JOY IS BMW.

BMW in China.JOY IS BMW.Analysts‘ MeetingMunichMarch, 2010SheerDriving Pleasure

BMW in China.Introduction to China.Introduction to the Automotive Market in China.Introduction to BMW in China.

China.Influence of the Three Beliefs on ChineseCulture Throughout Time.Confucianism, Taoism, and Buddhism.A famous scholar in theMing Dynasty once said:"Confucianism is theoutside, Taoism, the inside,and Buddhism is thedirection in which it’s allgoing."Throughout Chinese historyit has also been said that "thestrong believe in Confucianism,the intellectual, in Taoism,and the wise, in Buddhism."

China.Chinese Civilization is one of the Only Ones in theWorld that has been Developing for more than 4,000Years Without Lasting Interruption.Empirial Influence:From 2200 b.C. until 1912 ruled by EmperorsTime between the two world wars 1912 – 1949 Republic of ChinaPeople s Republic of China since 1. October 1949Political and Economical Wind of ChangeDeng Xiaoping (1904 - 1997)He is called "the architect" of a new brand of socialistthinking and opened China to foreign investment andthe global market. Generally credited withadvancing China into becoming oneof the fastest growing economies in the world.

China.On the Road to Once Again Being theBiggest Contributor to the World Economy.GDP contribution of major countries to the global United StatesWesternEuropeJapanOthersChina GDP contribution reached the highest level in 1820, however sincethen continued to decline to the historical lowest level in 1973.Acceleration started again once China adopted the open door policy.

China.China’s Size and Opportunity Compared toEurope.China 2008Europe 2008Population1,328 million499,7 millionLand surface9,60 million km24,32 million km2Arable land12% (1.2 m km2)25% (1.08 m km2)GDPUSD 4,401 BnUSD 18,394 BnGDP per capitaUSD 3,315USD 36,810*The data is based on 27 countries of EU Source: Eurostat, IMF, China population and development research center

China.One Country, Three Economies.The mainland is dividedinto eastern, centraland western areasgeographicallyand economicallyEastern area, approx. 60% of national GDPBeijing, Tianjin, Hebei, Liaoning,Shanghai, Jiangsi, Zhejiang, Fujian, Shandong, Guangdong, HainanCentral area, approx. 25% of national GDPShanxi, Jilin, Heilongjang, Anhui, Jiangxi, Henan, Hubei, HunanWestern area, approx.15% of national GDPInner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai,Ninggxia, Xinjiang

China.Growing Cities Show Strong Trend TowardUrbanization.7› 50› 150Beijing16.5 millioncities, population 10 millionChengdu13 millionTianjin11.5 millionChongqing36 millioncities, population 5-10 millioncities, population 1-5 millionSource: China State Statistics BureauGuangzhou10 millionShenzhen12 millionShanghai18.5 million

China.Income Developments.Until 2025 the number of households in premium relevant upperincome groups will more than triple to over 100 mn and grow evenfaster than the middle class.700Number ofhouseholds per income group (mn)60050010440030003230CAGR 2010-25 8.6%147CAGR 2010-25 6.5%377200100298280CAGR 2010-25-6.4%103019950-15k USD 2005 PPP201015-60k USD 2005 PPP2025 60k USD 2005 PPPSource: Global Insight (data in real USD, price base 2005, purchasing power parity-adjusted), CAGR Compound average annual growth rate

China.Blooming Self-Confidence in Every Aspect.

China.The Chinese Dream.20 years ago – 1990Today – 2010

BMW in China.Introduction to China.Introduction to the Automotive Market in China.Introduction to BMW in China.

China.Automotive Market Development.Premium segment’000 unitsPassenger VehicleMarket‘000 09PV Market Growth26%29%25%11%53.9%Premium Seg. Growth21%47%44%29%29.5%Premium Seg./PV market 3.7%4.2%4.9%5.7%4.8%Passenger Vehicle MarketPremium SegmentSource: Registration data

China.Auto Regulations and Policies.The government controls the auto industry via:Limits on foreign shareholding (max. 50:50 and max. 2 2) and CBU market(NDRC benchmark of max. 5% of total market).Changing policies and strictly controlled administrations (e.g. LC homologation,taxes, production and distribution licenses).Direct involvement in business operations through state-owned enterprises andChinese share of JVs.State-owned enterprises (SOEs) 90%of total marketOwned by central governmentGAIGFAWHAFEIDFMBAICFJMGOwned by local gov. or FENGJIANGLINGGEELYCHERYPrivate EnterprisesYUEJINManganeseBronze

China.Chinese Customers are Brand Conscienceand Enjoy Owning Luxury Products.Ordinary car “have / not have car”Rigid demandLuxury car “have / not have good car”Elastic demandPurchase motive for a luxury car is not to fulfill a basic and urgentdemand it involves more emotional elements and therefore has morefreedom in purchase behavior.Demand for more safety/comfort10%To win trust of business partners35%To match with social status25%Affected by reference group10%Other reasons15%The most important reason to purchase a luxury car is toshow one’s financial strength.Source: State Information Center

China.The Spacious Sedan Fully Equipped is thePreferred Concept.Estate 1%Hatch15%BMW 5series LBMW 7series LRear seatEntertainmentSystemsCar phonesOthers14%Sedan71%Concept shares 2008 in total marketRear seats withmassage functionMultimedia andNavigation DevicesPark Pilot and ParkAssistants

BMW in China.Introduction to China.Introduction to the Automotive Market in China.Introduction to BMW in China.

China.BMW Milestones.1994Representative office1994 – 2002Sino-German transport projects1998 – 2000Search for a joint venture partnerNov. 2001 – 2003JV negotiations and approval processMay 23rd 2003JV business license,BMW Brilliance Automotive (BBA)July 1st 2003Appointment mgt. of JV company,start of JV operationsSeptember 2003Start of JV production, ShenyangOctober 2005National Sales Company, BeijingFall 2009Decision Greenfield in Tie Xi, Shenyang

China.Brand Symbolism and Attractiveness.寶馬The high attractiveness of the brand inChina is reflected by the translation ofBMW:The Chinese translation is Bǎo Mǎ, whichmeans Precious Horse. With this the brand hasthe highest brand positioning and value of allcar brands.

China.BMW Main Locations.ShenyangBMW Brilliance AutomotiveBeijingNSC / Reg. OfficeChengduReg. OfficeGuangzhouReg. OfficeShanghaiReg. OfficeTaiwanImporter:Pan German MotorsHong KongImporter: BMW Concessionaires (HK) Limited

China.BMW & MINI Volume Growth.2009 Market Share 22%Premium Segment25%2009 2nd plant signingceremony20%Established NSC15%1994SetupBMW Repoffice10%5%1994 2000Total2003-2004Start of JV produced BMWvehicles sold in W locally produced cars (JV)BMW imported carsMINI imported cars

China.BMW Model Offer.Local production.Local production.

China.BMW Model Mix 2009.New 7 Series achieved the No.1 position in its segment andChina is now the biggest 7 series market for BMW. Chinesecustomers prefer large engines and cars which is reflected inthe X5, X6 and 7 series sales.Z4, 1%1 series, 3%X6, 7%X5, 12%X3, 4%3 series, 24%5 series, 31%7 series, 18%6 series, 3%

SIGMA Sensor Research: China SensorSIGMA Milieus in China: Modern Business EliteModern Business EliteBMW Customers China's New Business Elite: directors, managers, executives, company owners, CEOs Age focus between 30 and 40 years, most have at least a 4-year university degree, oftenwith masters and PhDs. Philosophy of life: "Walk those roads that you never walked before, do things that younever knew you would do"!Important: Living their life to its fullest potential. Very rational, technocratic views.

China.Financial Services.Majority of vehicles are still bought without financingor leasing. penetration rate2009 was 7% roughly 7k unitswere financed in 2009Currently financing is offered via a cooperation partner.Goal is to start own Financial Services Operations forwholesale and retail financing in 2010.

China.BMW Outlets in Operation 2009 showWhere our Customers Reside.Total outlets nYingkouErdosTangshan nxiangLinyiLuoyangZhengzhouXuzhouYanchengXi anZhenjiangHefeiChangzhouNantongNanjingDeyang MianyangWuxiShanghaiYichang uan nShenzhenHohhotTotal BMW Retail 2009NorthEastWestSouth86,16827%40%12%21%Haikou

China.Government Market is Imperative forFuture Growth.Actual sales of 3 series and5 series LWB to governmentalofficials, ministries and police.

China.Strong BMW Corporate SocialResponsibility Strengthens theBrand Image.BMW WHFplatformBMW CSR activitiesBMWWarm HeartFamily.BMWassociatesBMW customersBMW dealers

China.BMW & Brilliance with Phase II GreenfieldPlant Expansion in November 2009.Construction work is to begin in 2010, with the start of production slated for early 2012.Upon completion of the second plant there will be a total annual production capacity of100,000 units. Around 1,000 further jobs will be added to the 3,300 existing jobs inShenyang.

BMW in China.Thank you.

Brand Image. BMW CSR activities BMW associates BMW customers BMW WHF platform BMW dealers BMW Warm Heart Family. China. BMW & Brilliance with Phase II Greenfield Plant Expansion in November 2009. Construction work is to begin in