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					Meeting deadlines - in all details.
Making sure that the right numbers of the right parts are in the right place at the right time - and that these parts
meet the required quality standards - is only one of many central tasks mastered daily by BMW logistics
specialists. They also oversee product and process targets to make sure these are efficiently achieved.

Logistics is of essential importance not only for stable production, but also for efficient transportation throughout
the network - between customers, dealers, suppliers, and plants around the world. This is made possible through
the "Customer-Oriented Sales and Production Process", or COSP for short. This ensures that customers can
change their orders even shortly before their vehicles go into production without affecting the delivery deadline.

Individual assembly according to customer desires.
The BMW Group stands for exceptional mobility. Realising all customer-specific desires and special features in a
premium-class automobile is the main task of assembly. After the car body is built and painted, assembly is the
third stage of the core manufacture of a car.

Some 20,000 parts - made by BMW as well as from external suppliers - go into a BMW 5 Series, for example.
Different engine variants, options and accessories, country-specific variations, and much more lead to an
unmistakably individual product. You will hardly ever see two identical models next to each other on the
production line.

Personal atmosphere.
Customers of the BMW Group expect the interior of their automobiles to be comfortable, functional, and
individual. The Specialists for interior components fulfil these expectations by using selected materials, innovative
manufacturing technology, and the highest quality standards.

Power and dynamics.
Driving pleasure is created primarily through an automobile's engine and chassis. And only components which are
finely tuned to each other ensure a car's performance. The tasks of our highly specialised technicians include,
assembling engines, front and rear axles, transmission, shafts, brake discs, axle supports as well as other chassis
components.

In addition to an automobile's heart - its engine - BMW chassis set standards for exceptional driving dynamics.
Innovative light-metal solutions such as the aluminium chassis of the BMW 5 Series and 7 Series, for example,
are the focus of BMW Group research and development.

Production pursues perfection.
Premium means exceptional for the customer. This added value becomes tangible through the superior product
substance and superior quality of the BMW Group's emotionally appealing automobiles and motorcycles.

BMW production is committed to fulfilling premium demands related to product quality and to meeting deadlines.
Some 70,000 employees in 22 locations ensure that every customer receives his or her tailor-made vehicle on
time- throughout the world. We do this with our "Customer-oriented Sales and Production Process", or COSP for
short. The principle behind COSP is that the car ordered by the customer defines the production process – not the
car planned by the company. In this way, the customer can make last-minute changes to the equipment and
accessories they’ve ordered shortly before the vehicle goes to assembly – without delaying the date of delivery.

The goal of BMW Group Production is to deliver the customer's custom-tailored premium automobile or
motorcycle by the agreed-upon deadline in our customary high quality.

This claim requires us to continually develop our processes and structures further, and thus, to adapt regularly to
new situations. As a learning organization, the BMW Group must recognize changing demands at an early stage
and orient itself rapidly and flexibly to new conditions. One example of this is our "Customer-oriented sales and
production process", or KOVP as it is abbreviated in German.

BMW Group successful despite difficult Environment.
The BMW Group continued to perform successfully in 2005 despite a difficult environment. It further extended its
lead in the premium segments of the international automobile markets by recording a sharp rise in its car sales
volume. Particular challenges arose in the year under report as a result of the co-occurrence of adverse currency
factors, above-average raw material prices and intense competition on the international car markets. The
BMW Group was, however, once again able to prove its operating strength. As a result of the sharp increase in
car sales and on-going efficiency improvement measures, the negative impact of these external factors was
almost completely offset by the year-end. Profit before tax, at euro 3,287 million, was 8.3% below the record level
achieved in the previous year.

The adverse effects have particularly affected the Automobiles segment. Compared to the record result recorded
in the previous year, the segment's profit before tax fell by 5.9% to euro 2,976 million.
After the temporary slow-down in the previous year, the Motorcycles segment returned to the growth course set in
previous years and recorded a sharp increase in sales volume. Segment profit in 2005 rose by 93.5% to euro 60
million.

Strong growth by the Financial Services segment again provided the basis for a very pleasing improvement in
earnings. At euro 605 million, segment profit surpassed the previous year's record result by 17.5%.

In addition to the impact from adverse operating factors, group earnings in 2005 were also affected by fair value
gains and losses. The fair value loss on the exchangeable bond option relating to the BMW Group investment in
Rolls-Royce plc, London, resulted in an additional expense of euro 308 million being recorded in 2005 compared
to the previous year.

Positive tax factors in 2005 reduced the Group's tax expense. The BMW Group reports a net profit for the year of
euro 2,239 million, almost matching the previous year's high level (-0.1%).

Increased dividend proposed.
The Board of Management and Supervisory Board propose to the Annual General Meeting to use the
unappropriated profit available for distribution in BMW AG, amounting to euro 424 million, to pay a dividend of
euro 0.64 for each share of common stock (2004: euro 0.62) and euro 0.66 for each share of preferred stock
(2004: euro 0.64), each with a nominal value of euro 1.

Programme to buy back shares of common stock.
At the Annual General Meeting of Bayerische Motoren Werke Aktiengesellschaft on 12 May 2005, the
shareholders authorised the Board of Management to acquire treasury shares via the stock exchange, up to a
maximum of 10% of the share capital issued at the date of the resolution and to withdraw these shares from
circulation without any further resolution by the Annual General Meeting. In conjunction with this authorisation, the
Board of Management of BMW AG resolved on 20 September 2005 to put a programme in place to buy back
shares via the stock exchange. Up to 20,232,722 shares of common stock (i. e. 3% of share capital) have been
acquired under this programme. The shares have been acquired with the purpose of withdrawing them from
circulation at a later date and reducing share capital. A total of 13,488,480 shares of common stock had been
acquired by the end of 2005, equivalent to 2% of share capital. The average accorprice paid was euro 37.49.
Including ancillary purchase costs, approximately euro 506 million were used in 2005 to buy back shares.
Safety is one of the central issues in vehicle development – and in this sector, the BMW Group is a market
leader.
When discussing vehicle safety, it is important to distinguish between passive and active safety.

Passive safety.
This term signifies reduction of the negative consequences of an accident. An innovative example is the ITS
system (Inflatable Tubular Structure), an airbag which protects the head during side collisions, or the Smart
Airbag, an intelligent airbag system which recognizes via crash sensor whether the vehicle is involved in a light
– or serious – accident. The airbags then deploy with differing degrees of inflation, depending on the degree of
danger to passengers.

Active safety.
To provide active safety, i.e. to prevent accidents, our vehicles are outfitted with intelligent chassis control
systems which actively engage in the seconds immediately preceding an accident. One example is Dynamic
Stability Control (DSC). This system recognizes unstable driving situations such as under- or oversteering and
helps control the vehicle in critical moments. One element of DSC, Automatic Stability Control (ASC), prevents
the drive wheels from spinning. Another control system is Dynamic Brake Control (DBC). When the brake pedal
is depressed rapidly, this system causes the braking force – independent of pedal pressure – to be increased
until maximum vehicle deceleration is achieved.

Responsibility for road users.
The BMW Group finds that the overall concept of safety requires a commitment to all traffic participants. You'll
find an overview here on current projects organized and supported by the corporation.

				
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