BMW 2008 Annual Report Download - page 69

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14 Group Management Report
14 A Review of the Financial Year
16 General Economic Environment
20 Review of Operations
42 BMW Stock and Bonds
45 Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
47 Financial Analysis
47 Internal Management System
49 Earnings Performance
51 Financial Position
52 Net Assets Position
55 Subsequent Events Report
55 Value Added Statement
57 Key Performance Figures
58 Comments on BMW AG
62 Risk Management
68 Outlook
will significantly improve opportunities for the BMW Group
when the situation begins to ease.
In the subsequent phase of economic recovery – which is
generally expected to gather pace during the course of
 – the BMW Group will also benefit from the addi-
tional
impetus generated by its renewed range of models.
Recently, for example, the new BMW Z4 and the MINI Con-
vertible
were presented to the public at the North Ameri-
can International Auto Show in Detroit. At the beginning of
February, the new BMW 7 Series came onto the markets
(in the USA and Asia together with the extended wheelbase
version) and are receiving a positive response from cus-
tomers and the media alike. In , the X range of vehicles
will be extended by the addition of the BMW X1. The BMW
Group will also expand its portfolio with the Progressive
Activity Sedan (PAS), the concept study of which was pre-
sented at the Geneva Motor Show.
After-sales business continues to gain in strategic impor-
tance for the BMW Group. A worldwide initiative is cur-
rently being implemented to tap the full potential of further
profitable growth in the service and spare parts lines of
business.
Despite difficult conditions, the BMW Group has success-
fully managed to increase efficiency and operating per-
formance. Ongoing initiatives to improve efficiency and
productivity on a continuous basis ensure the sustainable
and economic use of resources. On the cost side, these
measures represent another important aspect of the
BMW Group’s new strategic direction. Good progress has
already been made in implementing the profitability pro-
gramme in the areas of fixed and variable costs. This is
being achieved by rigorous exploitation of benefits of scale,
standardisation of processes throughout the business and
targeted management of capital employed.
The BMW Group’s research and development expense
ratio in  was within the announced target range of . 
to .  of revenues. Despite its efforts to rationalise re-
search and development activities, the BMW Group will
continue to develop visionary products and technologies –
such as the MINI E – and thus ensure that the combustion
engine is not the only field in which it sets standards. The
BMW Group will also continue to invest in the future in or-
der to extend its competitive advantage. This also includes
the development of innovative mobility concepts in con-
junction with project i. In the current transitional phase, up-
front expenditure in this area provides an important basis
for opening up medium and long-term opportunities.
Thanks to its broad expertise in the area of innovation, the
BMW Group will retain its ability to satisfy the needs of its
customers with its premium products and services.
Rising to the substantial challenges that it faces, the BMW
Group is now intensifying the various measures it has initi-
ated to implement its new strategic direction. The BMW
Group is convinced that these initiatives will yield benefits
for the business in the medium term.
This confidence is based, amongst other things, on a dis-
cernible trend towards smaller-sized and more efficient
drive systems that are nevertheless powerful. The BMW
Group recognised this trend at an early stage. After
meas-
uring the impact on its own model programme, these
concepts have now been incorporated in future forecasts.
This trend and the move towards a CO emissions-based
tax are seen as the first important steps towards creating
stable legal conditions, thus giving the BMW Group a great
opportunity to increase its technological lead with Efficient
Dynamics.
Automobiles segment
As a result of the massively adverse impact of the economic
crisis, the BMW Group does not expect to achieve the
car sales volume level it recorded in . The prevailing
uncertainties make it difficult to forecast sales volumes
at present. The BMW Group is working on various market
and sales volume performance scenarios and is preparing
the appropriate measures.
From today’s perspective, the BMW Group believes that
these uncertainties will remain throughout  and the
following year. Since economic recovery generally lags
behind, it is not now expected that the targeted return on
sales and EBIT margin for  will be achieved.
Motorcycles segment
The BMW Group will continue the Motorcycles segment’s
new model initiative in  in an attempt to counter the
reduction in consumer spending caused by the financial
crisis. Despite this, motorcycle sales volume is still forecast
to be lower than in .
Financial Services segment
Business conditions for the Financial Services segment will
again be subjected to a high degree of volatility in . The
availability of attractive credit and lease products for
cus-
tomers of BMW, MINI and Rolls-Royce brand cars will remain
the basis for sustainable growth in the segment’s business
volume. The same applies in the area of dealer financing.