THE FUTURE OF MOBILITY - A OEM

PERSPECTIVE. ANNUAL CONVENTION OF THE EUROPEAN LEASING AND AUTOMOTIVE RENTAL INDUSTRY, BARCELONA,

OCTOBER 10TH 2014.

Dr. Michael Hajesch.

Corporate Planning and Product Strategy, BMW Group.

BMW GROUP STRATEGY NUMBER ONE.

“… become the leading provider of premium products and services for individual mobility…”

THE STRATEGIC FRAMEWORK FOR FUTURE INDIVIDUAL MOBILITY.

Customer Expectations Changing values

Politics and Regulations CO2 - and fleet regulations,

Restrictions on imports

Economics Shortage of resources, increase in the price of fossil

fuels

Culture Sustainable mobility as part of a modern urban

lifestyle; assumption of social responsibility

Environment Climate change and the subsequent effects

Urbanisation By 2030, over 60 % of world population

will live in cities

DRIVING FACTORS

EU CO2 REGULATION. CONVERGENCE OF THE CO2 TARGETS 2021 AMONG MANUFACTURERS.

80

100

120

140

160

180

200

2006 2013 2020

CO

2 (

g/k

m)

Year

Audi

BMW

Daimler

Fiat

Ford

GM

Honda

Hyundai

PSA

Renault

Toyota

Volvo

VW

50.46 g

Differenc

e

15.37 g

Differenc

e

The span between OEM CO2

targets will be reduced by ~ 70%.

OEM 1

OEM 2

OEM 3

OEM 4

OEM 5

OEM 6

OEM 7

OEM 8

OEM 9

OEM

10

OEM

11 Source: Official CO2 monitoring Data, EU Commission, 2013

Forecast 2020

Significant reduction rates for all OEMs vehicle portfolios anticipated.

EFFICIENT DYNAMICS. 44 BMW GROUP MODELS WITH MAX. 120 GRAM CO2/KM.

LONG TERM TRENDS IN MOTORIZED TRAFFIC. PEAK-TRAVEL IN DEVELOPED COUNTRIES, MODESHARE OF PASSENGER CARS DECLINING.

Passenger km cars and public transport in selected countries (source: BMW /Prognos 2014).

LONG TERM TRENDS IN MOTORIZED MOBILITY.PEAK IN IT, BOOM IN PL.

Passenger km

0

2000

4000

6000

8000

10000

12000

14000

16000

1995 2000 2005 2010 2015 2020 2025

Mode shares for cars in selected countries (on the basis of pkm in motorized mobility, source: BMW/Prognos 2014).

MODE SHARE FOR CARS IN MOTORIZED MOBILITY.SATURATION IN EUROPE AT 80-90%.

30%

40%

50%

60%

70%

80%

90%

1995 2000 2005 2010 2015 2020 2025

Mode share cars (%)

The coupling of economic growth and

mobility demand is declining

PeakTravel.

First saturation tendencies are visible,

emerging countries are different.

The long structural increase of pessanger

car transportation is declining.

Mode share in some cities regarding

passenger car transportation declining.

MANAGING TECHNOLOGICAL CHANGE. TURNING A CHALLENGE INTO AN OPPORTUNITY.

Technological substitution Competitive advantage Old technology Competitive advantage New technology

The most beautiful sailing vessels The best analog cameras

…before they were

superseded by digital cameras

…before they were

superseded by steamboats

“Products of linear

extrapolation“

Linear extrapolation leads to the “best“ products of the

outdated technology Mobility of the future

Linear extrapolation:

Threatening the livelihood of the

company!

Growth

Level of

technological

development

Time Source: S-Curves, compare C. Marchetti

„Iconic“

Technologic

al Change

THE BEST OF BOTH WORLDS.

EVOLUTION REVOLUT ON

THE BMW i BRAND STANDS FOR INSPIRING DESIGN, VISIONARY MOBILITY AND ‘NEXT PREMIUM‘.

Visionary Mobility Inspiring

Design

Next Premium

EVERYTHING IS NEW.

BMW i sales-

and service

model BMWAG

NSC

Customer

BMW AG

NSC

Customer

Market

development

electromobility

BMW i8

BMW i3

Mobility services

BMW i

Connected Drive

Brand BMW i

Sustainable

production

360° Electric

Car - enabled

Mobile (smartphone) users

Car - related Car - independent

MOBILITY SERVICES PORTFOLIO ADDRESSES THREE DIFFERENT TARGET GROUPS.

BMW & MINI drivers

Automobile users

BMW i WILL PROVIDE FLEXIBLE MOBILITY.

FLEXIBLE MOBILITY

A new mobile lifestyle

PUBLIC CHARGING

On the road

HOME CHARGING

“Convenient charging at home”

ASSISTANCE SERVICES

Provide Assurance

HOME CHARGING

Convenient charging at home

360° ELECTRIC.

SHIFTING CUSTOMER BEHAVIOR FROM

OUTRIGHT PURCHASE TOWARDS FLEXIBLE

USAGE OFFERINGS.

Loan & Lease

Packages Outright Purchase

Past (1950)

Usage Offerings

Future Status Quo

+ +

29%

Urbanization

51%

Urbanization

69%

Urbanization

Financial Services Product & Service Offerings

Loan & Full Service Lease Packages

Fleet Management Solutions

Connected & Intermodal

Mobility

Flexible

Solutions

BMW / MINI Financial Services

“The Ultimate Drive”

Page 14

ALPHABET IS BMW GROUP’S BUSINESS MOBILITY ARM AND PROVIDES CUSTOMER FOCUSED SOLUTIONS.

today

Page 15

Business Mobility

Solutions

Advanced Mobility

Solutions

Fleet

Management

Services

Funding

Solutions

AlphaCity

AlphaElectric

AlphaGuide

ALPHABET – SMART BUSINESS MOBILITY

SOLUTIONS.

ALPHAELECTRIC - A HOLISTIC APPROACH.

Page 17

DRIVE NOW. THE FIRST ALL PREMIUM, FREE FLOATING CAR SHARING SERVICE FROM BMW GROUP & SIXT.

DriveNow customers are BMW Group’s most modern target

group

320,000+ customers

DriveNow Customers are on average 10 years

younger than MINI customers

2,400+ cars

100,000+ ActiveE customer drives

CHARGE NOW. THE BMW i SERVICE THAT MAKES CHARGING CONVENIENT AND EASY.

17.400

charging stations

in 18 markets

43% take rate

3000+ customers worldwide

IN A NUTSHELL…

… key mega trends will influence sustainable business development in the

next years.

… individual mobility is most important.

… managing the “iconic” change will define future business success.

… key enabler is a holistic approach.

You as key stakeholders are in the driver seat in

designing and making the future of mobility

happen.

THANK YOU VERY MUCH FOR YOUR ATTENTION.

“BMW has seen – if not the future-

then at least a credible version of it.”

Metropolis