BMW 2008 Annual Report Download - page 26

27 Group Management Report
Financial Services segment severely affected by
economic crisis
The worldwide economic and financial crisis affected earn-
ings of the Financial Services segment in  more se-
verely than expected. Above all else, the tense situation on
the international used car markets and the higher level of
bad debts risk necessitated the recognition of substantial
expenses for risk provision. For a current assessment of
risk in the financial services business, reference is made to
the risk report on pages  – .
The business volume in balance sheet terms at  Decem-
ber  amounted to euro , million and therefore
increased by .  on a year-on-year basis. ,, lease
and credit contracts were in place with dealers and retail
customers at  December , .  more than at the end
of the previous reporting period. The increase was due,
amongst other reasons, to the repurchase of a previously
off-balance-sheet port folio of vehicles which had included
a part of the leasing business for Germany. The proportion
of new BMW Group cars leased or financed by the Finan-
cial
Services segment in  went up by . percentage
points to . .
Targeted regional expansion continued
The Financial Services segment continued its strategy of
targeted regional expansion in . In October , an
agreement was signed with BMW Brilliance Automotive
Ltd., Shenyang, concerning the establishment of a joint
venture for financial services products in China. In conjunc-
tion with a cooperation agreement with Nordea Finance,
a subsidiary of Scandinavia’s largest bank, Nordea Bank,
financing products have also been available to retail cus-
tomers in Estonia, Latvia and Lithuania since July .
During the first half of the year, the Financial Services seg-
ment received its banking licence for Russia. Retail cus-
tomer financing operations were commenced on this mar-
ket in July .
Study bears out retail customer and dealer
satisfaction
The internationally renowned market research institute,
J. D. Power and Associates, published the results of its
Consumer Financing Satisfaction StudySM  in
December . The BMW Group’s Financial Services
segment took first place in both award categories for
customer satisfaction in the USA.
In the Dealer Financing Satisfaction StudySM 
pub-
lished in September , the segment headed all
cate-
gories for dealer satisfaction in the USA. These awards
acknowledge the quality of services provided by the BMW
Group to retail customers and dealers in the area of finan-
cial services.
Retail customer business continues to expand
Credit and lease business with retail customers, the seg-
ment’s largest line of business, again grew strongly in .
The value of new contracts signed with retail customers in
 amounted to euro , million, representing a . 
increase over the previous year. ,, new contracts
were signed in , .  more than one year earlier. Well
over half of these contracts related to new vehicles manu-
factured by the BMW Group.
Lease contracts accounted for .  of new business with
retail customers. This was . percentage points down
on the previous year and is the result of a targeted shift in
focus towards credit financing. In terms of new contracts,
lease business was .  lower and credit finance business
was .  higher than in the previous year.
In the area of used car financing, the number of new con-
tracts rose by .  . Almost three quarters of these related
to the credit financing of used BMW and MINI brand cars.
At the end of the reporting period, the Financial Services
segment had a portfolio of ,, contracts with retail
customers, .  more than one year earlier. The number
of contracts in place with retail customers in Germany
rose by .  , partly due to the repurchase of a previously
off-balance-sheet port folio of vehicles which had included
a part of the leasing business for Germany. The contract
portfolio in the remaining European markets grew by
.  and in the Asia / Oceania / Africa region by .  .
The Americas region, with
, contracts, continues
Contract portfolio of BMW Group Financial Services
in , units
3,000
2,800
2,600
2,400
2,200
2,000
1,800
04 05 06 07 08
1,843 2,087 2,271 2,630 3,032