BMW 2004 Annual Report Download - page 30

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Outlook
Economic prospects in 2005
Economic momentum had already started to slow
down perceptibly in all of the world’s regions during
2004. High oil and raw material prices coupled with
more restrictive economic policies will again hold
down global growth in 2005. Despite the slow-down
in global economic activity, the BMW Group believes
that the process of global economic recovery is still
underway. The conditions necessary for the world’s
economies to grow solidly are still in place, even if
global expansion is likely to be less pronounced in
2005 than in 2004. Any further major increase in
crude oil prices could, however, significantly impair
global economic prospects.
After the overall sharp upturn in 2004, the econo-
mies of the USA, Japan and the emerging economies
of Asia and Latin America should again return to
more moderate economic growth rates. The econo-
my of the euro region is only likely to continue its
recovery at a moderate pace. The signs are that the
overall economic growth rate will decline marginally
in Germany. The scale of economic recovery in the
euro region in 2005, and in particular that of Germany,
will depend largely on the extent to which domestic
demand, which has remained the weak link for some
time now, will be revived.
Economic outlook for the automobile industry
in 2005
The BMW Group forecasts that the major traditional
car markets will see some growth in Japan and
Europe, whereas the US market will hardly grow at all.
It should, however, be possible to observe a robust
growth in the total number of new vehicles sold in the
major markets of Asia and Latin America.
The BMW Group continues to forecast that
premium segments will grow more strongly than
volume segments in the coming years.
Outlook for the BMW Group in 2005
Against this background, the BMW Group forecasts
sales volume growth for all three brands in 2005 and
hence a new sales volume record overall.
As far as the motorcycles business is concerned,
the BMW Group anticipates that, due to the availability
of the K1200 S at the beginning of the new season
and the large number of new models, it will be able
to return to the growth course set in previous years.
Growth is also expected to be achieved in all
lines of the financial services business. The process
of expanding the global reach of the BMW Group will
be continued in 2005, with a focus on Asia and Europe.
The BMW Group will continue to invest in
profitable sectors, whilst continuously improving and
expanding its production network. New body in white
production facilities will be added, for example, to the
MINI plant in Oxford. Overall, the BMW Group will
invest more than GBP 100 million in manufacturing
facilities in Oxford by 2007. A further euro 300 mil-
lion will be invested in the engine factory in Steyr in
the coming years in order to increase production
capacities. Other key areas of capital expenditure will
be at the new BMW plant in Leipzig and modifica-
tions at the BMW plant in Spartanburg.
The BMW Group will continue to create new
jobs as the product and market initiative unfolds,
whereby increases in the workforce will no longer be
as pronounced as in recent years.
The BMW Group will continue its successful
course in 2005 and again prove its underlying
strength. The BMW Group will tap the full sales po-
tential of the premium segments of the international
vehicle markets with new model series and individual
models. At the same time, the BMW Group will con-
tinue to expand its presence in both new and tradi-
tional markets. Some adverse factors will arise in
2005 as a result of a combination of increased mar-
ket competition, the effect of the US dollar exchange
rate and an above-average increase in the price of
important raw materials. Overall, the BMW Group aims
to achieve approximately the high earnings level of
2004.