BMW Group Annual Report 2019

1 Power of ChoiceANNUAL Report 2019 CONTENTS1TO OUR SHAREHOLDERS Page 4 BMW Group in Figures Page 8 Report of the Supervisory Board Page 18 Statement of the Chairman of the Board of Management Page 22 BMW AG Stock and Capital Markets in 2019 Page 24 Financial Calendar Page 24 Contacts2 COMBINED MANAGEMENT Report Page 26 General Information and Group Profile Page 26 Organisation and Business Model Page 44 Management System Page 48 Report on Economic Position Page 48 General and Sector-specific Environment Page 52 Overall Assessment by Management Page 53 Comparison of Forecasts for 2019 with Actual Results in 2019 Page 64 Review of Operations Page 76 Comments on Financial Statements of BMW AG Page 82 Report on Outlook, Risks and Opportunities Page 82 Outlook Page 88 Risks and Opportunities Page 101 Internal Control System Relevant for Accounting and Financial Reporting Processes Page 102 Disclosures Relevant for Takeovers and Explanatory Comments3 Group FINANCIAL STATEMENTS Page 108 Income Statement Page 108 Statement of Comprehensive Income Page 110 Balance Sheet Page 112 Cash Flow Statement Page 114 Statement of Changes in Equity Page 116 Notes to the Group Financial Statements Page 116 Accounting Principles and Policies Page 133 Notes to the Income Statement Page 141 Notes to the Statement of Comprehensive Income Page 142 Notes to the Balance Sheet Page 164 Other Disclosures Page 184 Segment Information Page 190 List of Investments at 31 December 20194 corporate governance Page 200 corporate governance (Part of the Combined Management Report )

2 Page 200 Information on the Company s Governing Constitution Page 201 Board of Management Page 201 Supervisory Board Page 202 Shareholders and Annual General Meeting Page 202 Declaration of Compliance Page 202 corporate governance Statement Page 203 Members of the Board of Management Page 204 Members of the Supervisory Board Page 207 Overview of Supervisory Board committees and their composition Page 208 Compliance and Human Rights in the BMW Group Page 211 compensation Report (Part of the Combined Management Report ) Page 242 Glossary Explanation of Key Figures Page 246 Responsibility Statement by the Company s Legal Representatives Page 247 Independent Auditor s Report5 OTHER INFORMATION Page 256 BMW Group Ten-year Comparison The figures for fuel consumption, CO2 emissions and power consumption are calculated based on the measurement methods stipulated in the current version of Regulation (EU) 715 / 2007.

3 This information is based on a vehicle with basic equipment in Germany; ranges take into account differences in wheel and tire size selected as well as optional equipment and can change based on configuration. Fuel consumption and CO2 emissions information are available on page 70. The figures have been calculated based on the new WLTP test cycle and adapted to NEDC for comparison purposes. In these vehicles, different figures than those published here may apply for the assessment of taxes and other vehicle-related duties which are (also) based on CO2 emissions. For further details of the official fuel consumption figures and official specific CO2 emissions of new cars, please refer to the Manual on fuel consumption, CO2 emissions and power consumption of new cars , available at /co2 /.Discover the Power of Choice from Rob, Faith and Sachiko as well as our financial year 2019 in our digital Annual MKHOMBE SOUTH AFRICAROB VAN ROON NETHERLANDSTADAMI SACHIKO JAPANOur customers across the globe have different mobility , they decide for themselves what they want and desire.

4 That s the Power of Choice. / 2019 Page 4 BMW Group in Figures Page 8 Report of the Supervisory Board Page 18 Statement of the Chairman of the Board of Management Page 22 BMW AG Stock and Capital Markets in 2019 Page 24 Financial Calendar Page 24 ContactsTO OUR SHAREHOLDERS1To Our ShareholdersBMW Group in Figures Report of the Supervisory BoardStatement of the Chairman of the Board of ManagementBMW AG Stock and Capital MarketsBMW Group IN FIGURES Key non-financial performance indicators 01 20152016201720182019 Change in %GroupWorkforce at year-end 1122,244124,729129,932134,682133,778 seGmentDeliveries 2, 32,257,8512,352,4402,468,6582,483,2922,5 38, emissions in g CO2 / km 4, 5 127124128128127 seGmentDeliveries136,963145,032164,15316 5,566175, non-financial performance figures 02 20152016201720182019 Change in %Automotive seGmentDeliveriesBMW 2, 31.

5 913,2131,989,8172,093,0262,114,9632,185, 3340,880358,586372,194364,135347,474 33,7584,0373,4384,1945, 2, 32,257,8512,352,4402,468,6582,483,2922,5 38, volumeBMW 61,933,6472,002,9972,123,9472,168,4962,2 05, ,008352,580378,486368,685352,729 ,8484,1793,3084,3535, 62,279,5032,359,7562,505,7412,541,5342,5 64, seGmentProduction volumeBMW151,004145,555185,682162,687187 , services seGmentNew contracts with retail customers1,655,9611,811,1571,828,6041,90 8,6402,003, Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time working arrangements and low income Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units).3 Delivery figures have been adjusted retrospectively going back to 2015.

6 The basis for the adjustments is a review of sales data in prior periods for the BMW Group s most important markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section Comparison of Forecasts for 2019 with Actual Results in 2019 .4 From 2018, adjusted value based on planned conversion to WLTP (Worldwide Harmonised Light Vehicles Test Procedure).6 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units).4To Our ShareholdersBMW Group in FiguresKey financial performance indicators 03 20152016201720182019 Change in %GroupProfit before tax 1 in million 9,2249,66510,6759,6277,118 seGmentEBIT margin in % (change in %pts) in % (change in %pts) seGmentEBIT margin in % (change in %pts) in % (change in %pts) services seGmentRoE in % (change in %pts) financial performance figures 04 in million20152016201720182019 Change in %Total capital expenditure 2 5,8905,8237,1128,0137,784 and amortisation 4,6594,8064,8225,1136, cash flow Automotive segment5,404 5,792 4,4592,7132,567 revenues 1 92,17594,16398,28296,855104, 85,53686,42485,74285,84691, 1,9902,0692,2722,1732, Services 1 23,73925,68127,56727,70529, Entities76765 1 19,097 20,017 17,306 18,875 19,443 profit before financial result (EBIT)

7 1 9,5939,3869,8998,9337,411 7,8367,6957,8886,1824,499 Services 1 1,9812,1842,1942,1722, Entities 169 1714 2729 Eliminations 1 575 663 404431377 profit before tax (EBT) 1 9,2249,66510,6759,6277,118 7,5237,9168,7176,9774,467 Services 1 1,9752,1662,2072,1432, Entities 21117080 45 96 Eliminations 1 664 772 534383288 income taxes 1 2,828 2,755 2,000 2,530 2, / loss from continuing operations 16,3966,9108,6757,0974,978 / loss from discontinued operations 3344 Group net profit 16,3966,9108,6757,0645,022 per share 1 in / / / / / / return on sales 1, 3 in % (change in %pts) Prior year s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.

8 In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material Expenditure for capitalised development costs, other intangible assets and property, plant and Group profit before tax as a percentage of Group Group deliveries of automobiles 1, 2 05 in 1,000 units2 , 2 5 7. 92, , , , ,6001,3000201520162 017201820191 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units).2 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group s most important markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-ables better comparability.

9 Additional information can be found in the section Comparison of Forecasts for 2019 with Actual Results in 2019 .BMW Group profit before financial result (EBIT) 06 in million9,5939,3869,8998,9337, 41111,0005,5000201520162 017 2018 320193 Prior year s figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material Group revenues 07 in 017 2018 32019 BMW Group profit before tax 08 in million9,2249,66510,6759,6277,11811,0005 ,5000201520162 017 2018 220196To Our ShareholdersBMW Group in Figures1To Our ShareholdersBMW Group in Figures Report of the Supervisory BoardStatement of the Chairman of the Board of ManagementBMW AG Stock and Capital MarketsREPORT OF THE SUPERVISORY BOARDSTATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENTBMW AG STOCK AND CAPITAL MARKETS IN 2019 FINANCIAL CALENDARCONTACTSN orbert ReithoferChairman of the Supervisory Board8To Our ShareholdersReport of the Supervisory BoardDear Shareholders,The BMW Group faced numerous challenges in 2019.

10 Despite retaining its leading position in the premium segment in terms of delivery volumes, it did not generate the level of earnings we aspire to. In our capacity as Supervisory Board, we stand firmly behind the Board of Man-agement s objective of increasing profitability again in the coming years and continuing in the long and highly successful tradition of the BMW Group despite the difficult global economic conditions. Customer focus is always our highest priority. At the same time, the BMW Group is committed to assuming a pioneering role in the field of sustainability. The importance we attach to this topic is most evident in the rapid expansion of our range of electrified vehicles driven by the BMW Group s new model offensive this year. With its product portfolio firmly on the right track, the BMW Group is well positioned to meet the challenges posed by technological change.