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News of  March 28, 2001

BMW Group Continues to Invest in Product Offensive: Increase in Sales in the First Quarter

Munich, Germany - For the BMW Group, the year 2000 was a decisive year that saw a number of major changes in direction. The restructuring of the company and the consistent focus on premium brand products led to the most successful fiscal year in the company's history: deliveries, sales and profits broke all records. The reasons for this success also form the basis for the future activities:

• After the sale of Rover Cars and Land Rover, the BMW Group consequently concentrated on the premium segments of the automobile market.
• An unparalleled product offensive was started in these premium segments.
• The production network is being expanded to cope with the expected growth in the coming years.
• The BMW Group will further intensify its sales activities worldwide.

At the BMW Group Accounts Press Conference in Munich, Professor Dr.-Ing. Joachim Milberg, Chairman of the Board of BMW AG, made the following comment: "To ensure also in future BMW's innovative power, we will continue to make major investments, solidly financed out of the cash flow - as in the past. The new BMW models will consolidate our technological leadership."

Success is the result of the uncompromising premium brand strategy The BMW Group concentrates on those segments of the world automobile market which show above-average growth potential, which suit the character of the brand in question and which allow the projected revenue objectives to be achieved.

As a part of the premium brand strategy, the product range within the BMW brand is being actively expanded by the addition of three new model ranges: the 1 and 6 series and the X family. The two additional, completely independent brands – MINI and from 2003 Rolls-Royce - will, in addition, round off the brand portfolio both in the small car segment and at the very top end of the market.

Investment offensive is being consequently continued  The BMW Group is committed to qualitative growth in the future. To make sure of this, the BMW Group will continue to allocate a large amount of funding to investment. The investment rate will continue to be around 6 to 7 % of sales. This means that funds which had been invested in the Rover Automobiles Segment in the past are now being invested completely in the expansion of the BMW, MINI and Rolls-Royce brand products. As in the past the investments will be financed solidly from cash-flow.

In the year 2000, investments by the BMW Group, at euro 2,138 million, were about the previous year's level (previous year: euro 2,155 million). As in previous years, investments were financed completely from cash flow, which reached a value of euro 3,198 million in 2000 (previous year: euro 2,807 million).

BMW Group increased sales in the first quarter by more than 8 percent and is confident for 2001

The positive trend of the last year is also continuing in 2001. The BMW brand will have increased deliveries to customers in the first quarter 2001 by more than 8% compared with the same period last year to 219,000 vehicles (previous year: 202,000 units). Increases take place throughout the world, and in all so-called volume markets such as Germany, the USA and Great Britain.

At the Geneva Motor Show, the BMW Group presented the new BMW 3 series compact, which is being launched in June, to the public. The new BMW 7 series will be presented at the IAA in Frankfurt in September. The new flagship of the BMW product range, with its technical innovations, its striking design and its outstanding driving performance, will be setting new standards in the luxury automobile segment.

In July 2001, the MINI One and the MINI Cooper will be delivered to the first customers. The market launch will take place first in the Great Britain, and this premium product in the small car segment will then be introduced in Germany too from September on. This will then be followed by the other European countries, and, from 2002, the USA and Asia. In the motorcycle sector, the roadster model R 1150 R, the tourer R 1150 RT and the sports tourer K 1200 RS will all be launched in 2001, and the C1 200 will also be appearing in the market.

New best brands in terms of deliveries, sales and profits in the year 2000 The successful reorientation of the BMW Group and its consequent concentration on premium products has contributed to a new record business result in the year 2000. The profit from ordinary activities increased by 50% to euro 1,663 million (previous year: euro 1,111 million). This significantly exceeds the previous record result of euro 1,293 million achieved in 1997. The profit of the BMW Group at euro 1,026 million (previous year: euro 663 million before extraordinary result) also represented a new all-time high in the history of the Group.

With an increase of 9.4% to 822,181 vehicles (previous year: 751,272 units), the BMW brand reached a new record for deliveries in 2000. Growth was driven by the high demand for models in the BMW 3 series, the totally successful market launch of the Sports Activity Vehicle BMW X5, a further rise in the sale of diesel vehicles (plus 40% to 188,500 units) and a new record for deliveries in the company's largest overseas market, the USA (plus 22% to 189,423 units).

In the year 2000, the BMW Group reached a new sales record of euro 35,356 million (previous year: euro 34,402 million), an increase of 2.8% compared with 1999. This growth is due to the increase in deliveries and its regional distribution, higher level of equipment fitted and new model variants. This more than made up for the loss of sales of Rover Cars and Land Rover after these companies were sold.

Despite provisions created for the EU End-of-Life Vehicle Directive, the BMW Automobiles Segment achieved record results

The profit from ordinary activities in the BMW Automobiles Segment was once again increased, this time by 13% to euro 2,380 million (previous year: euro 2,106 million). The 1999 annual accounts already contained, under the heading "Miscellaneous, Consolidated Companies", provisions for the cost of dismantling used cars of euro 128 million. In 2000, a further euro 112 million were set aside and the total amount of the provisions of euro 240 million was allocated to the BMW Automobiles Segment. The necessary provision requirement has thus been fully covered.

The Financial Services Segment again made a significant contribution to the overall success of the BMW Group, increasing its result by 9% to euro 345 million (previous year: euro 316 million). The Rover Automobiles Segment, representing the operative business of Rover Cars/Land Rover up to the respective sale dates, shows, as already reported in the Interim Report in summer 2000, a loss of euro 762 million (total year 1999: euro 1,207 million); this loss is included in the total result of euro 1,663 million.

BMW Motorcycles records a successful fiscal year

The BMW Motorcycles Segment continued to develop positively. The result in this segment increased by 50 % to euro 27 million (previous year: euro 18 million). In the year 2000, sales of BMW motorcycles could be increased by 14.5% from 65,168 to 74,614 units. Sales of the F 650 GS, the world's first single-cylinder machine with three-way catalytic converter as standard, digital engine electronics and optional ABS, reached 13,115 units. The R 1150 GS, with 14,612 units sold, was the BMW Group's most popular motorcycle. Deliveries of the R 1100 RT rose by 4.8% to 9,780 units.

The improvement in sales figures was predominantly due to sales abroad, with high rates of increase in the USA (plus 20% to 12,047 units) and of the European markets Spain (plus 35% to 3,580) and Italy (plus 17% to 9,141). The German market also made a major contribution to the company's success, with sales of 23,427 units (previous year: 22,211).

Shareholders and workforce benefit from record result

The Board of Management and Supervisory Board propose to the Annual General Meeting to use the unappropriated profit available for distribution in BMW AG of euro 310 million (1999: euro 269 million) for the payment of a dividend on the equity entitled to dividends (622.2 million common stock and 48.5 million preferred stock, each with a nominal value of euro 1). This dividend represents an increase of 15% to euro 0.46 per common stock (1999: euro 0.40) and of 14.3% to euro 0.48 per preferred stock (1999: euro 0.42). The dividend increase proposed reflects the successful development of the BMW Group in the year 2000. The profit share of the workforce of BMW AG is based on the size of the dividend and will thus also increase.

(March 27, 2001)

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