The Latest: BMW Motorrad News

BMW Group releases 2017 annual report

Saturday, March 24, 2018   (1 Comments)
Posted by: BMW Annual Report; Comments by Wes Fleming

NOTE: this article quotes from BMW Group's 2017 annual report; there has been light editing done to make the material clearer for American readers. Figures stated in euros (€) have not been converted to US dollars. Images are taken from the annual report.

According to BMW Group's 2017 Annual report, BMW Motorrad saw a significant increase, with deliveries of motorcycles and scooters up more than 13 percent to 164,000 units.

BMW Group profit rose 6.5 percent from €18.721 billion (2016) to €19.934 billion (2017). Motorcycle revenue rose 10.3 percent from €2.069 billion to €2.283 billion, and profit/loss before tax rose 10.8 percent from €185 million to €205 million. The gross profit margin remained at 20.8 percent.

Motorcycles segment revenues rose significantly, mainly reflecting year-on-year volume growth. Higher sales of optional equipment, spare parts and accessories as well as improved pricing also contributed. The net amount of other operating income and expenses deteriorated by €24 million to a net amount of negative €11 million. The previous year’s figure benefited in particular from higher income arising on the reversal of write-downs than in the year under report. Profit before tax rose significantly compared to the previous year thanks to the positive business development.

The Motorcycles business is also clearly focused on the premium segment. The model range currently comprises motorcycles for the Sport, Tour, Roadster, Heritage, Adventure and Urban Mobility segments. BMW Motorrad also offers a broad range of equipment options to enhance rider safety and comfort. The motorcycles sales network is organized similarly to that of the automobiles business. Currently, BMW motorcycles are sold by more than 1,200 dealerships and importers in over 90 countries.

As with the Automotive segment, the Motorcycles segment is managed on the basis of RoCE. Capital employed is determined on the same basis as in the Automotive segment. The strategic RoCE target for the Motorcycles segment is 26 percent.

In view of the increasing strategic importance of the segment, the operating return on sales (EBIT margin: profit / loss before financial result as a percentage of revenues) was adopted in the year under report as a key performance indicator. The long-term target range is between 8 and 10 percent. In conjunction with the non-financial value driver sales volume, this will enable RoCE development to be understood in greater detail.


Deliveries to customers: significant increase

The Motorcycles segment reported significant growth in 2017, with deliveries to customers rising by 13.2 percent to 164,153 units (2016: 145,032 units). This performance not only set a new record, it also took the single-year sales volume figure above the 150,000 mark for the first time.

As foreseen in the outlook for the financial year 2017, the Motorcycles segment sales volumes increased significantly and were therefore in line with expectations. EBIT margin in target range of between 8 and 10 percent The EBIT margin in the Motorcycles segment (profit before financial result divided by revenues) came in at 9.1 percent (2016: 9.0 percent; + 0.1 percentage point).

As foreseen for the financial year 2017, the EBIT margin was within the target range of between 8 and 10 percent and therefore in line with expectations. Return on capital employed: slight increase The return on capital employed (RoCE) of the Motorcycles segment increased slightly by 1.0 percentage point to 34.0 percent (2016: 33.0 percent), mainly reflecting effective working capital management and the improvement in earnings.

The outlook for RoCE, which had been raised in the Quarterly Report to 30 June 2017 from in line with last year’s level to a slight increase, was achieved. In the Annual Report 2016, RoCE in line with last year’s level had been foreseen.

The segment EBIT margin in 2018 is expected to lie within the target range between 8 and 10 percent (2017: 9.1 percent). The Motorcycles segment RoCE is expected to increase slightly year-on-year (2017: 34.0 percent). The long-term target RoCE of 26 percent for the Motorcycles segment will therefore be surpassed.


BMW Motorrad grows significantly

In 2017, the Motorcycles segment profited amongst others from the launch of numerous attractive new models and model revisions. Deliveries of BMW motorcycles worldwide were significantly higher than the previous year, rising by 13.2 percent to 164,153 units (2016: 145,032 units). The segment thus surpassed the 150,000-unit mark for the first time, setting a new sales volume record for a financial year.


Motorcycle Sales by Region

Region 2017 2016 Change
Worldwide 101,524 87,983 + 15.4 %
Germany 26,664* 24,894 + 7.1 %
France 16,607 13,350 + 24.4 %
Italy 14,430 12,300 + 17.3 %
United States 13,546** 13,730 - 1.3 %
Spain 11,193 9,520 + 17.6 %

* "...despite a contracting motorcycles market."
** "in a difficult market environment." USA sales in Q4-2017 showed a 20.3 percent increase over Q4-2016, rising from 2,782 to 3,346 units sold quarter-to-quarter.



Motorcycles production significantly expanded

A total of 185,682 motorcycles rolled off production lines during the year under report (2016: 145,555 units; + 27.6 percent). The significant increase in output was mainly driven by high demand and the start of production by the Indian partner, TVS Motor Company Limited. Expansion work at the BMW Group plant in Berlin was largely completed during the reporting period and will be finalized in 2018. The latest measures will create the capacities required to achieve planned growth.


R nineT family now complete

BMW Motorrad completed the R nineT product family line-up in 2017 with the launch of the R nineT Pure, R nineT Racer and R nineT Urban G/S models. In August 2017, the K 1600 B was introduced to keep up with demand on the US motorcycle market. It will be followed in March 2018 by the K 1600 Grand America, which was presented at the EICMA motorcycle trade show. All in all, BMW Motorrad launched six new motorcycle models and five model revisions during the period under report.


Deliveries to customers: solid increase expected

The BMW Group expects the positive trend in the Motorcycles segment to continue. The renewal of the product range in the previous year, and new models introduced at the EICMA 2017, such as the F 750 GS, F 850 GS and K 1600 Grand America, should all have a positive impact. Furthermore, the Scooter C 400 X expands the product range for urban environments. Overall, a solid increase in deliveries of BMW motorcycles to customers is forecast (2017: 164,153 units).



Note: This material is not contained in the annual report but is written by Wes Fleming, BMW MoA's Digital Media Editor. The opinions contained in it are solely his own.

BMW Group had a good year, and things are certainly looking up for BMW Motorrad nearly everywhere but the United States. The combined population (estimated) of France and Italy (127.5 million) is way less than half that of the USA (325.7 mil), yet Italians alone bought nearly 1,000 more BMW motorcycles than Americans did in 2017. People in France bought more BMWs than Americans last year, too, and this year they're starting to pull away in the standings.

As American BMW riders continue to complain that BMW Motorrad doesn't engage with its customers on this continent, these annual reports provide a picture as to why that may be. Why should BMW focus its marketing and outreach money and efforts in the USA, where sales continue to slide despite a massive population? Because it's not just BMW motorcycle sales that are down in the USA - all motorcycle sales are down in the USA.

Harley-Davidson announced its 2017 results not long ago. In their shareholder conference call, they admitted that their Q4-2017 sales in the USA fell 11.1 percent - to 23,195 motorcycles sold. When Harley's sales drop by double digit percentages and they still sell nearly as many motorcycles in this country in three months as BMW did in Germany (its largest market) in all of 2017, that says a lot about the obstacle BMW Motorrad has to hurdle in this country to achieve greater sales numbers.

It's hard to say what BMW can do to increase motorcycle sales in the USA. They are certainly making a lot of effort, which is obvious with the introduction of the Bagger and Grand America motorcycles (though ... that yellow? wow!). The USA is a huge market for anything, but American consumers can be difficult to figure out. From a functional standpoint, there's no performance difference between a K 16 GT/GTL and a B/GA, so why did BMW develop these bikes and aim them squarely at the American market? Because they (obviously) felt they had to do something to try to entice riders disinterested in mainstream Harley-Davidson and Indian heavy cruisers due to their outdated (air-cooled v-twin) technology. Nobody holds a candle to BMW Motorrad when it comes to technological innovation, but in a lot of regards, American riders simply don't respond to that. Oh, they sure demand it's there, but that's not what draws them in most of the time. It's the way the bike looks, the way it feels. These heart reactions easily overpower mind reactions. I know a K 1600 Bagger is way more technologically advanced than an Indian Chieftain - so why do I want a Chieftain so bad? Even I can't answer that question. It's visceral. I can't help it!

Similarly, BMW is updating its middleweight (or high-middleweight, if you like) motorcycles, the previous F 700/800 series, and bumping their displacement to 750/850. From my perspective, this is due to the constant American cry for "bigger! bigger!" In our culture, there is never enough of anything, and that is especially true when it comes to motorcycles. It was likely an American who coined the phrase "There is no replacement for displacement" and from a cultural standpoint, we are absolutely obsessed with engine size. Are we collectively compensating for something? I don't know, but maybe. There was nothing wrong with the F 800 motorcycles. They were fantastic! That parallel twin BMW developed is a great motor that - other than inexplicable stator weaknesses easily addressed by aftermarket parts - is damn near bulletproof. Why did BMW feel they had to make the engine bigger? In large part because Americans just won't shut up about bigger engines. (I know I'll catch flak for that, but hey, at least we can talk about it.) Ask me some time about my R 850 R and why I foolishly sold it.

Hot on the heels of the release of this annual report came the announcement that BMW Motorrad is getting a new director: Dr. Markus Schramm. Schramm will take over from Stephan Schaller on 1 May 2018; Schaller has been the director of BMW Motorrad since 2012. Not long before the annual report came out, Indian Motorcycle (owned by Polaris) announced it hired Ola Stenegard, a designer key to the development of both the R nineT and S 1000 RR motorcycles. This is bigger news than an uptick in motorcycle sales in that BMW Motorrad was either unable or unwilling to retain one of its top non-executive employees.

Almost immediately after I posted the news of Schramm's ascension, somebody on Facebook wondered if he would bother to attend the MOA's annual rally in Des Moines. Given the poor numbers being put up by the USA when it comes to sales, why would he bother? He can more easily attend BMW Motorrad Days the week before and visit with over 40,000 BMW motorcycle enthusiasts rather than the 5,000 or so that will attend the MOA rally.

There is no doubt in my mind that BMW Motorrad has a great future in the USA, but I also don't doubt it will be difficult for them. In the meantime, BMW enthusiasts in the USA would do well to check out BMW's new offerings and see if anything appeals to them.


Larry L. Pepper I says...
Posted Monday, March 26, 2018
I guess I am weird. My motorcycling career started with working as a Honda mechanic in 1977. I got to ride home any demo I wanted, so I never purchased a bike. But when I did purchase my first bike it was not a homogenized Japanese bike or, at least to me, a look alike HD. To me HDs are like steam powered locomotives, old with a lot of huffing and puffing and minimal resultant action. I have owned about ten BMWs two Guzzis and a Benelli. I like the personality of the European bikes but I must say that Bemmers are becoming more homogenized. That is not to say I agree or like the Saw-zall approach to customizing that seems so prevalent today. Or the factory custom that looks emaciated or only useful for carrying a small letter to the Post Office. Why I am ranting? Do you want to know what I think about the current styling of the sport bikes? I am glad you asked, they look like a Transformer on its knees throwing up. Aren't you glad you asked? As I said I guess I am weird.

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