BMW 2015 Annual Report Download - page 64

64
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
27 Overall Assessment by Management
27
Financial and Non-financial
Performance Indicators
29 Review of Operations
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
63 Outlook
68 Report on 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
to be weaker in the short term. It cannot be ruled out,
however, that economic output in China may slow down
more than currently expected.
In India, investment-friendly economic policies are likely
to continue in 2016, helping to generate a growth rate
of 7.6 %. The outlook for Russia (– 0.2 %) and Brazil
(– 2.6 %) is far less bright. After drops in economic output
in 2015, both economies are likely to remain in reces-
sion in 2016, with persistently low prices for raw mate-
rials exerting a detrimental effect on growth.
Currency markets
Currencies which have the greatest influence on the
BMW Group’s international business, i. e. the US dollar,
the Chinese renminbi, the Japanese yen and the British
pound, may well be subject to a significant degree of
fluctuation again in 2016.
The US dollar is again likely to remain generally strong
against the euro in 2016. This assumption is supported
by the interest rate turnaround initiated in the USA in
December 2015, highlighting the different approaches
to monetary policies taken by the Fed and the ECB.
Another factor is that economic recovery in Europe is
likely to proceed at a slower pace than in the USA.
Given that the Chinese renminbi will probably remain
closely coupled to the US dollar in the short term, there
is a considerable likelihood that its value against the
euro will tend upwards in 2016. If, on the other hand,
the Chinese central bank continues to intervene in cur-
rency markets, thus halting the upward trend, the value
of the renminbi may possibly move sideways. In the
long term, however, capital markets in China are likely
to become more liberalised, as a result of which the con-
vertibility of the renminbi with other currencies would
increase.
As the Bank of Japan and the ECB seem set to continue
their expansionary monetary policies for the time be-
ing, the rate of the Japanese yen is unlikely to fluctuate
greatly in relation to the euro.
Owing to the robust state of the UK economy, and fanned
by speculation that the Bank of England is on the verge
of raising interest rates, the British pound could either
remain at its current level or even gain additional ground
in the short to medium term.
The onset of normalisation with respect to US mone-
tary policies suggests that the currencies of numerous
emerging economies will remain under pressure in the
foreseeable future. Countries that export raw materials
and are faced with current account and fiscal deficits
are most likely to be affected.
Automobile markets
Worldwide demand for automobiles is forecast to grow by
approximately 1.9 % in the current year to an estimated
84.0 million units. Breaking that figure down, the BMW
Group forecasts slightly lower growth in the USA than
in 2015, with market volume edging up by around 1.3 %
to 17.7 million units. China is expected to see a further
drop in the pace of vehicle registration growth, slowing
to around 6.9 % or 22.0 million units.
The majority of Europe’s markets are likely to continue
recovering in 2016, growing overall by approximately
1.4 % to 14.4 million units. Excluding Germany, the pic-
ture across Europe is similar, with market volume also
expected to grow by 1.4 % to 11.2 million units. The re-
gion’s
core markets, however, are only likely to see rela-
tively weak growth. Registration figures in Germany, for
instance, are predicted to increase by 1.4 % to 3.3 mil-
lion
units. The French market is expected to grow by
3.3 % to 1.9 million units and the Italian market by 3.0 %
to 1.6 million units. By contrast, demand in Spain is
expected to show even more vitality than in 2015 and
grow by 9.7 % to 1.1 million units.
The market in Japan is forecast to grow by 7.3 % to 5.2 mil-
lion
units year-on-year.
Automobile markets in major emerging economies are
likely to remain under pressure in the current year. Due
to the prevailing unfavourable economic and political
situation, Russia is expected to see a further drop of
15.4 % to 1.2 million units. The situation in Brazil seems
unlikely to stabilise after the decrease recorded in 2015,
with the market expected to contract by a further 7.6 %
to 2.3 million units.
Motorcycle markets
Markets for 500 cc plus motorcycles are likely to con-
tinue growing slightly in 2016. Registration figures for
Europe as a whole are also expected to rise slightly,
including a minor increase in Germany. Italy and
France are set to remain at similar levels to the past