BMW 2008 Annual Report Download - page 68

69 Group Management Report
confidence is likely to last throughout the entire year, the
performance of motorcycle markets will be severely affected
in . In line with the overall trend, the BMW Group fore-
casts that motorcycle sales in the  cc plus segment will
be down in .
Financial services sector in 
The business climate in the financial services sector is cur-
rently being overshadowed by a high degree of uncertainty,
which, in turn, is having a negative impact on the refinanc-
ing and liquidity situation and the bad debt risk exposure
of the whole sector. Until confidence in the financial markets
is restored, there can be little hope that refinancing condi-
tions will stabilise.
Based on recent developments, the situation on credit
markets is unlikely to ease quickly.
If the economic down-
ward trend continues, the financial
services sector too is
likely to have to bear further losses in conjunction with
credit risk. A recovery of the prices on the used car markets
is also not in sight before the end of .
Outlook for the BMW Group in 
Towards the end of  the situation on international
financial markets climaxed in an unprecedented fashion.
At the same time, the crisis also spilled over to the real
economy worldwide. The rapid pace of the economic
downturn and uncertainty as to how the economic crisis
will proceed make reliable forecasts extremely difficult,
even for the near future.
The current business environment will also make the year
 a challenging one for the BMW Group. By the same
token, the BMW Group has shown on numerous occasions
in the past its ability to adapt successfully to changing con-
ditions. Processes and structures have also been newly
aligned and continually improved at the same time. For
these reasons, the BMW Group has – now more than ever –
the necessary manoeuvring room to position itself appro-
priately during the economic crisis in order to ensure as
good a starting position as possible for the ensuing phase
of economic recovery.
As long as the current situation shows no signs of easing,
the BMW Group will continue to charter its course through
this phase of extreme uncertainty by applying the neces-
sary combination of coordinated tactical measures and a
high degree of flexibility. In this way, the BMW Group is
bracing itself to cope with the market conditions that the
year  brings with it.
The necessary flexibility was shown in early adoption of a
wide range of measures to bring car production volumes
into line with falling worldwide demand. The various meas-
ures implemented – such as flexible deployment of em-
ployees in the production network, the use of employee
time accounts and the option of employees taking sab-
baticals – are decided on in close cooperation with em-
ployee representatives. Production volumes are also being
managed by the use of temporary short-time working
arrangements at specific sites. The BMW Group has also
been able to reduce workforce numbers on a targeted
basis, especially in the production area, by introducing
efficiency improvements, thus enabling personnel ex-
pense to be adapted to changing conditions at an early
stage.
Due to its flexible manufacturing structures, the BMW Group
is second to none in competitive terms. The extreme flexi-
bility of the production network therefore provides a clear
competitive advantage, enabling the BMW Group to adjust
production capacities in line with changing situations on
the various sales markets. The Group’s customer-oriented
sales and production processes enable capacities and
sales processes to be adjusted flexibly and at short notice.
On the sales side, the BMW Group is responding to the
challenges it faces by intensifying its various sales strate-
gies. As part of the process of managing sales volume, this
also includes tailoring volumes to suit demand in individual
sales markets. This strategy allows the BMW Group to
react quickly to changes in demand with due regard to its
strong market position, customer satisfaction and the sta-
bility of the dealer organisation.
The BMW Group took measures to allow for changing busi-
ness conditions at an early stage. For example, the first
signs of problems in  triggered an early adjustment to
risk provisions when the portfolio of lease cars was reas-
sessed. This move took account of the specific risks iden-
tified as well as the impact on the lease portfolio.
In view of the currently adverse climate, the strategy
Number ONE is proving to be an appropriate and forward-
looking entrepreneurial decision for redirecting the BMW
Group. A great deal of preliminary work was carried out
in originally developing this strategy. With business condi-
tions having deteriorated so extremely, this preliminary
work is proving to be a highly useful instrument in
man-
aging the business in the short term. The initiatives that
emerged from the strategy Number ONE are now helping
the business to charter its course through the crisis and