BMW 2011 Annual Report Download - page 33

33 COMBINED GROUP AND COMPANY MANAGEMENT REPORT
almost equal to the number recorded one year earlier
(– 0.3 %). The number of credit card contracts under
management at the end of the reporting period decreased
slightly to 288,293 contracts (– 1.7 %).
Insurance business on growth course
The Financial Services segment also conducts insur-
ance business in more than 30 markets, offering a
range of car, residual liability, warranty and other in-
surance policies relating to individual mobility. De-
mand for these products remained high in 2011,
with 846,639 new contracts signed during the period
under report (+ 22.7 %). The insurance contract port-
folio reached a new high of 2,007,268 contracts, 27.7 %
more than one year earlier.
Risk situation continues to ease
Reflecting the economic recovery on the BMW Group’s
major car markets, the situation for credit and residual
value risks improved throughout the period under re-
port. The loss ratio on lending was reduced by 18 basis
points from 0.67 % in 2010 to 0.49 % in 2011. Average
losses on residual value risks also decreased significantly.
In order to measure the amount of unexpected loss
for major risk categories (credit, residual value and in-
terest rate risks, operational risks and insurance busi-
ness-related risks), the value at risk (VaR) is calculated
by the Financial Services segment on the basis of a
confidence level of 99.98 % and a holding period of
one year. An integrated limit system is used to control
such losses. Limits stipulated at the beginning of an
annual period – determined on the basis of resources
available to cover risks – were not exceeded at any
stage during the period under report. The Financial
Services segment’s ability to bear risks was therefore
assured at all times.
Research and development expenditure increased
In 2011 our research and innovation network employed
a workforce of more than 9,600 people based in twelve
locations spread over five countries. Research and de-
velopment expenditure for the year rose by 21.6 % to
€ 3,373 million, mostly on projects aimed at securing the
Group’s future. The research and development ratio was
4.9 %, 0.3 percentage points higher than in the previous
year. Further information on research and development
activities is provided in note 11 to the Group Financial
Statements.
Individual mobility of the future with Efficient Dynamics
Efficient Dynamics is a highly effective concept for the
individual mobility of the future. During the year under
report we continued to make our combustion engines
even more efficient. We also developed a fully hybrid
propulsion system for the BMW 5 Series and made good
progress in the field of lightweight construction.
BMW TwinPower Turbo technology has once again un-
derlined the leading role that the BMW Group is playing
in the area of fuel consumption and emissions reduc-
tions. In 2011 we presented the new 2.0-litre, 4-cylinder
petrol engine and the 3.0-litre straightline 6-cylinder
diesel engine featuring this technology package.
Using their Driving Experience Control switch with ECO
PRO Mode, drivers can choose between four driving
modes: economy, comfort, sport or sport+ . The ECO PRO
Mode helps motorists drive more economically and hence
increase driving range. Brake Energy Regeneration, Gear-
shift Point Indicator, detachable air conditioning com-
pressors and needs-based management of auxiliary equip-
ment all help to reduce fuel consumption even further.
The future family of engines using Efficient Dynamics
technology will employ a standardised design princi-
ple and a higher number of common components for
petrol and diesel engines, thus opening up
opportu-
nities to develop 3-, 4- and 6-cylinder engines of varying
capacities.
Development work on drive train electrification was
continued during the year, particularly in conjunction
with hybrid technology. BMW ActiveHybrid technology
is currently installed in the BMW ActiveHybrid 7 and
ActiveHybrid X6 models. The power for the electrically
driven features in these vehicles is largely derived from
the Brake Energy Regeneration system. In 2012 we will
also be launching a hybrid drive system for BMW 5 Series
models.
RESEARCH AND DEVELOPMENT
Development of credit loss ratio
in %
0.9
0.8
0.7
0.6
0.5
0.4
0.3
07 08 09 10 11
0.46 0.59 0.84 0.67 0.49