BMW 2009 Annual Report Download - page 230
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54
Mr. Eichiner, Mr. Ebner von Eschenbach, how deeply has the BMW
Group been affected by the global economic and financial crisis to
date?
Mr. Eichiner
Like the rest of the automobile industry, the BMW Group
has been unable to fully escape the consequences of
the crisis. In an exceptional situation like this, there are
two options: hope for the economic crisis to pass, or
respond quickly and deliberately – which is what we did.
As a result, we came through 2008 in relatively good
shape and made a successful start to a difficult 2009.
Overall, we certainly performed better last year than
most of the other automobile manufacturers.
How do you manage such a massive economic downturn?
Mr. Eichiner
We immediately scaled back production in autumn
2008 to prevent inventories from building up and avoid
tying up funds unnecessarily. In an economic crisis,
cash really is king. Besides that, we consistently con-
trolled
our financial resources, costs and our access to
the capital markets at all times to ensure our flexibility
and sufficient liquidity.
Mr. Ebner von Eschenbach
In that respect, we benefited from having a corporate
financial structure with an international focus. We have
our own financing companies in Singapore, New York
and in Europe, where we are represented on the global
capital markets round-the-clock, five days a week. This
is one of the reasons we were able to fund our financial
services business on attractive terms. During the crisis
not only was access to many segments of the capital
market limited, but investors were also demanding
much higher risk premiums.
What do those higher risk premiums cost you?
Mr. Ebner von Eschenbach
We have to raise between 20 and 30 billion euros’
worth of new capital for our financial services business
every year. With volumes like that, a risk premium that
may only be a few hundredths of a percentage point
higher automatically means additional costs in the high
double-digit million euro range.
“ Companies who are unable to offer their customers
attractive financing will lose those customers.”