BMW INVESTOR PRESENTATION May 2016
STRATEGY NUMBER ONE > NEXT BMW Investor Presentation, May 2016 Page 2
FORWARD-LOOKING STRATEGIES LEADING TO A SUCCESSFUL CORPORATE DEVELOPMENT SINCE 2001. 2016 2001/ 2003 Premium brand strategy Strategy Number ONE 2007
VISION We are Number ONE. We inspire people on the move: We shape tomorrow s individual premium mobility. COMPETITIVE ADVANTAGE We unite excitement, responsibility and success: We have the most emotional products and attractive services. > Products > Technologies > Brands & Design > Customer Experience & Services > Digitalization > Profitability STRATEGIC APPROACH We are leading the BMW Group into a new era: We leverage innovative technologies, digitalization and sustainability to deliver unique customer experiences. CORPORATE CULTURE We create the future: We combine operational excellence and fresh thinking. BMW Investor Presentation, May 2016 Page 4
LEADERSHIP DRIVEN BY ASPIRATIONAL BRAND PORTFOLIO AND HIGHLY EMOTIONAL PRODUCTS. BRANDS & DESIGN Premium Brands Design Luxury Compact/Small Dynamic Target group Now Efficient BMW Investor Presentation, May 2016 Page 5
ATTRACTIVE PREMIUM BRANDS PROVIDE THE BASIS FOR A FURTHER EXPANSION OF THE PRODUCT PORTFOLIO. BRANDS & DESIGN BMW Investor Presentation, May 2016 Page 6
SIXTH GENERATION OF BMW 7 SERIES: THE NEW BENCHMARK IN THE LUXURY SEGMENT. PRODUCTS BMW Investor Presentation, May 2016 Page 7
KEEPING THE LEAD FURTHER EXPANSION OF THE X-PORTFOLIO PLANNED UNTIL 2020. PRODUCTS BMW X1 BMW X3 BMW X4 BMW X5 BMW X6 BMW X7 BMW Investor Presentation, May 2016 Page 8
BMW M AUTOMOBILES ARE THE VERY SPORTY AND DYNAMIC END OF OUR MODEL RANGE. PRODUCTS AN EXAMPLE: BRAND SHAPER BMW M4 GTS M AUTOMOBILES BMW M2 Coupé M PERFORMANCE AUTOMOBILES BMW M235i Coupé CORE BRAND MODEL WITH M SPORT PACKAGE BMW 420i Coupé with M sport package TOP MODEL CORE BRAND BMW 228i Coupé BMW Investor Presentation, May 2016 Page 9
iperformance AND BMW i BALANCING THE PRODUCT PORTFOLIO. PRODUCTS DYNAMIC EFFICIENT BMW brand framework for product portfolio M Core Models M Performance Core Models PHEVs BEVs High Performance Performance Champions Electrified Efficiency Champions Visionary Mobility The interplay of BMW M and BMW i enhances competitive differentiation (representation of the scope of the BMW brand). BMW Investor Presentation, May 2016 Page 10
SEVEN ELECTRIFIED BMW MODELS: FURTHER MODELS TO COME. PRODUCTS BMW i3 BMW i8 BMW 225xe iperformance BMW X5 xdrive40e iperformance BMW 330e iperformance BMW 530Le BMW 740e iperformance
FURTHER EXPANSION OF THE BMW i PORTFOLIO. PRODUCTS 2013 2014 2016 2018 Beginning ofthe next decade Continuous development of the BMW i3 with regard to range and design BMW Investor Presentation, May 2016 Page 12
PROJECT i 2.0: THE BMW i NEXT IS THE FUTURE OF MOBILITY. TECHNOLOGIES Lightweight construction Interior of the future Connectivity Sustainability Purpose-built Autonomous driving New sportiness Electrification Highly automated driving Artificial Intelligence BMW Investor Presentation, May 2016 Page 13
ENSURING OUR POSITION AS TECHNOLOGY LEADER. TECHNOLOGIES Technology and innovation leader Future focus: Powertrain technologies Future focus: Digitalization Efficient Dynamics NEXT Hydrogen Connectivity Artificial Intelligence Autonomous driving BMW Investor Presentation, May 2016 Page 14
THE NEXT STEPS ARE HIGHLY AND FULLY AUTONOMOUS DRIVING. TECHNOLOGIES Human Transition of responsibility Machine No active assistance system Early warning systems such as cruise control/ speed assistant ( Feet-off ) Traffic control (e.g. congestion assistant) ( Hands-off ) TODAY Awareness for take over Take over request ( Eyes-off ) General awareness No take over request ( Mind-off ) No driver 0 Driver Only 1 Assistance 2 Semi-Automation 3 High-Automation 4 Full-Automation 5 Autonomous BMW Investor Presentation, May 2016 Page 15
MASTERING THE BASIC TECHNOLOGIES IS THE FIRST STEP FOR HIGHLY AUTOMATED DRIVING. TECHNOLOGIES Sensor systems Artificial Intelligence Regulatory requirements Intelligent autonomous vehicle Digital maps / HERE Digital reality model BMW Investor Presentation, May 2016 Page 16
LEVERAGING POTENTIAL OF DIGITALIZATION AND CONNECTIVITY. CUSTOMER EXPERIENCE & SERVICES BMW Connected Mobility Cloud BMW Investor Presentation, May 2016 Page 17
INTELLIGENT AND INNOVATIVE PRODUCTION - DIGITIZATION CREATES NEW POTENTIAL. DIGITALIZATION Data and Analytics Smart Logistics Innovative Automation Additive Manufacturing 16 14 12 10 8 6 4 2 0 4 6 8 10 12 14 16 18 140 135 130 125 Internet-of-Things Architecture Autonomous Transport Systems Collaborative Robot Systems Laminate or Metal Data Management for Planning and Control Global Supply Chain Visibility and Control Context-sensitive Worker Support Systems Serial Production and Rapid Prototyping Cyber Security Integrated Supplier Networks Reorganization of Work New Individualization BMW Investor Presentation, May 2016 Page 18
BMW MOTORRAD. WIDER RANGE THAN EVER BEFORE. PRODUCTS ADVENTURE TOUR SPORT ROADSTER HERITAGE URBAN MOBILITY NEW SINCE 2014 NEW SINCE 2012 BMW Investor Presentation, May 2016 Page 19
MAINTAINING THE AUTOMOTIVE EBIT MARGIN IN THE CORRIDOR OF 8-10% DESPITE ONGOING CHALLENGES. PROFITABILITY Future costs Regulatory requirements Market and competitive environment Volatility 10 % 8 % Ongoing efficiency measures to compensate the cost burden Expansion & optimization Retail sales growth product portfolio Auto und Motorcycle New technologies/ equipment options Reduction of material costs Benefits from digitalization Efficiency measures
FINANCIAL TARGETS 2020: SUSTAINABLE GROWTH AND SOLID PROFITABILITY DESPITE CHALLENGES. PROFITABILITY BMW Group EBT margin (from 2017) Investment ratio* Research and development ratio Payout ratio Automotive Segment EBIT margin Free Cashflow Motorcycles Segment Sales volume EBIT margin (from 2017) Financial Services Segment Return on Equity 2015 10.0% 4.2% 5.6% 32.9% 9.2% 5.4 bn 136,963 units 9.1% 20.2% 2020 >10% <5.0% 5.0-5.5% 30-40% 8-10% >3 bn > 200,000 units 8-10% >18% * Investments in property, plant and equipment and other intangible assets (without capitalized development costs). BMW Investor Presentation, May 2016 Page 21
BMW GROUP BUSINESS UPDATE BMW Investor Presentation, May 2016 Page 22
SOLID START INTO THE NEW BUSINESS YEAR. BMW GROUP SALES FIGURES YTD MARCH 2016. 557,605 + 5.9 % 478,743 + 6.0 % 78,311 + 5.4 % 551-29.4 % 33,788 +7.7 % BMW Investor Presentation, May 2016 Page 23
BMW GROUP AUTOMOTIVE: BALANCED SALES DISTRIBUTION AND SOLID YTD MARCH 2016 GROWTH OF +5.9%. Americas Europe Mainland China Asia (w/o) China & Rest of World +9.5% -8.6% +10.5% +9.2% 18% 46% 23% 13% 100,081 units 256,973 units 127,105 units 72,895 units BMW Investor Presentation, May 2016 Source: Data for individual regions include BMW and MINI vehicles only, YTD March 2016 (figures may not add to 100% due to rounding) Page 24
BMW GROUP AUTOMOTIVE MAJOR MARKETS. DELIVERIES TO CUSTOMERS YTD MARCH 2016. Deliveries of automobiles YTD 2016 YTD 2015 Change in % Europe 256,973 234,655 9.5 thereof Germany 1) 72,177 68,718 5.0 Great Britain 59,121 53,456 10.6 France 20,811 18,803 10.7 Italy 19,951 17,888 11.5 Americas 100,081 109,510-8.6 thereof USA 81,452 91,269-10.8 Asia 182,982 166,334 10.0 thereof China Mainland 127,105 114,994 10.5 thereof BBA retail sales 81,900 72,185 13.5 Japan 18,668 17,149 8.9 Rest of the World 17,018 15,386 10.6 Total 557,054 525,885 5.9 1) BMW Investor Presentation, May 2016 Registrations Page 25
BMW AND MINI RETAIL DEVELOPMENT IN MAINLAND CHINA YTD MARCH 2016. Share of JV Sales 62% 59% 53% 48% 32% 41% 43% 51% 61% 61% 63% 64% in 000 units +19.7 % +16.7 % 390.7 +1.7% 456.0 463.7 Import JV Sales +37.6 % +40.3 % 232.6 326.4 141.2 198.5 275.9 282.0 +86.7 % 169.0 94.4 +10.5% 36.4 +27.5 % +41.8 % 51.6 65.8 35.2 30.6 22.6 13.8 21.0 30.7 +37.5 % 90.5 43.7 53.7 185.3 192.2 180.1 181.7 138.2 115.3 115.0 127.1 50.1 81.9 46.8 42.8 45.2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2015 YTD 2016 BMW Investor Presentation, May 2016 Source: BMW Group Retail data, YTD March 2016 Page 26
PREMIUM SEGMENT SHARE OF TOTAL MARKET 2015. in % 30 25 25.8 21.0 20 15 11.9 10 10.1 9.3 9.0 8.6 8.5 7.4 World Average: 8.9% 5 4.6 2.4 1.2 0 Germany United Kingdom Italy USA Turkey France S. Korea Russia China Japan Brazil India BMW Investor Presentation, May 2016 Source: Global Insight 12/2015 Page 27
GLOBAL ANNUAL PREMIUM SEGMENT SALES ARE EXPECTED TO GROW TO 9.0 MN UNITS BY 2020. 10,000 9,000 8,000 7,000 6,000 5,000 Rest of World, CAGR +4.6% BRIKT*, CAGR +5.2% China, CAGR +5.5% Japan, CAGR +0.4% 4,000 3,000 2,000 1,000 0 Region ( 000 units) 2015 2020 Chg. World 7,749 9,012 16% Res t of World 605 759 25% BRIKT* 475 612 29% China (Mainland) 1,793 2,345 31% Japan 225 229 2% North America 1,944 2,173 12% Western Europe 2,707 2,894 7% North America, CAGR +2.3% Western Europe, CAGR +1.3% 2015 2016 2017 2018 2019 2020 BMW Investor Presentation, May 2016 Source: Global Insight 04/2016 *BRIKT refers to Brazil, Russia, India, South Korea and Turkey Page 28
BMW GROUP Q1-2016: GOOD START IN THE FIRST THREE MONTHS OF 2016, WITH A RECORD FIRST-QUARTER SALES VOLUME PERFORMANCE. BMW Group Q1-2016 Q1-2015 Change in % Earnings before tax Group (in m ) 2,368 2,269 +4.4 EBT margin (in %) Group 11.4 10.8 - Automotive Segment Automotive sales (units) 557,605 526,669 +5.9 Earnings before interest and tax (EBIT) (in m ) 1,763 1,794-1.7 EBIT margin (in %) 9.4 9.5 - Net financial assets (m ) 17,511 15,037 +16.5 Motorcycles Segment Sales (units) 33,788 31,370 +7.7 Earnings before interest and tax (EBIT) (in m ) 94 115-18.3 EBIT margin (in %) 16.2 20.3 - Financial Services Earnings before tax (EBT) (in m ) 570 559 +2.0 Penetration rate (in %) 46.1 44.9 - Credit loss ratio (in %) 0.33 0.29 - BMW Investor Presentation, May 2016 Page 29
EBIT MARGIN DEVELOPMENT AUTOMOTIVE SEGMENT. TARGET PROFITABILITY OF 8-10%. PROFITABILITY EBIT margin development automotive segment [in %] 11.8 10.8 8.0 9.4 9.6 9.2 9.5 9.4 Target corridor: 8-10 % 6.4 6.4 1.4-0.6 2006 2007 2008 2009 2010 2011 2012 2013* 2014 2015 Q1-2015Q1-2016 BMW Investor Presentation, May 2016 * 2013 figures have been adjusted in accordance with IAS 8. Page 30
FREE CASH FLOW AUTOMOTIVE SEGMENT. TARGET OF >3BN EURO ANNUALLY. PROFITABILITY Free Cash Flow (Automotive) * [in m ] 5,404 4,471 2,277 3,166 3,809 3,003 3,481 Target: > 3 billion 1,456 1,060 n.a. 197 532 2006 2007 2008 2009** 2010 2011** 2012 2013** 2014 2015 Q1-2015 Q1-2016 * Definition: Free cash flow corresponds to the cash inflow from operating activities of the Automobiles segment less the cash outflow for investing activities of the Automobiles segment adjusted for net BMW Investor Presentation, May 2016 investment in marketable securities and term deposits. 2009 2015 as reported, 2007 & 2008 calculated according to above definition from reported figures. No cash flow reporting on segment level in 2006. ** 2009, 2011, 2013 figures have been adjusted in accordance with IAS 8. Page 31
CAPITAL EXPENDITURE BMW GROUP. TARGET RATIO BELOW 5% OF GROUP REVENUES. PROFITABILITY BMW Group Capital Expenditure * [in m ] Capex Ratio ** [in %] 6,000 10 9 5,000 8 4,000 3,000 2,000 1,000 5.7 5.2 5.6 2,777 2,933 2,980 4.7 3.8 4.0 2,383 2,312 2,720 5.4 4,151 6.5 4,967 5.7 4,601 4.2 3,826 2.6 1.9 7 6 5 4 3 2 Target ratio: <5% 0 548 405 2006 2007 2008 2009 2010 2011 2012 2013*** 2014 2015 Q1-2015 Q1-2016 1 0 BMW Investor Presentation, May 2016 * Capital Expenditure: additions to property, plant and equipment and other intangible assets (definition has been changed in 2016). ** Capital expenditure ratio: Capital expenditure divided by Group revenues. *** 2013 figures have been adjusted in accordance with IAS 8. Page 32
OUTLOOK FOR 2016 POSITIVE BUSINESS DEVELOPMENT EXPECTED DESPITE CHALLENGES. BMW Group Slight increase in EBT compared with previous year Automotive Segment Slight increase in deliveries and revenues compared with the previous year EBIT margin in the target range of 8-10% Financial Services Segment Return on equity of at least 18%, on par with previous year Motorcycles Segment Slight increase in deliveries compared with the previous year BMW Investor Presentation, May 2016 Page 33
BMW GROUP S FINANCE STRATEGY COVERS THE ENTIRE AUTOMOTIVE VALUE CHAIN. Research & Development Production Sales & Marketing Financial Services BMW GROUP S FINANCE STRATEGY FOCUSES ON SEVEN STRATEGIC TARGET FIELDS 1. Focus on Automotive Value Chain 2. Financing Follows Markets 3. Capability of Acting and Independence 4. Industry + Bank Typical Financing Instruments 5. Access to Banks, Investors & Rating Agencies 6. Value Orientation 7. Financial Robustness in Times of Crisis BMW Investor Presentation, May 2016 Page 34
DIVERSIFIED FUNDING MIX WITH A COMBINATION OF INDUSTRY AND BANK TYPICAL FINANCING INSTRUMENTS. Funding Instruments Financial Debt as of 31.03.2016 <1yr 1yr 2yrs 3yrs 4yrs 5yrs 7yrs 10yrs+ CP (EMTN) PPs Bonds Banks loans Others 1.6% Structured Financing 3.1% Bank Loans 8.1% Fed Funds 0.5% SSD 2.4% ABCP ABS Customers deposits Public Bonds 34.8% Brokered CD's 5.7% Fed Funds BCD s 86.5 bn * Customer Deposits BMW Bank 9.7% Industry-typical instruments Bank-typical instruments PP's 12.7% CP 6.2% ABS 15.3% BMW Investor Presentation, May 2016 *Adjusted, excluding currency and interest rate derivatives. Page 35
BMW GROUP INVESTOR RELATIONS. CONTACTS. Torsten Schüssler Head of Investor Relations Bernd Daser Debt & Equity IR Patrick Neumayer Equity IR +49-89-382-25387 torsten.schuessler@bmw.de +49-89-382-31684 bernd.daser@bmw.de +49-89-382-24272 patrick.neumayer@bmw.de Tanja Seiler Equity & SRI IR Andreas Stöffler Equity IR Ziye Zhou Debt & Equity IR +49-89-382-75161 tanja.seiler@bmw.de +49-89-382-17944 andreas.stoeffler@bmw.de +49-89-382-16190 ziye.zhou@bmw.de http://www.bmwgroup.com/ir IR Contact BMW Group Investor Relations Petuelring 130 80788 Munich +49-89-382-0 ir@bmwgroup.com BMW Investor Presentation, May 2016 Page 36
BMW GROUP INVESTOR RELATIONS. FINANCIAL CALENDAR 2016 & 2017. 03.05.2016 Quarterly Report to March 2016 12.05.2016 Annual General Meeting 2016 02.08.2016 Quarterly Report to June 2016 04.11.2016 Quarterly Report to September 2016 21.03.2017 Annual Accounts Press Conference 2017 22.03.2017 Analyst and Investor Conference 2017 11.05.2017 Annual General Meeting 2017 http://www.bmwgroup.com/ir BMW Investor Presentation, May 2016 Page 37
BMW GROUP INVESTOR RELATIONS. ON THE ROAD H1 2016. 31.05.-02.06.2016 Roadshow Copenhagen & Stockholm 07.06.2016 J. P. Morgan European Automotive Conference London 08./09.06.2016 Unicredit Auto Credit Conference London 09.06.2016 db Access German, Swiss & Austrian Conference Berlin 13.-15.06.2016 J. P. Morgan Global China Summit Beijing 20.06.-25.06.2016 Roadshow Chicago, Toronto & Montreal 21.06.2016 DB ADAS Conference, London 22.06.2016 Roadshow Edinburgh 23.06.2016 Bank of America Merrill Lynch Future Mobility Conference, London BMW Investor Presentation, May 2016 Page 38
DISCLAIMER. This document contains forward-looking statements that reflect BMW Group s current views about future events. The words anticipate, assume, believe, estimate, expect, intend, may, can, could, plan, project, should and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties or may be affected by factors outside BMW Group s control, including adverse developments in global economic conditions resulting in a decline in demand in BMW Group s key markets, including China, North America and Europe; a deterioration in credit and financial markets; a shift in consumer preferences affecting demand for BMW Group s products; changes in the prices of fuel or raw materials; disruption of production due to shortages of materials, labor strikes or supplier insolvencies; the effective implementation of BMW Group s strategic goals and targets; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; and other risks and uncertainties, including those described under the heading Report on Risks and Opportunities in BMW Group s most recent Annual Report. If any of these risks and uncertainties materializes or if the assumptions underlying any of BMW Group s forward-looking statements prove to be incorrect, actual results may be materially different from those BMW Group expresses or implies by such statements. BMW Group does not intend or assume any obligation to update these forward-looking statements. BMW Investor Presentation, May 2016 Page 39