The BMW Group – an Overview

BMW Group continues to perform well in third quarter
After a strong first-half year performance, business continued to prosper for the BMW Group throughout the third quarter 2011.

Our sales volumes developed positively and in line with expectations, despite some dark clouds on the economic horizon. The BMW Group also remained on track in terms of both revenues and earnings.

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Strong sales volume performance in third quarter
Worldwide sales of BMW, MINI and Rolls-Royce brand cars grew dynamically again in the third quarter 2011. Boosted by our young range of products, we were again able to maintain our strong position on international car markets. During the period from July to September, the number of cars sold worldwide by the BMW Group rose by 9.0% to 399,218 units. Sales volume for the
nine-month period from January to September 2011 totalled 1,232,584 units and was thus 16.0% higher than in the corresponding period one year earlier. The new BMW 5 Series asserted its lead in the upper medium segment and continued to be a key driver of sales performance worldwide. The BMW X5 is also enjoying great popularity and continues to lead its segment.

Motorcycles business also continued to perform well. In total, 28,862 BMW and Husqvarna brand motorcycles were sold during the third quarter, 6.5% up on the previous year. Sales volume for the nine-month period increased by 4.7% to 99,972 units.

The Financial Services segment also saw dynamic growth, thus making an important contribution to the BMW Group’s strong performance. The number of new contracts signed in the credit financing and leasing lines of business during the first nine months of the year rose by 10.0%
to 882,961 units. A portfolio of 3,303,635 contracts was in place with dealers and retail customers at 30 September 2011 (+5.1%).

Revenues and earnings well up
The BMW Group’s strong business performance is also reflected in revenues and earnings. Third-quarter revenues rose by 3.8% to euro 16,547 million, while revenues for the nine-month period increased to euro 50,472 million (+15.4%).

At euro 1,716 million, the profit before financial result (EBIT) was euro 524 million up on the previous year (+44.0%). EBIT for the nine-month period jumped to euro 6,474 million (+92.8%).

Group profit before tax also greatly improved, rising to euro 1,644 million (+21.0%) for the third quarter and to euro 6,160 million for the nine-month period (+94.6%).

Net profits for the third quarter and nine-month period were euro 1,082 million (+23.8%) and euro 4,103 million (+101.9%) respectively.

Workforce increased
The BMW Group had a worldwide workforce of 100,389 employees at 30 September 2011, 4.1% more than one year earlier. The increase is partially due to the acquisition of the fleet business of ING Lease Holding N.V. by the Financial Services segment. We also recruited skilled workers and engineers in order to keep apace with the unbroken strong demand for our vehicles and simultaneously focus on developing tomorrow’s technologies. A total of 1,661 apprentices – including 1,089 in Germany – began their careers with the BMW Group during the third quarter.

Numerous world debuts at the IAA
The BMW Group presented a total of ten world debut models at the IAA, held in Frankfurt in mid-September. With the BMW i3 Concept and the BMW i8 Concept, the Group introduced two innovative studies on the future of electromobility. The BMW i3 will be launched in 2013 as the first wholly electrically powered vehicle manufactured by the BMW Group. The BMW i8 Concept is a
high-performance sports car that combines a combustion engine and an electric drive with a unique plug-in hybrid concept, thereby achieving extremely low fuel consumption and carbon emission figures.

The Group also showcased the second generation of the BMW 1 Series at the IAA. The new model has more space than its predecessor and greatly improved driving comfort. Unique in the compact class is the wide range of features available in BMW ConnectedDrive, including new
systems presented for the first time in the BMW 1 Series such as the speed limit information with “no-overtaking” notification and the Lane Departure Warning system with rear collision warning system.

The new BMW M5 was revealed to a global public for the first time in Frankfurt this year as well. With its innovative V8 engine featuring M TwinPower turbo technology, the average fuel consumption of the new M5 has been reduced by more than 30% compared with the previous
model and now totals a mere 9.9 litres per 100 kilometres in the EU test cycle.

The BMW 520d EfficientDynamics Edition and the X1 sDrive20d EfficientDynamics Edition also celebrated world debuts. Both models are driving up standards in their classes with fuel consumption of 4.5 litres per 100 kilometres and CO2 emissions of 119 grams per kilometre.

The new BMW 3 Series Sedan was presented in Munich in mid-October. This model will be available to customers from February 2012 onwards. The sixth generation of this successful model will again set new standards in terms of agility and dynamic driving performance, whilst using significantly less fuel and weighing up to 45 kilograms less than its predecessor thanks to intelligent lightweight construction.

The MINI Coupé was presented to a broad public for the first time. The fifth member of the MINI family is also the brand’s first two-seater and has been designed with the emphasis on driving pleasure. The MINI Coupé was launched with four engine variants in September.

The Motorcycles segment celebrated three world debuts at the IAA. Together with the presentation of BMW’s Automobiles segment, which featured studies of the BMW i3 and i8, motorcycle design studies for the future electromobility of BMW and Husqvarna machines were
also on public display. The NUDA 900R from Husqvarna Motorcycles was also presented for the first time to the general public.

BMW Group and SGL Group open new carbon fibre production plant
In September 2011, SGL Automotive Carbon Fibers – a joint venture of BMW Group and SGL Group – opened a new state-of-the-art carbon fibre manufacturing plant in Moses Lake (Washington/USA). The new facility is strategic for the manufacture of ultra light-weight carbon
fibre reinforced plastics (CFRP) which will be used extensively in BMW i vehicles to be launched on the markets by the BMW Group in 2013.

Each of the venturer parent companies is investing some US dollar 100 million in the plant. In order to ensure a seamless market introduction for the BMW i3 in 2013, carbon fibre production has already commenced. All electricity needed for the production of carbon fibres will
come from readily available, clean and renewable local hydropower. The BMW i3 will be the first vehicle to use the carbon fibres manufactured in Moses Lake.

Carbon is becoming increasingly important in the quest for lighter-weight materials to keep down the vehicle’s weight and hence reduce fuel consumption and CO2 emissions. With the new production plant in Moses Lake, BMW Group and SGL Group are proving that sustainable
innovations will provide for a cleaner individual mobility of the future.

Innovative car sharing activities expanded
DriveNow, the forward-looking car sharing venture jointly set up by the BMW Group and Sixt, has also been represented in Berlin since September 2011. After a successful launch in Munich, DriveNow operations have meanwhile more than 8,000 members. The plan for the future is for DriveNow’s fleet to include electric cars, another major step forward in the provision of innovative
mobility services.

Continued recovery on many car markets
International car markets grew by some 5% compared to the first nine months of the previous year. The premium segment accelerated even faster than the market as a whole and was approximately 11% ahead of the previous year.

China registered growth of approximately 18% for the period from January to September. The market has therefore expanded somewhat more moderately than in the previous year. The premium segment continues to perform well, with nine-month sales up by almost 40%
on 2010.

The US automobile market grew by about 10% during the period under report. Although the market continues to gain pace steadily, overall demand for cars remains below pre-crisis levels and is only recovering step by step.

Performance on European markets continued to be of a mixed nature. Germany recorded growth of approximately 11%, whereas the overall car market in France stagnated at the previous year’s nine-month level. Demand for cars in Great Britain, Spain and Italy contracted sharply, reflecting the end of state-financed stimulus programmes and the current economic situation in those
countries. Car sales volumes fell by approximately 6% in Great Britain, by 13% in Italy and by more than 20% in Spain. Overall, Western Europe’s car markets were slightly down on 2010 levels.

Car sales in Japan during the first nine months of the year plummeted by more than 25% in the aftermath of the earthquake disaster and the expiry of the subsidy programme at the end of 2010. The premium segment managed to defy the general trend, however, and grew slightly compared to the previous year.

Automobile markets in most emerging economies recorded sharp volume increases during the period under report, even though the growth rate has become more moderate in some countries. Demand for cars surged by almost 50% in Russia, but was still significantly lower than prior to the crisis. In India, the car market grew by almost 15%, while overall demand in Brazil grew by 8%.
In both countries, the premium segment expanded significantly faster than the market as a whole.

Motorcycle markets remain weak
International motorcycle markets in the 500 cc plus class again showed little evidence of recovery in the third quarter 2011 and contracted overall by 3.9% during the nine-month period. The decline was 6.1% in Europe. Whilst the upward trend seen since the beginning of the year continued in Germany (+3.7%) and France (+3.1%), sharp decreases were recorded for the markets in Spain
(-25.6%), Great Britain (-12.8%) and Italy (-10.6%). The 500 cc plus segment in the USA also continued to follow the positive trend registered so far in 2011 (+0.8%). In Japan, however, the consequences of the catastrophe that befell the country in spring are still being felt (-8.6%).

Recessionary worries on financial markets
With economic data surprisingly strong during the first half of 2011, rising inflation was the main source of concern. The positive mood on international financial markets has meanwhile given way to fear of possible recession. This has been triggered by the slow-down of worldwide economic growth, the smouldering sovereign debt crisis and the downgrading of the credit ratings of countries such as the USA, Japan, Italy and Greece.

Used car markets remained stable during the third quarter 2011, particularly in North America. By contrast, some small decreases in residual values were noticeable in Great Britain and on Europe’s southern markets. The bad debt risk was largely unchanged compared to the previous quarter, despite the slight economic slowdown. Financing business only remains tense in southern Europe.

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