BMW 2015 Annual Report Download - page 38

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83
Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Risk profile improved
The positive trend in the global economy and the on-
going
lull in the euro crisis enabled the risk profile rele-
vant for the Financial Services segment’s total portfolio
to improve again in 2015. The positive trend in bad
debt
levels continued in 2015, both for retail and corpo-
rate customers. The risk profile in the credit line of busi-
ness improved slightly compared to the previous year.
The credit loss ratio incurred on the segment’s total credit
portfolio decreased by 13 basis points to 0.37 % (2014:
0.50 %). Reflecting the generally stable conditions pre-
vailing on the international used car markets, sales prices
for BMW and MINI brand pre-owned cars developed
robustly. Average residual value losses incurred on the
resale of these vehicles were marginally higher than in
the pre vious year. Further information on the risk profile
is provided in the section “Report on risks and oppor-
tunities”.
Research and development are absolutely essential for
the BMW Group to maintain competitiveness as a pre-
mium manufacturer. As part of the Efficient Dynamics
strategy, the Group works continually on additionally
improving energy efficiency and reducing the emissions
of the entire range of automobiles and motorcycles it
sells. Under the catchword “Connected Drive”, the BMW
Group works on the connectivity of driver, vehicle and
the outside world. Both concepts embrace forward-
looking technologies in vehicles and are testimony to
the BMW Group’s innovative strength. Going forward,
the BMW Group will no doubt continue to set standards
in the field of connectivity on the roads. At 31 Decem-
ber 2015, a total of 12,669 people at 13 locations in five
countries worldwide were working in the BMW Group’s
research and development network to achieve this end.
Expenditure for research and development rose by 13.2 %
to € 5,169 million, mostly for projects aimed at securing
the Group’s future (2014: € 4,566 million). The research
and development ratio stood at 5.6 % and therefore at a
similar level to the previous year (2014: 5.7 %). The ratio
of capitalised development costs to total research and
development expenditure for the period (capitalisation
ratio) was 39.9 % (2014: 32.8 %). Amortisation of capi-
talised
development costs totalled € 1,166 million (2014:
€ 1,068 million; + 9.2 %). Further information on research
and development expenditure is provided in the section
“Report on Economic Position” (Results of Operations)
and in note 10 to the Group Financial Statements.
Given the pace of technological innovation, cooperation
arrangements in the field of research and development
are commonplace in the automotive industry. The BMW
Group also enters into cooperation agreements with
selected partners. The aim of these research and devel-
opment activities, which may also include cross-sector
input, is to help find innovative solutions for individual
mobility. The focus is currently on next-generation
technologies, such as digitalisation and alternative drive
systems.
Broadly diversified drive system research
In the course of 2015, the Group integrated hybrid tech-
nologies in further BMW brand models. In parallel, en-
gineers continued development work on highly-efficient
combustion engines. In the medium and long term, the
BMW Group is also developing a fuel cell electric vehi-
cle (FCEV). With these varying drive systems, the BMW
Group is well prepared for the challenges of the future
and will also be able to flexibly cater to both the
require-
ments of customers and the standards dictated by
RESEARCH AND DEVELOPMENT
Development of credit loss ratio
in %
0.7
0.6
0.5
0.4
0.3
0.2
0.1
11 12 13 14 15
0.49 0.48 0.46 0.50 0.37