MOTORREADS: 19 March 2009

mika · Mar 19, 2009

Fairchild is a vendor making H-D brand gear and is suffering along with the rest of the industry.
businesswir.com: The Fairchild Corporation files for Chapter 11 Bankruptcy Reorganization

Oh Canada!!!
cmgonline.com: Winnipegger bids, wins Vincent

dealernews.com: Two federal bills introduced to end youth vehicle ban

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thekneeslider.com: Roehr Motorcycles sales office in Santa Monica, CA

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Porsche.com: ÔÇ£Greatest racing car in historyÔÇØ celebrates its birthday ÔÇô 40 years of the Porsche 917

Cage Racing News

Here is the bad news if you are a Canadian F1 fan ÔÇô but there is good news also
wheels.ca: TSN cancels F1 pre-race program.

autoweek.com: 12 Hours of Sebring ÔÇô Peugeot tops Wednesday practice

BMW RAHAL LETTERMAN RACING SEBRING PRE-TEST
03/17/2009

BMW Rahal Letterman Racing Team completed the third of three pre-race testing sessions this afternoon in preparation for this Saturday's 57th annual 12 Hours of Sebring. Today's one-and-one-half-hour session followed two yesterday with the two BMW M3s recording times in the upper half of the 13-car GT2 class field.
A total of 109 laps were completed over the two days with BMW Rahal Letterman Racing Team personnel working together with BMW Motorsport engineers to continue chassis and tire development. On Monday, the team took full advantage of the first time both M3s tested together and tested Dunlop tires for future races.

Pleased with the progress made, the team will shift its focus to specific preparation for the 12-hour race with the start of official practice tomorrow.

Driver quotes:

Bill Auberlen, No. 90 M3

ÔÇ£I think we are making a very good race car. Between the Dunlop tire engineers and all the BMW Rahal Letterman Racing Team crew, we are making a very consistent racing car that is awesome to drive.ÔÇØ

Joey Hand, No. 90 M3

ÔÇ£So far everything has gone well. We can do one setup on one car and a different setup on the other car and see which one works better. Compared to the winter test and the test a few weeks ago, we are progressing much faster. We have a lot of things to run through, but we are cutting through them quickly. You can tell that these guys are really good. The team has a strong crew with the engineers on top of everything.ÔÇØ

Tommy Milner, No. 92 M3:

ÔÇ£Today was very good. It was my first time on new tires so that added some fun to the day. Having two cars has helped a lot. Taking some of the settings from the No. 90 car has helped us so we are definitely seeing the benefits of having two cars.ÔÇØ

Dirk M??ller, No. 92 M3

ÔÇ£Yesterday was really a good, productive day. It is awesome to have two cars. We are learning together and it helps the progress. I have a big smile on my face when I am driving the M3. I know we still have work to do on the car, but we are making good steps.ÔÇØ

Official practice begins tomorrow with qualifying scheduled for 2:45 p.m. Thursday. The 57th annual 12 Hours of Sebring starts at 10:30 a.m. Saturday.

About Rahal Letterman Racing:

Rahal Letterman Racing, based in Hilliard, Ohio and co-owned by three-time IndyCar Champion and 1986 Indianapolis 500 winner Bobby Rahal and CBS LATE SHOW host David Letterman, has been competing for more than a decade compiling 20 victories, 30 poles and one series championship (Bobby Rahal in 1992 in CART) and an Indianapolis 500 championship (Buddy Rice in 2004). In 2008 Rahal Letterman Racing again won Rookie-of-the-Year honors at the Indianapolis 500 and partnered with Andersen Racing to run two entries in the Indy Pro Series. In 2009 the team has joined BMW North America to campaign the new BMW M3 as BMW Rahal Letterman Racing Team in the American Le Mans Series and will as serve as the organizers of the Formula BMW Americas championship.

Coveted design award goes to BMW Motorrad rider equipment.
18.03.2009

Munich. The BMW Motorrad suit Atlantis 4 and the helmet Sport were awarded the renowned iF product design award 2009 by an international jury.
A high level of functionality and safety coupled with a timeless, attractive design - these are the qualities which characterise the products of the BMW Motorrad rider equipment range. In designing its new collections, the BMW designers are guided by the look and visual styling of the current BMW motorcycle models. But it is not just the attractive design and shaping of the products which is striking; their functionality, fit, wear comfort, safety and finish are also top priorities when it comes to satisfying the high expectations of BMW Motorrad customers.

The fact that the BMW design team is not only creative but also highly successful is reflected on the one hand by the huge popularity of the BMW Motorrad rider equipment items. And yet further evidence was provided in March, when two products from the BMW Motorrad rider equipment program won the coveted iF product design award 2009: the BMW suit Atlantis and the BMW helmet Sport.

It was no easy task for the 28 jury members from ten nations, since over 2,808 products had been submitted by 1,025 entrants from 39 countries. All in all, 802 products won awards in 16 different categories. Assessment criteria included structure and design, finish and material selection, functionality, ergonomics, safety and brand value.

Atlantis 4 suit - the classic among the leather suits.

This all-weather touring suit is a symbiosis of a classic cut and a dynamic, elegant design. A two-section, anthracite-coloured suit in quick-drying, breathable calf nubuk leather, it is processed in such a way that no rain clothing is required for the wearer to stay dry. The suit is available all common ladies' and men's sizes.

Sport helmet - head protection for those with sporty ambitions.

The helmet's striking lines and dynamic design stand for outstanding aerodynamics and acoustic properties. This helmet leaves nothing to be desired in terms of head ventilation and wear comfort, either. The Sport helmet is available in a number of different designs.

The two award-winning products are available from BMW Motorrad dealers right away, as is the entire 2009 BMW Motorrad rider equipment collection.

The speeches given by Dr. Norber Reithofer Chairman of the Board and Dr. Friedrich Eichiner Finance member are on page 2 and beyond.

The speeches have a different tone than in the past. In the recent past they seemed geared toward jolting the investor from their perception of the premium market and its rewards to a new reality that management saw coming. The current speeches are not full of sunshine, yet seem to be more focused on letting everyone know where the company is in this market and how it will continue to move forward.

Even with very little mention of the Motorrad segment of the company the speeches give an insight into how the company will operate in these times. Financial stability and innovative strength were put forward as the keys to surviving these hard economic times.
Of the two it is clear financial stability is the main concern. Innovation is talked of in terms that set the company up for future innovative developments rather than striking out and pioneering now. The automotive lines discussed have been in the works for some time.

The speeches provide a one two punch.

The first talks of eschewing government bail outs, belt tightening, inventory reduction. Staffing levels are being decreased while hiring trainees at the same time. The profit sharing plan for the company has cuts in bonus compensation at all levels with management taking the lead on a percentage basis will give something for every reader to smile about. Innovation and the future continue to be there. The declines in demand for premium brands (Not luxury brands ÔÇô that has an entirely different connotation) are short term and not an indicator of future growth.

The second speech gives the financial two punch that knocks reader back into reality with numbers and analysis. For those of you wanting to skip to the chase here is a table that gives a summary of many of the numbers.

There will be more to discuss in the future.

hydrogencarsnow.com: Shell Oil and ExxonMobileÔÇÖs self serving hydrogen plans

webbikeworld.com Review: Frank Thomas Rage Gloves

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The view from the rear of a Triumph 675

Comments:

mika · Mar 19, 2009

Statement by
Dr. Norbert Reithofer,
Chairman of the Board of Management of BMW AG
Annual Accounts Press Conference
Munich, 18 March 2009

Ladies and GentlemenÔÇö

Fortune Magazine and Hay Consulting recently surveyed 4,000 global business leaders and experts to ascertain: Which are the worldÔÇÖs most admired companies?

The BMW Group has been ranked ÔÇ£most admired companyÔÇØ in the automotive industry for the second time in a row. Not in Germany or Europe, mind you, but worldwide. This is exactly how we see ourselvesÔÇöas a global company facing global challenges and global markets.

On FortuneÔÇÖs general list covering all industries, the BMW Group is the only German company ranked as one of the ÔÇ£Top 50 All StarsÔÇØ.

However, in the current economic situation, every company has to demonstrate that it is able to overcome challenging times.

Under these exceptional circumstances, there are two crucial factors:

ÔÇó First, financial stability. The combination of a sound financial footing and high liquidity is the key prerequisite for a companyÔÇÖs ability to act. In the short term, this applies to the economic crisis. But in the long term, it also applies to the implementation of any activities that help safeguard our future.
ÔÇó And second, innovative strength. It is reflected in state-of-the-art, trendsetting and attractive products that customers expect and desire.

Today, I would like to comment on three main points:
1.) What is important to consider in the current situation?
2.) How does Strategy Number ONE secure our future success?

3.) How do we view the business development for the rest of the year?

LetÔÇÖs get straight to the first point:

We took the necessary steps to enable us to soften the impact of the crisis much earlier than any other car manufacturer.

At the same time, we have been focusing our efforts on consistently implementing our Strategy Number ONE, charting our course for the future.

Our goal is to maintain the BMW GroupÔÇÖs independence.

Now more than ever, we see that size is not everything. To survive this current market situation, even perfectly healthy companies need to show
ÔÇó a high degree of flexibility,
ÔÇó the ability to stand their ground in a fiercely competitive global environment,
ÔÇó as well as ideas and the strength to create and promote new forms of individual mobility.

This is why government bailouts for private businesses are a mixed blessing.

DonÔÇÖt get me wrong: It is important that governments join hands with business under such exceptional circumstances and provide companies with certain instruments. However, we need to concentrate our attention on where government intervention beginsÔÇöand where it should end. The key is to avoid a distortion of competition, which would weaken productive companies.

The following eight points show the BMW GroupÔÇÖs position in this challenging environment:

ÔÇó First: In 2008, the BMW Group achieved an EBIT of Ôé¼ 921 million. Adjusted for the provisions for residual value risks and credit losses and additional expenses for headcount reductions, our 2008 result would have been significantly higher. Mr. Eichiner will present our annual accounts for the business year 2008 in detail. But let it be said right now: We are in a strong operating position.
ÔÇó Second: The groupÔÇÖs financial footing is absolutely sound.
At the end of 2008, our liquidity was approx. Ôé¼ 8.1 billion. Obviously, liquidity and free cash-flow are top priorities in such economic times as these. Cash is king. We are in a position of financial security, which provides us with considerable room to maneuver.
ÔÇó Third: We managed to reduce costs, investments and capital expenditure per vehicle. I instructed all divisions and areas to do their very best to save costs. As a result, our fixed costs in 2008 were lower than in 2007. We also managed to reduce our costs of materials significantlyÔÇöthanks to our successful cooperation with suppliers. As you may know, we want to reduce material costs by Ôé¼ 4 billion by 2012. It is already clear that we will clearly exceed this target.
ÔÇó Fourth: We reduced our fourth-quarter inventory below the third-quarter level. Compared to 2007, our inventories remained stable while competitorsÔÇÖ stocks increased noticeably. In late 2008, we curbed production at our German plants. In the beginning of 2009, employees at certain locations worked short-time. This was a joint solution the Board of Management and the Works Council agreed upon in due time. In April and May, plants Dingolfing and Regensburg will once again work short-time for a while. This is how we protect the jobs of our highly productive permanent staffÔÇöpeople we absolutely need for the next growth period. This is in the best interest of our company, our employees and Germany as a business location.
ÔÇó Fifth: In 2008, we sold more than 1.43 million cars. This is the second-best result in our companyÔÇÖs history. In the past few years, we managed to increase our market share in the global premium segment to over 25 percent. This accomplishment is proof that our products are extremely desirable and our brands enjoy recognition. Our market share in the global automotive market has grown from 1.5 percent in 2000 to 2.3 percent at the end of 2008. We still remain the number one in the premium segment. Nevertheless, we think this is not the time to get caught up in a race for maximum volumes. Our goal is to strengthen and expand our market share in the individual markets.
ÔÇó Sixth: We are the industry leader in terms of CO2 emission reductions. At an average 156 grams per kilometer, our EU fleet emissions are much lower than those of any other premium manufacturer. Many car manufacturers frequently announce future plans and schedules. This is hypothetical. We are presenting facts today. Once again, we invested in Efficient Dynamics and new technologies last year. As announced, the amount was lower than the year before. We are now harvesting the fruits of our previous Ôé¼ 1.2 billion investment in environmentally friendly technologies. Efficient Dynamics is now working for us.
ÔÇó Seventh: Regarding job reductions, we exceeded our target.
Between the end of 2007 and the end of 2008, our permanent staff decreased by 7,498 to 100,041. Approximately 4,000 employees signed mutual termination agreements by December 31, 2008. We succeeded in streamlining all areas of the company. In the headquarters alone, we were able to eliminate 500 positions. Close to 1,800 jobs were reduced by selling Cirquent Group to the Japanese company NTT Data.
We can see today how important it was to begin reducing permanent staffÔÇöon a voluntary basisÔÇöalready in early 2008. I would like to thank the Works Council for their support in this matter. We also made best use of the flexibility temporary work offers and reduced a total of 6,000 jobs in this area.
On the other hand, we will recruit several hundred new employees, primarily engineers, in 2009. There is no hiring freeze. In 2008, we created 226 new jobs.
We will also continue to train a large number of young peopleÔÇösometimes beyond our own demand. We regard this as an aspect of corporate social responsibility. At the end of 2008, the number of trainees stood at 4,102, most of them in Germany. In other words: Trainees make up over 5 percent of our staff. In 2009, there will be approx. 1,100 new trainees at our company.
ÔÇó Eighth: A profit-sharing program for our board members, executives and all employees is an important element of our compensation system. We apply this system in good times as well as in challenging times. Another important principle is that the amount of the profit-sharing bonus increases according to a personÔÇÖs management level within the company. The members of our Works Council agree with this approach. So the significant decrease in the 2008 operating result will have the following financial effect:
o a Board MemberÔÇÖs remuneration will decrease by 40 percent,
o a senior executiveÔÇÖs by about a third,
o and non-management employees will earn about 10 percent less.
I am convinced that our employees understand the difficulty of the current situation and are willing to accept this hardship.

Various activities initiated in 2008 have provided us with a solid basis for the challenging year 2009.

Our business activities are and will remain focused on the long term.

This is why we discuss a lot about changing mobility requirements.

This brings me to my second point: How can we guarantee our future success in light of the changes and new challenges in our business environment?

Our Strategy Number ONE gives us a clear vision for the year 2020.

The main trends that are relevant to our businessÔÇösuch as the demand for mobility and the desire for differentiationÔÇöwill remain unchanged.

You all know our strategy structure. We have implemented specific projects supporting all four pillars.

1.) Growth

The global car market will continue to grow, and along with it the demand for premium products and services.
All forecasts agree on this point.

So the present decline in premium sales is not an indicator of the segmentÔÇÖs future development.

The real question is: How will premium be defined in the future?

Future mobility will require us to find a new balance between individual and ecological demands. Sustainability will definitely play a key role in defining premium. This applies to both environmentally friendly drive systems and production processes.

The BMW Group is already the worldÔÇÖs most sustainable car manufacturer.

2008 marked the fourth consecutive year the Dow Jones Sustainability Indexes ranked us as the global industry leader and we have been in this index since its birth in 1999.

This is reflected in our products, our production system and many little details. One example: We chose a climate-neutral process to print our annual report.

We currently see certain changes and shifts between individual segments of the auto market.

Due to legal requirements and national initiatives like the scrappage scheme, there seems to be an interest in smaller and highly efficient cars. This is only part of the full picture:

ÔÇó Our premium brand MINI is very successful in the small-car segment.
ÔÇó A few years ago, we launched the BMW 1 Series as our premium offering in the compact class. In 2008, sales of the BMW 1 Series increased by about 36 percent to more than 225,000 units. Today, BMW 1 Series models make up almost 19 percent of our portfolio. And 2009 will see the launch of a new model in the compact classÔÇöthe BMW X1. This car combines the versatility of an SAV with the flexibility of a compact car and BMWÔÇÖs characteristic driving dynamics.

Another trend is innovation.

ÔÇó Our new BMW 7 Series is a clear statement for the further innovation development of automobiles in general and the new benchmark for all competitors. We are convinced that the new BMW 7 Series is the best car on the market right now. Our flagship model and its innovations have received enthusiastic feedback from the mediaÔÇöalso thanks to the carÔÇÖs efficiency. The 730d only uses 7.2 liter of Diesel per 100 km. This makes it very popular with customers as well: The new 7 Series was launched in Europe only a few months ago, but it is already the segment leader. In Germany alone, sales improved by 80 percent in the first two months of 2009 compared to last yearÔÇÖs reference period. Competitors, on the other hand, suffered dramatic setbacks. The Austrian federal and state governments will drive BMW in the future, namely the 730d and the 520d, the most environmentally friendly cars in their respective segments. Thanks to the new cars, the Austrian government will reduce CO2 emissions by 43 tons a year.
ÔÇó In 2009, we are launching a versatile and highly variable vehicle: the BMW 5 Series Gran Turismo. It is the near-series implementation of the Progressive Activity Sedan. Once again, we are defining an entirely new segment. For me, the BMW 5 Series Gran Turismo is premium at its most innovative.

Premium is also a matter of design.

Design is and will remain a key factor in peopleÔÇÖs buying decision. It is one of the major trends in the automotive future.

We plan to focus strongly on design in the years to come, and plan to continue to be a trendsetter in the area of design. The new BMW Z4, due out in May, is a perfect example of the direction we want to take.

2.) Our strategyÔÇÖs second pillar: Shaping the Future.

Shaping the future of the automobileÔÇöthis can only be achieved by reducing fuel consumption and emissions.

No other car company has reduced emissions as much as the BMW Group.

We even exceeded the ACEA voluntary commitment: Between 1995 and 2008, our EU fleet consumption decreased by 27 percent. And let me add:
ÔÇó We will also be able to meet the new EU emission performance requirements for 2012 and 2015.
ÔÇó Excess penalties will not be an issue for the BMW Group.

The Federal Motor Transport Authority has confirmed our lead in the field of emission reduction:
ÔÇó In Germany, our vehiclesÔÇÖ average fuel consumption is 5.9 liters per 100 kilometers, with CO2 emissions of 158 g/km. The average of all new cars registered in 2008 was 165 g/km.
ÔÇó But more than that: BMWÔÇÖs fleet consumption is lower than that of GermanyÔÇÖs major volume manufacturer and on par with that of manufacturers whose portfolios mainly comprise small cars.
ÔÇó MINIÔÇÖs average carbon emissions are 138.6 gram.

If we begin to compare horse power to horse power, along with CO2 emission levels, there is not a single engine from our competitors that can beat our engines when it comes to performance and fuel economy.

This is Efficient Dynamics at work.

BMWÔÇÖs new entry-level model was launched a few weeks ago: The BMW 116d is even ÔÇ£greenerÔÇØ than the ÔÇ£World Green Car of the YearÔÇØ, the 118d. This means an average of 4.4 liters per 100 km in the EU test cycle and CO2 emissions of 118 grams.

49 models comply with the EU5 emission requirements. The BMW 330d with the optional BMW BluePerformance technology even meets the EU6 standard taking effect in 2014.

Hybrid technology allows us to tap further efficiency potentials of up to 20 percent.

BMWÔÇÖs first two hybrid vehicles will go into series production this yearÔÇöthe new BMW 7 Series and the X6.

Our long-term goal is sustainable mobility. And project i is our tool to reach this goal.

The MINI E is the first result of project i and our first milestone towards electric mobility. Once again, we are ahead of our competitors. The MINI E is currently being tested by 500 customers in California in everyday city life. Customers in Berlin and Munich are about to join the project.

This field test makes us the car company with the largest fleet of electric cars.

The MINI E is also a technology leader: Fully charged, the 204 hp car can go up to 250 kilometers. And this is a good thing because most drivers do not want to give up driving fun or dynamicsÔÇönot even for the car of the future.

mika · Mar 19, 2009

But euphoria is not called forÔÇönot yet anyway. It will take years and years before electric cars will be a common sight on our roads.

Why is that so? First off, electric cars do not meet all the different mobility demands. And secondly, there are many open questionsÔÇöregarding affordable technology, battery lifecycles, infrastructure, etc. Currently all manufacturersÔÇöand our society for that matterÔÇöare going through a learning process.

There are still a lot of areas to be defined when it comes to electric mobility. Political decisions have to be taken on the EU level at the least. And Germany should play a driving role in this process.

But the point is that the BMW Group is working hard on developing solutions and that we are investing a lot of money in creating a new era of mobility.

The second specific result of project i will be our Megacity Vehicle.

This vehicle will be the first of a range of near-zero emission vehicles. Customers will have the choice between a fully electric drive and a high-efficiency combustion engine. Large-scale production could start in the first half of the next decade.

With the Megacity Vehicle, we are also pursuing a radical approach toward establishing a truly sustainable value chainÔÇöfrom development to production and sales.

Thanks to these efforts, we are at the forefront of sustainable mobility. So we are in an excellent position to define what premium will be in the future.

Sustainability is increasingly becoming a value driver. This is reflected in the third pillar of our strategy:

3.) Profitability

Once again, we focus strongly on improving our profitability this year. Mr. Eichiner will tell you more about that later.

Our long-term profitability targets for 2012 remain unchanged despite the current weakness of the market.

In 2012, we want to post:
ÔÇó a Return on Capital Employed of 26 percent in the Automobile segment, and
ÔÇó an EBIT-based return on sales of 8 to 10 percent in the Automobile segment.

Another way to save money and resources is furthering the sustainable business development. It is wrong to believe that sustainability is always a cost factor.

Our ÔÇ£Clean ProductionÔÇØ program has established sustainability in our production processes. One example: In 2008, we reduced our energy consumption by over 650,000 MWh, resulting in cost savings of approx. Ôé¼ 35 million.

Our targets for the coming years are also highly ambitious:

We plan to reduce the consumption of energy, water, sewage water, solvent emissions as well as waste in our international production network by another 30 percent between 2006 and 2012. This is responsibility that pays off.

We plan for the long term, so we need permanent access to technologies and customers.

This is what our strategyÔÇÖs fourth pillar is all about:

4.) Access to Technologies and Customers

The customer will continue to be an integral part of Strategy Number ONE.

We have restructured our marketing division to streamline it and improve customer focus.

Our idea is to generate new business by offering our customers a wider range of mobility services. Let me give you an example: our after-sales business.

In 2008, services and spare parts accounted for an additional contribution to operating income of Ôé¼ 90 million. Our goal is to increase after-sales revenues by 20 percent by 2014.

We want to continue to set our own course.

Nevertheless, we will continue to cooperate with other car manufacturersÔÇöwhenever necessary and reasonable. Obviously, a win-win situation is the key to a successful cooperation.

At present, we are developing our MINI engines together with PSA. And we have entered into a purchasing cooperation with Daimler which will soon be expanded. We plan to gradually increase the number of parts and components we purchase together. For the MINI E, we will work with utility companies, such as Vattenfall in Berlin and E.ON Energie in Munich.

Ladies and GentlemenÔÇö

The successful implementation of our strategy shows that

in these difficult times, the BMW Group is setting the course for long-term growth and maintaining its independence.

The activities launched in the course of the past weeks and months will have a positive effect on our business development in the medium term.

Last but not least, my third point for the day: What is our forecast for the business year 2009?

2009 will be a transition year.

This is why we have set clear priorities: liquidity, free cash-flow and working capital, fixed costs, investments.

In other words: We are tightening our beltsÔÇöjust like any good businessman.

We expect the recovery period to start in 2010.

Unfortunately, the current downturn in business still continues. And as a result there still exists uncertainty in the overall market.

Therefore it makes no sense to offer a reliable forecast for 2009 right now.

We do not expect to match our 2008 retail level this year.

For this reason, we have developed several action scenarios depending on market development. At present, we expect automotive sales to decline by 10 to 20 percent in 2009.

From 2010 on, our sales will pick up pace thanks to our new product portfolio. This momentum will increase with the high-profit contribution models to be launched between 2010 and 2012.

Some of our competitors might enjoy a model-cycle advantage right now.

So we remain confident. And our profitability targets for 2012 remain unchanged.

I stated at various occasions that the biggest challenge is the crisis has filtered into peopleÔÇÖs mind. We think and act differently at the BMW Group. Our Strategy Number ONE is a clear roadmap to the future and because of this the BMW Group is well positioned to stay the course and meet successfully the challenges ahead. ThatÔÇÖs premium as well.

And this is why we will continue to be a strong and sustainable company with three outstanding brands: BMW, MINI and Rolls-Royce.

Thank you for your attention!

mika · Mar 19, 2009

Statement by
Dr. Friedrich Eichiner
Member of the Board of Management of BMW AG, Finance
Annual Accounts Press Conference
Munich, 18 March 2009

Ladies and Gentlemen,

I would also like to welcome you to the BMW GroupÔÇÖs press conference on last yearÔÇÖs results.

I would like to start by making two important statements:

1. A decline in retail and unusually high charges characterized 2008 for the BMW Group and the entire industry. We accrued substantial additional risk provisions. We recognized substantial one-off expenses for a voluntary personnel reduction.

2. Management focused on cutting costs, adjusting production, reducing inventories and resolutely managing liquidity. We thus prepared the company with foresight for the challenging business environment this year. We worked hard on our cost structures and improved our efficiency even further.

Let me start with our Group earnings in 2008.

Group revenues totaled nearly 53.2 billion euros. This represents a 5 percent decrease compared to the previous year.

Net of currency effects, Group revenues would have dropped by only 0.8 percent.

Despite the high one-off charges caused by the financial crisis, we achieved a Group EBIT of 921 million euros. This corresponds to an EBIT margin of 1.7 percent.
Profit before tax was clearly positive at 351 million euros, but was 91 percent down year on year. This was caused by the decline in retail and the unusually high charges mentioned earlier, which amounted to more than 2.4 billion euros.

Let me review the one-off charges that had the largest impact on our earnings.

ÔÇó We accrued additional risk provisions for our financial services business. More than 1.97 billion euros were additionally recognized for residual value and credit default risks. I will say more on this shortly.

ÔÇó We spent some 455 million euros on personnel measures as part of our severance program. We expect this to result in 500 million euros in annual savings moving forward.

At their core, the GroupÔÇÖs operating activities were very successful. The following adjustments show the companyÔÇÖs operational strength.

Without the aforementioned additional charges, Group EBIT would have totaled 3.3 billion euros. On this basis, the EBIT margin would have been 6.3 percent.

This proves that the company fared well and demonstrated its operating strength in a very challenging business environment. Initiatives from strategy Number ONE made a major contribution to this. They enabled us to optimize costs even further. By taking action early on, we improved the companyÔÇÖs performance once again.

This brings me to the individual items on the income statement.

Our cost of sales in 2008 were slightly up year on year. They rose by 1.1 percent to 44.3 billion euros. The charges mentioned earlierÔÇönamely the risk provisions, the decline in retail and the effect of currencies and raw material pricesÔÇöhad the biggest impact on the gross profit.

The sales cost amounted to more than 4 billion euros and were down 5.5 percent year on year. The ratio of sales cost to revenues was unchanged. This development benefited from our comprehensive optimization measures.

Our administrative costs were up 36 percent owing to the unusual personnel expense. Net of the severance payments, the BMW Group would have improved in this area as well. This proves that actions taken to streamline administration are showing the desired results.

Research and development costs according to IFRS amounted to 2.8 billion euros. They were thus 95 million euros lower year on year. The ratio of R&D costs to revenues according to IFRS was 5.3 percent. This puts us in the R&D ratio target range of 5 to 5.5 percent which we aim to achieve by 2012.

The capitalization ratio was 42.7 percent.

We continued to invest in future technologies and efficient drive systems. In the process, we benefited from significant improvements in efficiency in research and development.

We want to maintain our technology lead, especially as regards efficient and alternative drive technologies, light weight construction and active safety systems. They give us a clear competitive advantage. In the future, we will leverage more synergies and make significant improvements in enhancing efficiencies.

We will change the structure of our income statement from the interim report on the first quarter of 2009 onwards. The change relates to the separate statement of our research and development costs. Since we adopted IFRS in 2001, you have seen them as a separate item on the income statements in our financial statements. We were asked by the German Financial Reporting Enforcement Panel to disclose research and development costs under sales costs in the future. We decided to comply with this request from fiscal 2009 onwards. In addition, we will make sure that research and development costs are transparent to you through relevant commentary in the notes.

At -570 million euros, the financial result was much lower than in the previous year. This is due to the other financial result. The decline largely stems from the negative effects of the measurement of stand-alone interest derivatives resulting from the change in the interest structure. In the previous year, the conversion of the Rolls-Royce exchangeable bond had a positive effect on the financial result of 97 million euros.

The 351 million euros in profit before tax were taxed 21 million euros, compared to 739 million euros in tax in the previous year. The effective tax rate in 2008 was thus 6 percent, compared to 19 percent in 2007.

Deducting taxes results in a net profit of 330 million euros. The return on sales after tax was thus 0.6 percent.

Net profit is used to calculate earnings per share of common stock. They amounted to 49 euro cents, and the profit per share of preferred stock amounted to 51 euro cents.

The BMW Group is maintaining its stakeholder oriented approach and considering shareholder interests appropriately despite the difficult environment. The Board of Management and the Supervisory Board are proposing a dividend of 0.30 euros per share of common stock and 0.32 euros per share of preferred stock to the Annual General Meeting. The dividend payment totals 197 million euros.

Now I would like to briefly address the fourth quarter.

We earned 12.8 billion euros in revenues within the Group. Revenues were 2.8 billion euros lower year on year due to the decline in retail.
Automobile production was reduced by 96,000 units compared to the previous year. We were foresighted enough to avoid stockpiling.

We suffered unusually strong burdens in the fourth quarter, the extent of which was impossible to predict.

We had to spend an additional 800 million euros for residual value risks alone in the fourth quarter. This was compounded by 131 million euros in expenses for credit default risks. The one-off personnel expense totaled 197 million euros. These charges resulted in a negative Group EBIT of 718 million euros in the fourth quarter.

Net of these substantial one-off effects, Group EBIT would have clearly been in the black in the fourth quarter, at +410 million euros.

We are convinced that the fourth quarter was significantly affected by the turmoil on international capital markets. As regards the amount of the additional charges, we do not view this as being the trend for the coming months.

What counter-measures have we taken to cushion the negative effects?

ÔÇó In 2008, we reduced fixed costs compared with the previous year. This is reflected in the sales costs and administrative costs adjusted to exclude the one-off expense.

ÔÇó We also realized substantial savings in material costs. We optimized our value-added chain lastingly in terms of costs, quality and innovations. In addition, we achieved substantial productivity improvements in our in-house manufacturing. Furthermore, we will benefit even more from the use of component kits and increased component sharing between our model series in the future.

ÔÇó But cost structures were not the only area we worked on in order to prepare ourselves for the difficult environment. We strengthened our robust financial position even further. Despite the turmoil on capital markets, we managed to strengthen our liquidity and expand it proactively for 2009. As of December 31, 2008, the Group had 8.1 billion euros in cash and cash equivalents. I will come back to this point shortly.

Before moving on to the performance of the individual segments, I would like to inform you of the change in segment reporting. We want to make our reporting as transparent to our shareholders, partners on the capital market and the public as possible. Therefore, we applied IFRS 8, the mandatory segment reporting standard from fiscal 2009 onwards, early to our 2008 statements. We have exceeded the transparency requirements. From now on, we will prepare separate balance sheets, income statements and cash flow statements for our segments. Naturally, this change has no effect on our earnings.

This means, as you can see here, that we provide disclosure for all major key figures for each segment. The reported segment results are the basis for the BMW GroupÔÇÖs segment-specific key performance indicators.

This chart gives you an overview of the new way in which we present our segments. From now on, we will disclose a full balance sheet, income statement and cash flow statement for the Automobiles and the Financial Services segments.

Consolidations are now stated separately from the BMW GroupÔÇÖs other entities. The Other Entities segment includes all of the companies that cannot be clearly assigned to one of the core business areas. In the BMW Group, these are primarily the holding and Group financing companies. The ÔÇ£Reconciliation to the Group figureÔÇØ column states the consolidations as well as amounts that cannot be assigned to any of the individual segments.

Company assignments to the segments differ from the old company assignments to the sub-groups. Assignments by segment are clearer.
Now I would like to comment on the financials of our individual segments.

Let me start with the automobile business.

In this segment, we posted revenues of 48.8 billion euros, falling 9.4 percent short of the high level achieved in the previous year.

At 690 million euros, EBIT was 2.76 billion euros down year on year.

RoCE of the Automobiles segment was 4.9 percent, compared with 24.7 percent a year earlier. Net of the one-off charges I mentioned earlier, RoCE would have amounted to 14.6 percent.

The significant decline in earnings reflects the substantial burdens experienced in the last financial year. This slide shows some of the causes of this sharp decline in earnings:

ÔÇó The decline in retail as well as mix and price-related effects reduced earnings by 1.45 million euros.

ÔÇó The additional risk provision for residual values decreased our earnings by 911 million euros.

ÔÇó The additional currency charge of 387 million euros foreshadowed over the course of the year primarily stems from the US dollar and the British pound.

ÔÇó The severance payments mentioned earlier had a negative effect of 452 million euros on the Automobiles segment.

ÔÇó Depreciation and amortization had a further adverse effect on earnings of 16 million euros.

ÔÇó Raw material price increases had an earnings-reducing impact of 196 million euros.

Conversely, efficiency enhancements had a positive effect of 801 million euros. What I said regarding the Group as a whole also applies to the Automobiles segment. Our overall operating performance improved. We succeeded in becoming even more efficient and reducing fixed costs even more. We improved efficiency by 450 million euros compared with 2007.

We increased productivity by 7 to 8 percent, although we manufactured far fewer units than originally planned. Therefore, this rise should be viewed even more positively.

Moreover, we stepped up efforts to manage working capital efficiently very early on. Our proactive and foresighted management activities involved decreasing production, optimizing receivables management and reducing inventories in good time. This decreased our net current assets by nearly 1.2 billion euros.

mika · Mar 19, 2009

In light of the significant decline in retail, the Automobiles segment had a moderate level of free cash flow of -81 million euros as of December 31. Free cash flow was only marginally negative in the fourth quarter as well. In sum, this development is proof of our solid financial management. We are better positioned in this area than many competitors.

Our 9 billion euros in net financial assets in the Automobiles segment give us a solid position from which to tackle the challenges of 2009.
Due to the introduction of new segment reporting from the 2008 annual financial statements onwards, we now report net financial assets for the Automobiles segment and no longer do so for the Industrial Operations sub-group.
The method for calculating net financial assets was adjusted to the practices common in the auto sector. Now, only internal receivables and liabilities from financing activities are netted against each other.
The positive development in 2008 was driven by the higher level of cash and cash equivalents and the rise in internal net financial receivables of the Automobiles segment companies. Net financial receivables of the Automobiles segment from the Other Entities segment were up some 4.5 billion euros to 8.2 billion euros. This was primarily due to the reassignment of subsidiaries as part of an internal restructuring. The internal loan to the financial services business amounts to 3.5 billion euros. It is thus essentially unchanged compared to its level after nine months.
Financial liabilities also grew year on year, increasing to about 4.8 billion euros. The rise stems from capital market borrowings by companies that belong to the Automobiles segment.
Therefore, in 2008, our net financial assets totaled 9.0 billion euros.

Given the difficult business environment, our financial management focused especially on maintaining a high level of liquidity and widely diversified financing.

Furthermore, we strengthened our cash and cash equivalents substantially in 2008. This was achieved through successful capital market transactions with international investors and the expansion of the customer deposit business.

This brings me to the Financial Services segment.

We concluded just under 1.2 million new contracts with end customersÔÇö10.3 percent more than a year earlier. Contracts on hand with end customers and dealers thus rose by 15.2 percent to a total of 3.03 million units.

The business volume based on balance sheet carrying amounts rose 12.3% to 57.6 billion euros.

We steered growth more towards credit financing via our proactive management in this area. The lease penetration rate was thus essentially flat. In total, the penetration rate rose to 48.5 percent in the year under review.

The Financial Services segment recorded a negative profit before tax of 292 million euros.

The main reason for the decline in earnings was the negative impact of the additional risk provision of 1,057 million euros. The rise in refinancing costs also played a role. Credit risks had a negative impact of 363 million euros. The risk provision for the leasing portfolioÔÇÖs residual value losses was the single-largest item. Expenses for the entire volume of leases on hand totaled 694 million. Contractual risks were primarily in the USA, UK, Germany and Canada. We accrued an additional risk provision of 580 million euros in the fourth quarter alone.

Without these additional charges, our EBT for 2008 in this segment would have amounted to 768 million euros, which would have been a year-on-year improvement of 3.4 percent. On this basis, the return on equity would have been 19.1 percent.

From our current perspective, we have sufficiently considered the foreseeable exposure of all our contracts to residual value risks with the risk provisions we have built in both segments.

We observed a marginal improvement on the US used car market in January and February: The average residual value loss per vehicle declined slightly. This is in line with our forecasts. Based on our assumptions, the situation on this market should stabilize and eventually improve over the medium term.

Of course, we are aware of the volatility of this business field. Therefore, we cannot completely rule out further residual value risks in 2009. In the end, this will depend on the development of the markets.

Last year, we further made a proactive move to reduce the number of lease agreements in the USA in favor of credit financing. This will result in a significant decline in lease returns in 2011 compared to 2008.

As a precautionary measure, we significantly lowered the residual values included in those lease agreements concluded last year. This reduces the residual value risks for new contracts.

In the last few months, we have taken a series of measures on the US market in order to bolster our residual values:

ÔÇó We adjusted monthly lease installments in order to take the residual value trend and the rise in refinancing costs into account.

ÔÇó We refined our used car strategy for the American market. Its measures support the marketing of returns. Our successful CPO program is one of the elements. CPO stands for ÔÇ£Certified Pre-Owned.ÔÇØ We offer these cars with extended warranties once they have gone through an extensive maintenance procedure.
Last year, we delivered more than 104,000 CPO cars in the USAÔÇö14 percent more than in 2007. We see strong demand for our CPO vehicles at present.

ÔÇó This enabled us to reduce inventories in the USA and the number of our vehicles in stock at dealerships substantially. BMW and MINI currently rank among the top five brands with the lowest number of days in inventory in the USA.

ÔÇó In addition, we reduced the risk of credit losses even further by making our credit award process even stricter. Our rigorous creditworthiness checks ensure that we are only exposed to manageable risks when entering into new credit agreements. The credit loss rate rose to 0.59 percent compared with 0.46 percent in the previous year.

However, we cannot rule out a further increase in credit defaults due to the global economic situation.

Despite these effects, the field of financial services is attractive to the BMW Group, both now and in the future. Leasing gives us the opportunity to put a well-to-excellently equipped car into the hands of a customer every three years. In contrast, vehicles purchased with cash are usually kept by the first owner by an average of over five years. On average, extras ordered for purchased cars are 40 percent lower than those for leased cars. The loyalty rates for leased cars are encouragingly high, at over 75 percent.

All in all, the environment on the leasing market has changed because a number of competitors have abandoned the business. Leasing is and will remain a good tool for the BMW Group to ensure customer loyalty over the medium term. Despite higher refinancing costs and the additional risk provisions, the Financial Services segment is profitable in organic terms and is an important element of our Group strategy.

The dependence on money and capital markets becomes especially evident in light of the world financial market crisis. The BMW Group has managed to refinance itself without a problem since last September, but at much higher costs.

In light of the more favorable basis interest rates caused by the interest-rate cuts implemented by the central banks, we expect that the rise in refinancing costs will remain within limits.

As mentioned earlier, we diversified our refinancing tools: This includes the customer deposit business in Germany and the USA as well as the issuance of benchmark bonds, private placements, commercial paper, ABS (asset-backed securities) and bank loans. These instruments and our numerous contacts with investors will enable us to secure seamless refinancing going forward as well.

Financial services now account for about two thirds of total assets. Therefore, we are looking into the further development of the structure of the financial services business. In so doing, we aim to make progress in optimizing refinancing and improve risk management.

Now I will provide you with some information on the Motorcycles segment. BMW Motorrad nearly managed to match the previous yearÔÇÖs retail figure and generated 1.23 billion euros in revenues in a difficult market environment. Regardless of the underlying conditions, the segment expanded its product portfolio and launched several new models.

The EBIT amounted to 60 million euros due to the difficult economic framework, and was thus 25 percent down year on year. RoCE was 13.9 percent.

What awaits us in 2009 and how will we react to the challenges? This year, we expect the market to shrink by 10 to 20 percent compared to 2007. We have initiated measures that will help minimize the negative effects on earnings. And we will maintain this course with resolve.

Processes to prioritize costs have been introduced successfully across all levels. Cost control will be a top priority in the next few months as well. We are consistently continuing the efficiency-enhancement measures introduced by strategy Number ONE.
We expect our cooperation with Daimler AG to result in cost advantages as well: We will leverage economies of scale when purchasing jointly developed parts.

We have been regularly holding talks on pooling purchasing volumes with Daimler AG. Both parties have identified a double-digit number of suitable components. None of these components help differentiate between the brands or are relevant from a customer perspective. Both companiesÔÇöas well as our suppliersÔÇöwill benefit from this in the foreseeable future.

We are making a huge effort to further optimize the use of our capital. We have identified the potential to reduce capital expenditure in 2009 to less than four billion euros compared with 2008. In light of the large number of vehicle projects, this is an ambitious goal, which we will achieve through efficiency improvements and optimization measures. Nevertheless, we will continue to invest in our future.

Thanks to our Strategy Number ONE we are looking into the future with confidence. We are certain of having the right strategy and the best productsÔÇöalso and especially given the difficult global environment.

This forces us to make some significant cuts. Cost management is our top priority today and in the months to come. Our staff understands how necessary this is. We will continue to chart our existing course for cost reduction and efficiency optimization on this basis.

We continue to actively manage net current assets (working capital) and free cash flow. Safeguarding and increasing our liquidity is also extremely important.

In so doing, we are setting the stage for giving the BMW Group the best possible position for this financial year and afterwards. The Board of Management of the BMW Group and all its employees will fight for every vehicle sold, for every cent saved and for every cent earned. If the economic environment should worsen, we will reassess the situation and work on the basis of a new scenario if need be.

We view the current situation as an opportunity, as a fitness program for our company. We will use this year to optimally align the BMW Group for the challenges we face today and prepare for the growth opportunities we will have tomorrow. We continue to invest in our future-oriented areas since they are the key to our future success. With our strategy Number ONE, we are charting the right courseÔÇöalso in light of the challenges in 2009.

Thank you for your attention!

PAULBACH · Mar 19, 2009

Mika, you have outdone yourself today.

From post #3

But euphoria is not called forÔÇönot yet anyway. It will take years and years before electric cars will be a common sight on our roads.

Just one breakthrough in battery chemistry and that time line will have to be shortened.
Of course the other big problem is even if battery problems are overcome - how and where will the energy come from to charge the batteries. In whose back yard will the transmission lines run?

108625 · Mar 19, 2009

Thanks, Mika...

The "bike candy" was great, we Montanan's love to see fast bikes with vicious tires. But the real treat was this:

Porsche.com: ÔÇ£Greatest racing car in historyÔÇØ celebrates its birthday ÔÇô 40 years of the Porsche 917

It brought back fond memories of my brother and I and our Tyco "LeMans" slot car set, with Steve McQueen's Gulf Porsche and the Red Ferrarri 512, complete with working headlights and glow-in-the-dark stripes and Armco, and the best Christmas ever. I still have the movie that inspired it, but the slot car set is long gone.

Wrestling my Mustang around the strawbales in the fairground parking lot is as close as I'll ever come to racing; but in my mind, I'm killing bugs at high speed on a dark french night in a shreiking sky-blue and orange 917.

PAGoldsby · Mar 19, 2009

108625 said:
Thanks, Mika...

The "bike candy" was great, we Montanan's love to see fast bikes with vicious tires. But the real treat was this:

Porsche.com: ÔÇ£Greatest racing car in historyÔÇØ celebrates its birthday ÔÇô 40 years of the Porsche 917

Agreed. The John Wyer "Gulf" Porsches and the Mark Donohue record-setting cars really embody the high art of Porsche race cars.

MOTORREADS: 19 March 2009

mika

Still Wondering

mika

Still Wondering

mika

Still Wondering

mika

Still Wondering

mika

Still Wondering

PAULBACH

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108625

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PAGoldsby

Not available in stores..

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