BMW 2007 Annual Report Download - page 71

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By contrast, the car markets in the USA, Japan
and Western Europe are still not generating any
momentum. At best, the markets there will stagnate.
Car sales will decrease slightly in the USA in the
wake of the credit crisis. Japan is also unlikely to see
any significant upturn. This also applies to Western
Europe taken as a whole. A slight recovery is, how-
ever, forecasted for Germany.
Motorcycle markets will continue to develop
divergently
The divergent development of the international mo-
torcycle markets will continue in 2008. The BMW
Group forecasts that the overall market for motor-
cycle sales in the 500 cc plus segment should be
close to the previous year’s level.
Whereas the US market is forecasted to con-
tract slightly, the markets in Europe and Asia should
remain stable overall, with European markets in par-
ticular again developing divergently.
More difficult environment for the financial
services sector
The current market environment is having an ad-
verse impact on the refinancing and liquidity situa-
tion and on credit risk within the financial services
sector. In combination with a stronger euro, this
will put a strain on profitability within the sector.
Outlook for the BMW Group in 2008
In the light of the general economic environment dis-
cussed above, the BMW Group believes that it will
continue to perform successfully in the financial year
2008 with the initial benefits of the
Group’s new stra-
tegic direction already becoming visible.
With the Number ONE strategy, the BMW Group
will lay the foundation in 2008 for the planned im-
provement in profitability. This will involve measures
on both the revenue and expenditure side. In total,
the BMW Group is aiming to achieve cumulative im-
provements of some euro 6 billion compared to the
original forecasts by 2012. The greatest potential for
savings is seen in the cost of materials, the largest
block of costs for the business.
As the basis for its continuing success, the
BMW Group is also aiming for sales volume records
with all three brands and is confident of being able to
retain its position as the world’s leading premium
manufacturer. Further expansion of the product
range and targeted engagement on new markets
will also help it to achieve these objectives. Against
the background of these aims, the BMW Group fore-
casts that business will grow faster in the first half of
2008 and more moderately in the second.
The BMW Group is also working hard to im-
prove cost efficiency in order to achieve its profit-
ability targets. This focus on costs, which needs
to start during the development phase, involves
avoiding unnecessary complexity, focusing firmly
on achieving value for the customer and creating
synergy benefits by the increased use of modular
components.
One of the objectives is to reduce research and
development expenditure for new products and
technologies as efficiently as possible, based on the
principle More output from less input. This will
enable the BMW Group to set the R&D ratio to a
level of approximately 5.0 % – 5.5 % of revenues and
still meet the same high standards.
In this context, the BMW Group is also setting
new targets for the ratio of internal and external input
in strategically important technological areas. Further
opportunities for better profitability will also come
from more efficiently designed interfaces within the
Group’s supplier network. In future, for example,
suppliers will be involved at an even earlier stage in
the decision-making process within product and
technology projects. In future, wherever it makes
commercial sense and the appropriate economies of
scale can be realised, the BMW Group will enter into
more cooperation arrangements.
The BMW Group believes that, compared to
the levels invested in the past, it will be able to
reduce its capital expenditure ratio over the coming
years whilst, at the same time, still remaining fully
prepared to face any future challenges. The plan is
to scale down the capital expenditure ratio to below
7.0 % of revenues.