BMW 2014 Annual Report Download - page 66

66
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26
Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87
BMW Stock and Capital Markets
but also the Chinese renminbi, the British pound and
the Japanese yen, could well be subject to a significant
degree of fluctuation again in 2015.
The expected interest rate turnaround in the USA, low
inflation in Europe and the fragile state of Europe’s
economy, suggest that the US dollar will again tend to
perform strongly against the euro in 2015.
The Chinese renminbi is likely to remain relatively closely
coupled with the US dollar over the coming year. In the
long term, however, it seems likely that volatility will
increase, following the announcement that capital mar-
kets in China are to be liberalised.
The Japanese yen, which has lost significant ground
against the euro since mid-2012, is not expected to see a
rapid recovery, given that the Japanese central bank is
unlikely to change its monetary and exchange rate poli-
cies in the near future.
The current healthy state of the UK economy and the
expected turnaround in interest rates that the Bank of
England is likely to set in motion could well strengthen
the British pound somewhat in the short and medium
term.
The currencies of many emerging economies are expected
to remain under pressure against the US dollar in the
foreseeable future, due to the normalisation of US mon-
etary policies, which is likely to get under way in 2015.
Countries with current account and fiscal deficits are
most likely to be affected. Due to the expansionary mon-
etary policies of the ECB, emerging market currencies
will tend to gain in value against the euro. The rouble
will remain on the weak side until political tensions have
eased.
Car markets
We expect global car markets to grow in the current year
by approximately 3.0 % to 83.1 million units. The US
market is forecast to grow by around 2.9 % to 17.0 mil-
lion units. Our prediction for passenger car registra-
tions in China is a rise of around 10.0 % to 20.3 million
units.
The majority of Europe’s car markets should continue
to recover in 2015. The region’s core markets, however,
are only likely to see growth on a modest scale. The
number of new registrations in Germany, for instance,
is forecast to rise by 2.1 % to 3.1 million. The French
market is expected to grow by 6.7 % to 1.9 million units,
the Italian market by 2.1 % to 1.4 million units. The
economic upturn in Spain should maintain momentum
and result in a further steep rise in car sales in the
cur-
rent year (0.95 million units; + 11.3 %). The UK car market
is likely to remain flat in 2015, with registrations down
marginally by 0.5 % to approximately 2.5 million units.
Car registrations in Japan are forecast to be in the region
of 4.8 million units and hence about 10.0 % lower than
in the previous year.
In
the case of car markets in major emerging econo-
mies, we predict some highly divergent developments.
Due to the prevailing economic and political situation,
Russia is expected to see a further 21.8 % drop to 1.8 mil-
lion units. The Brazilian car market is also likely to con-
tract slightly again in 2015 by approximately 2.0 % to
3.3 million units.
Motorcycle markets in 2015
The markets for 500 cc plus motorcycles are again likely
to continue their upward trend in 2015, albeit on a
modest scale. Registrations are expected to rise slightly
across Europe, including increases on a similar scale
for the major motorcycle markets in Germany, Italy and
France. The USA is also likely to see a continuation of
the positive trend.
Financial Services sector in 2015
The normalisation of monetary policies in the USA is
expected to continue throughout the coming year. The
first steps in the direction of a slight rise in interest
rates
might be taken in summer 2015. The current debt
situation, however, precludes any rapid interest rate
increases in the USA. In Europe, by contrast, the ECB
will proceed with the plans it has already announced
for a large scale bond-buying programme as inflation
remains low in the first half of 2015. A weakly perform-
ing economy and a low inflation rate will maintain the
pressure on the Bank of Japan to intervene. We there-
fore expect it to retain its expansionary monetary poli-
cies and continue to buy government bonds. Reference
interest rates in
the eurozone and Japan are therefore
set to remain at historically low levels at least until the
end of 2015.
We expect the pattern of credit risks worldwide to re-
main more or less stable during the current year.