BMW Group has said its Financial Services division (BMW FS) has continued to hit return-on-equity targets and will soon be the "point of contact" between brand and customer.

BMW FS ended 2012 with a return on equity of 21.2% with more than €2bn free cash flow; above the 18% target set by the Group’s Strategy Number One, begun in 2007 and set to last until 2020.

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Worldwide, the BMW FS penetration rate on new BMW-branded vehicles (including Mini, Rolls-Royce and BMW Motorrad), leased or financed, was 40.4% in 2012, slightly down on the 2011 figure of 41.1%. Total business volume for the year was almost €81bn, up 7.6% on 2011.

Friedrich Eichiner, board member for finance at BMW, explained the Group plans to enhance the role of BMW FS "as a service provider" and make the finance provider the "customer’s point of contact for the BMW Group".

Other finance

BMW leasing subsidiary Alphabet International, active in 19 countries, finished 2012 with in excess of 502,000 fleet contracts, making it the fourth-largest fleet lessor in Europe. The integration of ING Car Lease into Alphabet’s operations "has developed better than anticipated," added Eichiner.

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BMW Bank has continued to expand, with BMW FS France becoming the latest national operation run as a subsidiary of the bank in 2012, alongside BMW FS in Germany, Italy, Portugal and Spain. The deposit volume of BMW Banks in Germany and the US increased by 8.1%, year-on-year, to €13bn.

The year ahead

BMW FS is "expected to put in another strong performance" in 2013, according to a BMW Group statement, although the Group announced it was only "cautiously optimistic" about 2013, overall.

The Group recorded healthy results for 2012 and has predicted record annual sales volume in 2013 but expects outgoings to eat into profit ratios this year.

Group capital expenditure rose 41.9% year-on-year to €5.24bn in 2012, spent on new models, increased production and research and design, all including the brand’s Electromobility sub-sector of electric vehicles.

Similar to Fiat, Nissan and other manufacturers’ plans to introduce cars to market in the coming months, BMW intends to launch 11 models by the end of 2013 and a total of 25 models by the end of 2014.

richard.brown@timetric.com