production-related depreciation and  
amortisation as well as an appropriate proportion  
of administrative and social costs. As a general rule,  
borrowing costs are not included in acquisition or  
manufacturing cost unless they are directly attrib-  
utable to the asset. The carrying amount of items of  
depreciable property, plant and equipment is written  
down recording scheduled usage-based depreciation –  
as a general rule on a straight-line basis – over the  
useful lives of the assets. Depreciation is recorded as  
an expense in the income statement.  
The following uniform useful lives are applied through-  
out the BMW Group:  
in years  
Factory and office buildings, residential buildings, fixed  
installations in buildings and outside facilities  
8 to 50  
3 to 21  
2 to 25  
Plant and machinery  
Other equipment, factory and office equipment  
1
25  
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.  
Subsequent to initial recognition, financial assets  
which are available-for-sale or held-for-trading or for  
which the fair value option is applied, are measured at  
their fair value. The fair values shown are computed  
using market information available at the balance  
sheet date, on the basis of prices quoted by the  
contract partners or using appropriate measurement  
methods, e.ꢀg. discounted cash flow models.  
(
Investments in non-consolidated subsidiaries, non-con-  
solidated joint operations and interests in associated  
companies, joint ventures and participations not  
accounted for using the equity method, are reported  
as other investments, measured at their fair value. If  
this value is not available or cannot be determined  
reliably, they are measured at cost.  
Non-derivative financial assets that are not classified  
as “loans and receivables” or “held-to-maturity invest-  
ments” or as items measured “at fair value through  
profit and loss” are classified as “available-for-sale”.  
A financial instrument is a contract that gives rise to a  
financial asset of one entity and a financial liability or  
equity instrument of another entity. Financial assets  
are accounted for on the basis of the settlement date.  
Financial assets that are classified as loans and receiva-  
bles are measured at amortised cost using the effective  
interest method. All financial assets for which pub-  
lished price quotations in an active market are not  
available and whose fair value cannot be determined  
reliably are measured at cost.  
On initial recognition, financial assets are measured  
at their fair value. Transaction costs are included in  
the fair value unless the financial assets are allocated  
to the category “financial assets measured at fair value  
through profit or loss”.  
An assessment is made on a regular basis whether  
there is any objective evidence that a financial asset  
or group of assets may be impaired. For the purposes  
of assessing possible impairment, the BMW Group  
takes account of all available information, such as  
market conditions and prices as well as the length  
of time and the scale of the decline in value. In the  
case of equity capital instruments that are listed on a  
stock market, it is assumed that an item is impaired if  
its fair value falls significantly (more than 20%) or on  
a prolonged basis (more than 5% over nine months)  
below acquisition cost.  
The Group’s financial assets are allocated to either  
cash funds or to the categories “loans and receivables”,  
“
available-for-sale”, “held for trading” or “fair value  
option”.  
The fair value option is applied by the BMW Group  
for non-current marketable securities with embedded  
derivatives. The related gains and losses are presented  
in the income statement line item “Other financial  
result”. Related interest income and expenses are  
presented in the net interest result.  
1
26  
Group  
Financial  
Statements  
Receivables from sales financing are measured at amor-  
tised cost using the effective interest rate method.  
Impairment allowances are recognised both on a  
specific-item and a group basis. For these purposes,  
the main factors taken into consideration are past  
experience, current market data (such as the level  
of arrears), rating classes and scoring information.  
Specific allowances are recognised if there is objective  
evidence of impairment. In the retail customer credit  
financing and leasing lines of business, the existence  
of overdue balances or the incidence of similar events  
in the past are examples of such objective evidence.  
In the event of overdue receivables, allowances are  
always recognised individually based on the length  
of period of the arrears. In the case of dealership  
financing receivables, the allocation of the dealership  
to a corresponding rating category is also deemed to  
represent objective evidence of impairment. If there is  
no objective evidence of impairment, allowances are  
recognised using a portfolio approach based on similar  
groups of assets. Company-specific loss probabilities  
and loss ratios, derived from historical data, are used  
to measure allowances on similar groups of assets.  
In those cases where hedge accounting is applied,  
changes in fair value are recognised in the income  
statement or in other comprehensive income as a  
component of accumulated other equity, depending  
on whether the hedging relationship is classified as  
a fair value hedge or a cash flow hedge. In the case  
of a fair value hedge, the results of the fair value  
measurement of the derivative financial instruments  
and the related hedged items are recognised in the  
income statement. Fair value hedges are mainly used  
to hedge the market prices of bonds, other financial  
liabilities and receivables from sales financing. In the  
case of a cash flow hedge, the effective portion of  
the fair value gain or loss on the derivative financial  
instrument is recognised directly in accumulated other  
equity. The ineffective portion of the fair value gain or  
loss is recognised in the income statement. Amounts  
recorded in accumulated other equity are recognised  
subsequently in the income statement when the  
hedged item (usually external revenue) is recognised  
in the income statement. If, contrary to the normal  
case within the BMW Group, hedge accounting cannot  
be applied, the gains or losses arising on the fair value  
measurement of derivative financial instruments are  
recognised immediately in the income statement.  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
The recognition of impairment losses on receivables  
relating to the industrial side of the business is also,  
as far as possible, based on the same procedures  
applied to financial services business. The impair-  
ment losses are recorded in separate accounts and  
are derecognised at the same time the corresponding  
written-down receivables are derecognised.  
Deferred taxes are recognised on all temporary dif-  
ferences between the tax and accounting bases of  
assets and liabilities and on consolidation procedures.  
Deferred tax assets also include claims to future tax  
reductions which arise from the expected usage of  
existing tax losses available for carryforward to the  
extent that future usage is probable. The calculation of  
deferred tax assets requires assumptions to be made  
with regard to the level of future taxable income and  
the timing of recovery of deferred tax assets. These  
assumptions take account of forecast operating results  
and the impact on earnings of the reversal of taxable  
temporary differences. Since future business devel-  
opments cannot be predicted with certainty and to  
some extent cannot be influenced by the BMW Group,  
the measurement of deferred tax assets is subject to  
uncertainty.  
Derivative financial instruments are used within the  
BMW Group for hedging purposes in order to reduce  
currency, interest rate, fair value and market price  
risks arising from operating activities and the relat-  
ed financing requirements. All derivative financial  
instruments are measured at their fair value. The fair  
values of derivative financial instruments are deter-  
mined 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 finan-  
cial instruments. The supply of data to the model used  
to calculate fair values also takes account of tenor and  
currency basis spreads.  
In addition, the Group’s own default risk and that of  
counterparties is taken into account on the basis of  
credit default swap values for market contracts with  
matching terms. The BMW Group applies the option  
of measuring the credit risk for a group of financial  
assets and financial liabilities on the basis of its net  
exposure. Portfolio-based value adjustments to the  
individual financial assets and financial liabilities are  
allocated using the relative fair value approach (net  
method).  
1
27  
Current income taxes are computed throughout the  
BMW Group in accordance with tax legislation appli-  
cable in each relevant country. In situations where  
judgement was necessary to determine the amount  
of a tax exposure to be recognised in the financial  
statements, there is always a possibility that local tax  
authorities may reach a different conclusion.  
Provisions for pensions and similar obligations are meas-  
ured using the projected unit credit method. Under  
this method, not only obligations relating to known  
vested benefits at the reporting date are recognised,  
but also the effect of future expected increases in  
pensions and salaries. The calculation is based on  
an independent actuarial valuation which takes into  
account all relevant biometric factors.  
Inventories of raw materials, supplies and goods for  
resale are stated at the lower of average acquisition  
cost and net realisable value.  
In the case of externally funded plans, the pension  
obligation is offset against plan assets measured at  
their fair value. If the plan assets exceed the pension  
obligation, the surplus is tested for recoverability. In  
the event that the BMW Group has a right of reim-  
bursement or a right to reduce future contributions,  
it reports an asset (within “Other financial assets”),  
measured on the basis of the present value of the  
future economic benefits attached to the plan assets.  
If the plan is externally funded, a liability is recog-  
nised under pension provisions where the obligation  
exceeds fund assets.  
Work in progress and finished goods are stated at  
the lower of manufacturing cost and net realisable  
value. Manufacturing cost comprises all costs which  
are directly attributable to the manufacturing process  
as well as an appropriate proportion of production-re-  
lated overheads. This includes production-related  
depreciation and amortisation and an appropriate  
proportion of administrative and social costs. Bor-  
rowing costs are not included in the acquisition or  
manufacturing cost of inventories.  
Cash and cash equivalents, comprising mainly cash on  
hand and cash at bank with an original term of up to  
three months, are measured at fair value.  
Assets held for sale and disposal groups held for sale are  
presented separately in the balance sheet in accord-  
ance with IFRS 5, if the carrying amount of the rel-  
evant assets will be recovered principally through a  
sale transaction rather than through continuing use.  
This situation only arises if the assets can be sold  
immediately in their present condition, the sale is  
expected to be completed within one year from the  
date of classification and the sale is highly probable.  
At the date of classification, property, plant and equip-  
ment, 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 depreciationꢀ/ꢀamortisation ceases. This  
does not apply, however, to items within the disposal  
group which are not covered by the measurement  
rules contained in IFRS 5. Simultaneously, liabilities  
directly related to the sale are presented separately on  
the equity and liabilities side of the balance sheet as  
“
Liabilities in conjunction with assets held for sale”.  
1
28  
Group  
Financial  
Statements  
The calculation of the amount of the provision requires  
assumptions to be made with regard to discount  
factors, salary trends, employee fluctuation and the  
life expectancy of employees. Discount factors are  
determined by reference to market yields at the end  
of the reporting period on high quality fixed-interest  
corporate bonds. The salary level trend refers to the  
expected rate of salary increase which is estimated  
annually depending on inflation and the career devel-  
opment of employees within the Group.  
The measurement of provisions for statutory and  
non-statutory warranty obligations (statutory, contractual  
and voluntary) involves estimations. In addition to  
statutorily prescribed manufacturer warranties, the  
BMW Group also offers various categories of guar-  
antee depending on the product and sales market  
concerned. These provisions are recognised when  
the risks and rewards of ownership of the goods are  
transferred to the dealership or retail customer or  
when a new category of warranty is introduced. In  
order to determine the level of the provision, various  
factors are taken into consideration, including estima-  
tions based on past experience with the nature and  
amount of claims. The future level of potential repair  
costs and price increases per product and market are  
also taken into account. Provisions for warranties are  
adjusted regularly to take account of new circumstanc-  
es and the impact of any changes recognised in the  
income statement. Specific and expected warranty  
items, such as vehicle recall actions, are also included.  
Similar estimates are also made in conjunction with  
the measurement of expected reimbursement claims,  
which, if recognised, are presented as separate assets.  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
Net interest expense on the net obligation and/ꢀor  
net interest income on the net fund assets of defined  
benefit plans are presented separately within the  
financial result. All other costs relating to allocations  
to pension provisions are allocated to costs by function  
in the income statement.  
Past service cost arises where a BMW Group compa-  
ny introduces a defined benefit plan or changes the  
benefits payable under an existing plan. This cost  
is recognised immediately in the income statement.  
Similarly, gains and losses arising on the settlement  
of a defined benefit plan are recognised immediately  
in the income statement.  
The recognition and measurements of provisions for  
litigation and liability risks necessitates making assump-  
tions regarding the probability of occurrence, the  
amount involved and the duration of the legal dispute.  
These assumptions, especially the assumption about  
the outcome of legal proceedings, are subject to a high  
degree of uncertainty.  
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. Reasons for remeasurements include changes  
in financial and demographic assumptions as well as  
changes in the detailed composition of beneficiaries.  
Remeasurements are recognised immediately in  
If the recognition and measurement criteria relevant  
for provisions are not fulfilled and the outflow of  
resources to settle the matter is not probable, the  
“
Other comprehensive income” and hence directly  
in equity (within revenue reserves).  
potential obligation is disclosed as a contingent liability  
.
Other provisions are recognised when the BMW Group  
has a present obligation (legal or constructive) arising  
from past events, the settlement of which is proba-  
ble and when a reliable estimate can be made of the  
amount of the obligation. Provisions with a remaining  
period of more than one year are measured at their  
net present value.  
Financial liabilities are measured on first-time recogni-  
tion at their fair value. 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.  
1
29  
Related party disclosures comprise information on  
related individuals or entities which control  
the BMW Group or which are controlled by the  
BMW Group, unless such parties are already included  
in the Group Financial Statements of BMWAG as con-  
solidated companies. Control is defined as ownership  
of more than one half of the voting power of BMWAG  
or the power to direct, by statute or agreement, the  
financial and operating policies of the management of  
the Group. In addition, the disclosure requirements  
also cover transactions with associated companies,  
joint ventures and individuals that have the ability  
to exercise significant influence over the financial  
and operating policies of the BMW Group. This also  
includes close relatives and intermediary entities.  
Significant influence over the financial and operating  
policies of the BMW Group is presumed when a party  
holds 20% or more of the voting power of BMWAG.  
In addition, 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  
the Supervisory Board. Non-consolidated subsidiaries,  
joint ventures and associated companies also qualify  
as related parties. Details relating to these entities  
are provided in the list of investments in note 45.  
Share-based remuneration programmes which are expect-  
ed to be settled in shares are measured at their fair  
value at grant date. The related expense is recognised  
in the income statement (as personnel expense)  
over the vesting period, with a contra (credit) entry  
recorded against capital reserves. Share-based remu-  
neration programmes expected to be settled in cash  
are revalued to their fair value at each balance sheet  
date between the grant date and the settlement date  
and on the settlement date itself. The expense for such  
programmes is recognised in the income statement  
(as personnel expense) over the vesting period of the  
programmes and presented in the balance sheet as  
a provision.  
The share-based remuneration programmes for  
Board of Management members and senior heads of  
department entitles BMWAG to elect whether to settle  
its commitments in cash or with shares of BMWAG  
common stock. Following the decision to settle in cash,  
the share-based remuneration programmes for Board  
of Management members and senior heads of depart-  
ment are accounted for as cash-settled, share-based  
remuneration programmes. Further information on  
share-based remuneration programmes is provided  
see in note 39.  
note 39  
see  
note 45  
1
30  
Group  
Financial  
Statements  
05  
Financial reporting rules  
(
a) Standards and Revised Standards significant for  
the BMW Group and applied for the first time in  
the financial year 2016:  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
Date of  
mandatory  
application  
IASB  
Date  
of mandatory  
application  
EU  
Date of  
issue by  
IASB  
Standard / Interpretation  
IAS 1  
Presentation of Financial Statements  
Initiative to Improve Disclosure Requirements – Amendments to IAS 1)  
18.12. 2014  
1.1. 2016  
1.1. 2016  
(
The Amendments to IAS 1 (Presentation of Financial  
Statements) relate primarily to clarifications concern-  
ing the presentation of, and disclosures in, financial  
statements. The amendments emphasise the principle  
that it is only necessary to disclosure information if it  
is material for users of the financial statements, even  
in cases where specific disclosures in an IFRS are  
explicitly defined as minimum requirements.  
In this context, the BMW Group has examined the  
contents of the Notes to the Group Financial State-  
ments and the Combined Management Report and  
applied the principle of materiality in the Group  
Financial Statements for the year ended 31 Decem-  
ber 2016, mainly by revising the presentation and  
eliminating redundancies.  
(
b) Financial reporting pronouncements issued by  
the IASB that are significant for the BMW Group,  
but have not yet been applied:  
Date of  
mandatory  
application  
IASB  
Date  
of mandatory  
application  
EU  
Date of  
issue by  
IASB  
Standard/Interpretation  
IFRS 9  
Financial Instruments  
24. 7. 2014  
28. 5. 2014  
1.1. 2018  
1.1. 2018  
1.1. 2018  
1.1. 2018  
IFRS 15  
Revenue from Contracts with Customers  
1
1
1. 9. 2015  
2. 4. 2016  
IFRS 16  
Leases  
13. 1. 2016  
1.1. 2019  
No  
IFRS 9 (Financial Instruments) contains new require-  
ments for the classification and measurement of  
financial assets that are based on the reporting  
entity’s business model and its contractual cash flow  
characteristics (“Solely Payments of Principal and  
Interest” (SPPI) criterion). IFRS 9 also gives rise to  
a new model for determining impairment based on  
expected credit losses. Furthermore, the requirements  
for hedge accounting were revised with the aim of  
bringing the accounting treatment more into line with  
the reporting entity’s risk management activities.  
The impact of adoption of IFRS 9 on the Group Finan-  
cial Statements is currently being investigated. Based  
on analyses to date, the accounting treatment for  
specific financial assets that do not comply with the  
stipulated cash flow criteria may have to be changed,  
by reclassifying them from the “measured at amortised  
cost” category to the “measured at fair value” cate-  
gory. Based on the current assessment, the change  
would only affect a limited volume of assets, with the  
consequence that the impact on measurement is not  
expected to be material.  
1
31  
Implementation of the new impairment model requires  
substantial modifications to existing processes and  
systems, especially for the Financial Services segment.  
These modifications have been stipulated centrally  
and implemented to a large extent at subsidiary level.  
The overall impact cannot be quantified reliably as  
yet, however, given that the procedures for providing  
data by the subsidiaries still requires validation and  
some of the major implementation aspects of the  
new standard – in particular the transfer criterion for  
impairment levels – are not expected to be definitively  
The objective of the new Standard IFRS 15 (Revenue  
from Contracts with Customers) is to assimilate all the  
various existing requirements and Interpretations  
relating to revenue recognition into a single Standard.  
The new Standard also stipulates uniform revenue  
recognition principles for all sectors and all categories.  
The new Standard is based on a five-step model, which  
sets out the rules for revenue from contracts with  
customers. Revenues are required to be recognised  
either over time or at a specific point in time.  
established until a later stage in the financial year 2017  
.
Based on preliminary findings, significant changes to  
impairment amounts are not expected.  
A major difference to the previous Standard is the  
increased scope of discretion for estimates and the  
introduction of thresholds, thus influencing the  
amount and timing of revenue recognition.  
As far as the accounting for hedging relationships is  
concerned, analyses to date indicate that it will be pos-  
sible to account for the majority of commodity hedg-  
ing contracts using hedge accounting rules. Moreover,  
changes in the time value of options are required to be  
recognised as “cost of hedging” in accumulated other  
equity during the hedging period. This approach to  
accounting for hedging relationships could significant-  
ly reduce the volatility in the amounts reported for  
financial result and Group earnings. The presentation  
of the cost of hedging in the income statement has not  
yet been definitively clarified. It is therefore possible  
that shifts could arise between the line items “Profit  
before financial result” and “Financial result”.  
Accounting for buyback arrangements and rights  
of return for vehicles sold, but which the Financial  
Services segment will subsequently lease to customers,  
will result in the earlier recognition of eliminations.  
The adoption of IFRS 15 will result in a one-time  
reduction in equity, which will be recognised retro-  
spectively as of the date of the beginning of the first  
accounting period presented on the basis of the new  
requirements. The actual impact of adopting the new  
Standard will depend on the level of inventories of  
vehicles held by dealerships, the expected number of  
leases to be concluded and the amount of inter-seg-  
ment profits requiring to be eliminated at the date  
of first-time adoption. Based on analyses to date and  
the assumptions applied, it is estimated that equity  
at 31 December 2016 will be reduced by €ꢀ650 mil-  
lion. The impact in the period following first-time  
adoption and in subsequent periods is not expected  
to be significant.  
IFRS 9 contains a requirement that it should be  
applied retrospectively for classification and meas-  
urement, whereas the new rules for hedge accounting  
are generally required to be applied prospectively. The  
BMW Group intends to apply the exception granted  
by the Standard not to restate comparatives for earlier  
periods for classification and measurement (including  
impairment).  
In the case of multi-component contracts with variable  
consideration components, changes in the allocation  
of transaction prices will result in higher amounts  
being recognised for vehicle sales and a lower level  
of amounts deferred for service contracts. However,  
the shift in the timing of revenue recognition is not  
expected to have a significant impact at the date of  
first-time adoption or in subsequent periods.  
A different accounting treatment may be required if  
buyback arrangements are in place with customers,  
resulting in a shift in the timing of revenue recognition.  
The resulting impact is not expected to be significant.  
The BMW Group intends to apply the new Standard  
entirely retrospectively at the adoption date.  
1
32  
Group  
Financial  
Statements  
The new Standard IFRS 16 (Leases) stipulates a  
completely new approach to accounting for leases  
by lessees. Whereas under IAS 17, the accounting  
treatment of a lease was determined on the basis of  
the transfer of risks and rewards incidental to own-  
ership of the asset, in the future, all leases will be  
required to be accounted for as a general rule by the  
lessee in a similar way to finance leases. Recognition  
exemptions are available for short-term leases and for  
leasing assets with a low value.  
BMW Group  
Notes to the Group  
Financial Statements  
Accounting  
Principles and  
Policies  
Notes to the  
Income Statement  
The accounting requirements for lessors, particularly  
in relation to the requirement to classify leases, will  
remain largely unchanged.  
Given that the BMW Group is still in a very early phase  
of considering the implications of introducing IFRS 16  
,
the impact of the Standard on the Group Financial  
Statements from a lessee and lessor perspective cannot  
be wholly foreseen at present. Similarly, the transi-  
tion method to be used on first-time adoption of the  
Standard has not yet been stipulated.  
Early adoption of all of the new IFRS requirements is  
permitted. Currently, the BMW Group does not intend  
to adopt any of the new requirements early.  
1
33  
NOTES TO THE INCOME  
STATEMENT  
Warranty expenses include the accrued expense for  
vehicle recall actions, the cost of which is expected to  
exceed amounts previously recognised. Accordingly,  
a further amount of €ꢀ678 million was allocated to  
the warranty provision for various issues, including  
airbags supplied by the Takata group of companies,  
the ISOFIX attachment system used for child car seats,  
and costs relating to the provision of the network  
service for telematics (2G).  
0
6
Revenues  
Revenues by activity comprise the following:  
Cost of sales is reduced by public-sector subsidies  
in the form of reduced taxes on assets and reduced  
consumption-based taxes amounting to €ꢀ69 million  
in € million  
2016  
2015  
(
2015: €ꢀ71 million).  
Sales of products and related goods  
Income from lease instalments  
68,681  
9,507  
68,643  
8,965  
Research and development expenditure was as  
follows:  
Sales of products previously  
leased to customers  
9,258  
3,455  
8,181  
3,253  
Interest income on loan financing  
Other income  
in € million  
2016  
2015  
3,262  
3,133  
Revenues  
94,163  
92,175  
Research and development expenses  
Amortisation  
4,294  
4,271  
–1,222  
–1,166  
New expenditure for capitalised  
development costs  
2,092  
5,164  
2,064  
An analysis of revenues by segment and region is  
shown in the segment information in note 44.  
Total research and development  
expenditure  
see  
note 44  
5,169  
0
7
08  
Cost of sales  
Cost of sales comprises:  
Selling and administrative expenses  
Selling expenses amounted to €ꢀ6,030 million (2015:  
ꢀ5,758 million) and comprise mainly marketing,  
€
advertising and sales personnel costs.  
in € million  
2016  
2015  
Administrative expenses amounted to €ꢀ3,128 million  
Manufacturing costs  
43,175  
20,723  
43,685  
19,449  
(
2015: €ꢀ2,875 million) and relate mainly to personnel  
Cost of sales relating to financial services  
business  
and IT costs.  
thereof: Interest expense relating  
to financial services business  
1,638  
4,294  
2,165  
1,435  
583  
1,495  
4,271  
1,891  
1,325  
446  
Research and development expenses  
Warranty expenditure  
Service contracts  
Telematics and roadside assistance  
Other cost of sales  
3,067  
75,442  
2,976  
74,043  
Cost of sales  
1
34  
Group  
Financial  
Statements  
09  
11  
Other operating income and expenses  
Other operating income and expenses comprise the  
following items:  
Other financial result  
BMW Group  
Notes to the Group  
Financial Statements  
in € million  
2016  
2015  
Notes to the  
Income Statement  
in € million  
2016  
2015  
Income from investments in subsidiaries  
and participations  
13  
1
–
thereof from subsidiaries:  
13  
Exchange gains  
262  
115  
323  
172  
Impairment losses on investments in  
subsidiaries and participations  
Income from the reversal of provisions  
–192  
–179  
– 25  
Income from the reversal of impairment  
losses and write-downs  
Result on investments  
– 24  
51  
46  
27  
173  
219  
914  
Gains on the disposal of assets  
Sundry operating income  
Other operating income  
Income (+) and expenses (-) from  
financial instruments  
196  
670  
310  
310  
– 430  
Sundry other financial result  
Other financial result  
– 430  
Exchange losses  
– 249  
– 303  
– 311  
–192  
131  
– 454  
Expense for additions to provisions  
Expense for impairment losses and  
write-downs  
– 28  
– 267  
– 847  
– 76  
– 241  
– 820  
Sundry operating expenses  
Other operating expenses  
Other operating income and expenses  
–177  
94  
Income from the reversal of impairment losses and  
expenses for the recognition of impairment losses  
relate primarily to impairment allowances on receiv-  
ables.  
1
0
Net interest result  
in € million  
2016  
2015  
Other interest and similar income  
thereof from subsidiaries:  
196  
12  
185  
19  
Interest and similar income  
196  
185  
Expense relating to interest impact  
on other long-term provisions  
– 84  
– 72  
Net interest expense on the net defined  
benefit liability for pension plans  
– 78  
– 327  
– 4  
–123  
– 423  
– 5  
Other interest and similar expenses  
thereof to subsidiaries:  
Interest and similar expenses  
– 489  
– 618  
Net interest result  
– 293  
– 433  
1
35  
1
2
Deferred taxes are computed using enacted or planned  
tax rates which are expected to apply in the relevant  
national jurisdictions when the amounts are recov-  
ered. After taking account of an average municipal  
trade tax multiplier rate (Hebesatz) of 425.0% (2015:  
Income taxes  
Taxes on income comprise the following:  
in € million  
2016  
2015  
4
25.0%), the underlying income tax rate for Germany  
was as follows:  
Current tax expense  
Deferred tax expense  
2,670  
85  
2,751  
77  
in %  
2016  
2015  
thereof relating to temporary  
differences  
80  
52  
thereof relating to tax loss  
carryforwards and tax credits  
Corporation tax rate  
Solidarity surcharge  
15.0  
5.5  
15.0  
5.5  
5
25  
Income taxes  
2,755  
2,828  
Corporation tax rate including solidarity  
surcharge  
15.8  
14.9  
30.7  
15.8  
14.9  
30.7  
Municipal trade tax rate  
German income tax rate  
Current tax expense includes tax income of €ꢀ174 mil-  
lion (2015: tax expenses of €ꢀ164 million) relating to  
prior periods.  
Deferred taxes for non-German entities are calculated  
The tax expense was reduced by €ꢀ49 million (2015*: * Previous year’s on the basis of the relevant country-specific tax rates,  
figures adjusted.  
€
ꢀ41 million) as a result of utilising tax loss carryfor-  
ranging in the financial year 2016 between 12  
.5% and  
wards, for which deferred assets had not previously  
been recognised and in conjunction with previously  
unrecognised tax credits and temporary differences.  
45 % (2015: between 12 % and 46 %). Changes  
in tax rates resulted in a deferred tax expense of  
€ꢀ70 million (2015: €ꢀ36 million).  
.
0
.
5
.9  
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 €ꢀ38 million (2015*: €ꢀ82 million).  
The difference between the expected tax expense  
based on the underlying tax rate for Germany and  
actual tax expense is explained in the following  
reconciliation:  
in € million  
2016  
2015  
Profit before tax  
9,665  
30.7 %  
2,967  
9,224  
30.7 %  
2,832  
Tax rate applicable in Germany  
Expected tax expense  
Variances due to different tax rates  
–119  
78  
–119  
42  
Tax increases (+) / tax reductions (–) as a result of non-deductible expenses and tax-exempt income  
Tax expense (+) / benefits (–) for prior years  
Other variances  
–174  
3
164  
– 91  
Actual tax expense  
2,755  
28.5 %  
2,828  
30.7 %  
Effective tax rate  
1
36  
Group  
Financial  
Statements  
Tax increases as a result of non-deductible expens-  
es and tax reductions due to tax-exempt income  
increased compared to one year earlier. As in the  
previous year, tax increases as a result of non-tax-de-  
ductible expenses were attributable primarily to the  
impact of non-recoverable withholding taxes and  
transfer price issues.  
The line “Other variances” comprises various recon-  
ciling items, including the Group’s share of taxes on  
the earnings of companies accounted for using the  
equity method.  
BMW Group  
Notes to the Group  
Financial Statements  
Notes to the  
Income Statement  
The allocation of deferred tax assets and liabilities to  
balance sheet line items at 31 December is shown in  
the following table:  
Tax income relating to prior years resulted primarily  
from adjustments to income tax receivables and pro-  
visions for prior years.  
Deferred tax assets  
Deferred tax liabilities  
in € million  
2016  
2015  
2016  
2015  
Intangible assets  
13  
26  
10  
20  
2,234  
305  
1,977  
376  
Property, plant and equipment  
Leased products  
467  
367  
6,987  
17  
6,260  
11  
Other investments  
Sundry other assets  
Tax loss carryforwards and capital losses  
Provisions  
3
5
1,448  
536  
1,363  
548  
2,861  
–
2,109  
–
4,966  
2,760  
3,481  
4,187  
2,654  
3,281  
12,435  
184  
178  
Liabilities  
298  
478  
Eliminations  
797  
715  
1
3,700  
13,683  
12,104  
Valuation allowances on tax loss carryforwards and capital losses  
– 485  
– 502  
– 9,988  
1,945  
–
–
–10,888  
2,795  
–
– 9,988  
2,116  
171  
Netting  
–10,888  
2,327  
–
Deferred taxes  
Net  
468  
Tax loss carryforwards – for the most part usable with-  
out restriction – amounted to €ꢀ637 million (2015:  
Capital losses available for carryforward in the United  
Kingdom which do not relate to ongoing operations  
€
ꢀ
468 million). This includes an amount of €ꢀ464 million  
decreased to €ꢀ1,926 million (2015: €ꢀ2,234 million) due  
(
2015: €ꢀ345 million), for which a valuation allowance  
to currency factors. As in previous years, deferred tax  
assets recognised on these tax losses – amounting to  
of €ꢀ158 million (2015: €ꢀ100 million) was recognised  
on the related deferred tax asset. For entities with  
tax losses available for carryforward, a net surplus  
of deferred tax assets over deferred tax liabilities is  
reported at 31 December 2016 amounting to €ꢀ90 mil-  
lion (2015: €ꢀ104 million). Deferred tax assets are  
recognised on the basis of management’s assessment  
of whether it is probable that the relevant entities  
will generate sufficient future taxable profits, against  
which deductible temporary differences can be offset.  
€ꢀ327 million at the end of the reporting period (2015  
:
€ꢀ402 million) – were fully written down since they can  
only be utilised against future capital gains.  
Netting relates to the offset of deferred tax assets and  
liabilities within individual entities or tax groups to  
the extent that they relate to the same tax authorities.  
1
37  
Deferred taxes recognised directly in equity amounted  
to €ꢀ1,812 million (2015: €ꢀ2,004 million).  
Changes in deferred tax assets and liabilities during  
the reporting period can be summarised as follows:  
in € million  
2016  
2015  
Deferred taxes at 1 January (assets (–) / liabilities (+))  
171  
85  
– 87  
77  
Deferred tax expense (+) / income (–) recognised through income statement  
Change in deferred taxes recognised directly in equity  
163  
724  
– 561  
49  
– 72  
– 520  
448  
253  
171  
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity  
thereof relating to the remeasurements of net liabilities for defined benefit pension plans  
Exchange rate impact and other changes  
Deferred taxes at 31 December (assets (–) / liabilities (+))  
468  
Deferred taxes recognised directly in equity in the  
financial year 2016 decreased by an additional €ꢀ29 mil-  
lion (2015: increased by €ꢀ43 million) on currency  
translation.  
The tax returns of BMW Group entities are checked  
regularly by German and foreign tax authorities. Tak-  
ing account of a variety of factors – including existing  
interpretations, commentaries and legal decisions  
taken relating to the various tax jurisdictions and the  
BMW Group’s past experience – adequate provision  
has, to the extent identifiable and probable, been  
made for potential future tax obligations.  
Deferred taxes are not recognised on retained prof-  
its of €ꢀ38.7 billion (2015: €ꢀ33.7 billion) of foreign  
subsidiaries, as it is intended to invest these profits  
to maintain and expand the business volume of the  
relevant companies. A computation was not made of  
the potential impact of income taxes on the grounds  
of disproportionate expense.  
1
3
Earnings per share  
2
016  
2015  
Net profit for the year after minority interest  
€ million  
6,862.9  
6,369.4  
Profit attributable to common stock  
Profit attributable to preferred stock  
€ million  
€ million  
6,289.2  
573.7  
5,839.6  
529.8  
Average number of common stock shares in circulation  
Average number of preferred stock shares in circulation  
number  
number  
601,995,196  
54,809,375  
601,995,196  
54,499,460  
Basic earnings per share of common stock  
Basic earnings per share of preferred stock  
€
€
10.45  
10.47  
9.70  
9.72  
Dividend per share of common stock  
Dividend per share of preferred stock  
€
€
3.50*  
3.52*  
3.20  
3.22  
*
Proposal by management.  
Earnings per share of preferred stock are computed  
on the basis of the number of preferred stock shares  
entitled to receive a dividend in each of the relevant  
financial years. As in the previous year, diluted earn-  
ings per share correspond to basic earnings per share.  
1
38  
Group  
Financial  
Statements  
14  
15  
Personnel expenses  
Fee expense for the Group auditor  
The fee expense pursuant to §314 (1) no. 9 HGB  
recognised in the financial year 2016 for the Group  
auditor and its network of audit firms amounted to  
€ꢀ23 million (2015: €ꢀ23 million) and consists of the  
following:  
The income statement includes personnel expenses  
as follows:  
BMW Group  
Notes to the Group  
Financial Statements  
Notes to the  
Income Statement  
in € million  
2016  
2015  
Notes to the  
Statement of  
Comprehensive  
Income  
Wages and salaries  
9,581  
1,152  
802  
8,887  
1,250  
733  
Pension and welfare expenses  
Social insurance expenses  
Personnel expenses  
in € million  
2016  
15  
2015  
15  
11,535  
10,870  
Audit of financial statements  
thereof KPMG AG Wirtschafts-  
prüfungsgesellschaft, Berlin  
4
4
Personnel expenses include €ꢀ61 million (2015: €ꢀ48 mil-  
lion) of costs incurred to adjust the workforce size.  
The total pension expense for defined contribution  
plans of the BMW Group amounted to €ꢀ90 million  
Other attestation services  
5
4
thereof KPMG AG Wirtschafts-  
prüfungsgesellschaft, Berlin  
4
2
Tax advisory services  
2
3
(
2015: €ꢀ71 million). Employer contributions paid to  
state pension insurance schemes totalled €ꢀ607 million  
2015: €ꢀ571 million).  
thereof KPMG AG Wirtschafts-  
prüfungsgesellschaft, Berlin  
–
1
–
(
Other services  
1
thereof KPMG AG Wirtschafts-  
prüfungsgesellschaft, Berlin  
The average number of employees during the year was:  
–
1
Fee expense  
23  
23  
thereof KPMG AG Wirtschafts-  
prüfungsgesellschaft, Berlin  
2
016  
2015  
8
7
Employees  
thereof at  
115,842  
204  
111,905  
214  
The fee expense shown for KPMG AG Wirtschafts-  
prüfungsgesellschaft, Berlin, relates only to services  
provided on behalf of BMW AG and its German  
subsidiaries.  
proportionately-consolidated entities  
Apprentices and students gaining work  
experience  
7,913  
7,783  
thereof at  
proportionately-consolidated entities  
1
2
Average number of employees  
123,755  
119,688  
1
6
The number of employees at the end of the reporting  
period is disclosed in the Combined Management  
Report.  
Government grants and government assistance  
Income from asset-related and performance-related  
grants, amounting to €ꢀ31 million (2015: €ꢀ33 million)  
and €ꢀ126 million (2015: €ꢀ132 million) respectively,  
were recognised in the income statement in 2016.  
A large part of these amounts relate to public sector  
grants for the promotion of regional structures and  
to subsidies received for plant expansions.  
1
39  
NOTES TO THE STATEMENT  
OF COMPREHENSIVE  
INCOME  
1
7
Disclosures relating to the statement of total  
comprehensive income  
Other comprehensive income for the period after tax  
comprises the following:  
in € million  
2016  
2015  
Remeasurement of the net defined benefit liability for pension plans  
Deferred taxes  
–1,858  
529  
1,413  
– 401  
1,012  
Items not expected to be reclassified to the income statement in the future  
–1,329  
Available-for-sale securities  
40  
79  
–170  
– 26  
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  
– 39  
–144  
–1,301  
– 2,619  
1,318  
71  
2,008  
1,458  
550  
43  
– 721  
– 230  
1,140  
516  
Currency translation foreign operations  
765  
Items expected to be reclassified to the income statement in the future  
–119  
Other comprehensive income for the period after tax  
–189  
893  
Deferred taxes on components of other comprehen-  
sive income are as follows:  
2
016  
2015  
Deferred  
Before  
Deferred  
After  
Before  
After  
in € million  
tax  
taxes  
tax  
tax  
taxes  
tax  
Remeasurement of the net defined benefit liability for pension plans  
Available-for-sale securities  
–1,858  
40  
529  
–12  
– 680  
– 29  
–
–1,329  
28  
1,413  
–170  
–1,301  
71  
– 401  
53  
1,012  
–117  
– 842  
75  
Financial instruments used for hedging purposes  
Other comprehensive income from equity accounted investments  
Currency translation foreign operations  
2,008  
43  
1,328  
14  
459  
4
– 230  
3
– 230  
–189  
765  
–
765  
Other comprehensive income  
–192  
778  
115  
893  
Other comprehensive income arising at the level  
of equity accounted investments is reported in the  
Statement of Changes in Equity within “Currency  
translation foreign operations” with a negative amount  
of €ꢀ73 million (2015: positive amount of €ꢀ90 million)  
and within “Financial instruments used for hedging  
purposes” with a positive amount of €ꢀ87 million (2015  
negative amount of €ꢀ15 million).  
:
1
40  
Group  
Financial  
Statements  
NOTES TO THE BALANCE SHEET  
BMW Group  
Notes to the Group  
Financial Statements  
18  
Analysis of changes in Group tangible, intangible and investment assets 2016  
Notes to the  
Balance Sheet  
Acquisition and manufacturing cost  
Translation  
differences  
Reclassi-  
fications  
1
in € million  
1. 1. 2016  
Additions  
Disposals  
31.12. 2016  
Development costs  
Goodwill  
10,522  
369  
–
–
2,092  
–
–
–
–
–
1,130  
–
11,484  
369  
Other intangible assets  
Intangible assets  
1,455  
12,346  
– 2  
– 2  
100  
58  
1,495  
13,348  
2,192  
1,188  
Land, titles to land, buildings, including  
buildings on third party land  
10,458  
35,497  
2,606  
–15  
–185  
22  
300  
1,510  
234  
231  
691  
32  
34  
1,589  
222  
10,940  
35,924  
2,672  
Plant and machinery  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
1,600  
23  
1,587  
3,631  
– 954  
–
3
2,253  
50,161  
–155  
1,848  
51,789  
Leased products  
42,334  
2,233  
316  
–
18,339  
513  
–
–
15,401  
200  
45,588  
2,546  
Investments accounted for using  
the equity method  
Investments in non-consolidated subsidiaries  
Participations  
233  
656  
28  
2
–
–
2
321  
56  
–
–
–
–
56  
2
500  
710  
Non-current marketable securities  
Other investments  
–
–
28  
917  
377  
58  
1,238  
1
Including first-time consolidation.  
Including assets under construction of €1,760 million.  
2
Analysis of changes in Group tangible, intangible and investment assets 2015  
Acquisition and manufacturing cost  
Translation  
differences  
Reclassi-  
fications  
1
in € million  
1. 1. 2015  
Additions  
Disposals  
31.12. 2015  
Development costs  
Goodwill  
9,341  
369  
–
–
2,064  
–
–
–
–
–
883  
–
10,522  
369  
Other intangible assets  
Intangible assets  
1,445  
11,155  
15  
15  
146  
152  
1,454  
12,345  
2,210  
1,035  
Land, titles to land, buildings, including  
buildings on third party land  
9,806  
32,770  
2,517  
164  
551  
47  
240  
1,954  
218  
295  
1,362  
34  
75  
1,168  
215  
10,430  
35,469  
2,601  
Plant and machinery  
Other facilities, factory and office equipment  
Advance payments made and construction in progress  
Property, plant and equipment  
2,020  
4
1,268  
3,680  
–1,691  
–
4
1,597  
47,113  
766  
1,462  
50,097  
Leased products  
36,969  
1,088  
1,738  
–
18,011  
1,293  
–
–
14,452  
148  
42,266  
2,233  
Investments accounted for using  
the equity method  
Investments in non-consolidated subsidiaries  
Participations  
226  
641  
–
3
–
–
3
68  
15  
–
–
–
–
64  
–
233  
656  
28  
Non-current marketable securities  
Other investments  
28  
–
867  
111  
64  
917  
1
Including mergers.  
Including assets under construction of €1,187 million.  
2
1
41  
Depreciation and amortisation  
Reclassi-  
Carrying amount  
Translation  
differences  
1
1
. 1. 2016  
Current year  
fications  
Disposals  
31.12. 2016  
31.12. 2016  
31. 12. 2015  
4
,171  
5
–
–
3
3
1,222  
–
–
–
–
–
1,130  
–
4,263  
5
7,221  
364  
6,351  
364  
Development costs  
Goodwill  
7
97  
181  
58  
923  
5,191  
572  
657  
Other intangible assets  
Intangible assets  
4
,973  
1,403  
1,188  
8,157  
7,372  
Land, titles to land, buildings, including  
buildings on third party land  
4
,516  
– 28  
–100  
9
320  
2,865  
218  
4
2
26  
1,566  
214  
4,786  
27,092  
1,951  
–
6,154  
8,832  
721  
5,915  
9,593  
660  
2
5,891  
Plant and machinery  
1
,942  
2
– 4  
– 2  
–
Other facilities, factory and office equipment  
–
–
–
2,2532  
1,591 Advance payments made and construction in progress  
3
2,351  
–119  
3,403  
1,806  
33,829  
17,960  
17,759  
Property, plant and equipment  
7
,308  
–
19  
–
3,306  
–
–
–
2,834  
–
7,799  
–
37,789  
2,546  
34,965  
Leased products  
Investments accounted for using  
the equity method  
2,233  
7
6
–
–
–
–
116  
76  
–
–
–
–
–
3
–
3
192  
484  
2
308  
226  
26  
157  
245  
26  
Investments in non-consolidated subsidiaries  
Participations  
4
11  
2
–
Non-current marketable securities  
Other investments  
4
89  
192  
678  
560  
428  
Depreciation and amortisation  
Reclassi-  
Carrying amount  
Translation  
differences  
1
1
. 1. 2015  
Current year  
fications  
Disposals  
31.12. 2015  
31.12. 2015  
31. 12. 2014  
3
,888  
5
–
–
1,166  
–
–
–
–
–
883  
–
4,171  
5
6,351  
364  
5,453  
364  
Development costs  
Goodwill  
7
63  
11  
11  
175  
152  
797  
4,973  
657  
682  
Other intangible assets  
Intangible assets  
4
,656  
1,341  
1,035  
7,372  
6,499  
Land, titles to land, buildings, including  
buildings on third party land  
4
,181  
77  
390  
43  
319  
2,795  
204  
–
–
–
–
–
62  
1,150  
208  
4,515  
25,876  
1,941  
6
5,915  
9,593  
660  
5,625  
8,930  
613  
2
3,841  
Plant and machinery  
1
,902  
6
Other facilities, factory and office equipment  
–
–
–
1,5912  
2,014 Advance payments made and construction in progress  
2
9,930  
510  
3,318  
1,420  
32,338  
17,759  
17,182  
Property, plant and equipment  
6
,804  
–
238  
–
3,536  
–
–
–
3,277  
–
7,301  
–
34,965  
2,233  
30,165  
Leased products  
Investments accounted for using  
the equity method  
1,088  
6
2
2
–
–
2
12  
13  
2
–
–
–
–
–
–
–
–
76  
411  
2
157  
245  
26  
164  
244  
–
Investments in non-consolidated subsidiaries  
Participations  
3
98  
–
Non-current marketable securities  
Other investments  
4
60  
27  
489  
428  
408  
1
42  
Group  
Financial  
Statements  
19  
20  
Intangible assets  
Property, plant and equipment  
No impairment losses were recognised in 2016 (2015:  
€ꢀ3 million).  
Intangible assets mainly comprise capitalised develop-  
ment costs on vehicle and engine projects as well as  
subsidies for tool costs, licences, purchased develop-  
ment projects, software and purchased customer lists.  
BMW Group  
Notes to the Group  
Financial Statements  
Notes to the  
Balance Sheet  
As in the previous year, no borrowing costs were  
recognised as a cost component of property, plant  
and equipment in 2016.  
Other intangible assets include a brand-name right  
amounting to €ꢀ42 million (2015: €ꢀ48 million) which  
is allocated to the Automotive segment and is not  
subject to scheduled amortisation since its useful life  
is deemed to be indefinite. The year-on-year change  
is due entirely to currency factors. This line item also  
includes goodwill of €ꢀ33 million (2015: €ꢀ33 million)  
allocated to the Automotive cash-generating unit  
Property, plant and equipment include a total of  
€ꢀ107 million (2015: €ꢀ110 million) relating to land and  
buildings, for which economic ownership is attribut-  
able to the BMW Group (finance leases). Leases to  
which BMWAG is party, with a carrying amount of  
€ꢀ90 million (2015: €ꢀ102 million), run for periods up  
to 2030 at the latest and contain price adjustment  
clauses in the form of index-linked rentals as well as  
extension and purchase options.  
(
CGU) and goodwill of €ꢀ331 million (2015: €ꢀ331 mil-  
lion) allocated to the Financial Services CGU.  
Intangible assets amounting to €ꢀ42 million (2015:  
€
ꢀ48 million) are subject to restrictions on title.  
Minimum lease payments are as follows:  
As in the previous year, there was no requirement to  
recognise impairment losses or reversals of impair-  
ment losses on intangible assets in 2016.  
in € million  
31.12. 2016  
31.12. 2015  
Total of future minimum lease payments  
due within one year  
23  
73  
22  
69  
As in the previous year, no borrowing costs were  
recognised as a cost component of intangible assets  
in 2016.  
due between one and five years  
due later than five years  
127  
99  
2
23  
190  
Interest portion of the future minimum  
lease payments  
due within one year  
11  
36  
50  
10  
32  
27  
69  
due between one and five years  
due later than five years  
9
7
Present value of future minimum lease  
payments  
due within one year  
12  
37  
77  
26  
12  
37  
due between one and five years  
due later than five years  
72  
1
121  
1
43  
2
1
In August 2015, BMW AG, Daimler AG, Stuttgart,  
and AUDI AG, Ingolstadt, agreed with Nokia Cor-  
poration, Helsinki, to acquire that entity’s maps and  
location-based services business (HERE Group). The  
HERE Group’s digital maps are fundamental for the  
next generation of mobility and location-based ser-  
vices, providing the basis for new assistance systems  
and, ultimately, fully autonomous driving.  
Leased products  
Minimum lease payments of non-cancellable oper-  
ating leases amounting to €ꢀ17,850 million (2015:  
€
ꢀ16,527 million) fall due as follows:  
in € million  
31.12. 2016  
31.12. 2015  
within one year  
8,692  
9,154  
4
8,079  
8,445  
3
THERE Holding B.ꢀV. and its wholly owned subsidi-  
ary, HERE International B.ꢀV. (until 28 January 2016:  
THERE Acquisition B.ꢀV.) were founded in connection  
with the acquisition. HERE International B.ꢀV. acquired  
all of the shares of the HERE Group. Via BMW Inter-  
national Holding B.ꢀV., the BMW Group has a 33.3%  
shareholding in THERE Holding B.ꢀV. THERE acquired  
the HERE Group with effect from 4 December 2015.  
between one and five years  
later than five years  
Minimum lease payments  
17,850  
16,527  
Contingent rents of €ꢀ46 million (2015: €ꢀ54 million),  
based principally on the distance driven, were rec-  
ognised in income. The agreements have, in part,  
extension and purchase options.  
The total purchase price of €ꢀ billion was financed by  
2
.
6
using capital contributions (€ꢀ2.0 billion) and via bank  
loans taken up by HERE International B.ꢀV. (€ꢀ0.6 bil-  
lion). The BMW Group’s share of the purchase price  
was approximately €ꢀ0.67 billion.  
Impairment losses amounting to €ꢀ384 million (2015:  
€
ꢀ119 million) were recognised on leased products in  
2
016 as a consequence of changes in residual value  
expectations. No income was recognised in 2016 from  
the reversal of impairment losses (2015: €ꢀ24 million).  
THERE is included in the BMWAG Group Financial  
Statements as an associated company using the equity  
method and allocated for segment reporting purposes  
to the Automotive segment. In view of the proximity  
of the reporting date and on the grounds of imma-  
teriality, no fair value adjustments were recorded in  
conjunction with the at-equity carrying amount at  
31 December 2015, at which stage the investment  
was accounted for at cost. During 2016, the Group’s  
share of earnings was accounted for with one month’s  
delay, which was caught up at 31 December 2016. The  
purchase price allocation was completed during the  
first quarter of 2016.  
2
2
Investments accounted for using the equity  
method  
Investments accounted for using the equity method  
comprise the joint venture BMW Brilliance Auto-  
motive Ltd. (BMW Brilliance), the joint ventures  
DriveNow GmbH & Co. KG and DriveNow Ver-  
waltungs GmbH (DriveNow) and the interest in the  
associated company THERE Holding B.ꢀV. (THERE).  
In December 2016, THERE Holding B.ꢀV. signed  
contracts for the sale of a total of 25% of the shares  
of HERE International B.ꢀV. The contract relating to  
the sale of 15% of the shares to Intel Holdings B.ꢀV.,  
BMW Brilliance (in which the BMW Group has a 50.0%  
shareholding) produces mainly BMW brand models  
for the Chinese market and also has engine manufac-  
turing facilities, which supply the joint venture’s two  
plants with petrol engines.  
Schiphol-Rijk, was completed in January 2017. 10%  
of the shares were sold to a consortium comprising  
NavInfo Co. Ltd., Beijing, Tencent Holdings Ltd.,  
Shenzhen, and GIC Private Ltd., Singapore. After  
receipt of the approval of the relevant regulatory  
agencies, the transaction is expected to be completed  
during the first half of 2017.  
DriveNow (in which the BMW Group has a 50.0%  
shareholding) offers car-sharing services in major  
German cities and abroad.  
1
44  
Group  
Financial  
Statements  
Financial information relating to equity accounted  
investments is aggregated in the following tables:  
BMW Group  
Notes to the Group  
Financial Statements  
BMW Brilliance  
2016  
THERE  
2016  
DriveNow  
2016  
Notes to the  
Balance Sheet  
in € million  
2015  
2015  
2015  
ꢄISClꢅSꢂꢆꢀS ꢆꢀlAꢁIꢃG ꢁꢅ ꢁꢇꢀ IꢃCꢅꢈꢀ SꢁAꢁꢀꢈꢀꢃꢁ  
Revenues  
12,991  
13,220  
380  
1,240  
52  
–
–
–
–
–
–
–
–
–
58  
–
47  
–
Scheduled depreciation  
486  
1,328  
30  
Profit / loss before financial result  
Interest income  
1,399  
40  
–149  
1
–15  
–
– 6  
–
Interest expenses  
2
15  
22  
–
–
Income taxes  
363  
30  
369  
3
–
–
Other comprehensive income  
Total comprehensive income  
Dividends received by the Group  
150  
– 4  
–
–
1,061  
134  
1,081  
144  
–171  
–
–15  
–
– 6  
–
BMW Brilliance  
2016  
THERE  
DriveNow  
2016  
in € million  
2015  
2016  
2015  
2015  
ꢄISClꢅSꢂꢆꢀS ꢆꢀlAꢁIꢃG ꢁꢅ ꢁꢇꢀ bAlAꢃCꢀ Sꢇꢀꢀꢁ  
Non-current assets  
5,779  
2,106  
4,405  
4,678  
–
5,415  
1,663  
3,841  
3,853  
–
2,802  
209  
3,115  
96  
–
20  
33  
151  
–
–
23  
32  
Cash and cash equivalents  
Current assets  
592  
365  
Equity  
1,832  
525  
2,003  
598  
201  
Non-current financial liabilities  
Non-current provisions and liabilities  
Current financial liabilities  
–
–
670  
589  
1,044  
73  
1,093  
48  
–
87  
641  
–
–
Current provisions and liabilities  
4,835  
4,814  
518  
384  
18  
12  
ꢆꢀCꢅꢃCIlIAꢁIꢅꢃ ꢅꢉ AGGꢆꢀGAꢁꢀꢄ ꢉIꢃAꢃCIAl  
IꢃꢉꢅꢆꢈAꢁIꢅꢃ  
Assets  
10,183  
5,505  
4,678  
2,339  
– 414  
9,256  
5,403  
3,853  
1,927  
– 376  
1,551  
3,394  
1,562  
1,832  
611  
3,480  
1,477  
2,003  
668  
33  
18  
15  
102  
–
32  
12  
20  
142  
–
Provisions and liabilities  
Net assets  
Group’s interest in net assets  
Eliminations  
–
–
Carrying amount  
1
1,925  
611  
668  
10  
14  
Corresponds to the consolidated equity capital provided by the shareholders of DriveNow GmbH & Co. KG and its subsidiaries.  
The BMW Group holds 67.2 % (2015: 73.8 %) of the net assets at 31 December 2016. Due to the allocation of voting power within the decision-making bodies of the two entities,  
operations remain subject to joint control.  
2
1
45  
2
3
Allowances on receivables from sales financing –  
which only arise within the Financial Services seg-  
ment – developed as follows:  
Receivables from sales financing  
Receivables from sales financing comprise the fol-  
lowing:  
2
016  
in € million  
31.12. 2016  
31.12. 2015  
Allowance for impairment  
recognised on a  
Credit financing for retail customers  
and dealerships  
specific  
item basis  
in € million  
group basis  
Total  
61,602  
16,658  
52,915  
17,128  
Finance lease receivables  
Balance at 1 January*  
Allocated (+) / reversed (–)  
Utilised  
963  
248  
535  
– 25  
– 41  
1,498  
223  
Receivables from  
sales financing  
78,260  
70,043  
– 304  
– 345  
Exchange rate impact  
and other changes  
Non-guaranteed residual values that fall to the ben-  
27  
– 2  
25  
efit of the lessor amounted to €ꢀ118 million (2015:  
Balance at 31 December  
934  
467  
1,401  
€
ꢀ165 million).  
*
Balance at 1 January adjusted due to deconsolidation of entities.  
Impairment aꢊꢊowances  
2
015  
Allowance for impairment  
recognised on a  
in € million  
31.12. 2016  
14,440  
31.12. 2015  
specific  
Gross carry amount of items with  
impairment allowances recognised  
on a specific-item basis  
in € million  
item basis  
group basis  
Total  
13,742  
Balance at 1 January  
Allocated (+) / reversed (–)  
Utilised  
1,000  
265  
515  
30  
1,515  
295  
Impairment allowances recognised  
on a specific-item basis  
– 934  
– 963  
–174  
thereof for finance lease receivables  
–141  
– 319  
– 22  
– 341  
Exchange rate impact  
and other changes  
Gross carrying amount of items with  
impairment allowances recognised  
on a group basis  
17  
7
24  
Balance at 31 December  
963  
530  
1,493  
52,951  
– 467  
44,473  
– 530  
Impairment allowances recognised  
on a group basis  
The estimated fair value of collateral received for receiv-  
ables on which impairment losses were recognised  
totalled €ꢀ30,542 million (2015: €ꢀ26,992 million). This  
collateral related primarily to vehicles. The carrying  
amount of assets held as collateral and taken back as  
a result of payment default amounted to €ꢀ153 million  
Carrying amount without impairment  
allowances  
12,270  
78,260  
13,321  
Net carrying amount  
70,043  
(
2015: €ꢀ40 million).  
1
46  
Group  
Financial  
Statements  
Finance leases are analysed as follows:  
Marketable securities and investment funds relate to  
available-for-sale financial assets and comprise:  
BMW Group  
in € million  
31.12. 2016  
31.12. 2015  
Notes to the Group  
Financial Statements  
in € million  
31.12. 2016  
31.12. 2015  
Notes to the  
Balance Sheet  
Gross investment in finance leases  
due within one year  
5,921  
12,574  
32  
5,974  
12,816  
134  
Fixed income securities  
Stocks  
4,449  
734  
4,356  
561  
due between one and five years  
due later than five years  
Other debt securities  
104  
344  
1
8,527  
18,924  
Marketable securities and  
investment funds  
5,287  
5,261  
Present value of future minimum  
lease payments  
due within one year  
5,348  
5,429  
11,572  
127  
The contracted maturities of debt securities are as  
follows:  
due between one and five years  
due later than five years  
11,278  
32  
1
6,658  
17,128  
in € million  
31.12. 2016  
31.12. 2015  
Unrealised interest income  
1,869  
1,796  
Fixed income securities  
due within three months  
due later than three months  
780  
699  
3,669  
3,657  
Other debt securities  
due within three months  
due later than three months  
Debt securities  
2
4
104  
–
344  
–
Financial assets  
Financial assets comprise:  
4,553  
4,700  
in € million  
31.12. 2016  
31.12. 2015  
Marketable securities and  
investment funds  
5,287  
3,922  
287  
5,261  
3,030  
272  
Derivative instruments  
Credit card receivables  
Loans to third parties  
Other  
129  
133  
145  
147  
Financial assets  
9,770  
8,843  
thereof non-current  
thereof current  
2,705  
7,065  
2,208  
6,635  
The amount by which the value of investment funds  
exceeds obligations for part-time working arrange-  
ments (€ꢀ17 million; 2015: €ꢀ12 million) is reported  
under other financial assets. Investment funds are  
held to secure obligations relating to pre-retirement  
part-time work arrangements. These funds are man-  
aged by BMW Trust e.ꢀV., Munich, as part of Con-  
tractual Trust Arrangements (CTA) and are therefore  
netted against the corresponding settlement arrears  
for pre-retirement part-time work arrangements.  
1
47  
Aꢊꢊowances for impairment and credit risk  
Receivables relating to credit card business comprise  
the following:  
25  
Income tax assets  
Income tax assets totalling €ꢀ1,938 million (2015:  
€ꢀ2,381 million) include claims amounting to €ꢀ351 mil-  
lion (2015: €ꢀ519 million), which are expected to be  
settled after more than twelve months. Some of the  
claims may be settled earlier than this depending on  
the timing of proceedings.  
in € million  
31.12. 2016  
31.12. 2015  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
296  
– 9  
280  
– 8  
287  
272  
2
6
Allowances for impairment losses on receivables  
relating to credit card business developed as follows  
during the year under report:  
Other assets  
Other assets comprise:  
in € million  
31.12. 2016  
1,914  
31.12. 2015  
2
016  
Prepayments  
1,527  
Allowance for impairment  
recognised on a  
Receivables from companies in which  
an investment is held  
1,217  
1,135  
779  
893  
1,036  
711  
specific  
in € million  
item basis  
group basis  
Total  
Other taxes  
Expected reimbursement claims  
Receivables from subsidiaries  
Collateral receivables  
Sundry other assets  
Other assets  
Balance at 1 January  
Allocated (+) / reversed (–)  
Utilised  
8
8
–
–
–
8
8
422  
716  
387  
412  
– 8  
– 8  
828  
966  
Exchange rate impact and  
other changes  
6,682  
6,261  
1
–
1
9
Balance at 31 December  
9
–
thereof non-current  
thereof current  
1,595  
5,087  
1,568  
4,693  
2
015  
Allowance for impairment  
recognised on a  
Prepayments relate mainly to prepaid interest and  
commission paid to dealerships. Prepayments of  
€ꢀ1,018 million (2015: €ꢀ795 million) have a maturity  
specific  
in € million  
item basis  
group basis  
Total  
of less than one year.  
Balance at 1 January  
Allocated (+) / reversed (–)  
Utilised  
8
7
–
–
–
8
7
Collateral receivables comprise mainly customary  
collateral (banking deposits) arising on the sale of  
receivables.  
– 8  
– 8  
Exchange rate impact and  
other changes  
1
–
1
8
Balance at 31 December  
8
–
1
48  
Group  
Financial  
Statements  
27  
The impairment allowance on trade receivables devel-  
oped during the year under report as follows:  
Inventories  
Inventories comprise the following:  
BMW Group  
Notes to the Group  
Financial Statements  
2016  
Notes to the  
Balance Sheet  
in € million  
31.12. 2016  
31.12. 2015  
Allowance for impairment  
recognised on a  
Finished goods and goods for resale  
Work in progress, unbilled contracts  
Raw materials and supplies  
Inventories  
9,684  
1,157  
8,969  
1,098  
specific  
item basis  
in € million  
group basis  
Total  
1,000  
1,004  
Balance at 1 January  
Allocated (+) / reversed (–)  
Utilised  
84  
– 21  
–19  
12  
–
96  
– 21  
– 20  
11,841  
11,071  
–1  
Exchange rate impact  
and other changes  
At 31 December 2016, inventories measured at their  
2
–
2
net realisable value amounted to €ꢀ871 million (2015:  
Balance at 31 December  
46  
11  
57  
€ꢀ1,054 million). Write-downs to net realisable value  
amounting to €ꢀ101 million (2015: €ꢀ486 million) were  
recognised in 2016. The write-down recorded in the  
previous year resulted primarily from accidents and  
natural disasters.  
2015  
Allowance for impairment  
recognised on a  
specific  
in € million  
item basis  
group basis  
Total  
The expense recorded in conjunction with inven-  
tories during the financial year 2016 amounted to  
Balance at 1 January  
Allocated (+) / reversed (–)  
Utilised  
76  
36  
7
7
83  
43  
€
ꢀ55,129 million (2015: €ꢀ55,536 million).  
– 27  
–1  
– 28  
Exchange rate impact and  
other changes  
–1  
–1  
– 2  
96  
2
8
Balance at 31 December  
84  
12  
Trade receivables  
Trade receivables comprise the following:  
Some trade receivables were overdue for which an  
impairment allowance was not recognised. Overdue  
balances are analysed into the following time windows:  
in € million  
31.12. 2016  
31.12. 2015  
Gross carrying amount  
Allowance for impairment  
Net carrying amount  
2,882  
– 57  
2,847  
– 96  
in € million  
31.12. 2016  
31.12. 2015  
2,825  
2,751  
1
3
6
9
– 30 days overdue  
1 – 60 days overdue  
1 – 90 days overdue  
1 – 120 days overdue  
174  
23  
128  
20  
29  
10  
17  
15  
More than 120 days overdue  
64  
22  
Balance at 31 December  
307  
195  
Receivables that are overdue by between one and  
0 days do not normally result in bad debt losses  
3
since the overdue nature of the receivables is primar-  
ily attributable to the timing of receipts around the  
month-end. In the case of trade receivables, collateral  
is generally held in the form of vehicle documents  
and bank guarantees so that the risk of bad debt loss  
is extremely low.  
1
49  
2
9
Equity  
ꢃumꢋer of shares issued  
Preferred stock  
2016  
Common stock  
2016  
Number of shares issued  
2015  
2015  
Shares issued / in circulation at 1 January  
54,809,404  
305,029  
29  
54,499,544  
309,944  
84  
601,995,196  
601,995,196  
Shares issued in conjunction with Employee Share Programme  
Less: shares repurchased and re-issued  
–
–
–
–
Shares issued / in circulation at 31 December  
55,114,404  
54,809,404  
601,995,196  
601,995,196  
All of the Company stock is issued to bearer and each  
ꢆevenue reserves  
share has a par value of €ꢀ  
which no voting rights are attached, bears an addi-  
tional dividend of €ꢀ0.02 per share.  
1
.
00. Preferred stock, to  
Revenue reserves comprise the post-acquisition and  
non-distributed earnings of consolidated companies.  
In addition, remeasurements of the net defined ben-  
efit liability for pension plans are also presented in  
revenue reserves.  
In 2016, a total of 305  
was sold to employees at a reduced price of €ꢀ44  
,
029 shares of preferred stock  
14 per  
.
share in conjunction with the Company’s Employee  
Share Programme. These shares are entitled to receive  
A proposal will be made that the unappropriated profit  
of BMWAG for the financial year 2016 amounting to  
€ꢀ2,300 million be utilised as follows:  
dividends with effect from the financial year 2017  
.
2
2
9 shares of preferred stock were bought back in  
016 via the stock exchange in conjunction with the  
Distribution of a dividend of €ꢀ3.52 per share of  
preferred stock (€ꢀ193 million).  
—
Company’s Employee Share Programme.  
Issued share capital increased by €ꢀ million as a  
0
.
3
Distribution of a dividend of €ꢀ3.50 per share of  
common stock (€ꢀ2,107 million).  
—
result of the issue to employees of 305,000 shares of  
non-voting preferred stock. The number of author-  
ised shares and the Authorised Capital of BMWAG  
amounted to 4.2 million shares and €ꢀ4.2 million  
respectively at the end of the reporting period. The  
The proposed distribution was not recognised as a  
liability in the Group Financial Statements.  
Company is authorised to issue  
non-voting preferred stock amounting to nominal  
ꢀ5.0 million prior to 14 May 2019.  
5
million shares of  
Accumulated other equity  
Accumulated other equity comprises all amounts rec-  
ognised directly in equity resulting from the transla-  
tion of the financial statements of foreign subsidiaries,  
the effects of recognising changes in the fair value  
of derivative financial instruments and marketable  
securities directly in equity and the related deferred  
taxes recognised directly in equity.  
€
Capitaꢊ reserves  
Capital reserves include premiums arising from the  
issue of shares and totalled €ꢀ2,047 million (2015:  
€
ꢀ2,027 million). The change related to the share cap-  
ital increase arising in conjunction with the issue of  
shares of preferred stock to employees amounting to  
€
ꢀ20.1 million.  
1
50  
Group  
Financial  
Statements  
Capitaꢊ management discꢊosures  
The capital structure at the end of the reporting period  
was as follows:  
The BMW Group’s objectives when managing capital  
are to safeguard the Group’s ability to continue as  
a going concern in the long-term and to provide an  
adequate return to shareholders.  
BMW Group  
Notes to the Group  
Financial Statements  
in € million  
31.12. 2016  
31.12. 2015  
Notes to the  
Balance Sheet  
Equity attributable to shareholders  
of BMW AG  
The BMW Group manages the capital structure and  
makes adjustments to it in the light of changes in  
economic conditions and the risk profile of the under-  
lying assets.  
47,108  
32.5 %  
42,530  
31.7 %  
Proportion of total capital  
Non-current financial liabilities  
Current financial liabilities  
Total financial liabilities  
Proportion of total capital  
Total capital  
55,405  
42,326  
97,731  
67.5 %  
144,839  
49,523  
42,160  
91,683  
68.3 %  
The BMW Group is not subject to any external  
minimum equity capital requirements. Within the  
Financial Services segment, however, there are a  
number of individual entities which are subject to  
equity capital requirements set by relevant regulatory  
banking agencies.  
134,213  
The equity ratio attributable to shareholders of  
BMW AG increased during the financial year by  
0.8 percentage points, primarily reflecting the  
increase in revenue reserves.  
In order to manage its capital structure, the  
BMW Group uses various instruments, including the  
amount of dividends paid to shareholders and share  
buybacks. Moreover, the BMW Group pro-actively  
manages debt capital, determining levels of debt  
capital transactions with a target debt structure in  
mind. An important aspect of the selection of finan-  
cial instruments is the objective to achieve matching  
maturities for the Group’s financing requirements. In  
order to reduce non-systematic risk, the BMW Group  
uses a variety of financial instruments available on  
the world’s capital markets to achieve diversification.  
1
51  
3
0
In the meantime, most of the defined benefit plans  
have been closed to new entrants.  
Pension provisions  
In the case of defined benefit plans, the BMW Group  
is required to pay the benefits it has granted to pres-  
ent and past employees. Defined benefit plans may  
be funded or unfunded, the latter sometimes covered  
by accounting provisions. Pension commitments in  
Germany are mostly covered by assets contributed  
to BMW Trust e.ꢀV., Munich, in conjunction with a  
contractual trust arrangement (CTA). The main other  
countries with funded plans were the UK, the USA,  
Switzerland, the Netherlands, Belgium and Japan.  
The assumptions stated below, all of which depend  
on the economic situation in the relevant country,  
are used to measure the defined benefit obligation  
of each pension plan. The following weighted aver-  
age values have been used for Germany, the United  
Kingdom and other countries:  
Germany  
31.12. 2016  
United Kingdom  
31.12. 2016 31.12. 2015  
Other  
31.12. 2016  
in %  
31.12. 2015  
31.12. 2015  
Discount rate  
1.80  
1.78  
21.3  
2.51  
1.60  
20.5  
2.51  
2.55  
20.9  
3.58  
2.43  
19.2  
3.70  
–
3.83  
0.02  
18.4  
Pension level trend  
Weighted duration of all pension obligations in years  
17.6  
The following mortality tables are applied in countries,  
in which the BMW Group has significant defined  
benefit plans:  
Germany  
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50 %)  
United Kingdom  
SP2 tables with weightings  
In Germany, the so-called “pension entitlement trend”  
Based on the measurement principles contained in  
IAS 19, the following balance sheet carrying amounts  
apply to the Group’s pension plans:  
(
Festbetragstrend) also represents a significant actu-  
arial assumption for the purposes of determining  
benefits payable at retirement and was left unchanged  
at 2.0%.  
Germany  
United Kingdom  
31.12. 2016 31.12. 2015  
Other  
31.12. 2016  
Total  
31.12. 2016  
in € million  
31.12. 2016  
31.12. 2015  
31.12. 2015  
31.12. 2015  
Present value of defined benefit  
obligations  
11,112  
8,643  
9,215  
7,855  
10,311  
8,714  
9,327  
8,153  
1,476  
958  
1,384  
922  
22,899  
18,315  
19,926  
16,930  
Fair value of plan assets  
Effect of limiting net defined benefit  
asset to asset ceiling  
–
–
–
–
3
3
3
3
Carrying amounts at 31 December  
2,469  
1,360  
1,597  
1,174  
521  
465  
4,587  
2,999  
thereof pension provision  
thereof assets  
2,469  
–
1,360  
–
1,597  
–
1,174  
–
521  
–
466  
–1  
4,587  
–
3,000  
–1  
1
52  
Group  
Financial  
Statements  
Numerous defined benefit plans are in place through-  
out the BMW Group.  
The assets of the German pension plans are admin-  
istered by BMW Trust e.ꢀV., Munich, (German reg-  
istered association) in accordance with a CTA. The  
representative bodies of this entity are the Board  
of Directors and the Members’ General Meeting.  
BMW Trust e.ꢀV., Munich, currently has seven mem-  
bers and three Board of Directors members elected  
by the Members’ General Meeting. The Board of  
Directors is responsible for investments, drawing  
up and deciding on investment guidelines as well as  
monitoring compliance with those guidelines. The  
members of the association can be employees, senior  
executives and members of the Board of Directors.  
An ordinary Members’ General Meeting takes place  
once every calendar year, and deals with a range  
of matters, including receiving and approving the  
association’s annual report, ratifying the activities  
of the Board of Directors and adopting changes to  
the association’s statutes.  
BMW Group  
Notes to the Group  
Financial Statements  
Under the motto “THE NEXT 100 YEARS”, almost  
all of the workforce received a special bonus in  
conjunction with the BMW Group’s centenary  
anniversary. Depending on opportunities available  
in each country, the bonus was contributed to the  
relevant pension plan or paid to the recipient in a  
one-off amount.  
Notes to the  
Balance Sheet  
The most significant of the BMW Group’s pension  
plans are described below.  
Germany  
Both employer- and employee-funded benefit plans  
are in place in Germany. Benefits paid in conjunction  
with these plans comprise old-age retirement pen-  
sions as well as invalidity and surviving dependents’  
benefits. The Deferred Remuneration Retirement  
Plan is an employee-financed defined contribution  
plan with a minimum 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 remu-  
neration components in return for a future benefit.  
When the benefit falls due, it is paid on the basis  
of the higher of the value of the depot account or a  
guaranteed minimum amount. Defined benefit obli-  
gations also remain in Germany, for which benefits  
are determined either by multiplying a fixed amount  
by the number of years of service or on the basis of  
an employee’s final salary.  
ꢂnited Kingdom  
In the United Kingdom, the BMW Group has defined  
benefit plans, which are primarily employer-funded  
combined with employee-funded components based  
on the conversion of employee remuneration. These  
plans are subject to statutory minimum recovery  
requirements. Benefits paid in conjunction with  
these plans comprise old-age retirement pensions as  
well as invalidity and surviving dependents’ benefits.  
The defined benefit plans have been closed to new  
entrants, who, since 1 January 2014, are covered by  
a defined contribution plan.  
The pension plans are administered by BMW Pen-  
sion Trustees Limited, Hams Hall, and BMW (UK)  
Trustees Limited, Hams Hall, both trustee companies  
which act independently of the BMW Group. BMW  
The defined benefit plans have been closed to new  
entrants. With effect from 1 January 2014, new  
employees receive a defined contribution entitle-  
ment with a minimum rate of return. Under the  
motto “THE NEXT 100 YEARS”, this entitlement was  
enhanced by a special centenary bonus to employees,  
made in the form of a starting contribution to a new  
BMW supplementary benefit plan.  
(
UK) Trustees Limited, Hams Hall, is represented  
by 11 trustees and BMW Pension Trustees Limited,  
Hams Hall, by five trustees. A minimum of one  
third of the trustees must be elected by plan partic-  
ipants. The trustees represent the interests of plan  
participants and decide on investment strategies.  
Recovery contributions to the funds are determined  
in agreement with the BMW Group.  
1
53  
The change in the net defined benefit liability for pension  
plans can be derived as follows:  
Limitation of  
the net defined  
benefit asset to  
the asset ceiling  
Defined  
benefit  
obligation  
Net defined  
benefit liability  
in € million  
Plan assets  
Total  
1
January 2016  
19,926  
–16,930  
2,996  
3
2,999  
ExꢀEꢁSEꢂ/ꢂIꢁꢃꢄME  
Current service cost  
557  
557  
–
– 479  
–
557  
78  
–
–
–
–
557  
78  
Interest expense (+) / income (–)  
Past service cost  
–171  
– 8  
–171  
– 8  
–171  
– 8  
Gains (–) or losses (+) arising from settlements  
–
ꢆꢀꢈꢀASꢂꢆꢀꢈꢀꢃꢁS  
Gains (–) or losses (+) on plan assets, excluding amounts included  
in interest income  
–
4,093  
– 40  
–1,836  
–1,836  
4,093  
– 40  
–
–
–
–
–1,836  
4,093  
– 40  
Gains (–) or losses (+) arising from changes in the discount factor  
Gains (–) or losses (+) arising from changes in demographic assumptions  
Gains (–) or losses (+) arising from experience adjustments  
–
–
–
–118  
–118  
–118  
Changes in the limitation of the net defined benefit asset to the  
asset ceiling  
–
–
–
–
–
Transfers to fund  
–
85  
– 827  
– 85  
– 827  
–
–
–
–
–
3
– 827  
–
Employee contributions  
Pensions and other benefits paid  
Translation differences and other changes  
– 643  
676  
33  
33  
–1,339  
22,899  
1,166  
–18,315  
–173  
4,584  
–173  
4,587  
3
1 December 2016  
thereof pension provision  
thereof assets  
4,587  
–
Limitation of  
the net defined  
benefit asset to  
the asset ceiling  
Defined  
benefit  
obligation  
Net defined  
benefit liability  
in € million  
Plan assets  
Total  
1
January 2015  
20,462  
–15,861  
4,601  
2
4,603  
ExꢀEꢁSEꢂ/ꢂIꢁꢃꢄME  
Current service cost  
494  
591  
– 9  
–
–
– 468  
–
494  
123  
– 9  
–
–
–
–
–
494  
123  
– 9  
–
Interest expense (+) / income (–)  
Past service cost  
Gains (–) or losses (+) arising from settlements  
–
ꢆꢀꢈꢀASꢂꢆꢀꢈꢀꢃꢁS  
Gains (–) or losses (+) on plan assets, excluding amounts included  
in interest income  
–
–1,181  
– 224  
325  
–
325  
–1,181  
– 224  
–
–
–
–
325  
–1,181  
– 224  
Gains (–) or losses (+) arising from changes in the discount factor  
Gains (–) or losses (+) arising from changes in demographic assumptions  
Gains (–) or losses (+) arising from experience adjustments  
–
– 429  
–
– 429  
– 429  
Changes in the limitation of the net defined benefit asset to the  
asset ceiling  
–
–
–
1
1
Transfers to fund  
–
79  
– 872  
– 79  
– 872  
–
–
–
–
–
3
– 872  
–
Employee contributions  
Pensions and other benefits paid  
Translation differences and other changes  
– 540  
683  
554  
14  
14  
– 529  
154  
2,996  
154  
2,999  
3
1 December 2015  
19,926  
–16,930  
thereof pension provision  
thereof assets  
3,000  
–1  
1
54  
Group  
Financial  
Statements  
Past service cost results from a change in the defined  
benefit pension plan in Germany. In future, 12 month-  
ly pension payments will be paid to all plan benefi-  
Depending on the cash flow profile and risk structure  
of the pension obligations involved, pension plan  
assets are invested in various investment classes.  
BMW Group  
Notes to the Group  
Financial Statements  
ciaries, with a guaranteed 1% increase in pension  
entitlements for benefits awarded since 1999.  
Plan assets in Germany, the UK and other countries  
comprised the following:  
Notes to the  
Balance Sheet  
Germany  
United Kingdom  
2016  
Other  
2016  
Total  
2016  
in € million  
2016  
2015  
2015  
2015  
2015  
CꢅꢈꢌꢅꢃꢀꢃꢁS ꢅꢉ ꢌlAꢃ ASSꢀꢁS  
Equity instruments  
1,726  
5,439  
3,752  
1,687  
–
1,807  
4,834  
3,525  
1,309  
–
611  
6,071  
5,564  
507  
–
1,340  
4,623  
4,437  
186  
–
235  
458  
422  
36  
224  
420  
383  
37  
2,572  
11,968  
9,738  
2,230  
25  
3,371  
9,877  
8,345  
1,532  
20  
Debt instruments  
thereof investment grade  
thereof non-investment grade  
Real estate  
25  
11  
–
20  
Money market funds  
Absolute return funds  
Other  
–
–
26  
255  
33  
19  
37  
274  
–
–
82  
–
82  
33  
–
–
–
–
5
–
5
–
Total with quoted market price  
7,165  
6,641  
6,790  
6,251  
734  
683  
14,689  
13,575  
Debt instruments  
543  
367  
189  
408  
207  
2
3
3
1
954  
577  
192  
thereof investment grade  
195  
2
1
198  
thereof mixed funds  
(
funds without a rating)  
thereof non-investment grade  
Real estate  
348  
–
178  
–
179  
227  
697  
9
–
205  
–
2
–
2
527  
229  
178  
207  
183  
17  
172  
17  
783  
123  
1
105  
–
1,003  
27  
1,060  
41  
Cash and cash equivalents  
Absolute return funds  
Other  
24  
419  
316  
1,478  
376  
282  
1,214  
745  
65  
705  
46  
51  
224  
34  
97  
239  
1,210  
432  
1,115  
562  
183  
Total without quoted market price  
1,924  
1,902  
3,626  
3,355  
3
1 December  
8,643  
7,855  
8,714  
8,153  
958  
922  
18,315  
16,930  
Employer contributions to plan assets are expected to  
amount to €ꢀ1,190 million in the coming year.  
consultants, with the aim of ensuring that investments  
are structured to coincide with the timing of pen-  
sion payments and the expected pattern of pension  
obligations. Each of these measures helps to reduce  
fluctuations in pension funding shortfalls.  
The BMW Group is exposed to risks arising from  
defined benefit plans on the one hand and defined  
contribution plans with a minimum return guarantee  
on the other. The discount rates used to calculate  
pension obligations are subject to market fluctuation  
and therefore influence the level of the obligations.  
Furthermore, changes in other actuarial parameters,  
such as expected rates of inflation, also have an impact  
on pension obligations. In order to reduce currency  
exposures, a substantial portion of plan assets is either  
invested in the same currency as the underlying plan  
or hedged by means of currency derivatives. As part  
of the internal reporting procedures and for internal  
management purposes, financial risks relating to the  
pension plans are reported on using a deficit-value-  
at-risk approach. The investment strategy is also  
subjected to regular review together with external  
1
55  
The defined benefit obligation relates to current  
employees, former employees with vested benefits  
and pensioners as follows:  
Germany  
31.12. 2016  
United Kingdom  
31.12. 2016 31.12. 2015  
Other  
31.12. 2016  
in € million  
31.12. 2015  
31.12. 2015  
Current employees  
67.3  
27.8  
4.9  
66.3  
28.6  
26.7  
43.1  
23.4  
48.6  
79.1  
17.5  
3.4  
75.0  
16.7  
Pensioners  
Former employees with vested benefits  
Defined benefit obligation  
5.1  
30.2  
28.0  
8.3  
100.0  
100.0  
100.0  
100.0  
100.0  
100.0  
The sensitivity analysis provided below shows the  
extent to which changes in individual factors at the  
end of the reporting period influence the defined  
benefit obligation.  
does not follow a linear pattern, estimates made on  
the basis of the specified sensitivities are only possible  
with this restriction. The calculation of sensitivities  
using ranges other than those specified could result  
in a non-proportional change in the defined benefit  
obligation.  
It is only possible, however, to aggregate sensitivities  
to a limited extent. Since the change in obligations  
Change in defined benefit obligation  
3
1.12. 2016  
31.12. 2015  
in € million  
in € million  
in %  
in %  
increase of 0.75 %  
decrease of 0.75 %  
increase of 0.25 %  
decrease of 0.25 %  
increase of 1 year  
decrease of 1 year  
increase of 0.25 %  
decrease of 0.25 %  
– 2,939  
4,031  
747  
–12.8  
17.6  
3.3  
– 2,577  
3,253  
655  
–12.9  
16.3  
3.3  
Discount rate  
Pension level trend  
Average life expectancy  
Pension entitlement trend  
– 713  
853  
– 3.1  
3.7  
– 610  
632  
– 3.1  
3.2  
– 854  
165  
– 3.7  
0.7  
– 633  
134  
– 3.2  
0.7  
–158  
– 0.7  
–128  
– 0.6  
In the UK, the sensitivity analysis for the pension  
level trend also takes account of restrictions due to  
caps and floors.  
1
56  
Group  
Financial  
Statements  
31  
Other provisions  
Other provisions changed during the year as follows:  
BMW Group  
Notes to the Group  
Financial Statements  
Notes to the  
Balance Sheet  
Translation  
differences  
Reversal of  
discounting  
thereof due  
31.12. 2016 within one year  
in € million  
1.1.2016  
Additions  
Utilised  
Reversed  
Obligations for personnel and social  
expenses  
1,939  
5
1,705  
1
–1,436  
– 23  
2,191  
1,661  
Obligations for ongoing operational  
expenses  
5,811  
1,880  
9,630  
48  
21  
74  
3,219  
938  
51  
6
– 2,313  
– 362  
– 289  
– 283  
– 595  
6,527  
2,200  
2,824  
1,394  
5,879  
Other obligations  
Other provisions  
5,862  
58  
– 4,111  
10,918  
Provisions for obligations for personnel and social  
expenses comprise mainly performance-related  
remuneration components, early retirement part-time  
working arrangements and employee long-service  
awards.  
32  
Income tax liabilities  
Current income tax liabilities totalling €ꢀ  
1
,
074 million  
(2015: €ꢀ1,441 million) include €ꢀ33 million (2015: 485  
€million), which is expected to be settled after more  
than twelve months. Some of the liabilities may be  
settled earlier than this depending on the timing of  
proceedings.  
Provisions for obligations for on-going operational  
expenses comprise primarily warranty obligations.  
Depending on when claims are made, it is possible  
that the BMW Group may be called upon to fulfil  
obligations over the whole period of the warranty  
or guarantee. Expected reimbursement claims at  
Current income tax liabilities of €ꢀ1,074 million  
(
2015: €ꢀ  
1
,
441 million) comprise €ꢀ269 million (2015  
:
:
€ꢀ288 million) for taxes payable and €ꢀ805 million (2015  
€ꢀ1,153 million) for tax provisions.  
31 December 2016 amounted to €ꢀ779 million at the  
end of the reporting period (2015: €ꢀ711 million). Also  
included are other provisions for expected payments  
for bonuses, rebates and other price deductions.  
Provisions for other obligations cover numerous spe-  
cific risks and obligations of uncertain timing and  
amount, in particular for litigation and liability risks.  
Income from the reversal of other provisions amount-  
ing to €ꢀ480 million (2015: €ꢀ550 million) is recorded  
in cost of sales and in selling and administrative  
expenses.  
1
57  
3
3
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
1.12. 2016  
Maturity within  
one year  
Maturity between  
one and five years  
Maturity later  
than five years  
in € million  
Total  
Bonds  
9,242  
6,765  
10,251  
10,063  
3,852  
1,656  
497  
25,496  
9,709  
3,997  
3,316  
–
9,683  
–
44,421  
16,474  
14,892  
13,512  
3,852  
Asset backed financing transactions  
Liabilities to banks  
644  
133  
–
Liabilities from customer deposits (banking)  
Commercial paper  
Derivative instruments  
Other  
1,496  
130  
179  
622  
11,261  
3,331  
1,249  
Financial liabilities  
42,326  
44,144  
97,731  
3
1.12. 2015  
Maturity within  
one year  
Maturity between  
one and five years  
Maturity later  
than five years  
in € million  
Total  
Bonds  
10,124  
5,046  
9,030  
9,719  
5,415  
2,198  
628  
23,283  
8,585  
3,194  
3,657  
–
6,912  
–
40,319  
13,631  
12,720  
13,509  
5,415  
Asset backed financing transactions  
Liabilities to banks  
496  
133  
–
Liabilities from customer deposits (banking)  
Commercial paper  
Derivative instruments  
Other  
2,245  
325  
107  
586  
8,234  
4,550  
1,539  
Financial liabilities  
42,160  
41,289  
91,683  
Customer deposit liabilities arise in the BMW Group’s  
banks, notably in Germany and the USA, which offer  
a range of investment products.  
1
58  
Group  
Financial  
Statements  
Bonds comprise:  
BMW Group  
Notes to the Group  
Financial Statements  
Issue volume  
in relevant currency  
(ISO-Code)  
Weighted average  
maturity period  
(in years)  
Weighted average  
nominal interest rate  
(in %)  
Issuer  
Interest  
Notes to the  
Balance Sheet  
variable  
variable  
variable  
fixed  
EUR 6,101 million  
GBP 67 million  
2.2  
1.0  
3.0  
5.4  
6.0  
3.0  
7.2  
5.2  
4.1  
3.7  
3.9  
5.0  
3.2  
1.8  
3.0  
3.0  
3.8  
6.6  
5.0  
3.0  
3.0  
3.0  
6.2  
2.7  
4.6  
3.0  
3.0  
5.0  
3.9  
0.1  
0.7  
0.0  
4.0  
1.8  
4.2  
2.0  
2.5  
1.9  
0.4  
2.1  
1.9  
0.0  
0.7  
2.9  
1.4  
2.8  
0.9  
2.0  
1.6  
0.2  
4.4  
2.3  
0.9  
2.1  
2.4  
3.3  
10.3  
2.8  
SEK 1,950 million  
AUD 690 million  
CHF 300 million  
CNH 300 million  
EUR 15,214 million  
GBP 2,700 million  
HKD 1,093 million  
JPY 49,100 million  
NOK 1,650 million  
SEK 1,750 million  
EUR 1,500 million  
GBP 250 million  
NZD 30 million  
fixed  
fixed  
fixed  
fixed  
fixed  
fixed  
fixed  
BMW Finance N. V.  
fixed  
variable  
variable  
variable  
variable  
fixed  
USD 1,295 million  
AUD 130 million  
EUR 3,500 million  
GBP 300 million  
HKD 834 million  
JPY 30,000 million  
NZD 100 million  
USD 8,210 million  
CAD 500 million  
CAD 1,600 million  
AUD 700 million  
CNY 2,000 million  
INR 3,500 million  
KRW 260,000 million  
fixed  
fixed  
fixed  
fixed  
fixed  
BMW US Capital, LLC  
BMW Canada Inc.  
fixed  
variable  
fixed  
variable  
fixed  
fixed  
Other  
fixed  
The following details apply to the commercial paper:  
Issue volume  
in relevant currency  
(ISO-Code)  
Weighted average  
maturity period  
(in days)  
Weighted average  
nominal interest rate  
(in %)  
Issuer  
EUR 380 million  
GBP 300 million  
EUR 350 million  
USD 2,722 million  
INR 14,000 million  
76  
74  
13  
20  
91  
– 0.32  
0.37  
BMW Finance N. V.  
BMW Malta Finance Ltd.  
BMW US Capital, LLC  
– 0.30  
0.67  
BMW India Financial Services Private Ltd.  
7.33  
1
59  
3
4
Other liabilities  
Other liabilities comprise the following items:  
3
1.12. 2016  
Maturity within  
one year  
Maturity between  
one and five years  
Maturity later  
than five years  
in € million  
Total  
Deferred income  
2,599  
847  
4,238  
130  
387  
–
419  
–
7,256  
977  
Advance payments from customers  
Deposits received  
501  
5
893  
Other taxes  
807  
–
807  
Payables to other companies in which an investment is held  
615  
–
–
615  
Payables to subsidiaries  
Social security  
Other  
99  
–
–
99  
71  
21  
–
92  
4,659  
10,198  
147  
4,923  
10  
434  
4,816  
15,555  
Other liabilities  
3
1.12. 2015  
Maturity within  
one year  
Maturity between  
one and five years  
Maturity later  
than five years  
in € million  
Total  
Deferred income  
2,399  
681  
3,640  
121  
374  
–
215  
–
6,254  
802  
Advance payments from customers  
Deposits received  
492  
5
871  
Other taxes  
1,080  
107  
–
1,080  
107  
Payables to other companies in which an investment is held  
–
–
Payables to subsidiaries  
Social security  
Other  
86  
–
–
86  
71  
17  
1
89  
4,292  
9,208  
176  
4,328  
10  
231  
4,478  
13,767  
Other liabilities  
Sundry other liabilities include mainly bonuses for  
services already performed as well as sales promotions,  
commission payable and credit balances on customers’  
accounts.  
1
60  
Group  
Financial  
Statements  
Deferred income comprises the following items:  
3
1.12. 2016  
31.12. 2015  
BMW Group  
Notes to the Group  
Financial Statements  
thereof due  
within one year  
thereof due  
within one year  
in € million  
Total  
Total  
Notes to the  
Balance Sheet  
Other Disclosures  
Deferred income relating to service contracts  
Deferred income from lease financing  
Grants  
4,412  
2,241  
382  
1,474  
1,037  
30  
3,910  
1,922  
299  
1,397  
915  
32  
Other deferred income  
221  
58  
123  
55  
Deferred income  
7,256  
2,599  
6,254  
2,399  
Deferred income relating to service contracts arises  
in conjunction with service and repair work as well  
as telematics services and roadside assistance to be  
provided under commitments given at the time of  
the sale of a vehicle (multi-component arrangements).  
Deferred income from lease financing relates primarily  
to upfront lease payments.  
Grants comprise primarily public sector funds to  
promote regional structures and which have been  
invested in the production plants in Brazil, Mexico,  
Leipzig and Berlin. The grants are partly subject to  
holding periods for the assets concerned of up to five  
years and/ꢀor minimum employment figures. Grant  
income is recognised over the useful lives of the assets  
to which they relate.  
3
5
Trade payables  
Trade payables have the following maturities:  
in Mio. €  
31.12. 2016  
31.12. 2015  
Maturity within one year  
Maturity between one and five years  
Maturity later than five years  
Trade payables  
8,512  
7,701  
72  
–
–
–
8,512  
7,773  
1
61  
OTHER DISCLOSURES  
ꢄther financial obligations  
In addition to liabilities, provisions and contingent lia-  
bilities, the BMW Group also has other financial com-  
mitments, primarily under rental and lease contracts  
for land, buildings, plant and machinery, tools, office  
and other facilities. These contracts run for periods of  
one to 85 years. Some of them contain extension and  
purchase options as well as price adjustment clauses,  
based on index-linked or graduated rentals, including  
adjustments for inflation.  
3
6
Contingent liabilities and other financial  
commitments  
Contingent ꢊiaꢋiꢊities  
The following contingent liabilities existed at the  
balance sheet date:  
In the financial year 2016, an amount of €ꢀ432 million  
(
2015: €ꢀ315 million) was recognised as expense in  
conjunction with operating leases.  
in € million  
31.12. 2016  
31.12. 2015  
The total of future minimum payments under non-  
cancellable leases and rental contracts can be analysed  
by maturity as follows:  
Guarantees  
67  
–
93  
–
Performance guarantees  
Other  
474  
541  
213  
306  
Contingent liabilities  
in € million  
31.12. 2016  
31.12. 2015  
due within one year  
447  
1,102  
895  
371  
1,003  
816  
Other contingent liabilities comprise mainly legal  
disputes as well as risks relating to taxes and customs  
duties.  
due between one and five years  
due later than five years  
Other financial obligations  
2,444  
2,190  
Regulatory agencies have ordered the BMW Group  
to recall various vehicle models that are fitted with  
airbags supplied by the Takata group of companies.  
Provision for the costs involved has been recognised  
within warranty provisions. It cannot be ruled out,  
however, that further BMW Group vehicles will be  
affected by future recall actions. Further disclosures  
pursuant to IAS 37.86 cannot be provided at present  
in view of the fact that technical tests have not yet  
been completed.  
The following obligations also existed for the  
BMW Group at the end of the reporting period:  
in € million  
31.12. 2016  
31.12. 2015  
Purchase commitments for  
property plant and equipment  
3,141  
1,363  
2,217  
757  
Purchase commitments for  
intangible assets  
In June 2016, Germany’s Federal Cartel Agency con-  
ducted searches at various carmakers and suppliers,  
including the BMWAG, as part of an investigation  
into the purchase of steel in the automotive industry.  
The investigations have not yet been completed. More  
detailed information is currently not available.  
The BMW Group determines its best estimate of  
contingent liabilities on the basis of the information  
available at the date of preparation of the Group  
Financial Statements. This assessment may change  
over time and is adjusted regularly on the basis of new  
information and circumstances. Some of the risks are  
insured. In accordance with IAS 37, the BMW Group  
does not disclose information relating to legal disputes  
and risks relating to taxes and customs duties, if such  
disclosures could be expected to prejudice seriously  
the position of the BMW Group or if disclosure is not  
practicable. From today’s perspective, the BMW Group  
does not expect these proceedings to have a significant  
adverse impact on the results of operations, financial  
position or net assets of the Group.  
1
62  
Group  
Financial  
Statements  
37  
Financial instruments  
The carrying amounts of financial instruments are  
assigned to IAS 39 categories and cash funds as fol-  
lows:*  
BMW Group  
Notes to the Group  
Financial Statements  
Other Disclosures  
Cash funds  
31.12. 2016 31.12. 2015  
Loans and receivables  
Available for sale  
31.12. 2016 31.12. 2015  
in € million  
31.12. 2016  
31.12. 2015  
ASSꢀꢁS  
Other investments  
–
–
–
–
–
–
534  
–
402  
–
Receivables from sales financing  
Financial assets  
78,260  
70,043  
Derivative instruments  
Cash flow hedges  
–
–
–
–
–
–
–
–
Fair value hedges  
–
–
–
–
Other derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
Credit card receivables  
Other  
–
–
–
–
–
–
–
–
–
100  
133  
272  
147  
–
5,287  
5,161  
–
–
129  
287  
145  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash and cash equivalents  
Trade receivables  
7,880  
–
6,122  
–
2,825  
2,751  
Other assets  
Receivables from subsidiaries  
Receivables from companies in which an investment is held  
Collateral receivables  
Other  
–
–
–
–
422  
1,217  
–
716  
893  
–
–
–
–
–
287  
–
314  
–
100  
–
98  
–
1,124  
1,050  
Total  
8,167  
6,436  
84,409  
76,105  
5,921  
5,661  
lIAbIlIꢁIꢀS  
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  
–
–
–
–
–
–
*
The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.  
1
63  
Fair value option  
1.12. 2016 31.12. 2015  
Other liabilities  
31.12. 2016 31.12. 2015  
Held for trading  
31.12. 2016 31.12. 2015  
3
ASSꢀꢁS  
Other investments  
2
6
26  
–
–
–
–
–
–
–
–
–
–
Receivables from sales financing  
Financial assets  
Derivative instruments  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,758  
830  
Cash flow hedges  
949  
1,194  
Fair value hedges  
1,215  
1,006  
Other derivative instruments  
Marketable securities and investment funds  
Loans to third parties  
–
–
–
–
–
–
–
–
–
–
–
–
Credit card receivables  
Other  
Cash and cash equivalents  
Trade receivables  
Other assets  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Receivables from subsidiaries  
Receivables from companies in which an investment is held  
Collateral receivables  
Other  
2
6
26  
–
–
3,922  
3,030  
Total  
lIAbIlIꢁIꢀS  
Financial liabilities  
–
–
–
–
–
–
–
–
–
–
44,421  
14,892  
13,512  
3,852  
40,319  
12,720  
13,509  
5,415  
–
–
–
–
–
–
–
–
–
–
Bonds  
Liabilities to banks  
Liabilities from customer deposits (banking)  
Commercial paper  
16,474  
13,631  
Asset backed financing transactions  
Derivative instruments  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,694  
870  
767  
–
2,535  
563  
1,452  
–
Cash flow hedges  
Fair value hedges  
–
–
Other derivative instruments  
Other  
1,249  
8,512  
1,539  
7,773  
–
–
Trade payables  
Other liabilities  
–
–
–
–
–
–
99  
615  
86  
107  
–
–
–
–
–
–
Payables to subsidiaries  
Payables to other companies in which an investment is held  
Other  
5,535  
5,075  
–
–
109,161  
100,174  
3,331  
4,550  
Total  
1
64  
Group  
Financial  
Statements  
The following table shows the fair values and carrying  
amounts of financial assets and liabilities that are  
measured at cost or amortised cost and whose carrying  
amounts differ from their fair value. Based on the  
fact that maturities of some balance sheet items are  
generally short, it is assumed in this case that their  
fair value corresponds to the carrying amount.  
BMW Group  
Notes to the Group  
Financial Statements  
Other Disclosures  
3
1.12. 2016  
31.12. 2015  
in € million  
Fair value  
Carrying amount  
Fair value  
Carrying amount  
Receivables from sales financing  
Bonds  
81,621  
45,140  
14,942  
13,545  
16,556  
78,260  
44,421  
14,892  
13,512  
16,474  
72,309  
40,701  
12,783  
13,543  
13,611  
70,043  
40,319  
12,720  
13,509  
13,631  
Liabilities to banks  
Liabilities from customer deposits (banking)  
Asset-backed financing transactions  
Fair value measurement of financial instruments  
The following interest rate structures were used to  
discount financial instruments at 31 December 2016  
:
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  
– 0.23  
– 0.20  
0.08  
1.21  
1.18  
1.98  
2.37  
0.60  
0.55  
0.87  
1.25  
– 0.20  
0.02  
0.08  
0.23  
2.94  
3.77  
4.44  
4.85  
0.67  
Interest rates taken from interest rate curves were  
adjusted, where necessary, to take account of the  
credit quality and risk of the underlying financial  
instrument.  
Financial instruments measured at fair value are allo-  
cated to different measurement levels in accordance  
with IFRS 13. This includes financial instruments that  
are  
Commodity derivatives were measured on the basis  
of the following quoted market prices:  
1. measured at their fair values in an active market  
for identical financial instruments (Level 1),  
2
3
. measured at their fair values in an active market  
for comparable financial instruments or using  
measurement models whose main input factors  
are based on observable market data (Level 2), or  
Raw material  
31.12. 2016  
31.12. 2015  
Iron ore  
USD / t  
USD / t  
79.65  
230.00  
43.05  
76.45  
Coke /coal  
Aluminium  
Palladium  
USD / t  
1,695.13  
680.96  
1,507.00  
561.70  
. using input factors not based on observable mar-  
ket data (Level 3).  
USD / oz  
1
65  
The following table shows the amounts allocated to  
each measurement level at the end of the reporting  
period:  
3
1.12. 2016  
Level hierarchy in accordance with IFRS 13  
in € million  
Level 1  
Level 2  
Level 3  
Marketable securities, investment funds and collateral assets – available-for-sale  
Other investments – available-for-sale / fair value option  
Derivative instruments (assets)  
Interest rate risks  
5,387  
213  
–
–
–
–
–
–
–
1,933  
1,842  
147  
–
–
–
Currency risks  
Raw materials price risks  
Derivative instruments (liabilities)  
Interest rate risks  
–
–
–
1,402  
1,479  
450  
–
–
–
Currency risks  
Raw materials price risks  
3
1.12. 2015  
Level hierarchy in accordance with IFRS 13  
in € million  
Level 1  
Level 2  
Level 3  
Marketable securities, investment funds and collateral assets – available-for-sale  
Other investments – available-for-sale / fair value option  
Derivative instruments (assets)  
Interest rate risks  
5,259  
244  
–
–
–
–
–
–
–
1,939  
1,086  
5
–
–
–
Currency risks  
Raw materials price risks  
Derivative instruments (liabilities)  
Interest rate risks  
–
–
–
1,352  
2,136  
1,062  
–
–
–
Currency risks  
Raw materials price risks  
Other investments (available-for-sale) amounting to  
As in the previous year, there were no reclassifications  
within the level hierarchy during the financial year  
2016.  
€
ꢀ347 million (2015: €ꢀ184 million) are measured at  
amortised 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  
€ꢀ213 million (2015: €ꢀ244 million) are measured at fair  
value since quoted market prices are available. These  
items are included in Level 1.  
In situations where a fair value was required to be  
measured for a financial instrument only for disclosure  
purposes, this was achieved using the discounted cash  
flow method and taking account of the BMW Group’s  
own default risk. For this reason, the fair values cal-  
culated can be allocated to Level 2.  
1
66  
Group  
Financial  
Statements  
ꢄffsetting of financial instruments  
master netting agreements or similar contracts are in  
place, actual offsetting would be possible in principle,  
for instance in the case of insolvency. Offsetting would  
have the following impact on the carrying amounts  
of derivatives:  
In the BMW Group, financial assets and liabilities  
relating to derivative financial instruments would  
normally be required to be offset. No offsetting takes  
place for accounting purposes, however, since the nec-  
essary criteria are not met. Since legally enforceable  
BMW Group  
Notes to the Group  
Financial Statements  
Other Disclosures  
3
1.12. 2016  
31.12. 2015  
Reported on Reported on equity  
assets side and liabilities side  
Reported on Reported on equity  
assets side and liabilities side  
in € million  
Balance sheet amounts as reported  
3,922  
–1,169  
2,753  
3,331  
–1,169  
2,162  
3,030  
–1,285  
1,745  
4,550  
–1,285  
3,265  
Gross amount of derivatives which can be offset in case of insolvency  
Net amount after offsetting  
Gains and losses on financial instruments  
The following table shows the net gains and losses  
arising for each of the categories of financial instru-  
ment defined by IAS 39:  
in € million  
2016  
2015  
Held for trading  
Gains / losses from the use of derivative instruments  
Fair value option  
1,265  
–
– 717  
– 2  
Gains / losses on investments measured at fair value through profit and loss  
Available-for-sale  
Gains and losses on sale and fair value measurement of marketable securities held for sale  
(
including investments in subsidiaries and participations measured at cost)  
–155  
13  
129  
1
Net income from participations and investments  
Accumulated other equity  
Balance at 1 January  
24  
28  
141  
–117  
–144  
24  
Total change during the year  
thereof recognised in the income statement during the period under report  
Balance at 31 December  
– 39  
52  
Loans and receivables  
Impairment losses / reversals of impairment losses  
Other income / expenses  
– 210  
– 38  
– 345  
– 77  
Other liabilities  
Income / expenses  
586  
32  
Gainsꢀ/ꢀlosses from the use of derivatives relate primar  
ily to fair value gains or losses arising on stand-alone  
derivatives.  
-
in the default risk. Such credit-risk related changes in  
fair values are calculated as a general rule by deducting  
market-related changes in fair value from the overall  
change in fair value.  
In the case of financial instruments for which the  
fair value option is applied, no significant changes in  
fair values arose in the financial year 2016 or on an  
accumulated basis which were attributable to changes  
Net interest expenses from interest rate and interest  
rateꢀ/ꢀcurrency swaps amounted to €ꢀ120 million (2015  
€ꢀ22 million).  
:
1
67  
Impairment losses of €ꢀ76 million (2015: €ꢀ13 million)  
were recognised in the income statement in 2016 on  
available-for-sale securities accounted for as partici-  
pations, for which fair value changes had previously  
been recognised directly in equity. As in the previous  
year, no reversals of impairment losses on marketable  
securities occurred.  
denominated in a foreign currency over the coming  
44 months (2015: 55 months). The income statement  
impact of the hedged cash flows will be recognised as  
a general rule in the same periods in which external  
revenues are recognised. It is expected that €ꢀ113 mil-  
lion of net losses, recognised in equity at the end of  
the reporting period, will be reclassified to the income  
statement in the new financial year (2015: net losses  
of €ꢀ623 million).  
The disclosure of interest income resulting from the  
unwinding of interest on future expected receipts  
would normally only be relevant for the BMW Group  
where assets have been discounted as part of the pro-  
cess of determining impairment losses. However, as  
a result of the assumption that most of the income  
that is subsequently recovered is received within one  
year and the fact that the impact is not material, the  
BMW Group does not discount assets for the purposes  
of determining impairment losses.  
The BMW Group did not hold any derivative financial  
instruments at 31 December 2016, which had been  
designated at cash flow hedges to hedge against  
interest-rate risks.  
At 31 December 2016, the BMW Group held deriva-  
tive financial instruments (mostly commodity swaps)  
with terms of up to 58 months (2015: 58 months) to  
hedge raw materials price risks. The income statement  
impact of the hedged cash flows will be recognised  
as a general rule in the same periods in which the  
derivative instruments mature. It is expected that  
ꢃash flow hedges  
The impact of cash flow hedges on accumulated other  
equity is analysed as follows:  
€
ꢀ94 million of net losses, recognised in equity at the  
end of the reporting period, will be reclassified to the  
income statement in the new financial year (2015: net  
losses of €ꢀ127 million).  
in € million  
2016  
2015  
Balance at 1 January  
–1,337  
1,415  
– 480  
– 857  
Total changes during the year  
ꢉair vaꢊue hedges  
thereof reclassified to the income  
statement  
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:  
550  
1,318  
Balance at 31 December  
78  
–1,337  
in € million  
31.12. 2016  
31.12. 2015  
Fair value gains and losses recognised on derivatives  
and recorded initially in accumulated other equity  
are reclassified to cost of sales when the derivatives  
mature.  
Gains / losses on hedging instruments  
designated as part of a fair value hedge  
relationship  
–158  
134  
– 269  
276  
7
Gains / losses from hedged items  
An amount of €ꢀ  
2
million (2015: €ꢀ  
8
million) attributable  
Ineffectiveness of fair value hedges  
– 24  
to forecasting errors (and the resulting over-hedging  
of currency exposures) was recognised as a loss in  
“
Financial Result” in the year under report. Losses  
attributable to the ineffective portion of cash flow  
hedges amounting to €ꢀ11 million were recognised in  
The difference between the gainsꢀ/ꢀlosses on hedging  
instruments (mostly interest rate swaps and com-  
bined interest rateꢀ/ꢀcurrency swaps) and the results  
recognised on hedged items represents the ineffective  
portion of fair value hedges.  
“
Financial Result” (2015: gains of €ꢀ9 million). As in  
the previous year, no gains or losses were recognised  
in “Financial Result” in 2016 in connection with  
forecasting errors relating to cash flow hedges for  
commodities. Gains attributable to the ineffective  
portion of cash flow hedges amounting to €ꢀ17 million  
were recognised in “Financial Result” (2015: losses of  
€
ꢀ13 million).  
At 31 December 2016, the BMW Group held deriva-  
tive financial instruments (mainly forward currency  
contracts) in order to hedge currency risks attached  
to future or existing transactionsꢀ/ꢀitems. These deriv-  
ative instruments are intended to hedge forecast sales  
1
68  
Group  
Financial  
Statements  
Credit risk  
The credit risk relating to derivative financial instru-  
ments is minimised by the fact that the Group only  
enters into such contracts with parties of first-class  
credit standing. The general credit risk on derivative  
financial instruments utilised by the BMW Group is  
therefore not considered to be significant.  
Notwithstanding the existence of collateral accepted,  
the carrying amounts of financial assets generally take  
account of the maximum credit risk arising from the  
possibility that the counterparties will not be able to  
fulfil their contractual obligations. The maximum cred-  
it risk for irrevocable credit commitments relating to  
BMW Group  
Notes to the Group  
Financial Statements  
Other Disclosures  
credit card business amounts to €ꢀ  
1
,
461 million (2015  
:
A concentration of credit risk with particular borrow-  
ers or groups of borrowers has not been identified in  
conjunction with financial instruments.  
€
ꢀ2,011 million). The equivalent figure for dealership  
financing is €ꢀ27,494 million (2015: €ꢀ24,733 million).  
In the case of performance relationships underlying  
non-derivative financial instruments, collateral will  
be required, information on the credit standing of  
the counterparty obtained or historical data based  
on the existing business relationship (i.ꢀe. payment  
patterns to date) reviewed in order to minimise the  
credit risk, all depending on the nature and amount  
of the exposure that the BMW Group is proposing  
to enter into.  
Further disclosures relating to credit risk – in particu-  
lar with regard to the amounts of impairment losses  
recognised – are provided in the explanatory notes  
see to the relevant categories of receivables in notes 23  
,
notes 23, 24  
and 28  
24 and 28.  
Within the financial services business, the financed  
items (e.ꢀg. vehicles, equipment and property) in  
the retail customer and dealership lines of business  
serve as first-ranking collateral with a recoverable  
value. Security is also put up by customers in the  
form of collateral asset pledges, asset assignment  
and first-ranking mortgages, supplemented where  
appropriate by warranties and guarantees. If an  
item previously accepted as collateral is acquired, it  
undergoes a multi-stage process of repossession and  
disposal in accordance with the legal situation pre-  
vailing in the relevant market. The assets involved are  
generally vehicles which can be converted into cash  
at any time via the dealership organisation.  
Impairment losses are recorded as soon as credit risks  
are identified on individual financial assets, using a  
methodology specifically designed by the BMW Group.  
More detailed information regarding this methodol-  
ogy is provided in the section on accounting policies  
(
note 4).  
see  
note 4  
Creditworthiness testing is an important aspect of  
the BMW Group’s credit risk management. Every  
borrower’s creditworthiness is tested for all credit  
financing and lease contracts entered into by the  
BMW Group. In the case of retail customer financing,  
creditworthiness is assessed using validated scoring  
systems integrated into the purchasing process. In  
the area of dealership financing, creditworthiness is  
assessed by means of ongoing credit monitoring and  
an internal rating system that takes account not only  
of the tangible situation of the borrower, but also of  
qualitative factors such as past reliability in business  
relations.  
1
69  
Liquidity risk  
The following table shows the maturity structure of  
expected contractual cash flows (undiscounted) for  
financial liabilities:  
3
1.12. 2016  
Maturity within  
one year  
Maturity between  
one and five years  
Maturity later  
than five years  
in € million  
Total  
Bonds  
9,954  
7,161  
11,238  
10,140  
8,512  
1,983  
3,853  
72  
26,766  
9,938  
4,234  
3,446  
–
10,089  
–
46,809  
17,099  
16,030  
13,719  
8,512  
Asset backed financing transactions  
Liabilities to banks  
558  
133  
–
Liabilities from customer deposits (banking)  
Trade payables  
Derivative instruments  
Commercial paper  
2,395  
–
187  
–
4,565  
3,853  
Other financial liabilities  
Total  
178  
601  
11,568  
851  
52,913  
46,957  
111,438  
3
1.12. 2015  
Maturity within  
one year  
Maturity between  
one and five years  
Maturity later  
than five years  
in € million  
Total  
Bonds  
10,774  
5,195  
9,464  
9,805  
7,701  
2,564  
5,416  
261  
24,241  
8,849  
3,485  
3,990  
72  
7,230  
–
42,245  
14,044  
13,354  
13,928  
7,773  
Asset backed financing transactions  
Liabilities to banks  
405  
133  
–
Liabilities from customer deposits (banking)  
Trade payables  
Derivative instruments  
Commercial paper  
3,366  
–
174  
–
6,104  
5,416  
Other financial liabilities  
Total  
372  
570  
8,512  
1,203  
51,180  
44,375  
104,067  
The cash flows shown comprise principal repayments  
and the related interest. The amounts disclosed for  
derivatives comprise only cash flows relating to  
derivatives that have a negative fair value at the bal-  
ance sheet date. At 31 December 2016, irrevocable  
credit commitments to dealerships which had not  
been called upon at the end of the reporting period  
amounted to €ꢀ9,194 million (2015: 7,552 million).  
BMW Group issues commercial paper on the money  
markets, corporate bonds and asset-backed financial  
securities in various currencies. Customer deposits  
at the Group’s in-house banks are also used as a  
supplementary source of financing.  
These refinancing activities are underpinned by the  
longstanding long- and short-term ratings issued by  
Moody’s and Standard & Poor’s.  
Solvency is assured at all times by managing and mon-  
itoring 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. Depending on  
financing requirements and market conditions, the  
Also reducing liquidity risk, additional secured and  
unsecured lines of credit are in place with internation-  
al banks, including a syndicated credit line totalling  
€ꢀ6 billion (2015: €ꢀ6 billion). Intra-group cash flow  
fluctuations are evened out by the use of daily cash  
pooling arrangements.  
1
70  
Group  
Financial  
Statements  
ꢈarket risks  
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:  
The principal market risks to which the BMW Group  
is exposed are currency risk, interest rate risk and raw  
materials price risk.  
BMW Group  
Notes to the Group  
Financial Statements  
Other Disclosures  
Protection against such risks is provided in the first  
instance through natural hedging which arises when  
the values of non-derivative financial instruments  
have matching maturities and amounts (netting).  
Derivative financial instruments are used to reduce  
the risk remaining after netting. Financial instruments  
are only used to hedge underlying positions or forecast  
transactions.  
in € million  
31.12. 2016  
31.12. 2015  
Euro / Chinese Renminbi  
Euro / US Dollar  
10,467  
3,319  
4,785  
1,926  
1,510  
9,973  
4,770  
5,396  
1,985  
1,162  
Euro / British Pound  
Euro / Korean Won  
Euro / Japanese Yen  
The scope of permitted transactions, responsibilities,  
financial reporting procedures and control mecha-  
nisms used for financial instruments are set out in  
detailed internal guidelines. This includes, above  
all, a clear separation of duties between trading and  
processing. Currency, interest rate and raw materi-  
als price risks of the BMW Group are managed at a  
corporate level.  
In the next stage, these exposures are compared to all  
hedges that are in place. The net cash flow surplus  
represents an uncovered risk position. The cash-  
flow-at-risk approach involves allocating the impact  
of potential 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.  
Further information is provided in the “Report on  
Outlook, Risks and Opportunities” section of the  
Combined Management Report.  
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  
confidence level of 95% and a holding period of up to  
one year. Correlations between the various currencies  
are taken into account when the risks are aggregated,  
thus reducing the overall risk.  
ꢃurrency risks  
As an enterprise with worldwide operations, business  
is conducted in a variety of currencies, from which  
currency risks arise. Since a significant portion of  
Group revenues is generated outside the euro currency  
region and the procurement of production materials  
and funding is also organised on a worldwide basis,  
the currency risk is an extremely important factor for  
Group earnings.  
The following table shows the potential negative  
impact for the BMW Group – measured on the basis  
of the cash-flow-at-risk approach – attributable to  
unfavourable changes in exchange rates. The impact  
for the principal currencies, in each case for the fol-  
lowing financial year, is as follows:  
At 31 December 2016, derivative financial instruments,  
mostly in the form of forward currency contracts, were  
in place.  
in € million  
31.12. 2016  
31.12. 2015  
A description of the management of this risk is pro-  
vided in the Combined Management Report. The  
BMW Group measures currency risk using a cash-  
flow-at-risk model.  
Euro / Chinese Renminbi  
Euro / US Dollar  
249  
278  
134  
30  
163  
48  
Euro / British Pound  
Euro / Korean Won  
Euro / Japanese Yen  
86  
99  
68  
70  
Currency risk for the BMW Group is concentrated on  
the currencies referred to above.  
1
71  
Interest rate risks  
In the following table the potential volumes of fair  
value fluctuations – measured on the basis of the val-  
ue-at-risk approach – are compared with the expected  
value for the interest-rate-sensitive exposures of the  
BMW Group:  
The BMW Group’s financial management system  
involves the use of standard financial instruments  
such as short-term deposits, investments in variable  
and fixed-income securities as well as securities funds.  
The BMW Group is therefore exposed to risks resulting  
from changes in interest rates.  
in € million  
31.12. 2016  
31.12. 2015  
Interest rate risks arise when funds with differing  
fixed-rate periods or differing terms are borrowed and  
invested. All items subject to, or bearing, interest are  
exposed to interest rate risk. Interest rate risks can  
affect either side of the balance sheet.  
Euro*  
532  
545  
244  
16  
475  
449  
186  
33  
US Dollar  
British Pound  
Chinese Renminbi  
Japanese Yen  
14  
12  
The fair values of the Group’s interest rate portfolios  
for the five main currencies were as follows at the end  
of the reporting period:  
* Previous year’s figures adjusted.  
ꢆaw materiaꢊs price risk  
The BMW Group is exposed to the risk of price fluc-  
tuations for raw materials. A description of the man-  
agement of these risks is provided in the Combined  
Management Report.  
in € million  
31.12. 2016  
31.12. 2015  
Euro*  
28,063  
14,340  
5,708  
3,124  
571  
25,772  
10,742  
4,220  
1,006  
536  
US Dollar  
British Pound  
Chinese Renminbi  
Japanese Yen  
The first step in the analysis of the raw materials price  
risk is to determine the volume of planned purchases  
of raw materials (and components containing those  
raw materials). These amounts, which represent the  
gross exposure, were as follows at each reporting date  
for the following financial year:  
*
Previous year’s figures adjusted.  
Interest rate risks can be managed by the use of inter-  
est rate derivatives. The interest rate contracts used  
for hedging purposes comprise mainly swaps, which,  
if hedge accounting is applied, are accounted for as  
fair value hedges. A description of the management  
of interest rate risks is provided in the Combined  
Management Report.  
in € million  
31.12. 2016  
3,150  
31.12. 2015  
Raw materials price exposures  
3,720  
In the next stage, these exposures are compared to all  
hedges that are in place. The net cash flow surplus  
represents an uncovered risk position. The cash-  
flow-at-risk approach involves allocating the impact  
of potential fluctuations in raw materials prices to  
operating cash flows on the basis of probability dis-  
tributions. Volatilities and correlations serve as input  
factors to assess the relevant probability distributions.  
As stated there, the BMW Group applies a Group-wide  
value-at-risk approach for internal reporting purpos-  
es and to manage interest rate risks. This is based  
on a state-of-the-art historical simulation, in which  
the potential future fair value losses of the interest  
rate portfolios are compared across the Group, with  
expected amounts measured on the basis of a holding  
period of 250 days and a confidence level of 99.98%.  
Aggregation of these results creates a risk reduction  
effect due to correlations between the various port-  
folios.  
The potential negative impact on earnings is computed  
for each raw materials category for the following finan  
-
cial year on the basis of current market prices and  
exposure to a confidence level of 95% and a holding  
period of up to one year. Correlations between the  
various categories of raw materials are taken into  
account when the risks are aggregated, thus reducing  
the overall risk.  
1
72  
Group  
Financial  
Statements  
The following table shows the potential negative  
impact for the BMW Group – measured on the basis  
of the cash-flow-at-risk approach – attributable to fluc-  
tuations in prices across all categories of raw materials.  
The risk at each reporting date for the following finan-  
cial year was as follows:  
BMW Group  
Notes to the Group  
Financial Statements  
in € million  
31.12. 2016  
135  
31.12. 2015  
Other Disclosures  
Cash flow at risk  
155  
3
8
Related party relationship  
Transactions of Group entities with related parties  
arise, without exception, in the normal course of the  
business of each of the parties concerned and are  
conducted on the basis of arm’s length principles.  
A significant proportion of the BMW Group’s transac-  
tions with related parties relates to the joint venture  
BMW Brilliance Automotive Ltd. and the associated  
company THERE Holding B.ꢀV.  
Supplies and services  
performed  
Supplies and services  
received  
Receivables  
at 31 December  
Payables  
at 31 December  
in € million  
2016  
2015  
2016  
2015  
2016  
2015  
2016  
2015  
BMW Brilliance Automotive Ltd.  
THERE Holding B.V.  
5,316  
–
4,815  
–
50  
58  
43  
7
1,215  
–
892  
–
615  
9
107  
3
Business relationships of the BMW Group with other  
associated companies and joint ventures as well as  
with non-consolidated subsidiaries are small in scale.  
Susanne Klatten, Germany, is a shareholder and  
member of the Supervisory Board of BMWAG and  
also a shareholder and Deputy Chairman of the Super-  
visory Board of ALTANA AG, Wesel. ALTANA AG  
,
Stefan Quandt, Germany, is a shareholder and Deputy  
Chairman of the Supervisory Board of BMWAG. He is  
also the sole shareholder and Chairman of the Super-  
visory Board of DELTON AG, Bad Homburg v.ꢀd.ꢀH.,  
which, via its subsidiaries, performed logistic-related  
services for the BMW Group during the financial year  
Wesel, acquired vehicles from the BMW Group during  
the financial year 2016, mostly in the form of lease  
contracts.  
Susanne Klatten, Germany, is also the sole share-  
holder and Chairwoman of the Supervisory Board  
of UnternehmerTUM GmbH, Garching. During  
the financial year 2016, the BMW Group bought in  
services from UnternehmerTUM GmbH, Garching,  
primarily in the form of consultancy and workshop  
services.  
2
016. In addition, companies of the DELTON Group  
acquired vehicles from the BMW Group by way of  
leasing.  
Stefan Quandt, Germany, is also the indirect majority  
shareholder of SOLARWATT GmbH, Dresden. Coop-  
eration arrangements are in place between BMWAG  
and SOLARWATT GmbH, Dresden, within the field  
of electric mobility. The focus of this collaboration  
is on providing complete photovoltaic solutions for  
rooftop systems and carports to BMWi customers.  
SOLARWATT GmbH, Dresden, leased vehicles from  
the BMW Group in 2016.  
Seen from the BMW Group’s perspective, the transac-  
tions of BMW Group companies with the above-men-  
tioned entities were as follows:  
Supplies and services  
performed  
Supplies and services  
received  
Receivables  
at 31 December  
Payables  
at 31 December  
in € thousand  
2016  
2015  
2016  
2015  
2016  
2015  
2016  
2015  
DELTON AG  
3,546  
309  
3,617  
287  
2,764  
–
22,554  
–
22,818  
3
64  
1
37  
7
1,331  
–
2,476  
–
SOLARWATT GmbH  
ALTANA AG  
2,690  
29  
458  
324  
769  
337  
–
312  
–
50  
–
UnternehmerTUM GmbH  
1,227  
585  
276  
1
73  
Apart from vehicle leasing and credit financing con-  
tracts 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 Super-  
visory Board of BMWAG. The same applies to close  
members of the families of those persons.  
holding period of four years. Once the holding period  
is fulfilled, BMWAG grants one additional share of  
BMWAG common stock for each three held or pays  
the equivalent amount in cash (share-based remuner-  
ation component). Special rules apply in the case of  
death or invalidity of a Board of Management member  
or early termination of the contractual relationship  
before fulfilment of the holding period.  
BMW Trust e.ꢀV., Munich, administers assets on a  
trustee basis to secure obligations relating to pensions  
and pre-retirement part-time working arrangements  
in Germany and is therefore a related party of the  
BMW Group in accordance with IAS 24. This entity,  
which is a registered association (eingetragener Vere-  
in) under German law, does not have any assets of its  
own. It did not have any income or expenses during  
the period under report. BMWAG bears expenses on  
an immaterial scale and performs services for BMW  
Trust e.ꢀV., Munich.  
With effect from the financial year 2012, qualifying  
heads of department are also entitled to opt for a  
share-based remuneration component, which, in most  
respects, is comparable to the share-based remunera-  
tion arrangements for Board of Management members.  
The share-based remuneration component is measured  
at its fair value at each balance sheet date between  
grant and settlement date, and on the settlement date  
itself. The appropriate amounts are recognised as per-  
sonnel expense on a straight-line basis over the vesting  
period and reported in the balance sheet as a provision.  
For disclosures relating to key management personnel,  
please see note 42 and the Compensation Report.  
see  
note 42  
The cash-settlement obligation for the share-based  
remuneration component is measured at its fair  
value at the balance sheet date (based on the closing  
price of BMWAG common stock in Xetra trading at  
31 December 2016).  
3
9
Share-based remuneration  
Three share-based remuneration programmes are in  
place within the BMW Group, namely the Employee  
Share Programme (for entitled employees of the  
BMW Group), a share-based remuneration programme  
for members of the Board of Management and a share-  
based remuneration programme for senior heads of  
department of BMWAG.  
The total carrying amount of the provision for the  
share-based remuneration component of current  
and former Board of Management members and  
senior heads of department at 31 December 2016 was  
€ꢀ5,473,219 (2015: €ꢀ4,989,668).  
In the case of the Employee Share Programme,  
non-voting shares of preferred stock in BMWAG were  
granted to qualifying employees during the financial  
year 2016 at favourable conditions (see note 29 for  
the number and price of issued shares). The holding  
period for these shares is up to 31 December 2019. In  
the financial year 2016, the BMW Group recorded a  
The total expense recognised in 2016 for the share-  
based remuneration component of current and former  
Board of Management members and senior heads of  
department was €ꢀ1,443,227 (2015: €ꢀ1,892,994).  
see  
note 29  
The fair value of the programmes for Board of Man-  
agement members and senior heads of department  
at the date of grant of the share-based remuneration  
personnel expense of €ꢀ7 million (2015: €ꢀ6 million) for  
the Employee Share Programme, corresponding to the  
difference between the market price and the reduced  
price of the shares of preferred stock purchased by  
employees. The Board of Management reserves the  
right to decide anew each year with respect to an  
Employee Share Programme.  
components was €ꢀ  
1
,
950  
,
853  
(
2015: €ꢀ  
1
,
605  
,147), based  
on a total of 21 201 shares (2015  
,
:
18,  
143 shares) of  
BMWAG common stock or a corresponding cash-  
based settlement measured at the relevant market  
share price prevailing on the grant date.  
Further details on the remuneration of the Board  
of Management are provided in the Compensation  
Report for the financial year 2016.  
For financial years beginning after  
1 January 2011,  
BMW AG has added a share-based remuneration  
component to the existing compensation system for  
Board of Management members.  
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 sep-  
arate custodian account for each member concerned  
40  
Declaration with respect to the Corporate  
Governance Code  
The Board of Management and the Supervisory Board  
of Bayerische Motoren Werke Aktiengesellschaft have  
(
annual tranche). Each annual tranche is subject to a  
1
74  
Group  
Financial  
Statements  
issued the prescribed Declaration of Compliance pur-  
suant to §161 of the German Stock Corporation Act.  
It is reproduced in the Annual Report 2016 of the  
BMW Group and is also available to shareholders on  
The total remuneration of former members of the  
Board of Management and their dependants amount-  
ed to €ꢀ6.5 million (2015: €ꢀ8.0 million).  
BMW Group  
Notes to the Group  
Financial Statements  
the BMW Group website at  
www.bmwgroup.com/ir  
.
Pension obligations to current members of the Board  
of Management are covered by provisions amounting  
Other Disclosures  
Segment Information  
to €ꢀ23.6 million (2015: €ꢀ23.2 million), computed in  
accordance with IAS 19 (Employee Benefits). Pen-  
sion obligations to former members of the Board of  
Management and their surviving dependants, also  
computed in accordance with IAS 19, amounted to  
€ꢀ86.4 million (2015: €ꢀ71.8 million).  
4
1
Shareholdings of members of the Board of  
Management and Supervisory Board  
The members of the Supervisory Board of BMWAG  
hold in total 27.99% (2015: 43.00%) of the issued  
common and preferred stock shares, of which 16  
.
25  
26%) relates to Stefan Quandt, Germany, and  
1.73% (2015: 26.74%) to Susanne Klatten, Germany.  
%
The compensation systems for members of the Super-  
visory Board do not include any stock options, value  
appreciation rights comparable to stock options or any  
other stock-based compensation components. Apart  
from vehicle lease and financing contracts entered  
into on customary market conditions, no advances  
or loans were granted to members of the Board of  
Management and the Supervisory Board of BMWAG  
or its subsidiaries, nor were any contingent liabilities  
entered into on their behalf.  
(
2015  
:
31  
.
1
The differences compared to the previous year resulted  
almost entirely from the fact that the shares held by  
Johanna Quandt GmbH & Co. KG für Automobilwerte,  
Bad Homburg v.ꢀd. Höhe, are no longer attributed to  
Stefan Quandt and Susanne Klatten following the  
dissolution of the community of heirsꢀ. As at 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.  
Further details about the remuneration of current  
members of the Board of Management and the  
Supervisory Board can be found in the Compensation  
Report, which is part of the Combined Management  
Report.  
4
2
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 2016 in accordance  
43  
Events after the end of the reporting period  
No events have occurred since the end of the financial  
year which could have a major impact on the results  
of operations, financial position and net assets of  
BMWAG and the BMW Group.  
with IFRS amounted to €ꢀ46  
.
9
million (2015: €ꢀ43  
.
6
mil-  
lion) and comprised the following:  
in € million  
2016  
2015  
Compensation to members of the  
Board of Management  
37.6  
7.8  
35.9  
7.7  
Fixed remuneration  
Variable remuneration  
29.0  
0.8  
27.1  
1.1  
Share-based remuneration component  
Allocation to pension provisions  
2.8  
1.1  
2.6  
–
Benefits in conjunction with the  
termination of an employment relationship  
Compensation to members of the  
Supervisory Board  
5.4  
2.0  
5.1  
2.0  
Fixed compensation and attendance fees  
Variable compensation  
3.4  
3.1  
Total expense  
46.9  
43.6  
thereof due within one year  
43.3  
39.9  
1
75  
SEGMENT INFORMATION  
Internaꢊ management and reporting  
Segment information is prepared as a general rule in  
conformity with the accounting policies adopted for  
preparing and presenting the Group Financial State-  
ments. The only exceptions to this general principle  
are the treatment of inter-segment warranties (the  
earnings impact of which is allocated to the Automo-  
tive and Financial Services segments on the basis used  
internally to manage the business) and cross-segment  
impairment losses on investments in subsidiaries.  
Inter-segment receivables and payables, provisions,  
income, expenses and profits are eliminated in the  
column “Eliminations”. Inter-segment sales take place  
at arm’s length prices.  
4
4
Explanatory notes to segment information  
Information on reportaꢋꢊe segments  
For the purposes of presenting segment information,  
the activities of the BMW Group are divided into oper-  
ating segments in accordance with IFRS 8 (Operating  
Segments). Operating segments are identified on the  
same basis that is used internally to manage and report  
on performance. The allocation also takes account of  
the organisational structure of the BMW Group based  
on the various products and services of the reportable  
segments.  
The role of “chief operating decision maker” with  
respect to resource allocation and performance  
assessment of the reportable segment is embodied  
in the full Board of Management. In order to assist  
the decision-taking process, different measures of  
segment performance as well as segment assets have  
been set for the operating segments.  
The activities of the BMW Group are broken down  
into the operating segments Automotive, Motorcycles,  
Financial Services and Other Entities.  
The Automotive segment develops, manufactures,  
assembles and sells cars and off-road vehicles, under  
the brands BMW, MINI and Rolls-Royce as well as  
The performance of the Automotive and Motorcycles  
segments is managed on the basis of return on capital  
employed (RoCE). The relevant measure of segment  
results used is therefore profit before financial result.  
Capital employed is the corresponding measure of  
segment assets used to determine how to allocate  
resources and comprises all current and non-current  
operational assets after deduction of liabilities used  
operationally which are not subject to interest (e.ꢀg.  
trade payables).  
spare parts, accessories and mobility services. BMW  
and MINI brand products are sold in Germany  
through branches of BMWAG and by independent,  
authorised dealerships. Sales outside Germany are  
handled primarily by subsidiary companies and  
by independent import companies in a number of  
markets. Rolls-Royce brand vehicles are sold in the  
USA, China and Russia via subsidiary companies and  
elsewhere by independent, authorised dealerships.  
The performance of the Financial Services segment is  
measured on the basis of return on equity (RoE), with  
profit before tax therefore representing the measure  
of segment result used. For this reason, the measure  
of segment assets in the Financial Services segment  
corresponds to net assets, defined as total assets less  
total liabilities.  
The Motorcycles segment develops, manufactures,  
assembles and sells motorcycles as well as spare parts  
and accessories.  
The principal lines of business of the Financial Servic-  
es segment are car leasing, fleet business, multi-brand  
business, retail customer and dealership financing,  
customer deposit business and insurance activities.  
The performance of the Other Entities segment is  
assessed on the basis of profit or loss before tax. The  
corresponding measure of segment assets used to  
manage the Other Entities segment is total assets less  
asset-side income tax items and intragroup invest-  
ments.  
Holding and Group financing companies are includ-  
ed in the Other Entities segment. This segment also  
includes operating companies – BMW Services Ltd.,  
BMW (UK) Investments Ltd., Bavaria Lloyd Reise-  
büro GmbH, and MITEC Mikroelektronik Mikro-  
technik Informatik GmbH – which are not allocated  
to one of the other segments.  
1
76  
Group  
Financial  
Statements  
Segment information by operating segment is as  
follows:  
BMW Group  
Notes to the Group  
Financial Statements  
Automotive  
2016  
Motorcycles  
2016  
Financial Services  
2016 2015  
Segment Information  
in € million  
2015  
2015  
SꢀGꢈꢀꢃꢁ IꢃꢉꢅꢆꢈAꢁIꢅꢃ  
by ꢅꢌꢀꢆAꢁIꢃG SꢀGꢈꢀꢃꢁ  
External revenues  
Inter-segment revenues  
Total revenues  
67,977  
68,045  
17,491  
85,536  
2,062  
1,984  
6
24,122  
1,559  
22,144  
1,595  
18,447  
86,424  
7
2,069  
1,990  
25,681  
23,739  
Segment result  
7,695  
441  
7,836  
518  
187  
–
182  
–
2,166  
–
1,975  
–
Result from equity accounted investments  
Capital expenditure on non-current assets  
Depreciation and amortisation on non-current assets  
5,699  
4,702  
5,792  
4,559  
114  
75  
92  
69  
25,105  
9,606  
23,689  
8,686  
Automotive  
Motorcycles  
Financial Services  
31.12. 2016 31.12. 2015  
in € million  
31.12. 2016  
31.12. 2015  
31.12. 2016  
31.12. 2015  
Segment assets  
9,411  
2,546  
10,024  
2,233  
600  
–
557  
–
11,049  
–
9,948  
–
Investments accounted for using the equity method  
1
77  
Other Entities  
Reconciliation to Group figures  
Group  
2016  
2
016  
2015  
2016  
2015  
2015  
SꢀGꢈꢀꢃꢁ IꢃꢉꢅꢆꢈAꢁIꢅꢃ  
by ꢅꢌꢀꢆAꢁIꢃG SꢀGꢈꢀꢃꢁ  
2
4
6
2
5
7
–
– 20,017  
– 20,017  
–
–19,097  
–19,097  
94,163  
–
92,175  
–
External revenues  
Inter-segment revenues  
Total revenues  
94,163  
92,175  
1
70  
–
211  
–
– 553  
–
– 980  
–
9,665  
441  
9,224  
518  
Segment result  
Result from equity accounted investments  
–
–
– 6,756  
– 6,271  
– 5,672  
– 5,119  
24,162  
8,112  
23,901  
8,195  
Capital expenditure on non-current assets  
–
–
Depreciation and amortisation on non-current assets  
Other Entities  
Reconciliation to Group figures  
Group  
3
1.12. 2016  
31.12. 2015  
31.12. 2016  
31.12. 2015  
31.12. 2016  
31.12. 2015  
7
5,363  
–
71,709  
–
92,112  
–
79,936  
–
188,535  
2,546  
172,174  
2,233  
Segment assets  
Investments accounted for using the equity method  
1
78  
Group  
Financial  
Statements  
Write-downs on inventories to their net realisable  
value amounting to €ꢀ101 million (2015: €ꢀ486 million)  
were recognised by the Automotive segment in the  
financial year 2016. The write-down recorded in the  
previous year resulted primarily from accidents and  
natural disasters.  
Segment figures can be reconciled to the correspond-  
ing Group figures as follows:  
BMW Group  
Notes to the Group  
Financial Statements  
in € million  
2016  
2015  
Segment Information  
Reconciliation of segment result  
Total for reportable segments  
10,218  
10,204  
Impairment losses and fair value changes on oth-  
er investments amounting to €ꢀ174 million (2015:  
Financial result of Automotive  
segment and Motorcycles segment  
219  
– 772  
9,665  
– 316  
– 664  
9,224  
€
ꢀ17 million) relating to the Automotive segment and  
Elimination of inter-segment items  
recognised in the financial result are not included in  
the segment result.  
Group profit before tax  
Reconciliation of capital expenditure  
on non-current assets  
Financial Services segment result was negatively  
impacted by impairment losses totalling €ꢀ384 million  
Total for reportable segments  
30,918  
– 6,756  
29,573  
– 5,672  
(
2015: €ꢀ406 million) recognised on leased products.  
Elimination of inter-segment items  
Income from the reversal of impairment losses on  
leased products amounted to €ꢀ211 million (2015:  
Total Group capital expenditure  
on non-current assets  
24,162  
23,901  
€
ꢀ81 million). No impairment losses were recognised  
on other financial assets in the year under report  
2015: €ꢀ3 million).  
Reconciliation of depreciation and  
amortisation on non-current assets  
(
Total for reportable segments  
14,383  
– 6,271  
13,314  
– 5,119  
The Other Entities’ segment result includes interest  
and similar income amounting to €ꢀ 250 million (2015  
ꢀ1,177 million) and interest and similar expenses  
amounting to €ꢀ 006 million (2015: €ꢀ 080 million)  
Elimination of inter-segment items  
1
,
:
Total Group depreciation and  
amortisation on non-current assets  
8,112  
8,195  
€
1
,
1,  
as well as impairment losses on other investments  
totalling €ꢀ18 million (2015: €ꢀ7 million).  
in € million  
31.12. 2016  
31.12. 2015  
Reconciliation of segment assets  
Total for reportable segments  
The information disclosed for capital expenditure and  
depreciation and amortisation relates to non-current  
property, plant and equipment, intangible assets and  
leased products.  
96,423  
7,432  
92,238  
7,132  
Non-operating assets –  
Other Entities segment  
Total liabilities –  
Financial Services segment  
126,679  
45,923  
112,081  
41,932  
Non-operating assets –  
Automotive and Motorcycles segments  
Liabilities of Automotive  
and Motorcycles segments  
not subject to interest  
33,858  
–121,780  
188,535  
31,817  
–113,026  
172,174  
Elimination of inter-segment items  
Total Group assets  
1
79  
In the case of information by geographical region,  
external sales are based on the location of the custom-  
er’s registered office. Revenues with major customers  
were not material overall. The information disclosed  
for non-current assets relates to property, plant and  
equipment, intangible assets and leased products.  
Eliminations disclosed for non-current assets relate  
to leased products.  
External revenues  
Non-current assets  
2016  
Information by region  
in € million  
2016  
2015  
2015  
Germany  
13,776  
16,619  
16,000  
30,544  
10,466  
3,507  
3,251  
–
13,394  
15,856  
18,155  
28,617  
9,582  
3,361  
3,210  
–
29,741  
23  
28,786  
23  
China  
USA  
23,249  
13,910  
1,439  
2,628  
261  
21,000  
13,099  
1,197  
2,053  
121  
Rest of Europe  
Rest of Asia  
Rest of the Americas  
Other regions  
Eliminations  
Group  
– 7,345  
63,906  
– 6,183  
60,096  
94,163  
92,175  
1
80  
Group  
Financial  
Statements  
LIST OF INVESTMENTS AT  
1 DECEMBER 2016  
significance” for the results of operations, financial  
position and net assets of BMWAG pursuant to §286  
(3) sentence 1 no. 1 HGB or if financial statements  
for a company are not yet available. It is also shown  
in the list which subsidiaries apply the exemptions  
available in §264 (3) and §264b HGB with regard  
3
BMW Group  
Notes to the Group  
Financial Statements  
List of Investments  
at 31 December 2016  
to the publication of annual financial statements  
and the drawing up of a management report and/ꢀor  
notes to the financial statements (footnotes 5 and 6).  
The Group Financial Statements of BMWAG serve  
as exempting consolidated financial statements for  
these companies.  
4
5
List of investments at 31 December 2016  
The List of Investments of BMWAG pursuant to §285  
and §313 HGB is presented below. Figures for equity  
and earnings are not disclosed if they are of “minor  
BMW AG’s subsidiary at 31 December 2016  
•
61  
Equity  
Profit/loss Capital invest-  
Companies  
in € million  
in € million  
ment in %  
DꢄMESꢅIꢃꢆ1  
BMW Beteiligungs GmbH & Co. KG, Munich6  
BMW INTEC Beteiligungs GmbH, Munich3, 6  
BMW Bank GmbH, Munich3  
5,794  
– 5  
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
51  
3,558  
1,988  
–
BMW Finanz Verwaltungs GmbH, Munich  
BMW Verwaltungs GmbH, Munich3, 6  
325  
153  
–
–1  
–
BMW Hams Hall Motoren GmbH, Munich4, 5, 6  
BMW M GmbH Gesellschaft für individuelle Automobile, Munich3, 5, 6  
MITEC Mikroelektronik Mikrotechnik Informatik GmbH, Munich4, 6  
Alphabet International GmbH, Munich4, 5, 6  
Alphabet Fuhrparkmanagement GmbH, Munich4  
Rolls-Royce Motor Cars GmbH, Munich4, 5, 6  
BMW Vermögensverwaltungs GmbH, Munich  
BMW Fahrzeugtechnik GmbH, Eisenach3, 5, 6  
BMW Anlagen Verwaltungs GmbH, Munich3, 6  
BMW Vertriebszentren Verwaltungs GmbH, Munich  
Parkhaus Oberwiesenfeld GmbH, Munich  
Bürohaus Petuelring GmbH, Munich  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich  
Bavaria Wirtschaftsagentur GmbH, Munich3, 5, 6  
BAVARIA-LLOYD Reisebüro GmbH, Munich  
–
–
–
–
–
–
FꢄREIGꢁꢆ2  
Europe13  
BMW Holding B.V., The Hague  
BMW International Holding B.V., Rijswijk11  
BMW Österreich Holding GmbH, Steyr  
BMW Malta Ltd., Floriana  
14,696  
7,898  
2,502  
1,541  
1,366  
948  
1,180  
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
267  
73  
BMW Malta Finance Ltd., Floriana  
BMW Motoren GmbH, Steyr  
48  
179  
282  
14  
BMW Financial Services (GB) Ltd., Farnborough  
BMW España Finance S.L., Madrid  
BMW (UK) Holdings Ltd., Farnborough  
BMW (UK) Manufacturing Ltd., Farnborough  
881  
775  
749  
460  
136  
723  
1
81  
BMW (Schweiz) AG, Dielsdorf  
719  
592  
374  
364  
345  
302  
277  
213  
202  
180  
136  
135  
134  
123  
119  
112  
104  
103  
–
49  
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
BMW Coordination Center V.o.F., Bornem  
BMW France, Montigny-le-Bretonneux  
BMW Finance S.N.C., Guyancourt  
39  
40  
35  
24  
21  
65  
36  
12  
16  
59  
8
BMW Italia S.p.A., San Donato Milanese  
BMW Iberica S.A., Madrid  
BMW Belgium Luxembourg S.A. / N.V., Bornem  
BMW (UK) Ltd., Farnborough  
ALPHABET (GB) Ltd., Farnborough  
BMW Financial Services Scandinavia AB, Sollentuna  
Rolls-Royce Motor Cars Ltd., Farnborough  
Alphabet Nederland B.V., Breda11  
BMW Finance N.V., The Hague  
BMW Austria Leasing GmbH, Salzburg  
BMW Russland Trading OOO, Moscow  
Alphabet Belgium Long Term Rental NV, Aartselaar  
BMW International Investment B.V., ’s-Gravenhage  
BMW Austria Bank GmbH, Salzburg  
7
94  
21  
156  
6
APD Industries plc, Farnborough  
–
BMW Financial Services Belgium S.A. / N.V., Bornem  
BMW Austria Ges.m.b.H., Salzburg  
–
–
–
–
Alphabet UK Ltd., Glasgow  
–
–
Bavaria Reinsurance Malta Ltd., Floriana  
BMW Vertriebs GmbH, Salzburg  
–
–
–
–
BMW Bank OOO, Moscow  
–
–
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf  
Swindon Pressings Ltd., Farnborough  
BMW Sverige AB, Stockholm  
–
–
–
–
–
–
BMW Financial Services (Ireland) DAC, Dublin  
BMW Norge AS, Fornebu  
–
–
–
–
Alphabet España Fleet Management S.A.U., Madrid  
BMW Services Ltd., Farnborough  
–
–
–
–
BMW Financial Services B.V., Rijswijk  
Alphabet France Fleet Management S.N.C., Rueil-Malmaison  
Alphabet France SAS, Rueil-Malmaison  
BMW Retail Nederland B.V., Delft  
–
–
–
–
–
–
–
–
BMW Hellas Trade of Cars A.E., Kifissia  
BMW Financial Services Denmark A / S, Copenhagen  
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg  
Alphabet Polska Fleet Management Sp. z o.o., Warsaw  
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf  
BMW Portugal Lda., Porto Salvo  
–
–
–
–
–
–
–
–
–
–
–
–
Alphabet Italia Fleet Management S.p.A., Rome  
BMW Amsterdam B.V., Amsterdam  
–
–
–
–
BMW Renting (Portugal) Lda., Porto Salvo  
BMW Automotive (Ireland) Ltd., Dublin  
Park Lane Ltd., Farnborough  
–
–
–
–
–
–
BMW Services Belgium N.V., Bornem  
–
–
BMW Roma S.r.l., Rome  
–
–
BMW Financial Services Polska Sp. z o.o., Warsaw12  
BMW Distribution S.A.S., Montigny-le-Bretonneux  
BMW Danmark A / S, Copenhagen  
–
–
–
–
–
–
BMW Nederland B.V., Rijswijk  
–
–
1
82  
BMW Den Haag B.V., The Hague  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
Group  
Financial  
Statements  
Oy BMW Suomi AB, Helsinki  
BMW Madrid S.L., Madrid  
BMW Group  
Notes to the Group  
Financial Statements  
BMW Milano S.r.l., San Donato Milanese  
Alphabet Luxembourg S.A., Leudelange  
Société Nouvelle WATT Automobiles SARL, Rueil-Malmaison  
BMW (UK) Investments Ltd., Farnborough  
BMW (UK) Capital plc, Farnborough  
Riley Motors Ltd., Farnborough  
List of Investments  
at 31 December 2016  
BMW Central Pension Trustees Ltd., Farnborough  
Triumph Motor Company Ltd., Farnborough  
BLMC Ltd., Farnborough  
The Americas  
BMW (US) Holding Corp., Wilmington, Delaware  
BMW Bank of North America, Inc., Salt Lake City, Utah  
BMW Manufacturing Co., LLC, Wilmington, Delaware  
Financial Services Vehicle Trust, Wilmington, Delaware  
BMW of North America, LLC, Wilmington, Delaware  
BMW US Capital, LLC, Wilmington, Delaware  
BMW Financial Services NA, LLC, Wilmington, Delaware  
BMW SLP, S.A. de C.V., Villa de Reyes12  
2,339  
667  
148  
289  
– 49  
353  
59  
555  
– 31  
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
1,545  
1,429  
1,007  
558  
332  
315  
197  
–
BMW do Brasil Ltda., São Paulo  
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo  
BMW de Mexico, S.A. de C.V., Mexico D.F.  
–
–
–
–
BMW de Argentina S.A., Buenos Aires  
–
–
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City  
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus12  
BMW Leasing do Brasil, S.A., São Paulo  
–
–
–
–
–
–
BMW Insurance Agency, Inc., Wilmington, Delaware  
BMW Leasing de Mexico S.A. de C.V., Mexico City  
BMW Acquisitions Ltda., São Paulo  
–
–
–
–
–
–
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware  
BMW Consolidation Services Co., LLC, Wilmington, Delaware  
SB Acquisitions, LLC, Wilmington, Delaware  
–
–
–
–
–
–
BMW Extended Service Corporation, Wilmington, Delaware  
BMW Auto Leasing, LLC, Wilmington, Delaware  
BMW Facility Partners, LLC, Wilmington, Delaware  
BMW FS Securities LLC, Wilmington, Delaware  
BMW FS Funding Corp., Wilmington, Delaware  
BMW Manufacturing LP, Woodcliff Lake, New Jersey  
BMW FS Receivables Corp, Wilmington, Delaware  
BMW Receivables 2 Inc., Richmond Hill, Ontario  
BMW Receivables Limited Partnership, Richmond Hill, Ontario  
BMW Receivables 1 Inc., Richmond Hill, Ontario  
BMW of Manhattan, Inc., Wilmington, Delaware  
BMW Canada Inc., Richmond Hill, Ontario  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
83  
Africa  
BMW (South Africa) (Pty) Ltd., Pretoria  
BMW Financial Services (South Africa) (Pty) Ltd., Midrand  
682  
177  
63  
5
100  
100  
Asia  
BMW Automotive Finance (China) Co., Ltd., Beijing  
BMW China Automotive Trading Ltd., Beijing  
BMW Japan Finance Corp., Chiba  
987  
535  
384  
320  
310  
196  
108  
107  
–
154  
160  
66  
54  
151  
20  
83  
7
58  
100  
100  
100  
100  
100  
100  
100  
100  
51  
BMW Financial Services Korea Co., Ltd., Seoul  
BMW Japan Corp., Tokyo  
BMW Korea Co., Ltd., Seoul  
BMW (Thailand) Co., Ltd., Bangkok  
BMW India Financial Services Private Ltd., Gurgaon  
BMW Manufacturing (Thailand) Co., Ltd., Rayong  
BMW Malaysia Sdn Bhd, Kuala Lumpur  
BMW Asia Pte. Ltd., Singapore  
–
–
–
–
–
100  
100  
74  
BMW India Private Ltd., Gurgaon  
–
–
BMW Leasing (Thailand) Co., Ltd., Bangkok  
BMW China Services Ltd., Beijing  
–
–
–
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
PT BMW Indonesia, Jakarta  
–
–
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur  
BMW Asia Pacific Capital Pte Ltd., Singapore  
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur  
BMW Tokyo Corp., Tokyo  
–
–
–
–
–
–
–
–
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur  
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur  
BMW Osaka Corp., Osaka  
–
–
–
–
–
–
Oceania  
BMW Australia Finance Ltd., Mulgrave  
BMW Australia Ltd., Melbourne  
BMW Financial Services New Zealand Ltd., Auckland  
BMW New Zealand Ltd., Auckland  
BMW Sydney Pty. Ltd., Sydney  
BMW Melbourne Pty. Ltd., Melbourne  
394  
194  
–
–12  
20  
–
100  
100  
100  
100  
100  
100  
–
–
–
–
–
–
1
84  
Group  
Financial  
Statements  
BMW AG’s non-consolidated companies at 31December 2016  
• 62  
BMW Group  
Notes to the Group  
Financial Statements  
Equity  
in € million  
Profit/loss Capital invest-  
Companies  
in € million  
ment in %  
List of Investments  
at 31 December 2016  
DꢄMESꢅIꢃꢆ7  
Alphabet Fleetservices GmbH, Munich  
–
–
–
–
–
–
–
–
–
–
–
–
100  
100  
100  
100  
100  
100  
Automag GmbH, Munich  
Bavaria Betriebs-Gastronomie GmbH, Munich4  
BMW Car IT GmbH, Munich4  
ParkNow GmbH, Munich  
PM Parking Ventures GmbH, Munich  
FꢄREIGꢁꢆ7  
Europe  
Alphabet Insurance Services Polska Sp. z o.o., Warsaw  
BMW (GB) Ltd., Farnborough  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
60  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
BMW (P + A) Ltd., Farnborough  
BMW (UK) Pensions Services Ltd., Hams Hall  
BMW Car Club Ltd., Farnborough  
BMW Drivers Club Ltd., Farnborough  
BMW Group Benefit Trust Ltd., Farnborough  
BMW i Ventures B.V., ’s-Gravenhage  
BMW Motorsport Ltd., Farnborough  
Cobalt Holdings Ltd., Basingstoke  
Cobalt Telephone Technologies Ltd., Basingstoke  
Content4all BV, Amsterdam  
John Cooper Garages Ltd., Farnborough  
John Cooper Works Ltd., Farnborough  
OOO BMW Leasing, Moscow  
Park-line Aqua B.V., ’s-Gravenhage  
Park-line B.V., ’s-Gravenhage  
Park-line Holding B.V., ’s-Gravenhage  
Park-Mobile (UK) Limited, Basingstoke  
Parkmobile Belgium BvBa, Antwerpen  
Parkmobile Benelux B.V., Amsterdam  
Parkmobile France SAS, Versailles  
Parkmobile Group BV, Amsterdam  
Parkmobile Group Holding BV, Amsterdam  
Parkmobile Hellas SA, Athens  
Parkmobile Licenses B.V., Amsterdam  
Parkmobile Limited, Basingstoke  
Parkmobile Software BV, Amsterdam  
Parkmobile Suisse SA, Bulle  
100  
100  
100  
100  
90  
U.T.E. Alphabet España-Bujarkay, Sevilla  
1
85  
The Americas  
17-07 Northern Boulevard Corporation, Wilmington, Delaware  
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100  
100  
100  
100  
100  
100  
100  
100  
100  
100  
BMW Experience Centre Inc., Richmond Hill, Ontario  
BMW i Ventures, LLC, Wilmington, Delaware  
BMW Leasing de Argentina S.A., Buenos Aires  
BMW Operations Corp., Wilmington, Delaware  
BMW Technology Corporation, Wilmington, Delaware  
Designworks / USA, Inc., Newbury Park, California  
MINI Business Innovation, LLC, Wilmington, Delaware  
ReachNow, LLC, Wilmington, Delaware  
Toluca Planta de Automoviles, S.A. de C.V., Mexico City  
Africa  
BMW Automobile Distributors (Pty) Ltd., Midrand  
BPF Midrand Property Holdings (Pty) Ltd., Midrand  
Multisource Properties (Pty) Ltd., Midrand  
–
–
–
–
–
–
100  
100  
100  
Asia  
BMW Finance (United Arab Emirates) Ltd., Dubai  
BMW Financial Services Hong Kong Limited, Hong Kong  
BMW Financial Services Singapore Pte Ltd., Singapore  
BMW India Leasing Pvt. Ltd., Gurgaon  
BMW Insurance Services Korea Co. Ltd., Seoul  
BMW Philippines Corp., Manila  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100  
51  
100  
100  
100  
70  
Herald International Financial Leasing Co., Ltd., Tianjin  
THEPSATRI Co., Ltd., Bangkok9  
100  
49  
1
86  
Group  
Financial  
Statements  
BMW AG’s associated companies, joint ventures and joint operations at 31December 2016  
• 63  
BMW Group  
Notes to the Group  
Financial Statements  
Equity  
in € million  
Profit/loss Capital invest-  
Companies  
in € million  
ment in %  
List of Investments  
at 31 December 2016  
Joint ventures – equity accounted  
ꢄꢅꢈꢀSꢁIC  
DriveNow GmbH & Co. KG, Munich8  
DriveNow Verwaltungs GmbH, Munich8  
38  
–
– 2  
–
50  
50  
ꢉꢅꢆꢀIGꢃ  
BMW Brilliance Automotive Ltd., Shenyang8  
4,678  
1,061  
50  
Associated companies – equity accounted  
ꢉꢅꢆꢀIGꢃ  
THERE Holding B.V., Amsterdam8  
2,003  
–
33  
Joint operations – proportionately-consolidated entities  
ꢄꢅꢈꢀSꢁIC  
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich8  
SGL Automotive Carbon Fibers Verwaltungs GmbH, Munich8  
43  
–
10  
–
49  
49  
ꢉꢅꢆꢀIGꢃ  
SGL Automotive Carbon Fibers, LLC, Dover, Delaware8  
44  
2
49  
Not equity accounted or proportionately-consolidated entities  
DꢄMESꢅIꢃꢆ1  
Encory GmbH, Unterschleißheim  
–
–
–
–
–
–
–
–
–
–
50  
50  
50  
25  
20  
Digital Energy Solutions GmbH & Co. KG, Munich  
The Retail Performance Company GmbH, Munich  
Abgaszentrum der Automobilindustrie GbR, Weissach  
PDB – Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim  
FꢄREIGꢁꢆ1  
BMW Albatha Leasing LLC, Dubai  
BMW Albatha Finance PSC, Dubai  
BMW AVTOTOR Holding B.V., Amsterdam  
Stadspasparkeren B.V., Deurne  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40  
40  
50  
30  
25  
18  
46  
20  
IP Mobile N.V., Brussels  
Parkmobile International Holding BV, Utrecht10  
Mini Urban X Accelerator SPV, LLC, Wilmington, Delaware  
Bavarian & Co. Ltd., Incheon  
1
87  
BMW AG’s participations at 31 December 2016  
•
64  
Equity  
Profit/loss Capital invest-  
Companies  
in € million  
in € million  
ment in %  
DꢄMESꢅIꢃꢆ7  
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern  
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen  
Hubject GmbH, Berlin  
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.6  
3.1  
16.7  
18.9  
9.8  
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen  
Joblinge gemeinnützige AG Berlin, Berlin  
Joblinge gemeinnützige AG Leipzig, Leipzig  
Joblinge gemeinnützige AG München, Munich  
RA Rohstoffallianz GmbH i.L., Berlin  
16.7  
6.2  
10.5  
9.1  
Racer Benchmark Group GmbH, Landsberg am Lech  
SGL Carbon SE, Wiesbaden  
18.3  
FꢄREIGꢁꢆ7  
Chargemaster Plc., Luton  
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.5  
12.0  
6.7  
Gios Holding B.V., Oss  
JustPark Parking Limited, London  
Parkopedia Ltd., Birmingham  
Carbon, Inc., Wilmington, Delaware  
ChargePoint, Inc., Wilmington, Delaware  
Desktop Metal, Inc., Wilmington, Delaware  
Life360, Inc., Dover, Delaware  
Nauto, Inc., Dover, Delaware  
10.6  
1.1  
3.6  
0.3  
3.3  
1.1  
Rever Moto, Inc., Wilmington, Delaware  
RideCell, Inc., Wilmington, Delaware  
Scoop Technologies, Inc., Wilmington, Delaware  
Srividya Tech, Inc., Wilmington, Delaware  
striVB Labs., Inc., Camden, Delaware  
Turo, Inc., Dover, Delaware  
16.9  
18.6  
9.1  
11.8  
1.7  
0.9  
Zendrive, Inc., Dover, Delaware  
ZIRX Technologies, Inc., Dover, Delaware  
Moovit App Global Ltd., St. Ness Ziona  
1
2.7  
2.6  
1.2  
The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).  
The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into  
euro using the closing exchange rate at the balance sheet date.  
2
3
4
5
6
7
8
Profit and Loss Transfer Agreement with BMW AG.  
Profit and Loss Transfer Agreement with a subsidiary of BMW AG.  
Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.  
Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.  
These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.  
The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform IFRS  
rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.  
Including power to appoint representative bodies.  
Significant influence.  
Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands applied.  
First-time consolidation.  
First-time consolidation in the financial year 2016: BMW Leasing (GB) Ltd., Farnborough.  
9
1
1
1
1
0
1
2
3
1
88  
Group  
Financial  
Statements  
Munich, 14 February 2017  
Bayerische Motoren Werke  
BMW Group  
Notes to the Group  
Financial Statements  
Aktiengesellschaft  
List of Investments  
at 31 December 2016  
The Board of Management  
Harald Krüger  
Milagros Caiña Carreiro-Andree Markus Duesmann  
Klaus Fröhlich  
Dr. Nicolas Peter  
Dr. Ian Robertson (HonDSc)  
Oliver Zipse  
Peter Schwarzenbauer  
CORPORATE  
GOVERNANCE  
Page 190 Statement on Corporate Governance (§289a HGB)  
(
Part of the Combined Management Report)  
Page 190 Information on the Company’s Governing Constitution  
Page 191 Declaration of the Board of Management and  
of the Supervisory Board pursuant to § 161 AktG  
Page 192 Members of the Board of Management  
Page 193 Members of the Supervisory Board  
Page 196 Composition and Work Procedures of the Board of Management  
of BMW AG and its Committees  
Page 198 Composition and Work Procedures of the Supervisory Board  
of BMW AG and its Committees  
Page 204 Disclosures pursuant to the Act on Equal Gender Participation  
Page 205 Information on Corporate Governance  
Practices Applied beyond Mandatory Requirements  
Page 207 Compliance in the BMW Group  
Page 212 Compensation Report  
Page 223 Responsibility Statement by the Company’s  
Legal Representatives  
Page 224 BMW Group Auditor’s Report  
4
4
Corporate  
Governance  
Company’s Govern-  
ing Constitution  
Board of  
Management  
Supervisory Board  
Compliance  
Compensation  
Report  
1
90  
Statement on  
Corporate  
Governance  
Good corporate governance – acting in accordance  
with the principles of responsible management aimed  
at increasing the value of the business on a sustainable  
basis – is an essential requirement for the BMW Group  
embracing all areas of the business. Corporate culture  
within the BMW Group is founded on transparent  
reporting and communication, corporate governance  
in the interest of all stakeholders, fair and open coop-  
eration between the Board of Management and the  
Supervisory Board as well as among employees, and  
compliance with existing laws. The Board of Manage-  
ment and Supervisory Board report in this statement  
on important aspects of corporate governance pursuant  
to §§289, 315 (5) HGB and section 3.10 of the German  
Corporate Governance Code (GCGC).  
STATEMENT ON  
CORPORATE  
GOVERNANCE  
Information on the  
Company’s  
Governing  
Constitution  
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  
(
Aktiengesellschaft) 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 Superviso-  
ry Board and the Board of Management. The duties  
and authorities of those bodies derive from the Stock  
Corporation 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 the Supervisory Board, the appointment of the  
external auditor, changes to the Articles of Incorpo-  
ration and specified capital measures, and elects the  
shareholders’ representatives to the Supervisory Board.  
The Board of Management manages the enterprise  
under its own responsibility. Within this framework,  
it is monitored and advised by the Supervisory Board.  
The Supervisory Board appoints the members of the  
Board of Management and can, at any time, revoke  
an appointment for important reasons. The Board of  
Management keeps the Supervisory Board informed of  
all significant matters regularly, promptly and compre-  
hensively, following the principles of conscientious and  
faithful accountability and in accordance with prevail-  
ing law and the reporting duties allocated to it by the  
Supervisory Board. The Board of Management requires  
the approval of the Supervisory Board for certain major  
transactions. The Supervisory Board is not, however,  
authorised to undertake management measures itself.  
The close interaction between Board of Management  
and Supervisory Board in the interests of the enterprise  
as described above is also known as a “two-tier board  
structure”.  
1
91  
Declaration of the Board of Management and of the  
Supervisory Board of Bayerische Motoren Werke  
Aktiengesellschaft with respect to the recommen-  
dations of the “Government Commission on the  
German Corporate Governance Code” pursuant to  
§
161 German Stock Corporation Act  
The Board of Management and Supervisory Board  
of Bayerische Motoren Werke Aktiengesellschaft  
(
“BMWAG”) declare the following regarding the rec-  
ommendations of the “Government Commission on  
the German Corporate Governance Code”:  
1. Since issuance of the last Declaration in December  
2015, BMW AG has complied with all of the rec-  
ommendations published officially on 12 June 2015  
in the Federal Gazette (Code version dated 5 May  
2015), as announced with the exception of sec-  
tion 4.2.5 sentences 5 and 6.  
2. BMW AG will in future comply with all of the rec-  
ommendations published officially on 12 June  
2
5
015 in the Federal Gazette (Code version dated  
May 2015), with the exception of section 4.2.5  
sentences 5 and 6.  
3
. It is recommended in section 4.2.5 sentences 5  
and 6 of the Code that specified information per-  
taining to management board compensation be  
disclosed in the Compensation Report. These rec-  
ommendations have not been and 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  
instrumental in making the BMWꢁAG’s Compen-  
sation Report transparent and generally under-  
standable in accordance with generally applicable  
financial reporting requirements (see section 4.2.5  
sentence 3 of the Code).  
Munich, December 2016  
Bayerische Motoren Werke  
Aktiengesellschaft  
On behalf of the  
On behalf of the  
Supervisory Board  
Board of Management  
Dr.-Ing. Dr.-Ing. E.h.  
Norbert Reithofer  
Chairman  
Harald Krüger  
Chairman  
1
92  
Statement on  
Corporate  
Governance  
MEMBERS OF THE  
BOARD OF MANAGEMENT  
Kꢊaus ꢉröhꢊich (*1960)  
Development  
Mandates  
Members of the  
Board of  
Management  
HERE International B.V.  
Members of the  
Supervisory Board  
ꢄr. ꢃicoꢊas ꢌeter (*1962)  
Finance  
ꢇaraꢊd Krüger (*1965)  
Chairman  
(since 1 January 2017)  
Mandates  
BMW Brilliance Automotive Ltd.  
(Deputy Chairman, since 1 January 2017)  
ꢈiꢊagros Caiña Carreiro-Andree (*1962)  
Human Resources, Industrial Relations Director  
ꢄr. Ian ꢆoꢋertson (ꢇonꢄSc) (*1958)  
Sales and Marketing BMW,  
ꢄr.-Ing. Kꢊaus ꢄraeger (*1956)  
Purchasing and Supplier Network  
Sales Channels BMW Group  
Mandates  
(
until 30 September 2016)  
Weybourne Limited (since 3 January 2017)  
Weybourne Group Limited (since 25 February 2016)  
Weybourne Investments Holdings  
Mandates  
TÜV SÜD AG (since 15 July 2016)  
(since 25 February 2016)  
Weybourne Management Limited  
(since 25 February 2016)  
ꢈarkus ꢄuesmann (*1969)  
Purchasing and Supplier Network  
(since 1 October 2016)  
Mandates  
ꢌeter Schwarzenꢋauer (*1959)  
MINI, Motorrad, Rolls-Royce,  
Aftersales BMW Group  
BMW Motoren GmbH (until 7 November 2016)  
Mandates  
ꢄr. ꢉriedrich ꢀichiner (*1955)  
Rolls-Royce Motor Cars Limited (Chairman)  
Finance  
(until 31 December 2016)  
Mandates  
ꢅꢊiver Zipse (*1964)  
Production  
Allianz Deutschland AG (until 30 June 2016)  
Allianz SE (since 4 May 2016)  
FESTO Aktiengesellschaft  
BMW Brilliance Automotive Ltd.  
Mandates  
BMW (South Africa) (Pty) Ltd. (Chairman)  
BMW Motoren GmbH (Chairman)  
(Deputy Chairman, until 1 January 2017)  
FESTO Management Aktiengesellschaft  
General Counsel:  
ꢄr. Jürgen ꢆeuꢊ  
Membership of other statutory supervisory boards.  
Membership of equivalent national or foreign boards of business enterprises.  
Other mandates.  
1
93  
MEMBERS OF THE  
SUPERVISORY BOARD  
Dr. jur. Karl-Ludwig Kley (*1951)  
Member since 2008  
Deputy Chairman  
Chairman of the Supervisory Board of the E.ON SE  
(since 8 June 2016)  
Mandates  
E.ON SE (Chairman, since 8 June 2016)  
Bertelsmann Management SE (until 9 May 2016)  
Bertelsmann SE & Co. KGaA (until 9 May 2016)  
Deutsche Lufthansa Aktiengesellschaft  
Verizon Communications Inc.  
Dr.-Ing. Dr.-Ing. E.ꢂh. ꢁorbert Reithofer (*1956)  
Member since 2015  
Chairman  
Former Chairman of the Board of  
Management of BMWAG  
Mandates  
2
ꢃhristiane Bennerꢂ (*1968)  
Siemens Aktiengesellschaft  
Henkel AG & Co. KGaA (Shareholders’ Committee)  
Member since 2014  
Second Chairman of IG Metall  
Mandates  
Robert Bosch GmbH  
1
Manfred Schochꢂ (*1955)  
Member since 1988  
Deputy Chairman  
ꢉranz ꢇanieꢊ (*1955)  
Member since 2004  
Entrepreneur  
Chairman of the European  
and General Works Council  
Industrial Engineer  
Mandates  
DELTON AG (Deputy Chairman)  
Franz Haniel & Cie. GmbH (Chairman)  
Heraeus Holding GmbH  
TBG Limited  
Stefan quandt (*1966)  
Member since 1997  
Deputy Chairman  
Entrepreneur  
3
Mandates  
Ralf Hattlerꢂ (*1968)  
DELTON AG (Chairman)  
AQTON SE (Chairman)  
Entrust Datacard Corp.  
Member since 1 January 2017  
Head of Indirect Purchasing  
ꢀ
rof. Dr. rer. nat. Dr. h.ꢂc. Reinhard Hüttl (*1957)  
1
Stefan Schmidꢂ (*1965)  
Member since 2008  
Member since 2007  
Deputy Chairman  
Chairman of the Works Council, Dingolfing  
Chairman of the Executive Board  
of Helmholtz-Zentrum Potsdam  
Deutsches GeoForschungsZentrum - GFZ  
University Professor  
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.  
Other mandates.  
1
94  
Statement on  
Corporate  
Governance  
ꢀrof. Dr. rer. nat. Dr.-Ing. E.ꢂh.  
ꢇenning Kagermann (*1947)  
Member since 2010  
President of acatech – Deutsche Akademie  
der Technikwissenschaften e.ꢀV.  
Mandates  
Dr. h.ꢂc. Robert W. Lane (*1949)  
Member since 2009  
Former Chairman and Chief Executive Officer of  
Deere & Company  
Members of the  
Supervisory Board  
Mandates  
General Electric Company  
Deutsche Bank AG  
Deutsche Post AG  
Münchener Rückversicherungs-Gesellschaft  
Aktiengesellschaft in München  
2
Horst Lischkaꢂ (*1963)  
Member since 2009  
General Representative of IG Metall Munich  
Mandates  
Susanne Kꢊatten (*1962)  
Member since 1997  
KraussMaffei Group GmbH  
MAN Truck & Bus AG  
Entrepreneur  
Städtisches Klinikum München GmbH  
Mandates  
ALTANA AG (Deputy Chairman)  
SGL Carbon SE (Chairman)  
UnternehmerTUM GmbH (Chairman)  
1
Willibald Löwꢂ (*1956)  
Member since 1999  
Chairman of the Works Council, Landshut  
ꢌrof. ꢄr. rer. poꢊ. ꢆenate Köcher (*1952)  
Member since 2008  
Simone ꢈenne (*1960)  
Director of Institut für Demoskopie  
Allensbach Gesellschaft zum Studium der  
öffentlichen Meinung mbH  
Mandates  
Member since 2015  
Member of Management of Boehringer  
Ingelheim Gruppe, Finance  
(since 1 September 2016)  
Mandates  
Allianz SE (until 3 May 2017)  
Infineon Technologies AG  
Nestlé Deutschland AG  
Delvag Luftfahrtversicherungs-AG (Chairman)  
(until 31 August 2016)  
Robert Bosch GmbH  
Deutsche Post AG  
LSG Lufthansa Service Holding AG (Chairman)  
(
until 31 December 2016)  
3
Ulrich Kranzꢂ (*1958)  
Lufthansa Cargo AG  
Member from 2014 to 31 December 2016  
Head of Product Line BMWi  
(until 31 December 2016)  
Lufthansa Technik AG  
(until 31 December 2016)  
FWB Frankfurter Wertpapierbörse  
(Exchange Council)  
(until 31 August 2016)  
Miles & More GmbH (Chairman Advisory Board)  
until 31 August 2016)  
(
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.  
Other mandates.  
1
95  
1
Dr. Dominique Mohabeerꢂ (*1963)  
Member since 2012  
Member of the Works Council, Munich  
1
Brigitte Rödigꢂ (*1963)  
Member since 2013  
Member of the Works Council, Dingolfing  
2
Jürgen Wechslerꢂ (*1955)  
Member since 2011  
Regional Head of IG Metall Bavaria  
Mandates  
Schaeffler AG (Deputy Chairman)  
Siemens Healthcare GmbH (Deputy Chairman)  
1
Werner Ziererꢂ (*1959)  
Member since 2001  
Chairman of the Works Council, Regensburg  
1
96  
Statement on  
Corporate  
Governance  
COMPOSITION AND WORK  
PROCEDURES OF THE  
BOARD OF MANAGEMENT  
OF BMW AG AND ITS  
COMMITTEES  
of Management, the Sustainability Board, the Oper-  
ations Committee and the Committee for Executive  
Management Matters. At its meetings, the Board  
of Management defines the overall framework for  
business strategies and the use of resources, takes  
decisions regarding the implementation of strategies  
and deals with issues of particular importance to the  
BMW Group. The full board also takes decisions at a  
basic policy level relating to the Group’s automobile  
product strategies and product projects inasmuch as  
these are relevant for all brands. The Board of Man-  
agement and its committees may, as required and  
depending on the subject matters being discussed,  
invite non-voting advisers to participate at meetings.  
Composition and  
Work Procedures  
of the Board of  
Management of  
BMW AG and its  
Committees  
The Board of Management governs the enterprise  
under its own responsibility, acting in the interests  
of the BMW Group with the aim of achieving sustain-  
able growth in value. The interests of shareholders,  
employees and other stakeholders are also taken into  
account in the pursuit of this aim.  
Terms of reference approved by the Board of Man-  
agement contain a planned allocation of divisional  
responsibilities between the individual board mem-  
bers. These terms of reference also incorporate the  
principle that the full Board of Management bears  
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  
joint responsibility for all matters of particular impor  
-
tance and scope. In addition, members of the Board of  
Management manage the relevant portfolio of duties  
under their responsibility, whereby case-by-case rules  
can be put in place for cross-divisional projects. Board  
members continually provide the Chairman of the  
Board of Management with all information regarding  
major transactions and developments within their  
area of responsibility. The Chairman of the Board  
of Management coordinates cross-divisional matters  
with the overall targets and plans of the BMW Group,  
involving other board members to the extent that divi-  
sions within their area of responsibility are affected.  
complied with. Further details about compliance with  
-
in the BMW Group can be found in the “Corporate  
Governance” section of the Annual Report. The Board  
of Management is also responsible for ensuring that  
appropriate risk management and risk controlling  
systems are in place throughout the Group.  
During their period of employment for BMWAG,  
members of the Board of Management are bound by  
a comprehensive non-competition clause. They are  
required to act in the enterprise’s best interests and  
may not pursue personal interests in their decisions  
or take advantage of business opportunities intended  
for the enterprise. They may only undertake ancillary  
activities, in particular supervisory board mandates  
outside the BMW Group, with the approval of the  
Supervisory Board’s Personnel Committee. Each  
member of the Board of Management of BMWAG is  
obliged to disclose conflicts of interest to the Super-  
visory Board without delay and inform the other  
members of the Board of Management accordingly.  
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, decisions can also be taken outside of  
board meetings if none of the board members object  
to this procedure. A meeting is quorate if all Board  
of Management members are invited to the meeting  
in good time. Members unable to attend any meeting  
are entitled to vote in writing, by fax or by telephone.  
Votes cast by phone must be subsequently confirmed  
in writing. Except in urgent cases, matters relating to  
a division for which the responsible board member is  
not present will only be discussed and decided upon  
with that member’s consent.  
Following the appointment of a new member to the  
Board of Management, the BMW Group Corporate  
Governance Officer informs the new member of the  
framework conditions under which the board mem-  
ber’s duties are to be carried out – in particular those  
enshrined in the BMW Group’s Corporate Govern-  
ance Code – as well as the duty to cooperate when a  
transaction or event triggers reporting requirements  
or requires the approval of the Supervisory Board.  
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 meet-  
ings. Outside of board meetings, decisions are taken  
on the basis of a simple majority of board members.  
In the event of a tied vote, the Chairman of the Board  
of Management has the casting vote. Any changes  
to the board’s terms of reference must be passed  
The Board of Management consults and takes deci-  
sions as a collegiate body in meetings of the Board  
1
97  
unanimously. A board meeting may only be held if  
more than half of the board members are present.  
their entirety or individually (such as the executive  
management structure, potential candidates for exec-  
utive management, nominations for or promotions to  
senior management positions). This committee has,  
on the one hand, an advisory and preparatory role  
(e.ꢀg. making suggestions for promotions to the two  
remuneration groups below board level and preparing  
decisions to be taken at board meetings with regard  
to human resources principles with the emphasis on  
executive management issues) and a decision-taking  
function on the other (e.ꢀg. deciding on appointments  
to senior management positions and promotions to  
higher remuneration groups or the wording of human  
resources principles decided on by the full board).  
The Committee has two members who are entitled to  
vote at meetings, namely the Chairman of the Board  
of Management (who also chairs the meetings) and  
the board member responsible for Human Resources.  
The Head of “Human Resources Management and  
Services” as well as the Head of “Human Resources  
Executive Management” also participate in these  
meetings in an advisory function. At the request of  
the Chairman, resolutions may also be passed outside  
of committee meetings by casting votes in writing,  
by fax or by telephone if the other member entitled  
to vote does not object immediately. The Committee  
for Executive Management Matters convenes up to  
six times a year.  
In the event that the Chairman of the Board of  
Management is not present or is unable to attend  
a meeting, the member of the board responsible for  
Finance will represent him.  
Minutes are taken of all meetings and the Board of  
Management’s resolutions and signed by the Chair-  
man. Decisions taken by the Board of Management  
are binding for all employees.  
The rules relating to meetings and resolutions taken  
by the full Board of Management are also applicable  
for its committees.  
Members of the Board of Management not represent-  
ed in a committee are provided with the agendas and  
minutes of committee meetings. Committee matters  
are dealt with in full board meetings if the committee  
considers it necessary or at the request of a member  
of the Board of Management.  
A secretariat for Board of Management matters has  
been established to assist the Chairman and other  
board members with the preparation and follow-up  
work connected with board meetings.  
At meetings of the Operations Committee (general-  
ly held every two weeks), decisions are reached in  
connection with automobile product projects, based  
on the strategic orientation and decision framework  
stipulated at Board of Management meetings. The  
Operations Committee comprises the Board of  
Management member responsible for Development  
The Board of Management is represented by its Chair-  
man in its dealings with the Supervisory Board. The  
Chairman of the Board of Management maintains  
regular contact with the Chairman of the Supervisory  
Board and keeps him informed of all important mat-  
ters. The Supervisory Board has passed a resolution  
specifying the information and reporting duties of  
the Board of Management. As a general rule, in the  
case of reports required by dint of law, the Board of  
Management submits its reports to the Supervisory  
Board in writing. To the extent possible, documents  
required as a basis for taking decisions are sent to  
the members of the Supervisory Board in good time  
before the relevant meeting. Regarding transactions  
of fundamental importance, the Supervisory Board  
has stipulated specific transactions which require  
the approval of the Supervisory 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 fundamental principle followed  
when reporting to the Supervisory Board is that the  
latter should be kept informed regularly, without delay  
and comprehensively of all significant matters relating  
to planning, business performance, risk exposures,  
risk management and compliance, as well as any major  
variances between actual and budgeted figures.  
(
who also chairs the meetings), together with the  
board members responsible for the following areas:  
Purchasing and Supplier Network; Production; Sales  
and Marketing BMW, Sales Channels BMW Group;  
and MINI, Motorcycles, Rolls-Royce, Aftersales BMW  
Group. If the committee chairman is not present or  
unable to attend a meeting, the member of the board  
responsible for Production represents him. Resolu-  
tions taken at meetings of the Operations Committee  
are made online.  
The full board usually convenes up to twice a year in  
its function as Sustainability Board in order to define  
strategy with regard to sustainability and decide upon  
measures to implement that strategy. The Head of  
Corporate Affairs and the Representative for Sus-  
tainability and Environmental Protection participate  
in these meetings in an advisory capacity.  
The Board’s Committee for Executive Management  
Matters deals with enterprise-wide issues affecting  
executive managers of the BMW Group, either in  
1
98  
Statement on  
Corporate  
Governance  
COMPOSITION AND WORK  
PROCEDURES OF THE  
SUPERVISORY BOARD OF  
BMW AG AND ITS  
The Supervisory Board has a quorum if all members  
have been invited to the meeting and at least half the  
members of whom it is required to comprise partic-  
ipate in the vote. A resolution relating to an agenda  
item not included in the invitation is only valid if none  
of the members of the Supervisory Board who were  
not present at the meeting object to the resolution  
and if a minimum of two-thirds of the members are  
present.  
Composition and  
Work Procedures of  
the Supervisory  
Board of BMW AG  
and its Committees  
COMMITTEES  
Resolutions of the Supervisory Board are generally  
passed by a simple majority. The German Co-determina-  
tion Act contains specific legal requirements with regard  
to majorities and technical procedures, particularly with  
regard to the appointment and removal of management  
board members and the election of Chairman or Deputy  
Chairman of the Supervisory Board. In the event of a  
tied vote in the Supervisory Board, the Chairman of  
the Supervisory Board has two votes in a renewed vote,  
assuming it also results in a tie.  
BMWAG’s Supervisory Board is composed of ten share-  
holder representatives (elected by the Annual General  
Meeting) and ten employee representatives (elected in  
accordance with the Co-Determination Act). The ten  
Supervisory Board members representing employees  
comprise seven Company employees, including one  
executive staff representative, and three members elect-  
ed following nomination by unions. The Supervisory  
Board has the task of advising and supervising the Board  
of Management in its management of the BMW Group.  
It is involved in all decisions of fundamental importance  
for the BMW Group. The Supervisory Board appoints  
the members of the Board of Management and decides  
upon the level of compensation they receive. The Super-  
visory Board can revoke appointments for important  
reasons.  
In practice, resolutions are regularly passed by the  
Supervisory Board and its committees at meetings.  
Supervisory Board members who are not present can  
submit their vote in written, fax or electronic form via  
another Supervisory Board member. This rule also  
applies for the second vote of the Chairman of the  
Supervisory Board. The Chairman of the Supervisory  
Board can also grant a period of time in which all mem-  
bers not present at a meeting may retrospectively vote.  
In special cases, resolutions may also be passed outside  
of meetings, in particular in writing, by fax or by elec-  
tronic means. Resolutions and meetings are recorded  
in minutes, which are signed by the relevant Chairman.  
The Supervisory Board holds a minimum of two meet-  
ings per calendar half-year. Normally, five plenary  
meetings are held per calendar year. One meeting each  
year is planned to extend to several days and is used,  
among other things, to enable an in-depth exchange on  
strategic and technological matters. The main topics of  
meetings in the period under report are summarised  
in the Report of the Supervisory Board. Shareholder  
representatives and employee representatives generally  
prepare Supervisory Board meetings separately and  
occasionally with members of the Board of Manage-  
ment. Members of the Supervisory Board are specif-  
ically legally bound to maintain secrecy with respect  
to confidential reports they receive and confidential  
discussions in which they partake.  
Following its meetings, the Supervisory Board generally  
requests information on new vehicle models in the form  
of a short presentation.  
Following the election of a new Supervisory Board  
member, the Corporate Governance Officer informs  
the new member of the main framework for performing  
duties, in particular the BMW Group Corporate Gov-  
ernance Code and individual contributions required in  
circumstances which trigger reporting obligations or are  
subject to Supervisory Board approval.  
The Chairman of the Supervisory Board coordinates  
work within the Supervisory Board, convenes and  
chairs its meetings, handles the external affairs of the  
Supervisory Board and represents it before the Board  
of Management.  
Members of the Supervisory Board of BMWAG take  
care 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 three  
mandates on non-BMW Group supervisory boards of  
listed companies or in other bodies with comparable  
requirements.  
1
99  
The Supervisory Board regularly assesses the efficiency  
of its activities. To this end, shared discussion is con-  
ducted within the Supervisory Board and individual  
meetings held with the Chairman, prepared on the basis  
of a questionnaire sent in advance, which is drawn up  
by the Supervisory Board.  
According to the rules of procedure, the Chairman of the  
Supervisory Board is, by virtue of this function, member  
and Chairman of the Presiding Board, the Personnel  
Committee and the Nomination Committee.  
The number of meetings held by the Presiding Board  
and committees depends on requirements. The Pre-  
siding Board, the Personnel Committee and the Audit  
Committee generally hold several meetings in the course  
of the year (see “Report of the Supervisory Board” for  
details of the number of meetings held in 2016).  
Members of the Supervisory Board of BMW AG are  
obliged to act in the best interest of the organisation as  
a whole. They may not pursue personal interests in their  
decisions or take advantage of business opportunities  
intended to benefit the BMW Group.  
In line with the rules of procedure for the activities of  
the plenum, the Supervisory Board has set out proce-  
dural rules for the Presiding Board and committees.  
Committees only have a quorum when all members  
participate. Committee resolutions are passed by a  
simple majority, unless otherwise stipulated by law.  
Members of the Supervisory Board are obliged to inform  
the Supervisory Board of any conflicts of interest, in  
particular those resulting from a consulting or executive  
role with clients, suppliers, lenders or other business  
partners, so that the Supervisory Board can report to  
the shareholders at the Annual General Meeting on  
its treatment of the issue. Material and non-temporary  
conflicts of interest of a Supervisory Board member  
result in a termination of mandate.  
Members of the Supervisory Board may not delegate  
their duties to others. However, the Supervisory Board,  
the Presiding Board and the committees may call on  
experts and informed persons to attend meetings and  
advise on specific matters.  
In proposing candidates for election as members of the  
Supervisory Board, care is taken that the Supervisory  
Board collectively has the required knowledge, skills and  
expertise to perform its tasks appropriately.  
The Supervisory Board, the Presiding Board and com-  
mittees also meet without the Board of Management  
when necessary.  
The Supervisory Board has stated specific targets for its  
composition (see section “Composition targets for the  
Supervisory Board”).  
BMWAG ensures that the Supervisory Board and its  
committees are appropriately equipped to carry out  
their duties. This includes providing a central Super-  
visory Board office to support Chairpersons in their  
coordination work.  
Members of the Supervisory Board are responsible for  
undertaking any training required for the performance  
of their duties. The Company provides them with appro-  
priate assistance therein.  
In accordance with rules of procedure, the Presiding  
Board comprises the Chairman of the Supervisory Board  
and Deputies. The Presiding Board prepares Superviso-  
ry Board meetings to the extent that the subject matter  
does not fall within the remit of a committee. This  
includes, for example, preparing the annual Declaration  
of Compliance with the German Corporate Governance  
Code and assessment of Supervisory Board efficiency.  
Taking into account the specific circumstances of the  
BMW Group and the number of Board members, the  
Supervisory Board has set up a Presiding Board and  
four committees: the Personnel Committee, the Audit  
Committee, the Nomination Committee and the Medi-  
ation Committee (see “Overview of Supervisory Board  
committees and their composition”). These serve to  
raise the efficiency of the Supervisory Board’s work and  
facilitate handling of complex issues. Establishment and  
function of a mediation committee is prescribed by law.  
Committee chairpersons report in detail on committee  
work at each plenary meeting of the Supervisory Board.  
Composition of the Presiding Board and the committees  
is based on legal requirements, the Articles of Incor-  
poration, rules of procedure and corporate governance  
principles, while taking into particular account the  
expertise of Board members.  
2
00  
Statement on  
Corporate  
Governance  
The Personnel Committee prepares decisions of the  
Supervisory Board with regard to the appointment and,  
where applicable, removal of members of the Board of  
Management and, together with the full Supervisory  
Board and the Board of Management, ensures long-  
term succession planning. The Personnel Committee  
also prepares decisions of the Supervisory Board with  
regard to Board of Management compensation and the  
regular review of the compensation system for the Board  
of Management. In conjunction with resolutions taken  
by the Supervisory Board regarding the compensation  
of the Board of Management, the Personnel Committee  
is responsible for drawing up, amending and revoking  
employment contracts or, when necessary, to prepare  
and conclude other relevant contracts with members  
of the Board of Management. In certain cases, the  
Personnel Committee is also authorised to grant the  
necessary approval of a business transaction on behalf of  
the Supervisory Board. This includes cases of providing  
loans to members of the Board of Management or Super-  
visory Board, certain contractual arrangements with  
members of the Supervisory Board, taking into account  
related parties, as well as ancillary activities of members  
of the Board of Management, including acceptance of  
non-BMW Group supervisory board mandates.  
In line with the recommendations of the German Cor-  
porate Governance Code, the Chairman of the Audit  
Committee is independent, and not a former Chairman  
of the Board of Management, and has special knowledge  
and experience in the application of financial reporting  
standards and internal control procedures. He also  
fulfils the requirement of being a financial expert as  
defined by §100 (5) and §107 (4) AktG.  
Composition and  
Work Procedures of  
the Supervisory  
Board of BMW AG  
and its Committees  
The Nomination Committee is charged with the task of  
finding suitable candidates for election to the Super-  
visory Board as shareholder representatives and to  
propose them to the Supervisory Board for election at  
the Annual General Meeting. In line with the recom-  
mendations of the German Corporate Governance Code,  
the Nomination Committee is exclusively composed of  
shareholder representatives.  
The establishment and composition of a mediation com-  
mittee are prescribed by the German Co-determination  
Act. The Mediation Committee has the task of making  
proposals to the Supervisory Board if a resolution for the  
appointment of a member of the Board of Management  
has not been carried by the necessary two-thirds major-  
ity of members’ votes. In accordance with statutory  
requirements, the Mediation Committee comprises the  
Chairman and the Deputy Chairman of the Supervisory  
Board, one member selected by shareholder represent-  
atives and one by employee representatives.  
The Audit Committee deals in particular with the super-  
vision of the financial reporting process, effectiveness  
of the internal control system, the risk management  
system, internal audit system and compliance as well  
as the performance of Supervisory Board duties in  
connection with audits pursuant to §20 of the German  
Securities Trading Act (WpHG). It also oversees the  
audit of financial statements, auditor independence  
and any additional work performed by the auditor. It  
prepares the proposal for the election of the auditor  
at the Annual General Meeting, makes a relevant  
recommendation, issues the audit engagement and  
agrees on points of audit focus as well as the auditor’s  
fee. The Audit Committee prepares the Supervisory  
Board’s resolution relating to the Company and Group  
Financial Statements and discusses interim reports  
with the Board of Management prior to publication.  
The Audit Committee also decides on the Supervisory  
Board’s agreement on the use of Authorised Capital  
2
014 (Article 4 no.5 of the Articles of Incorporation)  
and on amendments to the Articles of Incorporation  
which only affect its wording.  
2
01  
ꢄverview of Supervisory Board committees  
and their composition  
Principal duties, basis for activities  
Members  
ꢌꢆꢀSIꢄIꢃG bꢅAꢆꢄ  
—
—
preparation of Supervisory Board meetings to the extent that the subject matter to be  
discussed does not fall within the remit of a committee  
Norbert Reithofer1  
Manfred Schoch  
Stefan Quandt  
Stefan Schmid  
Karl-Ludwig Kley  
activities based on terms of reference  
ꢌꢀꢆSꢅꢃꢃꢀl CꢅꢈꢈIꢁꢁꢀꢀ  
—
—
—
preparation of decisions relating to the appointment and revocation of appointment of  
members of the Board of Management, the compensation and the regular review of the  
Board of Management’s compensation system  
Norbert Reithofer1  
Manfred Schoch  
Stefan Quandt  
Stefan Schmid  
Karl-Ludwig Kley  
conclusion, amendment and revocation of employment contracts (in conjunction with  
the resolutions taken by the Supervisory Board regarding the compensation of the Board  
of Management) and other contracts with members of the Board of Management  
decisions relating to the approval of ancillary activities of Board of 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  
AꢂꢄIꢁ CꢅꢈꢈIꢁꢁꢀꢀ  
supervision of the financial reporting process, the effectiveness of the internal control  
system, the risk management system, internal audit arrangements and compliance as  
well as the performance of Supervisory Board duties in connection with audits pursuant  
to § 20 of the German Securities Trading Act (WpHG)  
Karl-Ludwig Kley1, 2  
Norbert Reithofer  
Manfred Schoch  
Stefan Quandt  
—
Stefan Schmid  
—
—
supervision of external audit, in particular auditor independence and additional work  
performed by external auditor  
preparation of proposals for election of external auditor at Annual General Meeting,  
engagement of external auditor and compliance of audit engagement, determination  
of areas of audit emphasis and fee agreements with external auditor  
—
preparation of Supervisory Board’s resolution on Company and  
Group Financial Statements  
—
—
—
—
discussion of interim reports with Board of Management prior to publication  
decision on approval for utilisation of Authorised Capital 2014  
amendments to Articles of Incorporation only affecting wording  
establishment in accordance with the recommendation contained in the  
German Corporate Governance Code, activities based on terms of reference  
ꢃꢅꢈIꢃAꢁIꢅꢃ CꢅꢈꢈIꢁꢁꢀꢀ  
identification of suitable candidates (male / female) as shareholder representatives on the Norbert Reithofer1  
Supervisory Board to be put forward for inclusion in the Supervisory Board’s proposals for Susanne Klatten  
—
election at the Annual General Meeting  
Karl-Ludwig Kley  
Stefan Quandt  
—
establishment in accordance with the recommendation contained in the German Corpo-  
rate 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 representa-  
tives.)  
ꢈꢀꢄIAꢁIꢅꢃ CꢅꢈꢈIꢁꢁꢀꢀ  
—
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 Manfred Schoch  
Norbert Reithofer  
members’ votes  
Stefan Quandt  
Stefan Schmid  
—
committee required by law  
(
In accordance with statutory requirements, the Mediation Committee  
comprises the Chairman and Deputy Chairman of the Supervisory Board  
and one member each selected by shareholder representatives and  
employee representatives.)  
1
Chair.  
2
(
Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.  
2
02  
Statement on  
Corporate  
Governance  
Board of Management succession planning,  
diversity concept  
In accordance with the recommendation of the  
German Corporate Governance Code, the  
Supervisory Board has set a standard age limit  
for Board of Management membership. This  
aims at a retirement age of 60. Consideration is  
also given to achieving an appropriate age-mix  
within the Board of Management.  
—
The Supervisory Board, in collaboration with the  
Personnel Committee and the Board of Management,  
ensures long-term succession planning. In their assess-  
ment of candidates for Board of Management posi-  
tions, the underlying suitability criteria applied by the  
Supervisory Board are expertise in the relevant function,  
outstanding leadership qualities, proven track record  
and knowledge of the Company. The Supervisory Board  
has adopted a diversity concept for the composition  
of the Board of Management, which is also aligned  
with recommendations of the German Corporate  
Governance Code. In considering which individuals  
would best complement the Board of Management, the  
Supervisory Board also takes diversity into account. The  
criteria diversity is taken by the Supervisory Board to  
encompass in particular different, mutually comple-  
mentary profiles, professional and life experiences also  
at the international level and an appropriate gender  
representation. In reaching its decisions, the Supervi-  
sory Board also considers the following:  
Composition and  
Work Procedures of  
the Supervisory  
Board of BMW AG  
and its Committees  
When selecting an individual for a particular Board of  
Management position, the Supervisory Board decides  
in the best interest of the Group and after due con-  
sideration of all relevant circumstances.  
Composition objectives of the Supervisory Board,  
diversity concept  
The Supervisory Board is to be composed in such a way  
that its members collectively possess the knowledge,  
skills and experience required to properly perform  
its tasks.  
To this end, the Supervisory Board has approved the  
following concrete objectives for its composition, tak-  
ing into account recommendations contained in the  
German Corporate Governance Code. These objectives  
also describe the concept for achieving diversity in  
the composition of the Supervisory Board (diversity  
concept):  
The members of the Board of Management  
—
should have a long-standing track record of  
management experience, ideally with experi-  
ence in different professional fields.  
At least two members should have international  
management experience.  
—
Four members of the Supervisory Board should  
—
if possible have international experience or  
specialist knowledge of one or more non-German  
markets important to the BMW Group.  
At least two members of the Board of Manage-  
ment should have a technical background.  
—
The Board of Management should collectively  
The Supervisory Board should include if possi-  
ble seven members who have acquired in-depth  
knowledge and experience within the  
BMW Group, though no more than two former  
members of the Board of Management.  
—
—
have extensive experience in the fields of devel-  
opment, production, sales and marketing,  
finances and human resources.  
The Supervisory Board has stipulated a target  
for the proportion of women on the Board of  
Management. This is outlined in the section  
—
Three of the shareholder representatives in the  
—
Supervisory Board should if possible be entre-  
preneurs or persons who have previous experi-  
ence in the management or supervision of  
another medium or large-sized company.  
“
Disclosures pursuant to the Act on Equal Gen-  
der Participation”. The Board of Management  
reports to the Personnel Committee and the  
Supervisory Board at regular intervals on the  
proportion and development of women in  
senior management positions, in particular at  
executive levels.  
2
03  
Three members of the Supervisory Board should  
if possible be figures from the worlds of busi-  
ness, science or research who have experience  
in areas relevant to the BMW Group, e.ꢀg. chem-  
istry, energy supply, information technology, or  
who have specialist knowledge in fields relevant  
for the future of the BMW Group, e.ꢀg. custom-  
er requirements, mobility, resources or sustain-  
ability.  
An age limit for membership of the Supervisory  
Board of 70 years should generally be applied.  
In exceptional cases, members may remain on  
the Board until the end of the next Annual Gen-  
eral Meeting after reaching the age of 73, in  
order to fulfil legal requirements or to facilitate  
smooth succession in the case of key roles or  
specialist qualifications.  
—
—
—
—
As a general rule, members of the Supervisory  
Board should not hold office for longer than  
until the end of the Annual General Meeting at  
which the resolution is passed ratifying the  
member’s activities for the 14th financial year  
after the beginning of the member’s first period  
of office. This excludes the financial year in  
which the first period of office began. This rule  
does not apply to natural persons who either  
directly or indirectly hold significant investments  
in the Company. In the Company’s interest,  
deviation from the general maximum period is  
possible, for instance in order to work towards  
another composition target, in particular diversi-  
ty of gender and technical, professional and per-  
sonal backgrounds.  
When seeking qualified individuals for the  
Supervisory Board whose specialist skills and  
leadership qualities are most likely to strength-  
en the Board as a whole, consideration is also  
to be given to diversity. When preparing nomi-  
nations, the extent to which the work of the  
Supervisory Board would benefit from diversi-  
fied professional and personal backgrounds  
(
including international aspects) and from an  
appropriate gender representation is also to be  
taken into account. It is the joint responsibility  
of all those participating in the nomination and  
election process to ensure that qualified wom-  
en are considered for Supervisory Board mem-  
bership.  
Of the 20 members of the Supervisory Board at  
least twelve should be independent members  
within the meaning of section 5.4.2 of the Ger-  
man Corporate Governance Code, including  
at least six as representatives of the Company’s  
shareholders.  
The time schedule set by the Supervisory Board for  
achieving the above-mentioned composition targets  
is the period up to 31 December 2017. Proposals for  
nomination made by the Supervisory Board at the  
Annual General Meeting – insofar as they apply to  
shareholder Supervisory Board members – should  
take account of these objectives in such a way that  
they can be achieved with the support of the appro-  
priate resolutions at the Annual General Meeting. The  
Annual General Meeting is not bound by nominations  
for election proposed by the Supervisory Board. The  
freedom of employees to vote for the employee mem-  
bers of the Supervisory Board is also protected. Under  
the rules stipulated by the German Co-Determination  
Act, the Supervisory Board does not have the right  
to nominate employee representatives for election.  
The objectives which the Supervisory Board has set  
itself with regard to its composition are therefore not  
intended to be instructions to those entitled to vote  
or restrictions on their freedom to vote.  
—
Two independent members of the Supervisory  
Board should have expert knowledge of  
accounting or auditing.  
—
—
No persons carrying out directorship functions  
or advisory tasks for important competitors of  
the BMW Group may belong to the Supervisory  
Board. In compliance with applicable legisla-  
tion, members of the Supervisory Board are to  
take care that no persons will be nominated  
for election with whom a serious, non-temporary  
conflict of interests could arise due to other  
activities and functions carried out by them out-  
side the BMW Group, in particular advisory  
activities or directorships with customers, sup-  
pliers, creditors or other business partners.  
In the Supervisory Board’s opinion, its composition  
as at 31 December 2016 fulfilled the composition  
objectives detailed above. In order to make it easier to  
assess the actual composition and composition targets,  
brief curricula vitae of the current members of the  
Supervisory Board are available on the Company’s  
website at www.bmwgroup.com. Information relating to  
members’ practised professions and to mandates in  
other statutory supervisory boards and equivalent  
national or foreign company boards, including the  
length of their periods of service on the Supervisory  
2
04  
Statement on  
Corporate  
Governance  
Board, is provided in the section “Statement on Cor-  
porate Governance”. Based on this information, it  
is evident that the Supervisory Board of BMWAG  
is very diversified, with significantly more than the  
targeted four members having international experi-  
ence or specialist knowledge with regard to one or  
more of the non-German markets important to the  
BMW Group. In-depth knowledge and experience  
from within the enterprise are provided by seven  
employee representatives, as well as the Chairman  
of the Supervisory Board. Only one previous Board of  
Management member holds office in the Supervisory  
Board. At least four members of the Supervisory Board  
have experience in managing another company. The  
Supervisory Board also has three entrepreneurs as  
members. Most of the members of the Supervisory  
Board – including employee representatives – have  
experience in supervising another medium-sized or  
large company. Moreover, more than three members  
of the Supervisory Board have experience and special-  
ist knowledge in subjects relevant for the future of the  
BMW Group, such as customer requirements, mobility,  
resources, sustainability and information technology.  
For the purpose of assessing the independence of its  
members, the Supervisory Board follows the recom-  
mendations of the German Corporate Governance  
Code. In the opinion of the Supervisory Board, the  
fact that a member has a substantial shareholding  
in the Company, or holds office as an employee  
representative, or was previously a member of the  
Board of Management, does not rule out that he or  
she is independent. A substantial and not merely  
temporary conflict of interests within the meaning  
DISCLOSURES PURSUANT  
TO THE ACT ON EQUAL  
Composition and  
Work Procedures of  
the Supervisory  
Board of BMW AG  
and its Committees  
GENDER PARTICIPATION –  
TARGETS FOR THE PROPOR-  
TION OF WOMEN ON THE  
BOARD OF MANAGEMENT  
AND AT EXECUTIVE MAN-  
AGEMENT LEVELS I AND II  
Disclosures Pursuant  
to the Act on Equal  
Gender Participation –  
Targets for the  
Proportion of Women  
on the Board of  
Management and at  
Executive Manage-  
ment Levels I and II  
Information on Cor-  
porate Governance  
Practices applied  
Beyond Mandatory  
Requirements  
The Act on Equal Participation of Women and Men  
in Executive Positions in the Private and the Public  
Sector (“Act on Equal Gender Participation”) was  
passed into German law in 2015.  
In accordance with this legislation, the Supervisory  
Board of BMWAG is required to set a target for the  
proportion of women on its Board of Management  
and a time frame for meeting this target. Likewise, the  
Board of Management of BMWAG is required to estab-  
lish targets and a time frame for attaining these targets  
with respect to the two executive management levels  
below the Board of Management. As its target for the  
Board of Management through to 31 December 2016,  
the Supervisory Board had stipulated that the Board  
of Management should continue to have at least one  
female member. This target was achieved: the Board  
of Management has one female member (12.5%).  
of section 5.4.2. of the German Corporate Governance  
Code does not apply to any of the Supervisory Board  
members. Employees holding office in the Supervi-  
sory Board are protected by law when performing  
their duties. All other Supervisory Board members  
have a sufficient degree of economic independence  
from the Company. Business with entities, in which  
the members of the Supervisory Board carry out a  
significant function, is conducted on an arm’s length  
basis. The Supervisory Board has therefore concluded  
that all of its members are independent. At least three  
members meet the requirements for being designated  
as an independent financial expert. At the end of  
the reporting period, the Supervisory Board had six  
female members (30%), comprising three shareholder  
representatives and three employee representatives.  
The Supervisory Board has 14 male members (70%),  
comprising seven shareholder representatives and  
seven employee representatives. The Company there-  
fore complies with the statutory gender quota of at  
least 30% female members applicable in Germany  
As its target for the proportion of women on the Board  
of Management for the time frame from  
1 January 2017  
to 31 December 2020, the Supervisory Board has stip-  
ulated that the Board of Management should continue  
to have at least one female member. Assuming that  
the Board of Management continues to comprise eight  
members, this would correspond to a proportion of  
at least 12.5%. The Supervisory Board considers it  
desirable to increase the proportion of women on the  
Board of Management and fully supports the Board of  
Management’s endeavours to increase the proportion  
of women at the highest executive management levels  
within the BMW Group.  
For the first target attainment time frame up to  
31 December 2016, target ranges of 10 to 12% and  
6 to  
8
% respectively were set by the Board of Management  
since  
1
January 2016. The Supervisory Board does not  
for the proportion of women to be represented in the  
first and second levels of executive management. On  
currently have any members more than 70 years old.  
3
1 December 2016, the proportion of women within  
the first and second executive management levels  
2
05  
stood at 10  
.
2
% and  
6
.
3
% respectively. The targets were  
INFORMATION ON  
therefore achieved within the stipulated time frame.  
CORPORATE GOVERNANCE  
PRACTICES APPLIED  
BEYOND MANDATORY  
REQUIREMENTS  
For the next target attainment time frame, which has  
been selected to run to 31 December 2020, the Board  
of Management has set target ranges of 10.2 – 12% for  
the first level of executive management and 8 – 10%  
for the second.  
Top management within the BMW Group is structured  
in terms of functions, following a consistent job eval-  
uation system based on Mercer.  
Core vaꢊues  
Within the BMW Group, the Board of Management,  
the Supervisory Board and the employees base their  
actions on five core values which are the cornerstone  
of the success of the BMW Group:  
ꢌroportion of femaꢊe executives within  
management / function levels I and II  
at bꢈW AG  
6
5
Responsibility  
in %  
We take consistent decisions and commit to them  
personally. This allows us to work freely and more  
effectively.  
1
6
0
2
10.2  
Appreciation  
We reflect on our actions, respect each other, offer  
clear feedback and celebrate success.  
6
.3  
ꢅransparency  
We acknowledge concerns and identify inconsisten-  
cies in a constructive way. We act with integrity.  
Function level I  
Function level II  
ꢁrust  
We trust and rely on each other. This is essential if we  
are to act swiftly and achieve our goals.  
Diversity contributes to greater competitiveness  
and innovation at BMW Group. Working together  
in mixed, complementary teams raises performance  
levels and helps sharpen the focus on the customer.  
The requirement of an appropriate gender balance is  
seen as an essential component of the BMW Group’s  
diversity concept. Further increase in the proportion  
of women therefore remains an objective of the Board  
of Management.  
ꢅpenness  
We are excited by change and open to new opportu-  
nities. We learn from our mistakes.  
During 2016, the proportion of women in both the  
workforce as a whole and in management positions  
increased, reflecting the positive impact of long-term  
measures, dialogue and information events. Further  
information on the topic of diversity within the  
BMW Group can be found in the section “Workforce”.  
2
06  
Statement on  
Corporate  
Governance  
Social responsibility towards employees and  
along the supplier chain  
Further information on social responsibility towards  
employees can be found in the section “Workforce”.  
The BMW Group stands by its social responsibilities.  
Our corporate culture combines the drive for success  
with openness, trust and transparency. We are well  
aware of our responsibility towards society. Socially  
sustainable human resource policies and compliance  
with social standards are based on various interna-  
tionally recognised guidelines. The BMW Group is  
committed to the OECD’s guidelines for multinational  
companies and the contents of the ICC Business  
Charter for Sustainable Development. Details of the  
contents of these guidelines and other relevant infor-  
Information on Cor-  
porate Governance  
Practices applied  
Beyond Mandatory  
Requirements  
Sustainable business management can only be  
effective, however, if it covers the entire value-added  
chain. That is why the BMW Group not only sets high  
standards for itself, but also expects its suppliers and  
partners to meet the ecological and social standards it  
sets and strives continually to improve the efficiency  
of processes, measures and activities. For instance,  
we consistently require our dealers and importers  
to comply with ecological and social standards on a  
contractual basis. Moreover, corresponding criteria  
are embedded throughout the entire purchasing  
system – including in enquiries to suppliers, in the  
sector-wide OEM Sustainability Questionnaire, in our  
purchasing terms and in our evaluation of suppli-  
ers – in order to promote sustainability aspects in  
line with the BMW Group Sustainability Standard.  
The BMW Group expects suppliers to ensure that the  
BMW Group’s sustainability criteria are also adhered  
to by their sub-suppliers. Purchasing terms and con-  
ditions and other information relating to purchasing  
can be found in the publicly available section of the  
Compliance in the  
BMW Group  
mation can be found at www.oecd.org and  
www.iccwbo.org.  
The Board of Management signed the United Nations  
Global Compact in 2001 and, in 2005, together with  
employee representatives, issued a “Joint Declaration  
on Human Rights and Working Conditions in the  
BMW Group”. This Joint Declaration was reconfirmed  
in 2010. With the signature of these documents, we  
have given our commitment to abide worldwide by  
internationally recognised human rights and with the  
fundamental working standards of the International  
Labour Organization (ILO). These include in particular  
freedom of employment, the principle of non-dis-  
crimination, freedom of association and the right to  
collective bargaining, the prohibition of child labour,  
appropriate remuneration, regulated working times  
and compliance with work and safety regulations.  
The complete text of the UN Global Compact and  
the recommendations of the ILO and other relevant  
BMW Group Partner Portal at  
https://b2b.bmw.com.  
We also work in close partnership with our suppliers  
and promote their commitment to sustainability.  
information can be found at  
www.unglobalcompact.org and  
www.ilo.org. The Joint Declaration on Human Rights  
and Working Conditions in the BMW Group can  
be found at  
www.bmwgroup.com under the menu items  
“
Downloads” and “Responsibility”.  
For the BMW Group, worldwide compliance of these  
fundamental principles and rights is self-evident.  
Since 2005 employees’ awareness of this issue has  
therefore been raised by means of regular internal  
communications and training on recent developments  
in this area. The “Compliance Contact” helpline  
and the BMW Group SpeakUP Line are available to  
employees wishing to raise queries or complaints  
relating to human rights issues. With effect from 2016  
,
human rights have been incorporated as an integral  
component of the BMW Group’s worldwide Compli-  
ance Management System, representing a further step  
in the systematic implementation of the UN Guiding  
Principles on Business and Human Rights.  
2
07  
COMPLIANCE IN THE  
BMW GROUP  
The BMW Group Compliance Committee reports  
regularly to the Board of Management on all compli-  
ance-related issues, including the progress made in  
refining the BMW Group Compliance Management  
System, details of investigations performed, known  
infringements of the law, sanctions imposed and  
correctiveꢀ/ꢀpreventative measures implemented. This  
ensures that the Board of Management is immediately  
notified of any cases of particular significance.  
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.  
BMW Group ꢃompliance Management System  
66  
This principle has been embedded in BMW Group’s  
internal rules of conduct for many years. In order to  
protect itself systematically against compliance-relat-  
ed and reputational risks, the Board of Management  
created a Compliance Committee several years ago,  
mandated to establish a worldwide Compliance  
Management System throughout the BMW Group.  
Supervisory Board BMWAG  
Annual  
Report  
board of ꢈanagement bꢈWAG  
Annual  
Report  
bꢈW Group Compꢊiance Committee  
bꢈW Group Compꢊiance Committee  
The BMW Group Compliance Committee comprises  
the heads of the following departments: Legal Affairs,  
Corporate and Governmental Affairs, Corporate Audit,  
Group Reporting, Organisational Development and  
Corporate Human Resources. It manages and moni-  
tors activities necessary to avoid non-compliance with  
the law. These activities include training, information  
and communication measures, compliance controls  
and following up cases of non-compliance.  
ꢅffice  
Annual  
Compliance  
Reporting  
ꢃompany-wide ꢃompliance  
ꢃetwork  
Compꢊiance Instruments and  
ꢈeasures of the bꢈW Group  
Compliance  
Risk Analysis  
Legal Compliance Code  
and Regulations  
Compliance  
Investigations  
and Controls  
Compliance  
Communication  
Compliance  
Reporting  
Compliance  
Training  
Compliance  
Contact and  
SpeakUP Line  
Compliance  
Governance and  
Processes  
The decisions taken by the BMW Group Compliance  
Committee are drafted in concept, and implement-  
ed operationally, by the BMW Group Compliance  
Committee Office. The BMW Group Compliance  
Committee Office comprises 13 employees and is  
allocated in organisational terms to the Chairman of  
the Board of Management.  
2
08  
Statement on  
Corporate  
Governance  
The Chairman of the BMW Group Compliance Com-  
mittee keeps the Audit Committee (which is part of the  
Supervisory Board) informed on the current status of  
compliance activities within the BMW Group, both on  
a regular and a case-by-case basis as the need arises.  
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 2016, explains the significance of legal  
compliance and provides an overview of the various  
areas relevant for the BMW Group. It is available both  
as a printed brochure and for download in German  
and English. In addition, translations into nine other  
languages are available in the BMW Group intranet.  
Compliance in the  
BMW Group  
The Board of Management keeps track of and analyses  
compliance-related developments and trends on the  
basis of the Group’s compliance reporting and input  
from the BMW Group Compliance Committee. Meas-  
ures to improve the Compliance Management System  
are initiated on the basis of identified requirements.  
In 2016, to strengthen local compliance manage-  
ment, local compliance functions were established  
at 69 BMW Group affiliated companies. Their activi-  
ties follow a standardised management process with  
clearly defined tasks and responsibilities.  
Managers in particular bear a high degree of respon-  
sibility and must set a good example with regard to  
preventing infringements. Managers throughout the  
BMW Group acknowledge this principle by signing  
a written declaration, in which they also undertake  
to 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 non-compliance with the  
law must be rigorously investigated.  
A coordinated set of instruments and measures is  
employed to ensure that the BMW Group, its repre-  
sentative bodies, its managers and staff act in a lawful  
manner. Particular emphasis is placed on compliance  
with antitrust legislation and the avoidance of corrup-  
tion risks. Compliance measures are supplemented  
by a whole range of internal policies, guidelines and  
instructions, which in part reflect applicable legisla-  
tion. The BMW Group Policy “Corruption Prevention”  
and the BMW Group Instruction “Corporate Hospi-  
tality and Gifts” deserve particular mention: these  
documents deal with lawful handling of gifts and  
benefits and define appropriate assessment criteria  
and approval procedures for specified actions. In 2016  
a new BMW Group Policy “Antitrust Compliance”,  
was introduced in 2016 to establish binding rules of  
conduct for all employees across the BMW Group to  
prevent unlawful restriction of competition.  
More than 32,500 managers and staff worldwide have  
received training in essential compliance matters  
since the introduction of the BMW Group Compli-  
ance Management System. The training material is  
available on an Internet-based training platform in  
German and English and includes a final test. Suc-  
cessful 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 training. In this  
way, the BMW Group ensures full training coverage  
for its managers in compliance matters.  
Compliance measures are determined and priori-  
tised on the basis of a group-wide compliance risk  
assessment covering all 340 organisational units and  
functions worldwide within the BMW Group. The  
assessment of compliance risks is updated annually.  
Measures are realised with the aid of a regionally  
structured compliance management team covering  
all parts of the BMW Group, which oversees a network  
of more than 210 Compliance Responsibles.  
In addition to this basic training, more in-depth  
training is also provided to certain groups of staff on  
specific compliance issues. Since 2013, employees  
have been trained related to an extended Antitrust  
law training, targeting employees who come into con-  
tact with antitrust-related issues as a result of their  
functions within sales and marketing, purchasing,  
production or development. Around 16,900 employees  
The various elements of the BMW Group Compliance  
Management System are shown in the diagram on the  
previous page and are applicable for all BMW Group  
organisational units worldwide. To the extent that  
additional compliance requirements apply to indi-  
vidual countries or specific lines of business, these  
are covered by supplementary compliance measures.  
have already completed this training. The relevant  
divisions also implemented and stepped up further  
antitrust compliance measures and processes in 2016  
to make employees who participate in meetings with  
competitors or work with suppliers or sales partners  
sufficiently aware of antitrust risks.  
2
09  
Additional compliance coaching has also been imple-  
mented for international sales and financial service  
locations in local markets. These multi-day classroom  
seminars strengthen the understanding of compliance  
in selected organisational units and enhance cooper-  
ation between the central BMW Group Compliance  
Committee Office and decentralised compliance  
offices. In 2016, market coaching was conducted in  
Italy, Belgium, Austria, China and Japan.  
Compliance Controls. Any necessary follow-up meas-  
ures are organised by the BMW Group Compliance  
Committee Office.  
It is essential that employees are aware of and comply  
with applicable legal regulations. The BMW Group  
does not tolerate violations of the law by its employees.  
Culpable violations of the law result in employment-  
contract sanctions and may involve personal liability  
consequences for the employee involved.  
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 non-employees for any questions  
regarding compliance.  
To avoid this, BMW Group employees are kept fully  
up-to-date with the instruments and measures used  
by the Compliance Management System via various  
internal channels. As of 2014, all new staff receive  
a welcome email underscoring the BMW Group’s  
special commitment to compliance when they join  
the company. The central means of communication  
is the Compliance website within the BMW Group’s  
intranet, where employees can find compliance-  
related information and access training materials  
in both German and English. The website contains a  
special service area where various practical tools are  
made available to employees to help them deal with  
typical compliance-related matters. Since mid-2015,  
BMW Group employees have also had access to an  
IT system, which helps them verify legal admissibility  
and approve and document benefits, especially in  
connection with corporate hospitality.  
Employees also have the opportunity to submit infor-  
mation – anonymously and confidentially – via the  
BMW Group SpeakUP Line about possible breaches  
of the law within the company. The BMW Group  
SpeakUP Line is available in a total of 34 languages  
and can be reached via local toll-free numbers in  
all countries in which BMW Group employees are  
engaged in activities.  
Compliance-related queries and concerns are  
documented 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.  
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  
evaluated with a view to identifying potential compli-  
ance risks. These procedures are particularly relevant  
for relations with sales partners and service providers,  
such as agencies and consultants. Depending on the  
results of the evaluation, appropriate measures – such  
as communication measures, training and possible  
monitoring – are implemented to manage compliance  
risks. The Business Relations Compliance programme  
has already been introduced in 37 organisational units  
since its launch and, over the coming years, will be  
rolled out successively throughout the BMW Group’s  
worldwide sales organisation. In 2016, the company  
also continued integrating compliance clauses to pro-  
tect contractual relationships into dealer and importer  
contracts. An IT system to verify customer integrity  
was developed and introduced in 20 markets under  
expanded anti-money-laundering measures.  
Through the group-wide reporting system, Com-  
pliance Responsibles throughout the BMW Group  
report on compliance-relevant issues to the Compli-  
ance Committee on a regular basis, and, if necessary,  
on an ad hoc basis. This includes reporting on the  
compliance status of the relevant organisational units,  
on identified legal risks and incidences of non-com-  
pliance, as well as on corrective or preventative  
measures implemented.  
Compliance with and implementation of the Legal  
Compliance Code are audited regularly by Corporate  
Audit and subjected to control checks by Corporate  
Security and the BMW Group Compliance Committee  
Office. As part of its regular activities, Corporate Audit  
carries out on-site audits. The BMW Group Compli-  
ance Committee also engages Corporate Audit to  
perform compliance-specific checks. In addition, three  
BMW Group Compliance Spot Checks, sample tests  
specifically designed to identify potential corruption  
risks, were carried out in 2016. Compliance control  
activities are coordinated by the BMW Group Panel  
2
10  
Statement on  
Corporate  
Governance  
The BMW Group is committed to respecting inter-  
nationally recognised human rights, in particular  
the UN Guiding Principles on Business and Human  
Rights, the ten principles of the UN Global Compact  
and the ILO Core Labour Conventions. The company  
focuses on topics and areas of activity where it can  
leverage its influence as a commercial enterprise.  
Reportable securities transactions  
(“Managers’ transactions”)  
Pursuant to Article 19 of the EU Market Abuse Regu-  
lation (MAR), members of the Board of Management  
and the Supervisory Board and any persons closely  
related to those members are required to give notice  
to BMW AG and the Federal Agency for the Super-  
vision of Financial Services (BaFin) of transactions  
with equity or debt instruments of BMWAG or with  
related derivatives or other financial instruments, if  
the total sum of such transactions reaches or exceeds  
an amount of €ꢀ5,000 during any given calendar year.  
BMWAG publishes such information without delay  
and communicates it to the Companies Register  
for archiving. Notice of publication is issued to the  
Federal Agency for the Supervision of Financial Ser-  
vices. Securities transactions notified to BMW AG  
during the financial year 2016 are also reported on  
the Company’s website.  
Compliance in the  
BMW Group  
The BMW Group underlined its position back in 2005  
with the Joint Declaration on Human Rights and  
Working Conditions at the BMW Group. This was  
followed by systematic introduction and upgrading of  
measures to protect human rights. Henceforth, these  
already established measures were integrated into the  
BMW Group’s group-wide Compliance Management  
System in 2016.  
Compliance is also an important factor in safeguarding  
the future of the BMW Group workforce. With this  
in mind, the Board of Management and the national  
and international employee representative bodies  
of the BMW Group have agreed on a binding set of  
Joint Principles for Lawful Conduct. In doing so, all  
parties involved made a commitment to the principles  
contained in the BMW Group Legal Compliance Code  
and to trustful cooperation in all matters relating to  
compliance. Employee representatives are therefore  
regularly involved in the process of refining compli-  
ance measures within the BMW Group.  
Shareholdings of members of the Board of  
Management and the Supervisory Board  
The members of the Supervisory Board of BMWAG  
hold in total 27.99% of the Company’s shares of com-  
mon and preferred stock (2015: 43.00%), of which  
16.25 % (2015: 31.26 %) relates to Stefan Quandt,  
Germany, and 11.73% (2015: 26.74%) to Susanne  
Klatten, Germany. The change from the previous  
year is almost entirely due to shares held by Johanna  
Quandt GmbH & Co. KG für Automobilwerte no  
longer being attributed to Stefan Quandt and Susanne  
Klatten following the dissolution of the community of  
heirs. The shareholdings of the members of the Board  
In the interest of investor protection and to ensure  
that the BMW Group complies with regulations  
relating to potential insider information, the Board of  
Management appointed an Ad-hoc Committee back in  
1
994, consisting of representatives of various specialist  
of Management total less than 1% of all issued shares.  
departments, whose members examine the relevance  
of issues for ad-hoc disclosure purposes. All persons  
working on behalf of the company who have access  
to insider information in accordance with existing  
rules have been, and continue to be, included in a  
corresponding, regularly updated list and informed  
of the duties arising from insider rules.  
2
11  
Share-based compensation programmes for  
employees and members of the Board of  
Management  
Under the terms of the Employee Share Programme,  
in 2016 employees were entitled to acquire packages  
of between four and eleven shares of non-voting pre-  
ferred stock with a discount of €ꢀ22.72 (2015: €ꢀ20.83)  
per share compared to the market price (average  
closing price in Xetra trading during the period from  
4 to 9 November 2016: €ꢀ66.86). All employees of  
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  
programme. Employees were required to have been  
in an uninterrupted 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 Employee Share Programme  
are subject to a blocking period of four years, starting  
Three share-based 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  
share-based remuneration programme for Board of  
Management members, and a share-based remuner-  
ation programme for senior heads of department  
(
relating in both cases to shares of common stock).  
The share-based remuneration programme for Board  
of Management members is described in detail in  
the Compensation Report (see also the “Share-based  
remuneration” section in the Compensation Report  
and note 39 to the Group Financial Statements).  
see  
note 39  
from January of the year in which the employees  
acquired the shares. A total of 305 029 2015 309 944)  
shares of preferred stock were acquired by employees  
under the programme in 2016 305 000 2015 309 860  
1
,
(
:
,
The share-based remuneration programme for qual-  
ifying heads of department, introduced with effect  
for financial years beginning after 1 January 2012, is  
closely based on the programme for Board of Manage-  
ment members and is aimed at rewarding a long-term,  
entrepreneurial approach to running the business on  
a sustainable basis.  
;
,
(
:
,
)
of these shares were drawn from Authorised Capital  
2014, the remainder were bought back via the stock  
exchange. Every year the Board of Management of  
BMWAG decides whether the scheme is to be con-  
see tinued. Further information is provided in notes 29  
notes  
9 and 39  
and 39 to the Group Financial Statements.  
2
Under the terms of the programme, participants give  
a commitment to invest an amount equivalent to 20  
%
of their performance-based bonus in BMW common  
stock and to hold the shares so acquired for a min-  
imum of four years. In return for this commitment,  
BMWAG pays 100% of the investment amount as a net  
subsidy. Once the four-year holding period require-  
ment has been fulfilled, the participants receive – for  
each three common stock shares held and at the  
Company’s option – one further share of common  
stock or the equivalent amount in cash.  
2
12  
Statement on  
Corporate  
Governance  
COMPENSATION REPORT  
positive and negative developments and that the pack-  
age as a whole encourages a long-term approach to  
business performance. Targets and other parameters  
may not be changed retrospectively. The Supervisory  
Board reviews the appropriateness of the compensa-  
tion system annually. In preparation, the Personnel  
Committee also consults remuneration studies. The  
Supervisory Board reviews the appropriateness of the  
compensation system in horizontal terms by compar-  
ing compensation paid by other DAX companies and  
in vertical terms by comparing board compensation  
with the salaries of executive managers and with the  
average salaries of employees of BMWAG based in  
Germany, in both cases with regard to their various  
levels and to changes over time. Recommendations  
made by an independent external remuneration  
expert and suggestions made by investors and analysts  
are also considered in the consultative process.  
Compensation  
Report  
The following section describes the principles govern-  
ing the compensation of the Board of Management  
and the stipulations set out in the statutes relating  
to the compensation of the Supervisory Board. In  
addition to explaining the compensation system, the  
components of compensation are also disclosed in  
absolute figures. Furthermore, the compensation  
of each member of the Board of Management and  
the Supervisory Board for the financial year 2016 is  
disclosed per individual member and analysed in its  
component parts.  
1
. board of ꢈanagement compensation  
ꢆesponsiꢋiꢊities  
ꢃompensation system, compensation components  
The compensation of the Board of Management com-  
prises both fixed and variable remuneration as well as  
a share-based component. Retirement and surviving  
dependants’ benefit entitlements are also in place.  
The full Supervisory Board is responsible for deter-  
mining and regularly reviewing Board of Management  
compensation. The necessary preparation for these  
tasks is undertaken by the Supervisory Board’s Per-  
sonnel Committee.  
ꢉixed remuneration  
ꢌrincipꢊes of compensation  
Fixed remuneration consists of a base salary (paid  
monthly) and other remuneration elements, which  
comprise mainly the use of company and leased cars  
as well as the payment of insurance premiums, con-  
tributions towards security systems and an annual  
medical check-up. Members of the Board of Manage-  
ment are also entitled to purchase vehicles and other  
services of the BMW Group at conditions that also  
apply in each relevant case for employees.  
The compensation system for the Board of Man-  
agement at BMW AG is designed to encourage a  
management approach focused on the sustainable  
development of the BMW Group. One further prin-  
ciple applied when designing remuneration systems  
at BMW is that of consistency at different levels. This  
means that compensation systems for the Board of  
Management, senior management and employees  
of BMWAG are composed of similar elements. The  
Supervisory Board carries out regular checks to ensure  
that all Board of Management compensation compo-  
nents are appropriate, both individually and in total,  
and do not encourage the Board of Management to  
take inappropriate risks on behalf of the BMW Group.  
At the same time, the compensation model used for  
the Board of Management needs to be sufficiently  
attractive for highly qualified executives in a compet-  
itive environment.  
The basic remuneration of members of the Board of  
Management was unchanged from the previous year,  
namely €ꢀ0.75 million p.a. for a board member during  
the first term of office, €ꢀ0.9 million p.a. for a board  
member from the second term of office or fourth  
year of office onwards and €ꢀ1.5 million p. a. for the  
Chairman of the Board of Management.  
Variaꢋꢊe remuneration  
The variable remuneration of Board of Management  
members comprises variable cash remuneration on  
the one hand and a share-based remuneration com-  
ponent on the other.  
The compensation of members of the Board of Man-  
agement is determined by the full Supervisory Board  
on the basis of performance criteria and after taking  
into account any remuneration received from Group  
companies. The principal performance criteria are the  
nature of the tasks allocated to each member of the  
Board of Management, the economic situation and the  
performance and future prospects of the BMW Group.  
The Supervisory Board sets ambitious and relevant  
parameters as the basis for variable compensation.  
It also ensures that variable components based on  
multi-year assessment criteria take account of both  
Variable cash remuneration, in particular bonuses  
Variable cash remuneration consists of a cash bonus  
and share-based remuneration component equiva-  
lent to 20% of a board member’s total bonus after  
taxes, which the board member is required to invest  
in BMWAG common stock. Taxes and social insur-  
ance relating to the share-based remuneration are  
also borne by the Company. In justified cases, the  
2
13  
Supervisory Board also has the option of paying an  
additional special bonus.  
at safeguarding the future viability of the business  
to the extent not included directly in the basis of  
measurement. Performance factor criteria include  
innovation (economic and ecological, e.ꢀg. reduction  
of carbon emissions), customer focus, ability to adapt,  
leadership accomplishments, shaping corporate cul-  
ture and promoting integrity, 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 cor-  
porate earnings-related bonus are fixed in advance for  
a period of three financial years, during which time  
they may not be amended retrospectively.  
The bonus comprises two components, each equally  
weighted, namely a corporate earnings-related bonus  
and a personal performance-related 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 or fourth year of office onwards. The  
equivalent figure for the Chairman of the Board of  
Management is €ꢀ3 million p.a. The bonus figure is  
capped for all Board of Management members at 200  
of the relevant target bonus.  
%
The corporate earnings-related bonus is based on the  
BMW Group’s net profit and post-tax return on sales  
Share-ꢋased remuneration programme  
The compensation system includes a share-based  
remuneration programme, in which the level of share-  
based remuneration is based on the amount of bonus  
paid. The system is aimed at creating further long-term  
incentives to encourage sustainable governance.  
(
which are combined in a single earnings factor) and  
the level of the dividend (common stock). The corpo-  
rate earnings-related bonus is derived by multiplying  
the target amount fixed for each member of the Board  
of Management by the earnings factor and by the  
dividend factor. In exceptional circumstances, for  
instance when there have been major acquisitions or  
disposals, the Supervisory Board may adjust the level  
of the corporate earnings-related bonus.  
This programme envisages a share-based remuner-  
ation component equivalent to 20% of the board  
member’s total bonus after taxes, which the board  
member is required to invest in BMWAG common  
stock. Taxes and social insurance relating to the share-  
based remuneration component are borne by the  
Company. As a general rule, the shares must be held  
for a minimum of four years. As part of a matching  
plan, at the end of the holding period the Board of  
Management members will normally receive from  
the Company either one additional share of common  
stock or an equivalent cash amount for three shares  
of common stock held, to be decided at the discretion  
of the Company (share-based remuneration compo-  
nentꢀ/ꢀmatching component). Special rules apply in the  
case of death or invalidity of a Board of Management  
member or early termination of the contractual rela-  
tionship before fulfilment of the holding period.  
An earnings and dividend factor of 1.00 would give  
rise to an earnings-based bonus of €ꢀ0.75 million for  
the financial year 2016 for a member of the Board  
of Management during the first period of office and  
one of €ꢀ0.875 million during the second term of  
appointment or from the fourth year in office. The  
equivalent bonus for the Chairman of the Board of  
Management is €ꢀ1  
.5 million. The earnings factor is  
1
.00 in the event of a Group net profit of €ꢀ3.1 billion  
and a post-tax return on sales of 5.6%. The dividend  
factor is 1.00 in the event that the dividend paid on  
the shares of common stock is between 101 and 110  
cents. If the Group net profit were below €ꢀ2 billion,  
or if the post-tax return on sales were less than 2%,  
the earnings factor for the financial year 2016 would  
be zero. In this case, no corporate earnings-related  
bonus would be paid.  
Retirement and surviving dependants’ benefits  
The provision of retirement and surviving depend-  
ants’ benefits for Board of Management members  
was changed to a defined contribution system with a  
guaranteed minimum return with effect from 1 Janu-  
ary 2010. However, given the fact that board members  
The personal performance-related bonus is derived by  
multiplying the target amount set for each member  
of the Board of Management by a performance factor.  
The Supervisory Board sets the performance factor  
on the basis of its assessment of the contribution  
of the relevant Board of Management member to  
sustainable and long-term oriented business devel-  
opment. In setting the factor, equal consideration is  
given to personal performance and decisions taken  
in previous planning periods, key decisions affecting  
the future development of the business and the effec-  
tiveness of measures taken in response to changing  
external conditions as well as other activities aimed  
appointed for the first time prior to 1 January 2010 for  
the most part had a legal right to receive the benefits  
already promised to them, these board members were  
given the option to choose between the previous sys-  
tem and the new one.  
In the event of the termination of mandate, Board  
of Management members appointed for the first  
time prior to  
1 January 2010 are entitled to receive  
certain defined benefits in accordance with the rules  
of an older (defined benefit) pension plan. Under the  
2
14  
Statement on  
Corporate  
Governance  
defined benefit plan, the entitlement to retirement  
benefits arises at the earliest on reaching the age of  
full year of service on the board (up to a maximum  
of 15 years). Pension payments are adjusted based  
on the rules applicable for the adjustment of civil  
servants’ pensions, i.ꢀe. the pensions of members of  
the Board of Management are adjusted when the civil  
servants remuneration level B6 (excluding allowances)  
is increased by more than 5% or in accordance with  
the Company Pension Act.  
6
0
or in case of invalidity. The amount of the pen-  
Compensation  
Report  
sion comprises a basic monthly amount of €ꢀ10 000  
,
plus a fixed amount. The fixed amount is made up  
of approximately €ꢀ75 for each year of service in the  
Company before becoming a member of the Board of  
Management plus between €ꢀ400 and €ꢀ600 for each  
ꢄverview of compensation system and  
compensation components  
Component  
Parameter / measurement base  
BASIꢃ ꢃꢄMꢀEꢁSAꢅIꢄꢁ ꢀ.ꢇA.  
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  
VAꢆIAblꢀ CꢅꢈꢌꢀꢃSAꢁIꢅꢃ  
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  
(
corresponds to 50 % of target bonus if target is 100 % achieved)  
Formula: 50 % of target bonus x earnings factor x dividend factor (common stock)  
The earnings factor is derived from the Group net profit and the Group post-tax return  
on sales  
b) Performance-related bonus  
corresponds to 50 % of target bonus if target is 100 % achieved)  
—
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  
(
—
—
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  
2
accomplishments, corporate culture and promoting integrity, 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  
b) Share-based remuneration component  
—
—
—
Requirement for Board of Management members to each invest an amount equivalent to  
0 % of their total bonus (after tax) in BMW AG common stock  
2
Earmarked cash remuneration equivalent to the amount required to be invested in  
BMW AG shares, plus taxes and social insurance contributions  
Once the four-year holding period requirement is fulfilled, Board of Management mem-  
bers receive for each three common stock shares held either – at the Company’s option –  
one further share of common stock or the equivalent amount in cash  
(
matching component)  
ꢅꢁꢇꢀꢆ CꢅꢈꢌꢀꢃSAꢁIꢅꢃ  
Contractual agreement, main points: use of Company cars, insurance premiums,  
contributions towards security systems, medical check-up  
2
15  
ꢆꢀꢁIꢆꢀꢈꢀꢃꢁ Aꢃꢄ SꢂꢆVIVIꢃG ꢄꢀꢌꢀꢃꢄAꢃꢁS’ bꢀꢃꢀꢉIꢁS  
Model  
Principal features  
a) Defined benefits  
Pension of €120,000 p. a. plus fixed amounts based on length of Company  
and board service  
(
only applies to board members appointed for the first time before  
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
(
b) Defined contribution system with guaranteed minimum rate of return  
Pension based on amounts credited to individual savings accounts for contributions paid  
and interest earned, various forms of disbursement  
Pension contributions p. a.:  
Member of the Board of Management: €350,000 – €400,000  
Chairman of the Board of Management: €500,000  
ꢆꢀꢈꢂꢃꢀꢆAꢁIꢅꢃ CAꢌS (ꢈAꢍIꢈꢂꢈ ꢆꢀꢈꢂꢃꢀꢆAꢁIꢅꢃ)  
Share-based compensation programme  
Cash compen-  
sation for share  
acquisition  
Monetary value  
of matching  
component  
Possible  
special bonus  
in € p. a.  
Bonus  
Total*  
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.  
If a mandate is terminated, the new defined contribu-  
tion system provides entitlements which can be paid  
either (a) in case of death or invalidity as a one-off  
amount or in instalments, or (b) upon retirement –  
depending on the wish of the ex-board member con-  
cerned – in the form of a lifelong monthly pension,  
as a one-off amount, in instalments, or in a combined  
form (for instance a combination of a one-off payment  
and a proportionately reduced lifelong monthly pen-  
sion). Former members of the Board of Management  
are entitled to receive the retirement benefit at the  
earliest upon reaching the age of 60, or in the case  
of entitlements awarded after 1 January 2012, upon  
reaching the age of 62.  
the number of annual contributions possible up to  
the age of sixty (up to a maximum of 10). In addition,  
following the death of a retired board member who  
has elected to receive a lifelong pension, 60% of that  
amount is paid as a lifelong widow’s pension. Pensions  
are increased annually by at least 1%.  
Depending on the length of membership in the Board  
of Management and previous activities, the annual  
contribution to be paid amounts to between €ꢀ350  
and €ꢀ400,000 for each member of the Board of Man-  
agement and €ꢀ500 000 for the Chairman of the Board  
,000  
,
of Management. The guaranteed minimum rate of  
return p.a. corresponds to the maximum interest rate  
used to calculate insurance reserves for life insurance  
policies (guaranteed interest on life insurance policies).  
When granting pension entitlements, the Supervisory  
Board considers the targeted level of pension provision  
in each case as well as the resulting expense for the  
BMW Group.  
The amount of the benefits to be paid is determined  
on the basis of the amount accrued in each board  
member’s individual pension savings account. The  
amount on this account arises from annual contribu-  
tions paid in, plus interest earned depending on the  
type of investment.  
Contributions falling due under the defined con-  
tribution model are paid into an external fund in  
conjunction with a trust model that is also used to  
fund pension obligations to employees.  
If a member of the Board of Management with a  
vested entitlement dies prior to the commencement  
of benefit payments, a surviving spouse or otherwise  
surviving children – in the latter case depending on  
their age and education – are entitled to receive ben-  
efits as surviving dependants. In case of invalidity or  
death, the minimum benefit promised is based on  
Income earned on an employed or a self-employed  
basis up to the age of 63 may be offset against pension  
entitlements. In addition, certain circumstances have  
2
16  
Statement on  
Corporate  
Governance  
been specified, in the event of which the Company no  
longer has any obligation to pay benefits. Transitional  
payments are no longer provided.  
contractual period. The Company will make a final  
pension contribution of €ꢀ0.167 million on behalf of  
Dr Eichiner for the financial year 2017.  
Compensation  
Report  
Board of Management members who retire immedi-  
ately after their service on the board and who draw a  
retirement pension are entitled to purchase vehicles  
and BMW Group services at conditions that also apply  
for Company pensioners and to lease BMW Group  
vehicles in accordance with the guidelines applicable  
to senior heads of departments. Retired Chairmen  
of the Board of Management are entitled to use a  
BMW Group vehicle as a company car on a similar  
basis to senior heads of departments, and depend-  
ing on availability and against payment, use BMW  
chauffeur services.  
No commitments or agreements exist to pay com-  
pensation for early termination of a board member’s  
mandate in the event of a change of control or a take-  
over offer. No members of the Board of Management  
received any payments or benefits from third parties  
in 2016 on account of their activities as members of  
the Board of Management.  
ꢆemuneration caps  
The Supervisory Board has stipulated caps for variable  
remuneration components and for the remuneration  
of Board of Management members in total. The caps  
are shown in the table “Overview of compensation  
system and compensation components”.  
ꢅermination benefits on premature termination of  
board activities, benefits paid by third parties  
In conjunction with the consensual early termina-  
tion of Dr Eichiner’s Board of Management mandate  
with effect from the expiry of 31 December 2016, the  
Company also reached an agreement with Dr Eichiner  
concerning an amendment to his service contract,  
which ends on 31 May 2017. For the period from  
the termination of his board mandate through to  
ꢁotaꢊ compensation of the board of ꢈanagement for  
the financial year 2016 (2015)  
The total compensation of the current members  
of the Board of Management of BMW AG for the  
financial year 2016 amounted to €ꢀ37.6 million (2015:  
€ꢀ35.5 million), of which €ꢀ7.8 million (2015: €ꢀ7.7 mil-  
lion) relates to fixed components (including other  
remuneration). Variable components amounted to  
€ꢀ29.0 million (2015: €ꢀ27.1 million) and the share-  
based remuneration component to €ꢀ0.8 million (2015:  
€ꢀ0.7 million).  
3
1 May 2017, he continues to receive fixed compen-  
sation of €ꢀ0.38 million. A payment of €ꢀ0.75 million,  
payable in 2017, was agreed to settle all other com-  
pensation entitlements for the remainder of the  
2
016  
2015  
in € million  
Amount  
Proportion in %  
Amount  
Proportion in %  
Fixed compensation  
7.8  
29.0  
0.8  
20.8  
77.1  
2.1  
7.7  
27.1  
0.7  
21.7  
76.3  
Variable cash compensation  
Share-based compensation component*  
Total compensation  
2.0  
37.6  
100.0  
35.5  
100.0  
*
Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in  
each case when the requirement to invest in BMW AG common stock has been fulfilled.  
2
17  
Compensation of the individuaꢊ memꢋers  
of the board of ꢈanagement for the  
financial year 2016 (2015)  
Total value of  
benefits  
Share-based  
Variable cash  
compensation  
compensation component  
(matching component)  
Compensation  
Total  
allocated in  
financial year  
1
2
Fixed compensation  
in € or  
Basic  
Other  
number of matching shares  
compensation compensation  
Total  
Number Monetary value  
Harald Krüger  
Milagros Caiña Carreiro-Andree  
Klaus Draeger3  
Markus Duesmann4  
Friedrich Eichiner5  
Klaus Fröhlich  
Ian Robertson  
Peter Schwarzenbauer  
Oliver Zipse  
1,500,000  
1,280,645)  
900,000  
18,719  
1,518,719  
5,947,178  
1,752  
(1,478)  
1,097  
(1,014)  
823  
161,622  
7,627,519  
7,545,122  
(
(21,809) (1,302,454) (4,786,438)  
(130,079) (6,218,971) (6,088,892)  
101,198 4,544,873 4,443,675  
(89,242) (4,047,547) (3,958,305)  
75,922 3,382,272 3,404,174  
(96,107) (4,314,767) (4,218,660)  
74,461  
(74,717)  
29,440  
(24,797)  
13,929  
(–)  
974,461  
(899,717) (3,058,588)  
704,440 2,601,910  
(924,797) (3,293,863)  
3,469,214  
(
825,000)  
675,000  
900,000)  
187,500  
(
(1,092)  
288  
201,429  
(–)  
743,403  
(–)  
21,629  
(–)  
966,461  
(–)  
944,832  
(–)  
(
–)  
(–)  
900,000  
900,000)  
750,000  
750,000)  
900,000  
900,000)  
862,500  
750,000)  
750,000  
475,806)  
25,413  
(23,982)  
57,311  
(71,792)  
18,735  
(14,501)  
32,689  
(31,101)  
114,694  
(44,089)  
385,391  
925,413  
3,469,214  
1,097  
(1,092)  
876  
101,198  
4,495,825  
4,492,451  
(
(
(
(
(
(923,982) (3,293,863)  
807,311 2,973,589  
(821,792) (2,823,290)  
918,735 3,469,214  
(914,501) (3,293,863)  
895,189 3,345,313  
(781,101) (2,823,311)  
864,694 2,973,589  
(96,107) (4,313,952) (4,217,845)  
80,811 3,861,711 3,780,900  
(76,657) (3,721,739) (3,645,082)  
101,198 4,489,147 4,483,005  
(96,107) (4,304,471) (4,208,364)  
97,601 4,338,103 4,240,502  
(82,377) (3,686,789) (3,604,412)  
80,811 3,919,094 3,838,283  
(871)  
1,097  
(1,092)  
1,058  
(936)  
876  
(519,895) (1,791,119)  
(457)  
8,964  
(8,032)  
(48,602) (2,359,616) (2,311,014)  
821,990 37,625,005 37,172,944  
(715,278) (35,472,904) (34,757,626)  
Total6  
7,425,000  
7,810,391 28,992,624  
(
7,333,870)  
(318,440) (7,652,310) (27,105,316)  
1
Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the  
requirement to invest in BMW AG common stock has been fulfilled. See note 39 to the Group Financial Statements for a description of the accounting treatment of the share-based compensation component.  
Value of benefits granted for work performed on the Board of Management during the financial year 2016 plus the amount falling due for payment in conjunction with a share-based remuneration component  
granted in a previous year and for which the holding period requirements were met.  
Member of the Board of Management until 30 September 2016.  
Member of the Board of Management since 1 October 2016.  
2
3
4
5
6
Member of the Board of Management until 31 December 2016.  
Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.  
In addition, an expense of €ꢀ2.8 million (2015: €ꢀ2.6 mil-  
lion) was recognised in the financial year 2016 for  
current members of the Board of Management for  
the period after the end of their service relationship,  
which relates to the expense for allocations to pension  
provisions.  
Total benefits paid to former members of the Board of  
Management and their surviving dependants for the  
financial year 2016 amounted to €ꢀ6.5 million (2015:  
ꢀ8.0 million).  
€
Pension obligations to former members of the Board of  
Management and their surviving dependants are cov-  
ered by pension provisions amounting to €ꢀ86.4 million  
2015: €ꢀ71.8 million), recognised in accordance with  
IAS 19.  
(
2
18  
Statement on  
Corporate  
Governance  
Share-ꢋased component of the individuaꢊ memꢋers  
of the board of ꢈanagement for the  
financial year 2016 (2015)  
Compensation  
Report  
Provision at  
31.12. 2016 in  
accordance with  
HGB and IFRS  
Expense in 2016  
in accordance with  
HGB and IFRS  
1
in €  
Harald Krüger  
279,932  
557,844  
(369,498)  
284,247  
(268,970)  
465,494  
(497,690)  
2,130  
(
(
166,581)  
15,276  
Milagros Caiña Carreiro-Andree  
Klaus Draeger2  
Markus Duesmann3  
Friedrich Eichiner4  
Klaus Fröhlich  
Ian Robertson  
Peter Schwarzenbauer  
Oliver Zipse  
109,760)  
102,338  
(
90,275)  
2,130  
(
–)  
(–)  
127,176  
133,415)  
76,878  
489,900  
(497,259)  
111,253  
(34,375)  
435,753  
(491,185)  
196,362  
(100,747)  
71,285  
(
(
(
34,245)  
68,865  
224,354)  
95,615  
(
59,311)  
61,370  
(
9,915)  
829,579  
1,106,057)  
(9,915)  
Total5  
2,614,266  
(2,959,655)  
(
1
Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2016 (88.75 €)  
fair value at reporting date).  
Member of the Board of Management until 30 September 2016.  
Member of the Board of Management since 1 October 2016.  
Member of the Board of Management until 31 December 2016.  
(
2
3
4
5
Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.  
2
19  
ꢌension entitꢊements  
Present value of  
pension obliga-  
tions (defined  
benefit plans),  
in accordance  
with IFRS  
Present value of  
pension obliga-  
tions (defined  
benefit plans),  
in accordance  
with HGB  
Service cost in  
accordance with  
IFRS for the  
Service cost in  
accordance with  
HGB for the  
5 5  
financial year 2016 financial year 2016  
6
6
in €  
Harald Krüger  
507,444  
175,287)  
358,490  
360,767)  
87,500  
510,811  
(358,331)  
360,785  
(364,656)  
87,500  
4,764,941  
(3,993,819)  
1,879,851  
(1,427,599)  
622,236  
4,763,838  
(3,992,702)  
1,879,263  
(1,427,072)  
620,307  
(
(
Milagros Caiña Carreiro-Andree  
Markus Duesmann1  
Friedrich Eichiner2  
Klaus Fröhlich  
(
–)  
(–)  
(–)  
(–)  
189,754  
201,018)  
354,365  
350,000)  
424,411  
448,139)  
357,203  
360,305)  
355,045  
221,667)  
407,706  
(408,960)  
356,743  
(350,000)  
408,564  
(411,555)  
359,548  
(364,312)  
357,410  
(221,667)  
2,849,067  
(2,888,441)  
6,856,658  
(5,465,539)  
1,935,142  
(1,510,725)  
4,469,471  
(3,279,690)  
1,481,134  
(1,081,408)  
1,621,507  
(1,188,313)  
23,630,940  
(23,198,892)  
5,622,284  
(5,163,692)  
1,935,142  
(1,510,706)  
3,502,860  
(2,968,379)  
1,480,940  
(1,081,155)  
1,620,978  
(1,187,721)  
21,425,612  
(22,343,033)  
(
(
(
(
(
Ian Robertson  
Peter Schwarzenbauer  
Oliver Zipse  
Total3  
2,634,212  
(
2,301,249)  
Klaus Draeger4  
174,793  
407,706  
7,864,591  
5,649,230  
(
184,066)  
(408,960)  
(5,251,799)  
(5,011,606)  
1
Member of the Board of Management since 1 October 2016.  
Member of the Board of Management until 31 December 2016.  
Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.  
Member of the Board of Management until 30 September 2016.  
2
3
4
5
Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes  
present value of the defined benefit obligation).  
(
6
Based on a legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 October 2010 were given the option of choosing between the  
previous defined benefit model and the new defined contribution model.  
2
20  
Statement on  
Corporate  
Governance  
2. Supervisory Board compensation  
With this combination of fixed compensation ele-  
ments and a Company performance-related com-  
pensation component oriented toward sustainable  
growth, the compensation structure in place for  
BMWAG’s Supervisory Board complies with the rec-  
ommendation on supervisory board compensation  
contained in section 5.4.6 paragraph 2 sentence 2 of  
the German Corporate Governance Code (version  
dated 5 May 2015).  
Responsibilities, regulation pursuant to  
Articꢊes of Incorporation  
Compensation  
Report  
The compensation of the Supervisory Board is specified  
either by a resolution of the shareholders at the Annu-  
al General Meeting or in the Articles of Incorporation.  
The compensation regulation valid for the financial  
year under report was resolved by shareholders at the  
Annual General Meeting on 14 May 2013 and is set  
out in Article 15 of BMWAG’s Articles of Incorpo-  
ration, which can be viewed and/ꢀor downloaded at  
www.bmwgroup.com/ir under the menu items “Facts about  
the BMW Group” and “Corporate Governance”.  
The German Corporate Governance Code also recom-  
mends in section 5.4.6 paragraph 1 sentence 2 that  
the exercising of chair and deputy chair positions in  
the Supervisory Board as well the chair and member-  
ship of committees should also be considered when  
determining the level of compensation.  
ꢃompensation principles, compensation components  
The Supervisory Board of BMWAG receives a fixed  
compensation component as well as a Company per-  
formance-related compensation component, which is  
oriented toward sustainable growth and based on a  
multi-year assessment. The Company performance-  
related component is based on average earnings per  
share of common stock for the remuneration year and  
the two preceding financial years.  
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 amount and each member of a committee receives  
one-and-a-half times the amount of the remuneration  
of a Supervisory Board member. If a member of the  
Supervisory Board exercises more than one of the  
functions referred to above, the compensation is  
measured only on the basis of the function that is  
remunerated with the highest amount.  
The fixed and performance-related components in  
combination are intended to ensure that the compen-  
sation of Supervisory Board members is appropriate  
in relation to the tasks of Supervisory Board members  
and the Company’s financial condition and also takes  
account of business performance over several years.  
In accordance with the Articles of Incorporation, each  
member of BMWAG’s Supervisory Board receives, in  
addition to the reimbursement of reasonable expens-  
es, a fixed amount of €ꢀ70,000 (payable at the end of  
the year) as well as a Company performance-related  
In addition, each member of the Supervisory Board  
receives an attendance fee of €ꢀ2,000 for each full  
meeting of the Supervisory Board (Plenum) which  
the member has attended (payable at the end of the  
financial year). Attendance of more than one meeting  
on the same day is not remunerated separately.  
compensation of €ꢀ170 for each full €ꢀ0  
the average amount of (undiluted) earnings per share  
EPS) of common stock reported in the Group Finan-  
.01 by which  
(
cial Statements for the remuneration year and the two  
preceding financial years exceed a minimum amount  
of €ꢀ2.00 (payable after the Annual General Meeting  
held in the following year). An upper limit correspond-  
ing to twice the amount of the fixed compensation  
is in place for the Company performance-related  
compensation. The limit for a member of the Supervi-  
sory Board with no additional compensation-relevant  
function is therefore set at €ꢀ140,000.  
The Company also reimburses to each member of  
the Supervisory Board reasonable expenses and any  
value-added tax arising on the member’s remunera-  
tion. The amounts disclosed below are net amounts.  
For performance of his duties, the Chairman of the  
Supervisory Board has the use of an office with admin-  
istrative support, as well as the BMW car service.  
2
21  
ꢅotal compensation of the Supervisory Board for the  
016 financial year  
€
ꢀ5  
.
4
million (2015: €ꢀ5  
.
1
million). This amount includes  
million (2015: €ꢀ2 million)  
2
fixed compensation of €ꢀ2  
.
0
.0  
In accordance with Article 15 of the Articles of Incor-  
poration, the compensation of the Supervisory Board  
for activities during the financial year 2016 totalled  
and variable compensation of €ꢀ3.4 million (2015:  
€ꢀ3.1 million).  
2
016  
2015  
Amount  
in € million  
Amount  
Proportion in %  
Proportion in %  
Fixed compensation  
Variable compensation  
Total compensation  
2.0  
3.4  
5.4  
37.0  
63.0  
2.0  
3.1  
5.1  
39.2  
60.8  
100.0  
100.0  
Supervisory Board members did not receive any fur-  
ther compensation or benefits from the BMW Group  
for advisory and/ꢀor agency services personally ren-  
dered.  
2
22  
Statement on  
Corporate  
ꢃompensation of the individual members of the Supervisory Board for the financial year 2016 (2015)  
Governance  
Compensation  
Report  
Fixed  
compensation  
Variable  
compensation  
in €  
Attendance fee  
Total  
Responsibility  
Statement by the  
Company’s Legal  
Representatives  
Norbert Reithofer (Chairman)  
210,000  
10,000  
(8,000)  
10,000  
(10,000)  
10,000  
(10,000)  
10,000  
(10,000)  
8,000  
390,660  
(223,986)  
260,440  
(233,920)  
260,440  
(233,920)  
260,440  
(233,920)  
260,440  
(233,920)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(74,662)  
610,660  
(366,041)  
410,440  
(383,920)  
410,440  
(383,920)  
410,440  
(383,920)  
408,440  
(377,920)  
210,220  
(196,960)  
208,220  
(196,960)  
210,220  
(196,960)  
208,220  
(196,960)  
210,220  
(196,960)  
210,220  
(196,960)  
210,220  
(196,960)  
208,220  
(196,960)  
210,220  
(194,960)  
210,220  
(196,960)  
210,220  
(127,347)  
210,220  
(196,960)  
208,220  
(196,960)  
208,220  
(194,960)  
210,220  
(196,960)  
5,393,720  
(5,053,009)  
(
(
(
(
(
134,055)  
140,000  
140,000)  
140,000  
140,000)  
140,000  
140,000)  
140,000  
140,000)  
70,000  
Manfred Schoch (Deputy Chairman)1  
Stefan Quandt (Deputy Chairman)  
Stefan Schmid (Deputy Chairman)1  
Karl-Ludwig Kley (Deputy Chairman)  
Christiane Benner1  
Franz Haniel  
(4,000)  
10,000  
(10,000)  
8,000  
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
44,685)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
70,000  
70,000)  
(10,000)  
10,000  
(10,000)  
8,000  
Reinhard Hüttl  
Henning Kagermann  
Susanne Klatten  
(10,000)  
10,000  
(10,000)  
10,000  
(10,000)  
10,000  
(10,000)  
8,000  
Renate Köcher  
Ulrich Kranz  
Robert W. Lane  
(10,000)  
10,000  
(8,000)  
10,000  
(10,000)  
10,000  
(8,000)  
10,000  
(10,000)  
8,000  
Horst Lischka1  
Willibald Löw1  
Simone Menne  
Dominique Mohabeer1  
Brigitte Rödig1  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
130,220  
(116,960)  
3,385,720  
(3,042,241)  
(10,000)  
8,000  
Jürgen Wechsler1  
Werner Zierer1  
(8,000)  
10,000  
(10,000)  
188,000  
(190,000)  
Total2  
1,820,000  
(
1,820,768)  
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.  
Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year of 2015.  
2
3
. ꢅther  
Apart from vehicle lease and financing contracts  
entered into on customary conditions, no advances  
or loans were granted to members of the Board of  
Management and the Supervisory Board of BMWAG  
or its subsidiaries, nor were any contingent liabilities  
entered into on their behalf.  
2
23  
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, 14 February 2017  
Bayerische Motoren Werke  
Aktiengesellschaft  
The Board of Management  
Harald Krüger  
Milagros Caiña Carreiro-Andree Markus Duesmann  
Klaus Fröhlich  
Dr. Nicolas Peter  
Dr. Ian Robertson (HonDSc)  
Oliver Zipse  
Peter Schwarzenbauer  
2
24  
Statement on  
Corporate  
Governance  
BMW GROUP  
AUDITOR’S REPORT  
financial statements in accordance with the applica-  
ble financial reporting framework and in the group  
management report are detected with reasonable  
assurance. Knowledge of the business activities and  
the economic and legal environment of the Group and  
expectations as to possible misstatements are taken  
into account in the determination of audit procedures.  
The effectiveness of the accounting-related internal  
control system and the evidence supporting the dis-  
closures in the consolidated financial statements and  
the group management report are examined primarily  
on a test basis within the framework of the audit. The  
audit includes assessing the annual financial state-  
ments of those entities included in consolidation, the  
determination of entities to be included in consoli-  
dation, the accounting and consolidation principles  
used and significant estimates made by management,  
as well as evaluating the overall presentation of the  
consolidated financial statements and group man-  
agement report. We believe that our audit provides a  
reasonable basis for our opinion.  
BMW Group  
Auditor’s Report  
We have audited the consolidated financial statements  
prepared by the Bayerische Motoren Werke Aktien-  
gesellschaft, 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,  
together with the group management report for the  
business year from  
1 January to 31 December 2016.  
The preparation of the consolidated financial state-  
ments and the group management report in accord-  
ance with IFRSs, as adopted by the EU, and the  
additional requirements of German commercial law  
pursuant to §315a Abs. 1 HGB [Handelsgesetzbuch  
“
German Commercial Code”] are the responsibility  
of the parent company’s management. Our respon-  
sibility is to express an opinion on the consolidated  
financial statements and on the group management  
report based on our audit.  
Our audit has not led to any reservations.  
In our opinion, based on the findings of our audit,  
the consolidated financial statements comply with  
IFRSs, as adopted by the EU, the additional require-  
We conducted our audit of the consolidated financial  
statements in accordance with §317 HGB [Handels-  
gesetzbuch “German Commercial Code”] and German  
generally accepted standards for the audit of financial  
statements promulgated by the Institut der Wirtschaft-  
sprüfer [Institute of Public Auditors in Germany]  
ments of German commercial law pursuant to §315a  
Abs. 1 HGB and give a true and fair view of the net  
assets, financial position and results of operations of  
the Group in accordance with these requirements.  
The group management report is consistent with the  
consolidated financial statements, complies with  
the German statutory requirements, and as a whole  
provides a suitable view of the Company’s position  
and suitably presents the opportunities and risks of  
future development.  
(
IDW). Those standards require that we plan and  
perform the audit such that misstatements materially  
affecting the presentation of the net assets, financial  
position and results of operations in the consolidated  
Munich, 24 February 2017  
KꢌꢈG AG  
Wirtschaftsprüfungsgesellschaft  
Sailer  
Feege  
Wirtschaftsprüfer  
Wirtschaftsprüfer  
OTHER  
INFORMATION  
Page 226 BMW Group Ten-year Comparison  
Page 228 Glossary  
Page 230 Index  
Page 232 Index of Graphs  
Page 233 Financial Calendar  
Page 234 Contacts  
5
5
Other  
Information  
Ten-year  
Comparison  
Glossary  
Index  
Index of Graphs  
Financial Calendar  
Contacts  
2
26  
Other  
Information  
BMW GROUP  
BMW Group  
Ten-year  
Comparison  
TEN-YEAR COMPARISON  
2
016  
2015  
2014  
2013  
SAlꢀS Vꢅlꢂꢈꢀ  
Automobiles  
units  
units  
2,367,603  
145,032  
2,247,485  
136,963  
2,117,965  
123,495  
1,963,798  
115,215  
Motorcycles1  
ꢌꢆꢅꢄꢂCꢁIꢅꢃ Vꢅlꢂꢈꢀ  
Automobiles  
units  
units  
2,359,756  
145,555  
2,279,503  
151,004  
2,165,566  
133,615  
2,006,366  
110,127  
Motorcycles1  
ꢉIꢃAꢃCIAl SꢀꢆVICꢀS  
Contract portfolio  
contracts  
€ million  
5,114,906  
123,394  
4,718,970  
111,191  
4,359,572  
96,390  
4,130,002  
84,347  
Business volume (based on balance sheet carrying amounts)2  
IꢃCꢅꢈꢀ SꢁAꢁꢀꢈꢀꢃꢁ  
Revenues  
€ million  
%
94,163  
19.9  
92,175  
19.7  
80,401  
21.2  
76,059  
20.1  
Gross profit margin3  
Earnings before financial result  
Earnings before tax  
€ million  
€ million  
%
9,386  
9,665  
10.3  
9,593  
9,224  
10.0  
9,118  
8,707  
10.8  
7,978  
7,893  
10.4  
Return on sales (earnings before tax / revenues)  
Income taxes  
€ million  
%
2,755  
28.5  
2,828  
30.7  
2,890  
33.2  
2,564  
32.5  
Effective tax rate  
Net profit for the year  
€ million  
6,910  
6,396  
5,817  
5,329  
bAlAꢃCꢀ Sꢇꢀꢀꢁ  
Non-current assets  
€ million  
€ million  
€ million  
%
121,671  
66,864  
3,731  
110,343  
61,831  
3,826  
97,959  
56,844  
4,601  
86,193  
52,184  
4,967  
Current assets  
Capital expenditure (excluding capitalised development costs)  
Capital expenditure ratio (capital expenditure / revenues)  
Equity  
4.0  
4.2  
5.7  
6.5  
€ million  
%
47,363  
25.1  
42,764  
24.8  
37,437  
24.2  
35,600  
25.7  
Equity ratio  
Non-current provisions and liabilities  
Current provisions and liabilities  
Balance sheet total  
€ million  
€ million  
€ million  
73,183  
67,989  
188,535  
63,819  
65,591  
172,174  
58,288  
59,078  
154,803  
51,643  
51,134  
138,377  
CASꢇ ꢉlꢅW SꢁAꢁꢀꢈꢀꢃꢁ  
Cash and cash equivalents at balance sheet date  
Operating cash flow Automotive segment4  
€ million  
€ million  
7,880  
6,122  
7,688  
9,423  
7,671  
9,964  
11,464  
11,836  
ꢌꢀꢆSꢅꢃꢃꢀl  
Workforce at year-end5  
124,729  
99,575  
122,244  
97,136  
116,324  
92,337  
110,351  
89,869  
Personnel cost per employee  
€
ꢄIVIꢄꢀꢃꢄ  
Dividend total  
€ million  
€
2,300  
2,102  
1,904  
1,707  
3.50 / 3.526  
6
3.20/ 3.22  
2.90 / 2.92  
2.60 / 2.62  
Dividend per share of common stock / preferred stock  
1
Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.  
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.  
Research and development expenses included in cost of sales with effect from 2008.  
Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations.  
Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.  
Proposal by management.  
2
3
4
5
6
2
27  
2
012  
2011  
2010  
2009  
2008  
2007  
SAlꢀS Vꢅlꢂꢈꢀ  
Automobiles  
1
1
3
,845,186  
06,358  
1,668,982  
104,286  
1,461,166  
98,047  
1,286,310  
87,306  
1,435,876  
101,685  
1,500,678  
102,467  
1
Motorcycles1  
ꢌꢆꢅꢄꢂCꢁIꢅꢃ Vꢅlꢂꢈꢀ  
Automobiles  
,861,826  
13,811  
1,738,160  
110,360  
1,481,253  
99,236  
1,258,417  
82,631  
1,439,918  
104,220  
1,541,503  
104,396  
1
Motorcycles1  
ꢉIꢃAꢃCIAl SꢀꢆVICꢀS  
Contract portfolio  
,846,364  
3,592,093  
75,245  
3,190,353  
66,233  
3,085,946  
61,202  
3,031,935  
60,653  
2,629,949  
51,257  
8
0,974  
Business volume (based on balance sheet carrying amounts)2  
IꢃCꢅꢈꢀ SꢁAꢁꢀꢈꢀꢃꢁ  
Revenues  
7
6,848  
68,821  
21.1  
60,477  
18.1  
50,681  
10.5  
289  
53,197  
11.4  
921  
351  
0.7  
56,018  
21.8  
2
0.2  
Gross profit margin3  
8
7
,275  
,803  
8,018  
7,383  
10.7  
5,111  
4,853  
8.0  
4,212  
3,873  
6.9  
Earnings before financial result  
Earnings before tax  
413  
1
0.2  
,692  
4.5  
,111  
0.8  
Return on sales (earnings before tax / revenues)  
Income taxes  
2
5
2,476  
33.5  
1,610  
33.1  
203  
21  
739  
3
49.2  
210  
6.0  
19.1  
Effective tax rate  
4,907  
3,243  
330  
3,134  
Net profit for the year  
bAlAꢃCꢀ Sꢇꢀꢀꢁ  
Non-current assets  
8
5
1,305  
0,530  
74,425  
49,004  
2,720  
67,013  
43,151  
2,312  
62,009  
39,944  
2,383  
62,416  
38,670  
2,980  
56,619  
32,378  
2,933  
5.2  
Current assets  
4
,151  
.4  
0,606  
3.2  
Capital expenditure (excluding capitalised development costs)  
Capital expenditure ratio (capital expenditure / revenues)  
Equity  
5
4.0  
3.8  
4.7  
5.6  
3
27,103  
22.0  
23,930  
21.7  
19,915  
19.5  
20,273  
20.1  
21,744  
24.4  
2
Equity ratio  
5
4
2,834  
8,395  
49,113  
47,213  
123,429  
46,100  
40,134  
110,164  
45,119  
36,919  
101,953  
41,526  
39,287  
101,086  
33,469  
33,784  
88,997  
Non-current provisions and liabilities  
Current provisions and liabilities  
Balance sheet total  
1
31,835  
CASꢇ ꢉlꢅW SꢁAꢁꢀꢈꢀꢃꢁ  
Cash and cash equivalents at balance sheet date  
Operating cash flow Automotive segment4  
8
9
,370  
,167  
7,776  
8,110  
7,432  
8,149  
7,767  
4,921  
7,454  
4,471  
2,393  
6,246  
ꢌꢀꢆSꢅꢃꢃꢀl  
Workforce at year-end5  
1
05,876  
9,161  
100,306  
84,887  
95,453  
83,141  
96,230  
72,349  
100,041  
75,612  
107,539  
76,704  
8
Personnel cost per employee  
ꢄIVIꢄꢀꢃꢄ  
Dividend total  
1
,640  
1,508  
852  
197  
197  
694  
2
.50 / 2.52  
2.30 / 2.32  
1.30 /1.32  
0.30 / 0.32  
0.30 / 0.32  
1.06 /1.08  
Dividend per share of common stock / preferred stock  
2
28  
Other  
Information  
GLOSSARY  
Commercial paper  
Short-term debt instruments with a term of less than  
one year which are usually sold at a discount to their  
face value.  
Glossary  
Asset-backed financing transactions  
A form of corporate financing involving the sale of  
receivables to a financing company.  
Consolidation  
The process of combining separate financial state-  
ments of Group entities into Group Financial State-  
ments, depicting the financial position, net assets  
and results of operations of the Group as a single  
economic entity.  
Bond  
A securitised debt instrument in which the issuer  
certifies its obligation to repay the nominal amount  
at the end of a fixed term and to pay a fixed or variable  
rate of interest.  
Credit default swap (CDS)  
Financial swap agreements, under which creditors of  
securities (usually bonds) pay premiums to the seller  
of the CDS to hedge against the risk that the issuer of  
the bond will default. As with credit default insurance  
agreements, the party receiving the premiums gives  
a commitment to compensate the bond creditor in  
the event of default.  
Business volume in balance sheet terms  
The sum of the balance sheet line items “Leased prod-  
ucts” and “Receivables from sales financing” (current  
and non-current), as reported in the balance sheet for  
the Financial Services segment.  
Capital expenditure ratio  
Earnings per share (EPS)  
Investments in property, plant and equipment and  
other intangible assets (excluding capitalised  
development costs) as a percentage of Group  
revenues.  
Basic earnings per share are calculated for common  
and preferred stock by dividing the net profit after  
minority interests, as attributable to each category of  
stock, by the average number of shares in circulation.  
Earnings per share of preferred stock are computed  
on the basis of the number of preferred stock shares  
entitled to receive a dividend in each of the relevant  
financial years.  
Capitalisation rate  
Capitalised development costs as a percentage of  
research and development expenditure.  
Cash flow  
EBIT  
Liquid funds generated (cash inflows) or used (cash  
outflows) during a reporting period.  
Abbreviation for “Earnings Before Interest and Taxes”,  
equivalent in the BMW Group income statement to  
“
Profitꢀ/ꢀloss before financial result”.  
Cash flow at risk  
Similar to “value at risk” (see definition below).  
EBIT margin  
Profitꢀ/ꢀloss before financial result as a percentage of  
revenues.  
Cash flow hedge  
A hedge against exposures to the variability in fore-  
casted cash flows, particularly in connection with  
exchange rate fluctuations.  
Effective tax rate  
The effective tax rate is calculated by dividing the  
income tax expense by the Group profit before tax.  
2
29  
Equity ratio  
Return on Capital Employed (RoCE)  
Equity capital as a percentage of the balance sheet  
total.  
RoCE in the Automotive and Motorcycles segments  
is measured on the basis of relevant segment profit  
before financial result and the average amount of  
capital employed in the segment concerned. Capital  
employed corresponds to the sum of all current and  
non-current operational assets, less liabilities that do  
not incur interest.  
Fair value  
The amount for which an asset could be exchanged,  
or a liability settled, between knowledgeable, willing  
parties in an arm’s length transaction.  
Return on Equity (RoE)  
Fair value hedge  
A hedge against exposures to fluctuations in the fair  
value of a balance sheet item.  
RoE in the Financial Services segment is calculated as  
segment profit before taxes, divided by the average  
amount of equity capital attributable to the Financial  
Services segment.  
Goodwill  
Goodwill corresponds to the consideration paid to  
acquire an entity, less the fair value of the separate  
assets acquired and liabilities assumed. The buyer  
is willing to pay the additional amount in return for  
future expected earnings.  
Value at risk  
A measure of the potential maximum loss in value of  
an item during a set time period, based on a specified  
probability.  
Gross margin  
Gross profit as a percentage of Group revenues.  
Post-tax return on sales  
Group net profit as a percentage of Group revenues.  
Pre-tax return on sales  
Group profitꢀ/ꢀloss before tax as a percentage of Group  
revenues.  
Research and development expenditure  
The sum of research and non-capitalised development  
cost and capitalised development cost (not including  
the associated scheduled amortisation).  
Research and development expense ratio  
Research and non-capitalised development costs as a  
percentage of Group revenues.  
2
30  
Other  
Information  
INDEX  
F
Index  
Financial assets  
Financial instruments  
Financial liabilities  
80, 146 et seq., 162 et seq.  
162 et seq.  
70, 157 et seq.  
Financial result  
65, 78  
A
Financial Services segment  
49 et seq.  
Accounting policies  
122 et seq.  
42 et seq.  
Fleet emissions  
4, 39, 61, 86  
Apprentices  
57  
Automotive segment  
G
Group tangible, intangible and investment  
B
assets  
124, 140 et seq.  
Balance sheet structure  
72  
Bonds  
70, 157 et seq.  
I
Income statement  
Income taxes  
63, 77, 112 et seq., 133 et seq.  
65, 135 et seq., 156  
80, 142  
71, 80, 148  
C
Capital expenditure  
Cash and cash equivalents  
5, 65 et seq.  
Intangible assets  
Inventories  
Investments accounted for using the equity method  
67 et seq., 162 et seq.  
Cash flow  
5, 68 et seq., 116 et seq.  
Cash flow statement  
67 et seq., 116 et seq.  
and other investments  
143 et seq.  
CO emissions  
4, 39, 61, 86 et seq.  
2
Compensation Report  
212 et seq.  
Compliance  
Connected Drive  
207 et seq.  
52 et seq.  
K
Consolidated companies  
Consolidation principles  
Contingent liabilities  
Corporate Governance  
121  
121  
Key data per share  
109  
161  
190 et seq.  
74 et seq.  
Cost of materials  
Cost of sales  
L
133  
Lease business  
49 et seq.  
143  
Leased products  
Locations  
24 et seq.  
List of investments  
180 et seq.  
D
Dealer organisation/dealerships  
Declaration with respect to the  
Corporate Governance Code  
23, 55  
191  
M
Digitalisation  
Dividend  
23, 45, 51, 55, 85, 96  
Mandates of members of the Board of Management  
192  
109, 137  
Dow Jones Sustainability Index World  
61  
Mandates of members of the Supervisory Board  
1
93 et seq.  
Marketable securities  
Motorcycles segment  
67 et seq., 125, 140 et seq.  
48  
E
Earnings per share  
EBIT marginꢀ/ꢀreturn on sales  
5, 137  
5, 29 et seq., 40, 65, 86  
Efficient Dynamics  
Employees  
Equity  
52  
4, 39, 57 et seq., 85  
73, 149  
N
Net profit  
New financial reporting rules  
5, 63  
130 et seq.  
Exchange rates  
35, 84, 97, 122, 170  
2
31  
O
T
Other financial result  
Other investments  
134  
Tangible, intangible and investment assets  
165  
140 et seq.  
Other operating income and expenses  
Other provisions  
134  
Trade payables  
Trade receivables  
160  
148 et seq.  
156  
Outlook  
82 et seq.  
P
Pension provisions  
Performance indicators  
73, 80, 127, 151 et seq.  
4 et seq., 29 et seq., 39 et seq.,  
8
5 et seq.  
Personnel expenses  
138  
Production  
44 et seq.  
Production network  
Profit before financial result  
24 et seq., 44 et seq.  
5 et seq., 63 et seq.,  
6
5 et seq.  
Profit before tax  
5 et seq., 39, 65, 85, 87  
Property, plant and equipment  
142  
Purchasing  
54  
R
Rating  
110  
Receivables from sales financing  
71, 145 et seq.  
Refinancing  
69 et seq.  
Related party relationships  
Remuneration system  
172 et seq.  
212 et seq.  
Report of the Supervisory Board  
Research and development  
8 et seq.  
51 et seq.  
Result from equity accounted investments  
65  
Return on sales  
5, 29 et seq., 40, 65, 86  
Revenue reserves  
149  
Revenues  
5, 40 et seq., 63, 66 et seq., 78, 86 et seq., 133  
Risks and opportunities  
88 et seq.  
RoCE  
RoE  
5, 29 et seq., 40, 86  
5, 30 et seq., 41, 87  
S
Sales volume  
Segment information  
4, 39 et seq., 42 et seq., 48, 86 et seq.  
175 et seq.  
Selling and administrative expenses  
65,133  
Shareholdings of members of the Board of Manage-  
ment and the Supervisory Board  
174  
Statement of Comprehensive Income  
112, 139  
Stock  
107 et seq.  
Sustainability  
59 et seq.  
2
32  
Other  
Information  
INDEX OF GRAPHS  
Finances  
BMW Group in Figures  
BMW Group Value drivers  
6
Index of Graphs  
29  
Financial Calendar  
Contract portfolio of Financial Services segment  
4
9
BMW Group new vehicles financed or leased by  
Financial Services segment  
Contract portfolio retail customer financing of  
49  
Financial Services segment 2016  
Development of credit loss ratio  
50  
51  
Regional mix of BMW Group purchase volumes  
016  
BMW Group Change in cash and cash equivalents  
2
54  
6
8
BMW Group Financial liabilities  
Balance sheet structure – Group  
70  
72  
Balance sheet structure – Automotive segment  
BMW Group value added 2016  
Risk management in the BMW Group  
Development of BMW stock  
BMWGroup Compliance Management System  
72  
75  
88  
107, 108  
2
07  
Sales volume and locations  
BMW Group Locations  
24 et seq.  
BMW Group – key automobile markets 2016  
BMW Group sales volume of motorcycles  
BMW Group – key motorcycle markets 2016  
42  
48  
57  
48  
Workforce  
BMW Group apprentices at 31 December  
Proportion of female employees in management  
functions at BMWAGꢀ/ꢀBMW Group  
58  
Employee attrition rate at BMWAG  
59  
Proportion of female executives within management  
2
05  
Sustainability  
Materiality matrix  
60  
Further information  
Exchange rates compared to the euro  
Oil price trend  
Precious metals price trend  
Steel price trend  
35  
36  
36  
37  
2
33  
FINANCIAL CALENDAR  
2
017  
2
1 March 2017  
Annual Accounts Press Conference  
2
2 March 2017  
Analyst and Investor Conference  
4
May 2017  
Quarterly Report to 31 March 2017  
1
1 May 2017  
Annual General Meeting  
3
August 2017  
Quarterly Report to 30 June 2017  
7
November 2017  
Quarterly Report to 30 September 2017  
2
018  
2
1 March 2018  
Annual Report 2017  
2
1 March 2018  
Annual Accounts Press Conference  
2
2 March 2018  
Analyst and Investor Conference  
4
May 2018  
Quarterly Report to 31 March 2018  
1
7 May 2018  
Annual General Meeting  
2
August 2018  
Quarterly Report to 30 June 2018  
7
November 2018  
Quarterly Report to 30 September 2018  
2
34  
Other  
Information  
CONTACTS  
Business and Finance Press  
Telephone +ꢀ49 89 382-2 45 44  
Contacts  
+
ꢀ49 89 382-2 41 18  
Fax  
+ꢀ49 89 382-2 44 18  
E-mail  
presse@bmwgroup.com  
Investor Relations  
Telephone +ꢀ49 89 382-3 16 84  
+
ꢀ49 89 382-2 53 87  
Fax  
+ꢀ49 89 382-1 46 61  
E-mail  
ir@bmwgroup.com  
The BMW Group on the Internet  
Further information about the BMW Group is  
available online at  
Investor Relations information is available directly  
at  
Information about the various BMW Group brands  
is available at  
and  
www.bmwgroup.com.  
www.bmwgroup.com/ir  
.
www.bmw.com  
,
www.mini.com  
www.rolls-roycemotorcars.com  
.
A further contribution  
towards preserving resources  
The BMW Annual Report was printed on paper produced in accordance with the internation-  
al FSC® Standard: the pulp is sourced from sustainably managed forests.  
2
The corresponding CO emissions were compensated by additional environmental and cli-  
mate protection measures as part of a reforestation project in collaboration with Bergwald-  
projekt e. V. (certificate number: DE-141-217903).  
This version of the Annual Report is a translation  
from the German version. Only the original German  
version is binding.  
P U B L I S H E D B Y  
Bayerische Motoren Werke  
Aktiengesellschaft  
8
0788 Munich  
Germany  
Telephone +49 89 382-0  


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