Bayerische Motoren Werke Aktiengesellschaft

Good morning, ladies and gentlemen. 2025 was, in many ways, a remarkable year for the BMW Group and, above all, one that set our course for the future. First, we achieved a solid financial result with Group earnings of more than €10 billion. Walter Mertl will provide more detail in just a moment. Second, we grew in 2025, selling more vehicles than the previous year and expanding our leadership of the global premium segment. And third, our technology open strategy continued to demonstrate its strength. Demand for cars with combustion engines remained stable, while sales of our all-electric and electrified vehicles continued to grow. And fourth, once again, through our own efforts, we significantly outperformed the EU's CO2 fleet targets for 2025. And finally, we successfully began the rollout of our Neue Klasse with the BMW iX3, giving the BMW brand and the entire company crucial momentum for the future. And all of this shows we deliver consistently and continuously. We have set the right course in recent years and do not need to change our strategic direction. In this way, we can keep the company on track for long-term success. Standing here beside me is the new BMW iX3. This vehicle marks a pivotal moment in the BMW Group's recent history, the serious launch of our neue Klasse. Production of the iX3 has successfully ramped up at our new plant in Debrecen in Hungary. First customers have already received their vehicles and since last week the iX3 has been in European showrooms. Demand for the iX3 is significantly exceeding our expectations with strong orders from both private and fleet customers. and we are also attracting many new customers who have never driven a BMW before. Our order books for the iX3 are full and reach well into this year. We are exploiting the flexibility of our production and supplier network and increasing capacity in line with demand. The Neue Klasse represents a huge investment. Only a company that enjoys long-term economic success like the BMW Group can invest in its future on such a massive scale. This success is built on three important parameters. I like to call this the BMW Group's strategic triangle. First, our balanced global positioning in sales and production. Second, our attractive product lineup across all brands serving the entire premium segment. And third, our consistent strategic focus on technology openness. I will talk about the last two points in the second part of my remarks after Walter Mertl has spoken. In 2025, we delivered around 2.46 million vehicles to customers worldwide, representing sales growth of 0.5% compared to the previous year. And this shows that our business model is robust and resilient. In Europe, we increased our sales by more than 7%, delivering more than 1 million vehicles to customers in Europe for the first time since before COVID. We also made significant gains in the United States of America, with growth of 5%, even in a saturated market. In our markets outside the main sales regions of Europe, the United States and China, we also posted growth despite the overall downward trend, with an increase of 3.4% over the previous year. China remains our largest single market. However, due to the intense competitive market environment, our sales development fell short of our expectations for the year. And thanks to the strong overall performance in three of our four sales regions, we nevertheless achieved growth worldwide. And this confirms the strength of our global footprint. Our worldwide presence is a decisive competitive advantage. And all BMW Group brands contributed to this result. Electrified models across all brands, as well as the models from BMW M, were the main growth drivers. The BMW brand once again maintained its position as the global number one in its segment. Demand was particularly strong for core models like the X1, the X3 and the X5, as well as our 3 Series and 5 Series models. BMW M continued its success story in impressive style in 2025, increasing its sales for the 14th consecutive year. With more than 213,000 vehicles delivered to customers, M reached a historic all-time high. The BMW M5 and M5 Touring and the X3 M50 were the main drivers of this success. This provides compelling proof of the enduring appeal and growing demand for top-level performance in the premium segment. MINI achieved significant growth thanks to its new model family. Sales increased by nearly 18% compared to the previous year. The main growth driver was the most versatile model in the lineup, the MINI Countryman, accounting for over 32% of the brand's total volume. MINI and electromobility are a perfect fit and our customers clearly agree. This is underscored by an impressive achievement in 2025. For the first time, the brand delivered more than 100,000 all-electric models to customers in a single year. That is more than one in every three MINIs delivered. And in this way MINI is making a major contribution to the electrification of the BMW Group. At our ultra-luxury Rolls-Royce brand, the number of hand-built motor cars delivered to clients remained on the high level of the previous year. The value and number of requests for highly individualized bespoke continued to increase. and the home of Rolls-Royce at Goodwood is currently being modernized and expanded to provide more space for both bespoke and the Marx Pinnacle coach built products. BMW Motorrad confirmed its strong market position in the premium segment in the financial year of 2025. Despite a global decline in the total market for motorcycles above 500cc, the brand delivered more than 200,000 vehicles for the fourth year in a row. And most notably, the R1300GS and F900GS played a key role in BMW's Motorrad's market success in 2025. Ladies and gentlemen, all of this shows that our multi-brand premium approach enables stability and growth. Another major strength of our business model is our ability to meet diverse customer preferences, different regional requirements and technological developments in parallel. Our electrified vehicles provide the clearest proof of this. In 2025, we delivered more than 640,000 electrified vehicles to customers worldwide. And that means they accounted for about 26% of our total sales, with all electric vehicles making up around 18%. Europe stands out in particular with electrified vehicles representing over 40% of sales. Plug-in hybrids were also in strong demand in 2025. And all of these factors make the BMW Group one of the leading providers of electromobility in the premium segment. Thanks to our balanced mix of efficient drive technologies and growth in electrified vehicles, we once again outperformed the legal CO2 requirements in the European Union. Based on our preliminary internal calculations, we achieved fleet emissions of 90 grams of CO2 per kilometer in Europe in 2025. that once again places us well below the legal target entirely through our own efforts. We do not need to rely on pooling with other manufacturers or even averaging over several years. This provides clear evidence that technology openness and effective climate protection are not mutually exclusive, but go hand in hand. The BMW Group remains fully committed to the goals of the Paris Climate Agreement while setting our own ambitious targets. For example, by 2035 we aim to reduce our CO2 emissions by at least 60 million tonnes compared to 2019 levels and we intend to hold ourselves accountable to this target. We're charting our own course, something that is more important now than ever before. On the one hand, we see that regulatory frameworks in individual markets can be extremely volatile. And on the other, we are convinced that the European Union experiment of mandating electrification will not deliver the desired results. To the contrary. For this reason, we continue to pursue a long-term holistic decarbonization strategy. We are committed to providing solutions not only for new vehicles, but also for the existing fleet on the roads based on technology openness across the entire life cycles of our vehicles. And for this reason, we also integrate fuels such as AVO 100 and advocate for 100% credit in CO2 calculations. And in addition, recognizing and crediting green steel would strengthen the European steel industry and safeguard jobs in Europe. Using more recycled materials in new cars reduces our climate footprint as demonstrated by our Neue Klasse. A holistic approach strengthens European value chains and keeps the industry competitive, and at the same time enables effective climate protection and real CO2 reductions. Companies should be free to provide solutions geared towards customer needs, while also investing in appropriate new technologies to meet the European Union's climate goals. As a global player, we stand for free trade and global collaboration. We do not believe in protectionism, but rather in the power of innovation to compete on the global stage. However, with the Industrial Accelerator Act, the EU Commission is continuing its protectionist course while not addressing homemade challenges like high energy prices. And one thing is clear. Without international value chains, the ramp-up of electromobility and the development of powerful battery technologies are not feasible. Labels such as Made in the European Union or Union Origin disadvantage European companies with global value chains if they do not recognize that each euro spent in Europe counts the same for prosperity and jobs. no matter if the car stays in Europe or is exported. Instead, the development of expertise and production for battery cell technologies in the EU should be promoted and effectively incentivized as fast as possible. This year, together with policymakers, we must find realistic solutions that allow us to achieve our climate goals and to strengthen our economy and competitiveness. Ladies and gentlemen, 2025 was shaped by very different developments. Strong growth in Europe and the United States, a much more challenging situation in China, rising competitive pressure and additional headwinds from tariffs. But nevertheless, the BMW Group continues to deliver a stable performance because we acted early. We adjusted our internal cost structures and maintained our strategic direction. This combination of strong operating performance today and a clear long-term perspective is a crucial success factor for our company. And that brings me back to the vehicle standing next to me. The iX3 and the technology of the Noe-Klasse testify to our innovation and performance. And it underlines that we are already ahead. Malte Mertl will explain in more detail how our strong operating performance is reflected in our financial figures. We will then take a look at 2026 with more new products on the way.

Good morning, ladies and gentlemen. For the BMW Group 2025 was marked by fully leveraging our operating model to deliver solid results in the face of the challenging environment. The year was heavily impacted by tariffs, developments on currency markets, especially in the second half of the year, as well as the intense market situation in China. In the face of these headwinds, we executed consistently on our strategy and took advantage of our flexible global structures. We balanced sales across our regions and our brands. We reduced R&D and capex thanks to early investments in the Neue Klasse and we drove further cost reductions across the entire company. With this, we were able to deliver on major KPIs in our operational business. A stable Group EBT margin of 7.7%, the same as 2024, with Group earnings of more than 10 billion euros. Volume growth to 2.46 million group vehicles. The continuation of our electrification story with an increase in BEV share to almost 18% and XEV share to over 26% of total sales. An electrified share in Europe of over 40%. A CO2 fleet emissions figure in the European Union of 90 gram per kilometer. 2.9 gram below the relevant target. An automotive EBIT margin within our guided corridor, over 3 billion euros free cash flow and solid capital returns. As I promised at the annual conference one year ago, we have addressed all aspects of costs, R&D, SG&A, manufacturing and material costs. to secure a consistent year-over-year reduction in every quarter. This amounted to an overall auto area tailwind of approximately 2.5 billion euros for the year. With our diligent management of the business, we have been able to offset a large share of the challenges we faced. Without the full year tariff burden of approximately one and a half percentage points of EBIT margin, both our group earnings as well as our auto EBIT would have been above the previous year. Let me now take you through our financial figures in detail. For the full year, group revenues totaled 133 billion euros. Earnings before tax at group level amounted to over 10 billion euros as anticipated at Q3. This represents a single digit percentage decline of 6.7%. The resulting group EBIT margin remains stable at 7.7% for the year. And earnings per share even rose slightly year on year. If we look at the breakdown of the group performance by segment, the automotive segment delivered 6.3 billion euros in earnings with an EBIT margin of 5.3%. Motorrad EBIT reached €178 million with a margin of 5.7%. Financial services generated €2.4 billion in earnings before tax and a return on equity of 14.3%. All three operational segments were therefore within their respective guidance corridors. Other entities improved to just over €1 billion in EBT. The positive trend after nine months continued into Q4. And finally, eliminations amounted to an EBT of 629 million euros. This reflects the positive development in Q4 as anticipated. Let's look at how the automotive segment performed across key metrics. Over the course of 2025, the BMW Group sold over 2.46 million BMW Mini and Rolls-Royce vehicles to customers worldwide, an increase of 0.5% over 2024. Looking at the regions, we see our global model at play as we steer effectively across geographies. As Oliver Zipse highlighted before, sales in Europe and the United States outperformed the market, delivering an increased market share and overcompensating the development in China. We delivered a stable monthly run rate for the BMW brand of around 50,000 vehicles throughout the entire year in China, despite the intense market environment. During the course of the year, we have taken actions to consolidate dealer structures and address pricing, which will underpin the stability in the market. Excluding this Chinese market, global group sales in 2025 grew by 5.9%. Electrified vehicles are both a foundational pillar in our strategy and also a key growth driver. thanks to our expanding portfolio of attractive products. Oliver Zipse has already taken you through the figures in detail, but the highlights were a total of 642,000 electrified vehicles delivered in 2025, representing solid growth of 8.2% and an overall XCV share of over 26%. and deliveries of all electric vehicles of 442,000 units for a share of almost 18%. Revenues in the automotive segment came in at nearly 118 billion euros, 5.9% below 2024. Approximately half of this decrease is due to negative currency effects. The reminder results mainly from global pricing pressure. Let's look at the year-on-year automotive EBIT result in detail, coming from our previous year's earnings. The net balance of currency and raw material positions resulted in a headwind of 600 million euros. Negative trends in FX outweighed the slight positive effects from raw materials, particularly in the second half of the year. This adverse FX development is expected to carry into the first half of the current year, mainly in Q1. Compared to 2024, the net effect of volume, model mix and pricing weighed on automotive EBIT by a total of 1.8 billion euros. The overall mix effect was positive. driven notably by a strong share from the mid-class, including five series growth, as well as a record M performance. For the full year, pricing was a significant headwind of 2 billion euros. In line with our planning, we continued to decrease operating costs in 2025. As planned, we reduced R&D expenses following the peak in 2024 with a nearly €800 million reduction year-on-year. SG&A savings represented €900 million, continuing the trend from the first nine months. Other cost changes amounted to a headwind of 800 million euros. This development resulted from a few areas. On the one hand, tariffs had a negative impact of approximately 1.5 percentage points on the auto EBIT margin. In addition, a softening market on residual values weighed on earnings. They remained positive, but lower than the previous year. On the other hand, warranty expenses were significantly lower year on year, as outlined at Q3. An additional positive effect came from a high three-digit million saving in manufacturing costs and material costs. Overall, we reduced costs by 2.5 billion euros for the full year through our active steering of R&D, SG&A and manufacturing costs and material costs. Through this, we were able to offset all headwinds except a portion of the approximately 1.5 percentage point tariff burden, resulting in a net year-on-year decrease of 1 percentage point in EBIT. In total, segment earnings in 2025 reached 6.3 billion euros. The automotive EBIT margin came in at 5.3%. Excluding the €1.3 billion depreciation resulting from the PPA of BMW Brilliance Automotive, the EBIT margin reached 6.4% for the year. And that still includes the headwind of approximately 1.5 percentage points from tariffs. As you know, our focus is consistently on our reported figures. Due to different approaches in the industry, however, consideration of PPA and tariff burden ensures better comparability of operational performance. Looking at R&D and capital expenditure in detail, we made early investments to implement our strategy, which we see as we look at R&D and CapEx development in 2025. Group expenditure for research and development, according to German commercial code for the year, amounted to 8.3 billion euros. This is a decrease of nearly 800 million euros or 8% below the peak of 9.1 billion euros in 2024. This translates to an R&D ratio of 6.2%. Given the lower revenue, the ratio only declined slightly year on year. Group capital expenditure totalled 7.2 billion euros, a year-on-year decrease of over 1.8 billion euros from the peak of 9.1 billion in 2024, or a 20% reduction. This resulted in a ratio of 5.4%. The capex ratio excluding right-of-use assets came in at 4.9%. As promised, R&D and capital expenditure have already significantly decreased from their peak in FY2024. Despite the rollout of models of the Neue Klasse, we will maintain this trend going forward. This means in both absolute and relative terms, we are heading back towards our strategic corridors, which are 4-5% for R&D, and less than 5% for CapEx by 2027. Moving to free cash flow. Total segment earnings before tax amounted to 5.9 billion euros for the year. Working capital contributed positively with 900 million euros, mainly due to strict management of inventories. The net effect from capital expenditure and depreciation reduced free cash flow by 2.3 billion euros. Changes to provisions had a negative impact of 1.3 billion euros, mainly due to the utilization of warranty provisions. Following the 2.7 billion euro figure communicated at Q3, free cash flow developed positively in Q4 and reached 3.2 billion euros at year-end. This was in line with our expectations of above 2.5 billion euros for the year. Our financial strength is further underscored by our automotive net financial assets. At year-end, this came in at over 44 billion euros. Let's now turn to our financial services segment. As a key component of our BMW ecosystem, the segment consistently contributes to group profitability. In 2025, new business developed positively throughout the year, with nearly 1.73 million new financing and leasing contracts concluded. This represents growth of almost 2% year on year. The increase is due in particular to the positive business development in Europe, as well as the changed competitive environment in China in the second half of the year. Since the end of June, the market situation has been influenced by the significant reduction in commissions from the local Chinese banks in connection with the brokering of financial and insurance products for end customers. Penetration rates for lease and loan offerings increased by 4 percentage points to 46.6%. Overall, new business volume at financial services reached an all-time high, growing by 2% to 65.8 billion euros, despite negative currency effects. Segment earnings before tax reached 2.4 billion euros. The moderate decrease compared to 2024 is due to lower income from the resale of end-of-lease vehicles, as well as tax payments related to changed assessments of operating taxes from previous years. Residual value remained positive, but lower than the previous year. The credit loss ratio of 0.28% was within our expectation. Return on equity for the full year reached 14.3% and therefore within the guided target corridor of 13-16%. Ladies and gentlemen, in 2025, the BMW Group achieved group earnings before tax of €10.24 billion. Thanks to a stable year-on-year profit attributable to shareholders of BMW AG amounting to €7.29 billion, the Board of Management and the Supervisory Board will propose to the Annual General Meeting a total dividend payment of €2.6 billion. The proposed dividend represents a payout ratio of 36.6%, which is consistent year over year and in the upper half of our strategic target range of 30-40%. This amounts to a dividend of €4.40 per share of ordinary stock and €4.42 per share of preferred stock. Additionally, we completed the second share buyback program in early 2025, before starting the third program after the AGM in May. The total from both programs amounted to a payout of 1.25 billion euros in 2025. Our third share buyback program will run until April 2027. We are currently running the second tranche of this program with a volume of 625 million euros for ordinary shares. That will be completed by August 31st, 2026 at the latest. The third tranche is earmarked for after that. For the financial year 2025, the total shareholder return of close to €4 billion, comprising the proposed dividend and share buybacks, exceeds free cash flow in the automotive segment. This further underscores our commitment to capital returns. That brings me to our outlook for the current financial year. What are our expectations for 2026? In Europe and the USA, we see some growth potential. In China, we have responded to the market environment by taking a number of steps to stabilize transaction prices. Average sales figures over the past few months indicate that sales in China could reach last year's level. Consequently, we forecast global deliveries of BMW, MINI and Rolls-Royce vehicles to be at previous year's level. Due to model cycle effects as well as shifting regulatory and market dynamics, we also expect the share of fully electric vehicles to be at the same level as the previous year. Turning to auto EV development. We continue to work diligently on reducing costs and will see tailwinds from reduced investments, lower manufacturing and material costs, declining R&D expenditure, as well as reduced SG&A in the 2026 financial year. We anticipate a negative impact of approximately one and a quarter percentage points from tariffs on the auto EBIT margin compared to the one and a half percent in 2025. Given the significant investments made into Neue Klasse in preceding years, we will see a material increase in depreciation and amortization from both CapEx and capitalized R&D. While we will continue to make significant reductions in R&D expenditure, the additional depreciation and a lower capitalization ratio, which is expected in the 30% area, will result in a significant P&L burden. Other headwinds in 2026 include FX and raw materials, the measures taken in China to stabilize transaction prices, and finally lower income from used car remarketing. The reductions we will achieve on the cost side will not fully offset these headwinds. We therefore expect an auto EBIT margin in the corridor of 4 to 6% in 2026. The corresponding ROSI in the automotive segment is forecast to be between 6% and 10%. In the financial services segment, we again anticipate a return on equity of 13% to 16%. Putting this all together, we expect group earnings before tax to be moderately lower than the strong result in 2025. The full 2026 outlook for all key performance indicators is available in the BMW Group Report. In addition, we expect a free cash flow in the automotive segment at the year-end over 4.5 billion euros. Ladies and gentlemen, for 2026, we will continue to systematically implement our strategic course, particularly with the launch of Neue Klasse Produkt Offensive and the roll-out of its technologies across the portfolio. We will leverage flexibility in our global business model to tackle the challenging and dynamic operating environment. At the same time, we will manage our operational business with continued focus on cost discipline. This will enable us to deliver financial results in line with our guidance and generate strong returns to shareholders. Ladies and gentlemen, let me pick up on Oliver Zipps' comments regarding sustainability and CO2 emissions before I hand back over to him. For the BMW Group, we view sustainability holistically and as a competitive advantage. That is why we in our annual reporting disclose our sustainability performance fully to our investors and customers. In line with our strategy and our commitment to the Paris Climate Agreement, The BMW Group considers the CO2 emissions of vehicles, both for the new and existing fleet, over their entire lifecycle. From raw material extraction and parts production to the manufacture of vehicles and across the use phase to the vehicle's end of life. We address all stages of the value chain with ambitious targets. However, European CO2 fleet emissions regulations focus only on the use phase and do not recognize the full reduction potential along the entire value chain. When it comes to reporting, emissions shown in sustainability statements do not always correlate to the actual generation of emissions of all vehicles on roads. For the 2025 financial year, the BMW Group reporting includes all vehicles sold in the year across their lifecycle, including the CO2 emissions from the supply chain for vehicles produced in the reporting year, from BMW group production, from the assumed use phase of 200,000 kilometers for vehicles delivered in the reporting year, based on the consumption mix of the reporting year, and from end-of-life disposal for vehicles produced in the reporting year. However, the use-phase emissions reported in line with European frameworks in 2025 do not consider all existing BMW Group vehicles still in use, but rather only those vehicles sold in the reported year. This means that European reporting frameworks neglect the reduction potential of the existing vehicle fleet. Here, there is significant leverage to quickly contribute to CO2 reductions through use of e-fuels and carbon neutral fuels such as HVO 100. Immediate credit should be given starting, for example, in 2027 for the CO2 reductions achieved using sustainable fuels, which should not be subject to limitations such as caps on specific gram per kilometer values. The European regulatory framework should reflect this holistic approach towards reducing overall emissions in the here and now in both the new and existing vehicle fleet. Because, ultimately, every gram of CO2 saved counts. That is what we at the BMW Group believe and what makes a true societal impact. I now hand back over to Oliver Zipse to provide additional strategic insights for 2026 and beyond.

Ladies and gentlemen, looking ahead to this year and beyond, three key factors will be decisive. First, for our 2026 targets, the product lineup is currently available, which we have built up gradually over the past few years. And second, for this year and the years to come, the rollout of additional Neue Klasse models and integration of its technologies across the entire product range. And third, the tech clusters of the Neue Klasse, which enable rapid advances and collaboration with leading tech players worldwide. Let's start with the first item. The company's current product portfolio across our BMW, MINI, Rolls-Royce and BMW Motorrad brands offers a range of premium options in all key segments. From MINI in the urban compact car segment to Rolls-Royce in the ultra luxury class. At the beginning of this year, we added another highly exclusive dimension to our brand portfolio – BMW Alpina. The long-established BMW Alpina brand embodies maximum performance and exceptional driving comfort combined with unique options for individualization. This makes it an ideal addition to our existing product range in the segment for individual, highly customized vehicles. In this way, we are tapping into a highly profitable segment with great growth potential, positioned above the BMW brand's top models and below our Rolls-Royce luxury brand. Overall, the BMW Group offers one of the industry's most comprehensive and diverse premium portfolios. A core strength of this lineup is our consistent focus on technology openness. We committed early to a market-driven mix of different drive technologies. With this approach, the BMW Group continues to chart its own course, enabling us to systematically respond to the diverse requirements of markets and customers well into the future. Because we choose this path early, making the necessary investments at the right time, we can now fully realize the market potential of our products. Today, we offer battery electric vehicles in all relevant segments. And by the end of the year, we will have a total of 20 BEVs across all brands. This will further strengthen our competitive position. And at the same time, plug-in hybrids also remain important. And this is not just a bridging technology. For many people in all regions of the world, they are the only way to integrate electric locally emission-free mobility into their everyday lives. Together with our range of highly efficient combustion engine, this approach provides maximum flexibility, ensuring that regional market opportunities can be consistently exploited. And this strong lineup lays the core foundation for the company's business success in 2026 and beyond. At the same time, And that brings me to my second point. We are systematically building on our current advantage with the Neue Klasse. With the release of the BMW iX3, the market launch of the Neue Klasse has just begun. And this is only the start. Additional all-electric models with the new design and innovations of the Neue Klasse will follow. Another notable highlight will be unveiled next week when we present the BMW i3, the first variant of the next generation of the BMW 3 Series. The new i3 brings our Neue Klasse right into the heart of the BMW brand. Prepare to be amazed by what the technologies of the Neue Klasse can do in a vehicle like the 3 Series. I think it is fair to say that they take sheer driving pleasure to a whole new level. And here's a sneak preview of what we will be unveiling next week. Ladies and gentlemen, I am looking forward to presenting this incredible car to our BMW fans worldwide next week. And after that, we will meet again at Auto China in Beijing to introduce the Chinese version of the iX3 as the next Neue Klasse model. We developed this vehicle exclusively for China, together with our local R&D team in the market, ensuring that the product meets the specific wishes and needs of our Chinese customers. The result? The most Chinese car we've ever built. Initial feedback from the local media has been overwhelmingly positive, with praise in particular for its driving characteristics. The China-specific digital features have also been very well received. And then in 2027, BMW M will usher in a new era in the high-performance segment with the first all-electric M vehicle with racetrack capabilities based on the Neue Klasse. Alongside development of the NOE-Klasse, we have also created the essential conditions for rapid ramp-up with our supplier and production network. Production of the iX3 has successfully begun at our new plant in Debrecen. We will start production of the new BMW i3 at our main plant here in Munich in the second half of the year. To do so, we have completely modernized the plant during ongoing operations. And from late 2027, we will build only electric vehicles in Munich. Production of high voltage batteries will also begin at our new plant in Ilbach-Straßkirchen in the second half of the year. And this facility will supply our plants in Germany with the sixth generation high-voltage batteries. Our plant cluster in Shenyang in China is also ready to build the Neue Klasse in China for China. And in our largest plant in Spartanburg in the United States, we are systematically modernizing the production system for the technologies of the Neue Klasse. This also includes the new high-voltage battery assembly facility in nearby Woodruff. And across all plants in our production network, we are creating the necessary conditions to implement the technologies of the Neue Klasse as quickly as possible in all BMW models. Between now and 2027 alone, we will bring more than 40 new or updated models to the market. Each of them will benefit from the technologies of the Neue Klasse, always tailored to concept requirements and independent of the drive technology. The best example of this is the next generation of our BMW X5. This summer we will officially unveil the successor to our current model and the X5 will be the first BMW model to be offered with five different drivetrain variants. With highly efficient conventional drives as a plug-in hybrid, battery electric and from 2028 onwards also powered by hydrogen. In this way, we are laying the foundation to successfully meet the diverse requirements and customer needs around the world, both today and in the future. And shortly before that, at the Beijing show, we will be showcasing the first model update to feature technologies from the Neue Klasse, the BMW 7 Series. The result is an almost completely new vehicle. We're taking full advantage of the new possibilities from Neue Klasse technologies and raising our luxury sedan to a whole new level in terms of both appearance and technology. And this brings me to my third point. The technology clusters of the Neue Klasse and their potential. With the technology clusters developed specifically for the NOAE cluster and our modular approach to technology, we can integrate market-specific functionalities and content into our vehicles. At the same time, we are strengthening our R&D capabilities to enable us to respond more quickly and flexibly to local customer needs and provide appropriate solutions. In our key sales regions, we have already implemented numerous features in collaboration with leading local partners. For example, in the Chinese market, we are working with Alibaba Banma to establish the next generation of intuitive in-car voice control. In China, the BMW Intelligent Personal Assistant is also being expanded to include deep-sea functionality. In most markets, including Europe, we will be integrating Alexa Plus as the centerpiece of our BMW Intelligent Personal Assistant. Thanks to the advanced large language model technology of Amazon Alexa Plus, our customers now benefit from an even smarter, more connected and highly personalized voice assistant. With our driver assistance systems, we continue delivering the best possible customer experience in each region, tailored to local requirements. And to achieve this, we work closely with selected partners. And our guiding principle remains the same. We always strive for smart, symbiotic and safe solutions. Last summer, we launched a new cooperation in China with Momenta, a leading local provider of ADAS technology. And outside China, we are collaborating with the American company Qualcomm. Both collaborations focus on the co-development and integration of software that adapts to different road conditions, traffic scenarios and user needs, relying on state-of-the-art AI algorithms and data-driven methods. These examples highlight the extraordinary flexibility and scalability of our tech clusters. With a software-defined NOE cluster, we maintain control over all systems and can deploy them simultaneously worldwide. And we are also able to rapidly integrate local technology stacks, giving our customers access to their preferred innovations and features. Continuous over-the-air updates ensure that our vehicle software is always up to date. All functionalities are improved on an ongoing basis to permanently enhance the customer experience. Ladies and gentlemen, as you can see, the BMW Group remains successful and highly innovative. Our current product range is one of the broadest and most attractive lineups in the premium segment worldwide. With the Neue Klasse and its technologies, we have secured a significant competitive advantage and we will leverage these strengths to drive our economic success. However, it is also clear that our world remains unstable and numerous risks will persist in the current financial year. We meet these challenges with strategic consistency and with market and opportunity driven vision. Our global footprint in sales, research and development and production provides us with a foundation to mitigate uncertainties and respond flexibly to unforeseen events. And we will continue to build on these strengths in 2026 and, of course, in the years to come. Thank you very much.

Ladies and gentlemen, dear colleagues, welcome to the media Q&A session of the BMW Group Annual Conference. I would now like to introduce to you the members of the Board of Management. I will start on my right. First, Milan Nedeljkovic, Production. Next to him we have Ilka Horstmeier, People and Real Estate. Then to my immediate right, Walter Mertl, responsible for Finance. To my left is our CEO, Oliver Zipse, Directly next to him, Joachim Post, member of the Board of Management for Development. Next to him is Jochen Goller, responsible for customers, brands and sales. And last but not least, Nicolai Martin, purchasing and supplier network. We will broadcast your questions live, of course. Happy to have you turn on your video transmission. We also ask you to use the raise hand feature if you have a question. Please note, your video will be visible on the wall behind us until your question has been fully answered. This year, we once again have participants joining us from all over the world. We therefore do ask for your understanding should there be any minor technical delays. Please note, the Q&A session will be held in German. Of course, we will provide simultaneous interpretation into English. You are therefore welcome to ask your questions in English as well. Our board members will then answer in German, and your questions will be interpreted simultaneously as well as the answers. Ladies and gentlemen, dear colleagues, let us begin. Now that we have covered the organizational part, let's start the Q&A. We will move on to the first question. It comes from Christina Ammann from Reuters. We probably will hear or see her in just a second. Hello, Ms.

Ammann.

We unfortunately cannot hear you just yet. Maybe you're on mute. We still can't hear you, I'm afraid.

I'm so sorry, Ms.

Ammann, we still can't hear you. We might have to circle back to you.

Right, so then we'll jump to the next question.

That's Frank Folt from Automobilwoche. Mr. Folt, over to you.

Mr. Volk, we can see you. I heard something. So sorry, it seems we also can't hear Mr. Volk.

Now I'm looking backstage. Are we sticking with Mr. Volk or are we moving on?

What do we do?

Let's see, maybe we can get some feedback. It should be working.

So, it seems that we're figuring it out.

Please bear with us. Also happy to entertain you in the meantime. So, of course, we have the entire Board of Management here. We're still at BMW. We are at the BMW Welt here in Munich at the annual BMW conference. And we're missing the times when everybody was here in the room because, of course, in that way, everybody was able to just speak to us. We had a fantastic tradition. We always had the manager magazine go first. Sometimes we had the Süddeutsche Zeitung from here in Munich go first. But with that being said, let me once again ask, Is there anything that we can do here to expedite the process, maybe read out a question? I've now just got feedback that it should work now, so we'll try once again Frank Volk from Automobilwoche. We're once again going to check. So, again, Mr. Volk, we can see you, which is one step in the right direction. Right, now we can hear you. Fantastic. Your question, please. Right, thank you very much. Good morning. Happy to... Now, you are the first one. Great to have that experiment finally working. Automobile Woche is now the number one. Yes, I'm very happy. I have three questions. Mr. Zipse, the i3, of course, is coming up next week, but maybe you could talk to us a little bit, because it is a special vehicle. Maybe you can tell us a bit more about your expectations and the meaning of this particular vehicle. Second question. In your speech, you were talking about the EU experiment regarding e-mobility. mandating it and that this is probably not going to have the benefits that they would expect. It sounds like you're losing faith in the fact that the EU would get the results that would be beneficial for the industry. How critical is that actually? Or, to flip it, what would you expect to ease the tension a bit? To kick things off, I have a little bit of a yellow press question, which you probably wouldn't love. But still, this is now, of course, your last annual conference as CEO. How does it feel, and looking back, Are you happy with the results that you're presenting now at your grand finale? Thank you very much, Mr. Folk. I think this really comprises everything that we wanted to cover today, and there's no better person to answer this, especially, of course, the third question, as our CEO, Oliver Tipson. Oliver, please. Right, Mr. Volk, thank you very much for these three questions. I do hope that we have enough time to cover it, because the i3, of course, is the beating heart of BMW. It's not the first generation. And, you know, just wait. We'll, of course, present the i3 next week after the iX3. We're going to be presenting it next week in great detail, of course. It is the beating heart of BMW, of the Neue Klasse. We have, of course, We rebuilt the entire Munich main plant for years now. It's finished. The cars are being produced. We are very happy with the results. And we are... Just really happy with the double surprise. Of course, the iX3 has been in the week for our market. You can order it, you can buy it. It's going extremely well. We have more than 50,000 people who have already ordered the car without ever having set a toe into the car. And now, of course, we're following that up with the i3. So just wait and see what the car can do. what the different capabilities are, and we're absolutely sure that we're going to be at the absolute peak of the industry. Now, moving on to Brussels, I'm not sure what you mean when you talk about the EU experiment. I didn't say that, but I do know what you're talking about, I believe. It's about what you do in 2030 and 2035 regarding the CO2 regulations. Now, as you know, CO2 is incredibly important to us. We are currently the only German manufacturer sorry, let me rephrase, the only European manufacturer, which at the moment in 2025 has achieved the goals without pooling, without averaging. We simply hit the goals in that particular year. Instead of 92.4 grams, we're actually right under 90 grams. So we even overperformed. So we can prove it. We have done it, not just scope three, also scope one and two, just the same. Each and every single year, less CO2. That's our strategy, and it works. Now, what is important to us is that when reworking the goals for 2035, we don't want to go overboard, just because all of a sudden, in the main buzzword, technology openness, there's now so much fine print added to that, so much overregulation in there that it has nothing to do with The first thing is, of course, the European content, which is phrased in a way that global business models, which are important for the European and especially, of course, the German and especially for the BMW industry, is so crucial that that just completely cuts it out. And that is actually an opportunity for Europe, because in this way, no other region in the world has it. So we're really giving the game away in a way. by trying to kind of cut ourselves off from the world. That's one thing. The other thing is, of course, that we have now created a new class of or they are creating a new class of vehicle, which is great. But the question is, what are they doing it for? Why should you get a CO2 credit just because the vehicle is small instead of just saying the most efficient cars get a CO2 credit and not just the smallest cars? And then via the incentivization, Sure, we have nothing against incentives. This is a well-intentioned but wrongly executed project. And then last but not least, only looking at the tailpipe is absolutely not the right thing. Our approach is let's look at the entire value chain from green steel via the supply chain and so on and so forth, really cradle to grave. Let's add that to the calculation, and then it'll be a fully rounded conversation. In the current conversation, I don't think it is wide-ranging enough, and all in all, We believe this is going to lead to a significantly shrinking industry, and we say it because this is very dangerous. And like I said, we are showing that it works. We're showing that there's a different way. The CEO question, well, After 35 years, looking back, you know, at some point the time has come to step away. I think it is now the right point in time. And, I mean, of course, you can see the entire team that we have set up in the last couple of years that has had great success in the last few years as well. And there is, of course, going to be huge continuity. Milan Hidelkovic, who is here, of course, as well today, is going to be my successor. So he is going to be a steady steward. There is not going to be any sort of disruption. that you will see or feel, and I think this is again very fitting for the BMW way. Personally speaking, it was a huge honor and a huge joy to chair this company, to run this company in the last few years, and I'm going very happy, very satisfied. Right, thank you very much. But that doesn't mean that we're going to wrap up the press conference, because, of course, this would have been the perfect way to go. But I can say that our CEO is going to stick with us for another while yet. Now, we'll go back to the first participant, Christina Ammann from Reuters. And once again, so sorry for the technical difficulties. We'll give it another try. Good morning. I hope it works now. Yes, it works brilliantly. Fantastic. Good morning. I have a few questions. First off, Iran. What does the Iran war mean to BMW? First off, of course, we're talking about parts, raw materials. Are there any particular raw materials which you received via the Strait of Hormuz that could now run into a bottleneck? Then, of course, also sales. The Middle East is, of course, a very strong luxury market, traditionally speaking. So what does that mean for BMW, probably particularly Rolls-Royce? The second question, China. Mr. Mattel, you mentioned that in the first half of the year, the initiated measures regarding price stabilization actually had a negative impact. Maybe you can explain a bit more what you meant by that. What is the outlook for the full year in China, not just regarding sales development, but also regarding the returns, and where you actually see the long-term outlook for the Chinese market going forward? Of course, the question is also, is the luxury market there going to recover at some point, or is the world there simply so fundamentally changed to what it was a couple of years ago? And the third question is, EU regulation, Mr. Tsipras, you've made it very clear that you do not go with a pure tailpipe observation and that emissions... are also supposed to be balanced by way of e-fuels and green steel. With green steel, we recently heard more and more projects being cancelled and stopped. Is there even an opportunity? Are there actually enough of those raw materials and with e-fuels, Do the customers, do the drivers actually accept this fuel, which technologically speaking wouldn't be an issue, but is it supported? And then local content, that's of course the next big topic with batteries. What do you think your opportunities are there to have major advantages and advances? All right, thank you very much, Ms. Ammann. I'm going to divvy these questions out. Nikolai Martin is going to talk about supply chains, Rolls-Royce, Jochen Goller, and then Walter Mertl, and then we'll do the rest. So we'll start.

Nikolai, we'll start with you.

We are, of course, observing the situation in and around Iran very closely. At the moment, there are no supply bottlenecks because of the current situation. There's also only one direct supply relationship to Dubai for aluminum. But we are absolutely hedged in the long run, and we also have additional supply sources. So there are no impairments of production in this way. Thank you very much. Jochen, on to Rolls-Royce and sales development Middle East.

Good morning, Mr. Chairman.

Good morning, Ms. Ammann. First off, Middle East on the BMW side is important, but in the global context and looking at the percentage, it is relatively low. And now, of course, we... have only been in this particular conflict for 11 days, so we just have to wait and see. Also, for Rolls-Royce, we are globally well positioned. Middle East is, in fact, an important market, but, yeah, we just have to wait and see and observe what's going to happen in the next few months. We do assume... that the situation is going to calm down, that if the situation calms down, the customers would be returning back to us. So this is at a very, very early stage. We can't say too much yet, but due to the fact that at Rolls-Royce, just like with BMW, we have four regions. You know, America is going really well. Europe is an important market. We also assume that, globally speaking, we're still well positioned. Excellent. And with that being said, I would like to hand over to Walter Mertl, our CFO, regarding price stabilization in China. And should we have any other open questions, then, Jochen, back to you. Good morning, Ms. Ammann. In the second half of the year, we started initiating product measures in China in parallel to stabilizing our dealership network and restructuring it as well. By way of these additional measures, of course, there is a slight negative impact. However, what we do find and what we do want to stress here is that the transaction prices in the market for our products have stabilized, are stabilizing, and are actually improving slightly compared to Q3. We also see that the product offering is received well. dealerships are going better and more smoothly. How do we see it? Well, it's because we're, of course, looking at the budget and the run rate, and sales in the first two months are exactly how we envisioned. And that's why, of course, you also asked about the overall outlook for China. If the run rate continues this way, we have the opportunity to go back to prior year level in China. Thank you very much, Walter. Jochen, maybe back to you. Maybe just a short outlook regarding the Chinese market. Sure. So, Mr. Mertl just said it. We see a stabilization regarding the BMW business since Q4, in fact, and we've actually started the new year quite solidly. Also, this large product initiative that we've kicked off around the globe, we're of course also doing in China. We have a huge kickoff in April at the Motor Show. We're going to be showing three new models, world premieres. We're also going to be there with the Board of Management. And so we do see... a very solid volume development, pricing structures, lots of decisions that we've made at the product space, product portfolio are showing effect, and we're going to be having new models coming into the market in the second half of the year. So as of right now, as Mr. Mattel said, we assume that there is going to be a solid trajectory, and we're aiming for prior year levels. Thank you very much. And then the third question was regarding the EU regulations. Are we speaking about green steel and e-fuels as a big opportunity?

Over to our CEO.

Well, every single gram of CO2 that we can reduce today is just as valuable or even more than one that we can reduce in 2035. And I think we should all take a step back And look at the major CO2 emissions and where they come from. It's the fleet. We have, of course, been preparing. We've been prepared to use regenerative fuels. And I think the best example is what happens. Diesel HV-0100. There are more than 700 gas stations in Europe, sorry, 7,000, not 700, 7,000 gas stations that can do this. So this is really quite widely covered across the board. And I think if you just get this particular fuel, you can reduce the CO2 emission footprint by 90% already. So it's already here. It's not something... intangible in the future. I think that's important, and we don't know why that can't be fed into the regulation. Now, we believe it is important to reduce CO2 across the board, and this, of course, includes electromobility at a large scale. We've proven this with the Neue Klasse, but we believe this isn't enough. But we believe this technology is still going to be a huge step. So we, once again, try to make the case for a wide-ranging approach, which is more important than the current regulation or even a reworked regulation. Local content – well, we say that the European industry is, of course, an export industry, and if we take local content seriously, this export share of the European industry needs to be taken into account, which at the moment is not the case. Thank you very much, Ms. Amann, for the question. I would now like to call upon the next person.

That's Christoph Ruhrmeier from DPA, and we can see you. Good morning, Mr. Ruhrmeier. Please ask your question.

Thank you.

Now, I'd be particularly interested about the staff numbers. If I read this correctly, there was a slight decline last year and that's expected to continue this year. Is there a reason for that? And is this something that's happening in Germany or more something abroad? And maybe a somewhat blunt question. Is there a headcount reduction plan? There's no plans for that at the moment. Is that correct? Thank you. Igor Horsmayer.

Mr. Röhmann, thank you for that important question.

It's not only important for you, but of course also for our employees. Now, let me try and explain it. Now, HR planning is a core of our HR work. We're always looking at our staff structures also for the future and make adjustments. We have now prepared the Neue Klasse and we invested in structures and technology, but last but not least in skills. in our employees. And in recent years, we've had the biggest training initiatives for software digitalization and, of course, AI, with around 1 billion investment in recent years. That's incredibly important to do precisely what we're doing now with the Neue Klasse, be it the iX3 or the 3 Series that's soon to be launched. So that's very important. Of course, we have to take account of the external markets. But with this big technological advance, we've also made advances in optimization of our processes. And we can see this at the moment. We saw this last year, and this will continue this year. We've seen that our automation and digitalization and AI initiatives are bearing fruit. And, of course, that has an effect on staff requirements. That was the case last year and will be the case this year. And it's important for me to emphasize we are using our existing HR tools and using the modules that we've been using in the company for years. And we take account of natural fluctuation as well. Very important, perhaps, one last remark. Employment is secured at BMW, and we will continue to offer apprenticeship and training positions. That's important for our future and for young talent. That's incredibly important there. So that's referring to the last question. No.

Thank you.

That was the question from Christoph Ruhrmeier from the DPA. The next question is from Sebastian Esch from Financial Times. Hi, Sebastian. Yes. Good morning, everyone. I've got three questions. Now, you are forecasting a downturn for this year because of the effects of tariffs in comparison to last year. What's the reason for that? Because some carmakers are saying that there will be greater effects there. So can you explain why you don't think it's going to have such a great effect? The second question You have a large range of drive trains, including hydrogen drive trains. So will there be range extenders as an option in the near future as well? And on the question of e-mobility, You expect a market share for this year that will be more or less the same as it was in 2025. Can you perhaps outline why? There won't be any fluctuations there this year. And can you perhaps also outline whether there will be any regional changes there? So what's the score in Europe in comparison to the USA, for instance, or in comparison to China? Thank you. We'll begin with Walter Myertl regarding the forecast. And then regarding the drive mix and range extender, we'll have our development member.

And then, yes, sir. Thank you, Mr. Asch.

In our forecast, we posted what we can expect from the tariffs, and we assume that in the first half of the year, we won't see any changes. That is to say, around the 1.75% that we saw in the third quarter. in our P&L. We expect that to remain. But in the second half of the year, we assume that there will be new agreements. On the one hand, an agreement between the U.S.A. and Europe, and that Europe will finally sign that, that we will then have zero percent. And, B, that there will be positive agreements made between the U.S.A., Mexico, and Canada, and further nations as well. And given that, we assume that the full-year effect that was at 1.5% last year in 2025. We assume that in 2026 we'll be at 1.25%. Thank you. Now we'll talk about the drive mix. I'd like to pass this over to our board member for development. Thank you, Mr. Asch. for your question. You know that technology openness is one of the main pillars of our strategy, and that's why we fundamentally offer all drives from combustion to plug-in hybrid to all electric. Now, the X5 will be provided with the fuel cell as of 2028 for the first time. Why? Well, because we are convinced that that will be a further alternative that will be needed for climate change mitigation. We think that fuel cell technology can make a contribution there. With the Neue Klasse, we have our sixth iteration of the battery cells, and we have made a huge contribution here to range. So we don't think that there is any cause for concern about range there. If we have a range of far beyond 800 kilometers, and 400 kilowatts charge power. We're, of course, keeping an eye on all of the options out there and seeing whether range extenders are something that we need to integrate into our portfolio. But at the moment, particularly with what we have with the Neue Klasse, we think we're in a very good position without that. Thank you. The last question was regarding to e-mobility and market shares this year. Jochen Golle. Thank you. Now, growth is always looking at the baseline as well. And in 2025, we had a very high baseline. Now, you know that we had around 18% market share and 25% electrified. And this year, if we look at Europe, we're above 40% electrified vehicles when we're looking at the share of volume. So that baseline is very high. We want to achieve growth with the Neue Klasse. And you're correct in saying that there will be regional differences because, of course, the Neue Klasse will first be launched in Europe and in the second half of the year in the USA and towards the end of the year in China as well. Thus, this year, we are aiming at... strong growth in volumes in Europe. And then in the following years, as the Neue Klasse is rolled out, we seek to grow more there. Thank you. I would now like to also read a written question, and this is a question to Milan Nedejkovic, production. What's the score with the rollout of the Neue Klasse and X5 and 7 this year in America? Can customers expect punctual deliveries?

Thank you for the question.

In recent years, we have prepared our global production systems for the launch of the Neue Klasse, but also for all models that will follow. And in our new plant, we started production, and we are starting to scale production there as well so that we will be able to provide the X3 in accordance with market demand. At the same time, the Spartanburg plant is preparing for the new models, and all of the preparations are on time. We will be able to ramp up production there on time as well and deliver on time. And thanks to the good demand for our vehicles, the plants have a lot of orders. Thank you, Milan Nedeljkovic. The next question is from Stefan Radamski from the Süddeutsche Zeitung. Thank you. Good morning to everyone. Two questions regarding the end customer. On the one hand, Mr. Merkel, you were talking about pricing pressure, which you'd already felt last year. Perhaps you can be a little bit more specific about that as to whether that is the same across the world. and whether it's the same across all of the different drivetrains or what is particularly subject to pressure there. Secondly, you expect decreasing residual values for used cars. Here again, the question, will that be the same across the entire portfolio and for all drivetrains? And to what extent? And then, Based on that question, what does that mean for leasing rates? What do you expect in that regard? Because the electric market is pretty much driven by leasing, at least for private customers. So decline in residual values would then generally mean that there would be increasing leasing rates. So will it be cheaper to buy an electric vehicle and will it be more expensive to lease a Neue Klasse? Pricing pressure is not the same everywhere in the world. Of course, there are regional differences. And in our forecast, we particularly looked at China. You know that in the last two years, they have been some quite intense differences in prices there. Since the third quarter, we've been able to address price stability, particularly with the product measures that we've taken. Regarding residual values for used cars declining, well, we need to relativize what a decline means there. I would say that they're less positive than they were in 2025, where they were positive. And in 2023, they were more positive than in 2024. So we see that the extra profits are going down gradually. And this was all due to availability. And we're seeing a downturn there. You can see this in all of the different indexes in the USA. But they're still positive, but not as positive as in the previous year. Whether that's the same everywhere, well, we do indeed see to an extent a trend for all electric vehicles and for combustion vehicles that they are relatively stable, but there are regional differences here as well. It's not the same across the world. A different situation in Europe than in the USA. Leasing rates, of course, don't only consist of production costs, but it's also a question of competitiveness. And if you have very convincing products which are in high demand, then, of course, that will have an effect on leasing rates, and that doesn't have anything to do with residual values. Thank you, Mr. Radomski, from the Süddeutsche Zeitung. And we hope that – I'm happy to hear some optimistic opinions from our CFO. The next question is from Steven Wilmot, Wall Street Journal. Hi, Steven. Stephen?

Hi there. Thank you for the opportunity. The first question, it would be great to have a bit of an update on the question of margin parity between EVs and conventional drivetrains. And secondly, which is a bit related, I guess, which is your margin outlook. Do you expect to get back to, I guess, what we would have once considered normal levels of maybe 8 and 10 percent any time within the medium term or later? can you give us any idea of longer term, um, margin outlook, um, given that you've got this four to 6%, um, guidance for 2026, um, um, you know, in, in, in the context of, I guess, of, of rising EV share and this question of margin parity. Um, and then just thirdly, um, it'd be great to hear your thoughts finally on, um, on advanced ADAS. And it was recently reported that you've deprioritized the so-called Level 3 program. And obviously, you've got these partnerships with Momentor and Qualcomm, which are more focused on kind of point-to-point urban mobility, it would be great to understand where you're at with that and at the timetable for rolling that out in a more comprehensive way. Thank you.

Thank you, Stephen.

We'll just... I'll try and summarize here. It was the margin parity between electric vehicles and combustion, then long-term margin outlook. Valter Mertl will deal with those questions. Then we came to some technical questions. Our head of development will talk about that, particularly Level 3, the ADS system. We'll begin with Valter. Hello, Mr. Wilmot. Now, regarding margin parity, Last time at the IAA, we were able to talk about that, and it still applies. Regionally, we do see differences. If you work in lots of different countries which are subject to tariffs, then margin parity will not be something necessarily that we can say is optimistic for the future. But in Europe, it's pretty good. Margin parity, particularly with the Neue Klasse, is possible. That's why, over recent years, our engineers have been very happy to work together with our CFO, and we've all worked together to achieve this margin parity, and then this return to the 8% to 10%. Now, that is our strategic goal for cars. But you know that there are lots of influences that are making it perhaps more difficult to achieve that, be it tariffs, which have an overproportional effect, or exchange rates, which aren't necessarily great at the moment either. Our clear goal, our clear plan is, however, We're working on all of these elements. You can see from the year 2025 that we were paying particular attention to fixed overheads, but also investment. And that will continue to play a role. And in 2026, we will pursue that so that on the performance and production costs and overhead side, we will be on the ball. And when this all comes together in the medium term, that will have an effect on achieving the 8 to 10 percent. Thank you, Walter. That brings us now to the third part of the question. That was the question about the ADAS system and the partnerships with Momenta and Qualcomm. I would like to ask Jochen Post to deal with this question. Yes, the Neue Klasse, Mr. Wilmot. We will really be able to launch the next level of the ADS systems. We call it smart, symbiotic, and safe. This is a unique driver experience. It intuitively involves the driver in the whole system. We have the hands-off system. on motorways up to 130 kilometers per hour that's now been enabled in accordance with the provisions and we are now as you correctly said focusing on level two and level two plus plus systems in europe and usa with the qualcomm partner and in china our partnership is with momenta and with the launch of the neuer class we want to have an end-to-end function so that's the level two plus plus system that we want to integrate there. They're very attractive systems for customers. They're in high demand with customers. Why? Well, because the sensors that they have on board with all of the safety systems and all of the regulations in the vehicle, we've been able to fulfill all of the provisions. We had the level three systems in the vehicles, but we realized that the demand for this was not currently at a stage where we could be profitable, and we have to be profitable in our business, of course. So that's why we no longer have a level three offer. But that doesn't mean that we are going to continually disregard higher levels. And as soon as we have business models that are feasible, we will pursue them. Thank you. The next question is from Martin Hesse from Spiegel Magazine. Mr. Hesse, please. Good morning, everyone. Thank you for the opportunity to ask these questions. A specific question about China and last year. Now, you had a sales downturn that you posted. Perhaps you can split this according to BEV and other drivetrains. So perhaps to be more specific, did you see a downturn in BEV sales? Then I understood that you weren't necessarily expecting a huge sales effect from the Neue Klasse, but rather that you expect that to kick in in coming years. Perhaps you can provide us with more of an outlook for the coming years, perhaps also, Mr. Niederkovich, as the designated new CEO. So what you're expecting for 2027, 2028, perhaps also for USA and China, whether you think that there will be a ramp up of BEV there as well, which will help. And then perhaps a question on a slightly different tack, We see that Chinese manufacturers, or it's expected that Chinese manufacturers are going to engage in a further offensive in Europe. What do you think they will achieve? Do you think they'll be able to secure new market share? And where from? Who from? Do you think that you'll be able to defend your market shares here in Europe and elsewhere? Thank you, Martin Hesse. These questions will all go straight to our head of sales because he is responsible for that. One, two, three.

Good morning, Mr. Hesse.

China BEV sales. Indeed, our BEV sales did decline a little bit last year, but we were aware of that. We were speaking about pricing pressure, particularly in electrified vehicles. We're not We didn't follow all of the pricing measures there. And then we did hold back in some segments. But with the Neue Klasse, which will be launched in China at the end of the year, and we're sure that that will be very well received there, and we think that that will lead to growth. That's something that we will particularly see, however, in the books next year. I won't tell you any specific figures for our outlook now, of course, but we are looking aiming to grow. We have invested many billions of euros in lots of new products and new models, which are either completely new or that have been significantly upgraded. That's why we seek to grow in all regions, and that's the advantage that we have. We are global. And we want to grow in Europe. We want to grow in China. We see significant potential in the USA, where we have a good position, and also in what we call the rest of world. So those are the markets that are not covered by the other markets, but I'm not going to tell you any specific figures. On the question of Chinese manufacturers, let me turn this around. A few years ago, the Japanese came to Europe, but BMW continued to grow, and then the Koreans came, and BMW continued to grow. And now the Chinese are coming, and I'm sure they will be able to secure market share for themselves. From whom? Well, I think that's a question for other OEMs. We will continue to grow with our product lineup. And we also have these new launches, plugins, BEVs. We think also combustion engines. will not only remain stable with market share, but we think that we'll be able to grow there as well. Similar to the Japanese and Korean manufacturers, I'm sure the Chinese manufacturers will be able to conquer some market share, but we assume that it won't come from us. Thank you for that clear question. And thank you, Martin Hesse from Spiegel. Next question is from Felix Stüppler, Handelsblatt.

Good morning to Munich. I have a question on two specific topics. Number one, the situation in the Middle East. Can you just take us on this journey on to the board level? How do you have these discussions? Is that just a daily topic? Do you politics in general? And also, how do you deal with that as the CEO, Mr. Tsipras, the chairman of the board? Also, on the levels below the board of management, are there any specific teams that don't just deal with the conflict situation, but that also, for example, monitor tariffs on a daily basis? And what is their result? What are their outlooks? And then the Neue Klasse, Mr. Mertl, a follow-up question on the margin parity. You said it's possible. Until when, particularly with the i3 and the iX3, especially compared to, of course, the combustion engines, until when can that be a reality? And how... Does the growing EV market in Europe support also your Neue Klasse, especially in Europe, of course? First, Mr. Zipse, and then Mr. Mertl. Right. Thank you very much, Mr. Schipler. We had a similar question before. Just to summarize, the situation in the Middle East is so young, so fresh. so brand new that any and all forecasts regarding what that could potentially mean for the full year is a full speculation. And that's what we would be fueling. Now, what happens, whether it's semiconductor bottlenecks or any sort of an event in terms of natural disasters or any political upheavals, the first thing that happens is that we go into the supply chains, we go all the way down to the raw materials, and we're taking a very close look at every step. And it's very important that this particular muscle that we've trained springs into effect, which is, of course, creating transparency across the entire supply chain. And at the moment, and let me just repeat that, we have no interruptions in the supply chains. The markets are also still quite stable. But an outlook in terms of when the situation would be over, what the overall impact could be on the full year, it's way too early, and it also would be pure speculation. Thank you very much. The second part of the question is on the Neue Klasse and the margin parity. Walter Mertl, please. Sure, happy to repeat what I said previously in some markets in Europe. already in the here and now. Actually, since this Saturday, we've had margin parity with the X3 brother. So it is reality. Is that in all markets? And of course, the question is exactly what you're comparing to. Are we comparing the i3 combustion versus the X3 or the X3 versus the iX3? Depends. But in some markets already today, we have the margin parity. Thank you very much. That's Felix Schipler from the Handelsblatt. Next question is from the Börsenzeitung Joachim Herrmann. Let's see if the audio signal works. Sorry, Joachim, we cannot hear you at this moment.

So sorry, we can't hear you, Mr. Herr.

We'll circle back to you, and we'll head to the next question for now. Who's up next in line? Andreas Höss? Münchner Merkur. So, Mr. Höss, over to you. Good morning, and thank you very much for having me. Just two follow-up questions. Number one, it's about the BEF share in the ongoing year, because I was also a bit surprised by the fact that you don't expect any more than the 18% despite the introduction of the Neue Klasse and so on. So maybe you can just comment on that a bit more in terms of why that is. Does that really only have to do with the delay or with the step launch across the world, or does it have to do with anything else, technical situations, the political framework, whatever have you? And the second follow-up question is on people. Unlike other large German manufacturers, you don't have any job cuts, but maybe still on temps. That's, of course, something that is very much a breathable entity when things go better or worse. So regarding temporary workers, are those numbers fluctuating? All right, thank you very much. We'll start with Jochen Goller.

Good morning, Mr. Hess.

Now, for one, of course, the development of electromobility is very different across the world. In Europe and in China, it's very strong. In the United States, it is relatively muted. But that is not the reason for our outlook on prior-year level, because, in fact, it's really the Neue Klasse ramp-up. We have started now in Debrecen, We are particularly, of course, applying to the European region, and you're going to be seeing a significant growth in the e-vehicles. And then in the second half of the year, you're also going to be seeing more supply trickling into the United States and then from the United States, pardon, and at the end of the year also from China. So it's the story of the rampart. We're starting with the iX3. The i3, which, of course, we're going to be introducing, is also only going to hit the shops at the end of the year, and that's why the impact... is going to be visible from full year 2027. This year, you're going to see very different regional impacts and numbers across the board, but still on prior year level. And again, you just have to see that we're coming from a very, very high level, right? So we're already at 18%. 25% of electrified vehicles. We're going to maintain this, and then next year we're going to grow across all regions. All right, thank you very much. Part two of the question was regarding people and temp workers. Mr. Hoess, I already said our HR structure is relatively, or very flexible, I should say. We're using all flexible instruments, of course, the working time accounts, also temporary workers, anything you could have. Of course, temps fluctuate wildly, both in terms of utilization, market demand, the individual sites. It's always going to go up and down and flexibly adjusted. That's why it would be unprofessional to give you a hard number for a particular deadline. But I would still like to comment on the fact that we are going to be using this instrument for flexibility. And I believe it's also a beautiful opportunity to give the people who are temp workers in the company that they can actually seize the opportunity to start working at BMW. We've done that for hundreds and thousands of employees across the company in the last few years, and I think it's a really nice building block for both sides of the equation. Thank you very much. We are now moving on to Tim Low from Bloomberg. Hi, Tim.

Good morning. Thanks so much for taking my question. I just want to take a moment to have a kind of a big picture question. In recent years, you guys have gotten a lot of credit for being quite pragmatic with your EV plans in a time when the transition has been rather bumpy, to say the least. And now that you're ramping up the Neue Klasse, I'm curious if you could sort of just look out a little bit over the next five or 10 years and say what's different about the demand picture now Globally, that makes this the right time for this ramp versus, say, in the 2015 to 2025 period, A. And then B, I read an interview with Mr. Tsipsa recently where he talked about by 2030, it's very plausible that the BEV share could jump up maybe even to 50% for BMW. But after that, the growth might slow down on that. So if you could just maybe... Explain why you see that as a potential trajectory.

Danke, Tim. Oliver Zipse.

Thank you very much. Oliver Zipse.

Sorry, sorry. Sorry, Tim. Let's have a look at... Last year, of course, we had 18%.

If we assume that with an oil class, there is definitely going to be a push, first in Europe and then the rest of the world, let's assume that we are going to triple our volume in the next four to five years. I'm not even going to look at 10 years. Let's look at four to five years. Then it will be around about 50%, globally speaking. Tripling anything in our industry is impossible. Because we always forget the scaling, right? Everything is large, global, incredibly complex in our industry. So let's assume there is a tripling. Then in many regions of the world, you're going to hit the actual limits of infrastructure, the limits of customer demands. So at this point, especially also driven by the Neue Klasse, in this segment in the next few years with the different vehicles we definitely see significant growth and then at that point and i'm really speaking of a global average i'm not talking about individual countries because individual countries there's going to be individual countries that are going to end up somewhere at 100 but if you look at china europe rest of world and then particularly if you add the united states where at the moment this is really slowing down then 50 global market share is very very much in just such a short amount of time and then we can expect and of course you know that we are a technology open company then there is going to be a moment when an equilibrium comes into play when other drive trains will reposition themselves right there might be a fifth drive train situation that is not so much dependent on battery technology you're going to be needing drive approaches that have a mixed approach like plug-in hybrids range extenders those things are going to grow more So I think the outlook from... You said it was pragmatic. We call it customer-oriented. I think from that particular perspective, to end up at around 50% is simply not unrealistic, and that's also in 2035 and then following. For the regulation, we try to really make the case for remaining technology open, and we try to really make the case for focusing on the tremendous strength of the German automotive industry as an export industry to not... underestimated and to not initiate anything that could jeopardize this particular position in the global market.

Thank you very much.

And with that, we are wrapping up our press conference. I would like to thank you all very much. These were the excellent questions at the BMW Group Annual Conference 2026. Again, thank you very much for joining us. Just a quick note, our second Q&A session with Oliver Zipse and Walter Mertl will begin at 11 a.m. This is going to be aimed directly at the analysts and investors. Stefan Reichmann is going to be the host of that particular event. And with that, ladies and gentlemen and dear colleagues, thank you very much for your interest and for having joined us at this call. And thank you very much for also having turned on your cameras by and large. And once again, so sorry for the technical glitches at the beginning, but of course, at the very end, everything worked seamlessly. Thank you very much. All the best from Munich and all the best from everyone here on stage. Thank you very much and see you next time.

Good morning, ladies and gentlemen. Welcome to the 2026 BMW Group Annual Conference Analyst and Investor Call. My name is Stefan Richmann. I'm the Head of Treasury and Investor Relations at the BMW Group. It is my pleasure to host today's Investor and Analyst Q&A with Oliver and Walter. As Oliver mentioned earlier, we continue to leverage our global business model and the advantages of our technology-neutral strategy, meeting demand for both combustion engine vehicles and electrified vehicles. With the successful rollout of the Neue Klasse iX3, we have kicked off a major product offensive that will provide the BMW brand with crucial momentum for the future. Walter has shared with you how we have navigated 2025 and delivered on major KPIs in our operational business despite the tariff impacts, developments on currency markets and the intense market situation in China. Disciplined and consistent cost reduction underpinned our performance. We have also provided comprehensive and reliable guidance for 2026, factoring in all known and decided aspects against an uncertain geopolitical backdrop and tariffs. With that, I will turn the floor over to you, and we are happy to take your questions. Our first caller will be Patrick Hummel from UBS. Patrick, I can see you on the screen. Welcome this morning and please, the stage is yours.

Yeah, thank you very much, Stefan. Good morning, gentlemen. Thanks for taking my question. So Oliver, first of all, your tenure is coming to an end soon and you've not been shy to be anti-consensual on many of the key topics that we have to discuss with you over the years. But your way of doing things or the BMW way of doing things has worked out pretty well compared to competition. So I'm curious, When you soon hand over to Milan, what's actually your high-level advice to him? What have been your key learnings over your tenure that you think are going to be most valuable for your successor and the entire company in the future? And the second one for Walter, I have to dive a little bit deeper into the 2026 guidance, if you don't mind. You take certain assumptions for tariffs that some people this morning called quite optimistic, such as the EU lowering the tariff to zero later in the year, also some sort of USMCA agreement that would improve the current situation. So to better understand and quantify what you've baked in versus the status quo. Can you just give us the 105 basis points of tariff impact? Alternatively, what would be the right number in a no-deal scenario? Would it be 175 basis points, 150, whatever? That would be helpful. And if you don't mind elaborating a little bit on the other key building blocks in the EBIT bridge for 2026, the usual volume price mix, costs, DNA, all of these. Thank you very much.

Thank you very much, Patrick, for your questions and also for being so kind to directly allocating them to Oliver and Walter. That, of course, makes my job easier. So first, the question to Oliver from your side with regards to his tenure as it comes to an end after more than three decades with the BMW Group and regarding high-level advice for Milan. Over to you, Oliver.

Good morning, Patrick. I regard being anti-consensual as a compliment. You know, we are living in a competitive environment and to be consensual is probably the first mistake you are about to do if you want to compete in a pretty high level competition in our industry. You know what drives us? If I give one word to what we, it's not me, it's a we including Milan of course, what we've been doing for the past years is to become anti-fragile, if I might use that word. And anti-fragile means you're profiting from a highly volatile world. And there are three components to that, and we built on that competitive strength for the past 10 years. To be a global company helps you. Like you have seen, we have been shrinking in China, but we have overcompensated with growth in Europe and the rest of the world and the United States. to be technology neutral or technology open, however you want to phrase that, helps you to quickly respond to market needs and requirements, you know. And you have very fast growing electrifying countries and you have countries who hit the brakes, you know. And to assume that would never be the case is the first mistake you do. This is a highly fluctuating world and under the assumption which every year holds true, the number of cars being sold in the world as new cars is increasing, not decreasing. So the world market is there. And the third component is of course that you are that you offer cars in all segments with all drivetrains. So it starts with a Mini, then goes over to the lower segments at BMW, all the way up to 7 Series, and now very soon Alpina plus Rolls-Royce, of course. So all these three elements build an anti-fragile environment. And then all you have to do, you have to train your muscle to react quickly. And that is what we have done through all supply chains crisis we might have had. Corona crisis, energy, whatever you call crisis, it helps you to train that muscle of maximum flexibility. In Milan, probably you won't even feel that there is a change in top leadership because he has been with us all along. There's good reason that he becomes my successor. Individual people do not make a big difference in our strategy because our strategy is built up of a close negotiation and devising a strategy with top leadership. And top leadership at BMW is 65 vice presidents and seven board members. And it's therefore not a top-down issue. So there will be some very, very stable elements in our strategy.

Thank you very much, Oliver. And now turning to your second question, Patrick, it was about the 2026 guidance and providing some additional detail, specifically on tariff assumptions. And you were asking about individual building blocks within the Abbott Bridge. And for that, of course, I would like to hand over to you, Walter.

Hello, Patrick. So first, I thank you with respect to the tariffs assumption. Why is that? Because everyone is raising this question, of course. So eventually, we start with 2025, first of all, to have a base. In 2025, we had a lot of ups and downs. You remember, in Q1, we had more or less three quarter of an EBIT margin hit because of China, cars coming into Europe. And we started with the US, then in Q2, then we had 2.0% in Q2, and 1.75% if it hits in Q3, as well as in Q4. And you do know, I'm not specifying it, whether it is 1.4, and I would still speak about 1.5, or whether it's 1.6, I would also classify it as 1.5. So there is a variance in already. Now, going forward, we assume, and we wrote about it on page 263 for everyone in this call, it's page 263 on the tariffs, it's about in the second half year we assume that we will see changes to the better. We assume EU and the US will come to the final agreement and we still assume it is nil from the second half year onwards, meaning July. whatever July really means then. And ultimately, we also assume that there will be a better negotiation between the US, with Mexico, and Canada, and some other countries. And with that, we assume that we are not having a one and three quarter burden in the first half year, but a lower. And overall, in the year 26, we shall see one and one quarter, 1.25 EBIT points burden in the EBIT margin. It's not on top. It is instead of the one and a half percent EBIT burden in 2025. So instead, not on top. I think that's the key element number one. And then you ask for some further details, which we wrote on page 264 for everyone. I'm happy to highlight these ones again. So we are working on all cost elements. Whether we speak about capex, we will reduce capex. We will reduce also R&D further on the German commercial law side. And we will reduce also the fixed cost. That means sales and general costs, SG&A. So on all elements. We shouldn't forget about the depreciation, which we see based on the start of the Neue Klasse. You saw some already in Q4, but just a bit. And with the real start of production, we see, of course, the depreciation starting across the year. And with that, there's a burden. And on top of that, with the start of the Neue Klasse, you remember that our activation on development costs is finished six months after start of production. And we focused heavily on all elements of the Neue Klasse, all our tech clusters are getting activated, and six months after start, not anymore. Hence, our activation ratio is going down in the second half year. Latest, but you shall see already some elements in the first half year. Ending, before the next question is coming, that we assume an activation ratio, a capitalization ratio of R&D costs of around 30%. You saw that in 25 we had 41% capitalization ratio of R&D, and we assume it is around 30%. That gives you also a burden on top of that. And, of course, we also wrote about the product measures we described and discussed even in China. On the other side, I have to say, currently in the first two months, we see transaction price stabilization, even to the better, so that works out. All these product measures we did starting in November, and now one month after the other, we are shifting something behind. And also the dealer network is stabilizing themselves, so that should help a bit at least. Now, if you take all these elements together, still the headwind is bigger than the tailwind, which we're working on. And that ended up in the assumption that we'd rather guide for the segment automobile four to six percent instead of five to seven last year. And with that burden, we come also to the conclusion for the group that we have a moderate decline. A moderate decline is between 10 and 15% minus the previous years, which I think I would like to underpin. Last year was a very good group profit of the year as guided, and we are better than 10 billion euros profit. So that is a very high position to start with in this current environment, especially if I look around some others. Hope that helps, Patrick.

Thank you, Walter, and all the best, Oliver. Thank you very much, Walter, for this detailed explanation. We have the next caller up, and I hope we will see him on screen in just a second. That will be right here. We see him, Jose Azumendi from J.P. Morgan. Good morning, Jose. The stage is all yours for your questions. Thank you.

Very good morning. Thank you very much. Thank you, Stefan. Two questions, please. Oliver, I would love to hear your thoughts, please, when you look at the Chinese market over the next, let's say, three years. What do you think are the biggest challenges BMW will have to confront in the region? And then looking back then at the work you've done in the last three, five years, how are you leaving the group in terms of the manufacturing and the product offensive to be able to compete and obviously take further market share? And then, Walter, I'd love to also get some thoughts, please. Walter, I see the lower end and the upper end of the margin range. You provided already a very detailed reply to this, but a bit more thoughts as to the lower end and the upper end of the margin range for the automotive division. and whether we should expect potentially some pricing relief in 2026 in China, as hopefully you will have to support less the dealers in China in 2026 in comparison to 2025. Thank you.

Thank you very much for your three questions, José, and the first two I will then hand on to Oliver, the third one obviously to Walter. First question being from your side, what is our expectation on the Chinese market over the next three years, whether we see any big challenges and what are those? Oliver, please go ahead.

When you look at the... Chinese market then the first thing you must recognize this is by far the largest car market in the world and all along it was clear the largest car market in the world will be highly competitive highly innovative and of course dominated by the largest local players so what happened and is still happening in this market is not a surprise it's normalizing so when you When you say normalizing, that means there is competition in a saturated market like we have in Europe and in the United States. To survive in such an environment of saturated market, of course you have to safeguard your profitability. And you cannot expect that you have higher profitability as somewhere else in the world, which is not a big disaster and not a surprise. Now with the Neue Klasse coming up and we already received very high resonance from the Neue Klasse, the iX3, which will also be available very soon in the Chinese market in the long version. The feedbacks we get are as positive as we have them here in Europe. There's no difference. underlining that we are highly competitive. Why are we highly competitive? The car in China is very much made in China for China. We are collaborating, of course, with local supply chains. We are collaborating with leading China tech players like Alibaba, Huawei, Momenta. We have a local production at the Shenyang plant and we will present the car at the Beijing Auto Show next month. So this car is underlining exactly what the next three years, and that is your question. What is important in China? High local content, super innovative, and highly competitive. And all three elements are inside the iX3 for the Chinese market. So there's a very positive outlook. And as we said before, this is not a car. This is a technology platform with technology clusters. And all cars which are being launched after that, for example, the local X5, will bear all these technologies. So we have a positive outlook. into that market, especially with the launch of the car. And the main fundamental, if you want to compete in the Chinese market in the future, the Chinese content will be ever higher. And that's exactly what we do.

Thank you, Oliver, for this look into the future regarding the Chinese market. And following up with Jose's second question, what have we done in the last three to five years, specifically with regards to manufacturing and our product offensive?

I mean, what you see in our production and product, that always comes together, kind of. Production comes from product. And what we see with all these technology classes, which you will see in more than 40 cars until end of 2027, you will see exactly the same thing in the production areas. And you will see that in productivity. the throughput with AI applications are as high in the manufacturing area as it's in the product area. and which help will increase productivity as well as the quality and the output of the cars. So new technologies are at the forefront of BMW and this process of optimization will never end. There is never an end. Every year we have pretty tough targets for productivity improvement. So every year this production system becomes more expensive. And there's a good reason why Milan becomes my successor, because he has done that very, very successfully in the manufacturing area. And of course, you will see that at the end, you will see the bottom line. And production is well on track worldwide. The Munich plant here in Munich will start very soon with the i3. It has been completely rebuilt. In Spartanburg, the new X5 starts very soon and next year the new X7. In Leipzig and Regensburg, they're both working three shifts because of the high demand for the cars in these factories. And the new plant in Debrecen also works well. So all plants are full speed ahead for the product offensive we are undertaking now.

Thank you very much, Oliver. And now moving to Jose's third question, I would like to pass that on to Walter. And I think it goes pretty well hand in hand with Patrick's question on guidance 2026. So Jose is asking how the lower and the upper end of the margin corridor in the auto segment could be driven. Walter, over to you.

Yeah, well, a corridor is a corridor, right? So that's the reason why it's four to six. And of course, as we are in the beginning of this year, everything could happen. As we remember in 25, 12 months ago, over the course of following eight to nine months, also a lot of things have changed on the cost side, on the pricing side, across the geopolitics and the regions. So luckily, we are a global player. And hence, in 25, we have been able to shift margins also between China with the success, especially in Europe and the U.S., And you can only do that as a global player. And we're happy to do that. Other than that, of course, it's about pricing. It's about cost targets, how we achieve them. And I think in 25, you saw that we executed very good in my eyes. And of course, it's about the tariffs, whether our assumptions are right or not. On the other side, there's always risk and there's always a chance. And we try to organize them from a portfolio aspect. And we managed that one in the same year this year as we did it last year. And usually you see that driving costs down is always a good thing because that is in our own hand. All the rest, we have to organize flexibly with the markets on the pricing side. But so far, I think four to six is a very good prediction and guidance.

Thank you very much, Walter, for this answer. And we will now move on to the next caller. We should be seeing Tim Rokosa from Deutsche Bank, and we see him right here already on screen. Good morning, Tim. The stage is yours. Please go ahead with your questions. Tim, we are not hearing you, and I'm wondering whether that is technically on our side or whether it is on yours.

Yeah, sorry, I was not unmuted by the host yet. Now I'm there. Can't believe how happy I am that it was on your side. Thank you very much. So thank you, Stefan, Oliver and Walter. I have two and a half questions, please. The first one goes to you, Oliver. When we think about the support from the EU, it feels like the regulator has finally understood how important this industry is and wants to help. But whatever they come out with seems oddly complex and difficult and probably beyond the point. I wrote to Oliver Bloom yesterday, and obviously there was also a lot of investor questions about what he thinks the industry, the EU should do for the industry. Some very specific points about EU-made BEFs, for example, getting support for them. Do you feel like the EU has finally understood that they need to help this industry and want to help them? And what would be your view of what they should do to do that? And then secondly, Stefan, I'm allocating the questions here as well, but obviously, please feel free to reallocate them. When we think about China, maybe Walter here, what do you say to people that just feel like they have a bit of a deja vu moment at this point in time compared to last year? where you also were very optimistic on the Chinese development. You also guided for some improvements from what we see right now. I understand the transaction prices have stabilized, but it still really feels like something that might be a bad awakening in the summer. And the final point probably also to you, Walter, Why do you decide to bake in the tariff easing in the rest of the year? When we look at someone like Daimler Truck this morning, for example, they don't. I think there's reasons to believe that you should rather show what is the reality today rather than taking a view on when this would be signed. Thank you.

Thank you very much for your questions, Tim. The first one will be going to Oliver, the other two then obviously to Walter. And the first one with regards to the EU, support from the EU. Has the regulator really understood? Oliver, over to you. And since the question already came up this morning in media, maybe the concise brief version on that question.

I'll try to make it brief. Tim, it's great that you participate. You seem to be part of the inventory of this meeting. I cannot remember the last year that you have not been here. So good morning to you specifically. I will try to make it very short. Very clearly, the EU is making things not complicated. Complicated is not the problem. We can control complexity. That's not the problem. But they're working against the industry. In the news proposal, which came out in December, they tried to put even more topics in where markets are restrained from developing themselves. One portion is, yes, they go from 100% to 90% CO2, but how to achieve that in the small print, it actually works against technology openness. The second element, and that was not in the legislation before, they tried to put European content in such a way that export models and the German car industry is very much export orientated is neglected. So all the European content which comes out of export is simply not taken into account, which is a very dangerous thing, I think. Because this creates a lot of job and a lot of value. And to only favor smaller cars, which are 4 meters 20 and longer, you can do that. We don't mind given incentives. But how it's written, it creates two classes of cars. And that, of course, reduces the competitiveness of the whole industry. So the small print behind it is still very much technology unopened, too much focus on electric only, and not enough focus on real CO2 reduction. And I end with the question, what happens to a regulation where the markets in the electric arena, also with our products, grows to 50% market share and then it stalls? If that regulation is implemented and that is happening in the market, you will shrink this industry. And I think this is a dangerous path to go to. And with that, I stop. I was supposed to be short. Thank you.

Thank you very much, Oliver. But I think the message came across. A second question over to you, Walter, was with regards to the guidance 2026, our provision on the Chinese market, its development, whether it might be too optimistic. Please, over to you.

Too optimistic. We rather like risks to incorporate them as Germans, don't we? No, we do not. We have to see chances and risks. And with respect to China, if you really compare the last six months, And you see months after months, or you eventually rather quarter by quarter, you will see that the dealer network and all these measures we have taken in place are starting to get more grasp and starting to be more effective and stabilizing the dealer network. That's the first of all, because in the Chinese environment on all dealers, not just BMW, the whole industry, There's still a lot of irritation, let's say, with all these new rules also come in place, right? That price has to be finally over costs, which I really appreciate from SAMR. The new rules, which they also double check. So, I'm really highly appreciating those. So that's already a positive sign with respect to the transaction price. And we see that in December, in January, in February, and they are stabilizing and even rising. So they are becoming better, positive for us. Second, we also did a lot of product measures. In November, we started the first launch. In February, the second one, and the next one will come. So we are enhancing product attractivity. and increasing transaction prices for those products. And it works. And the third one, which is, well, take it optimistic or realistic, whatever, if you see the run rate of our sales in China, if it moves on like that, we can achieve previous year. Of course, if everything is crashing, then we have a different scenario, but our run rate is stable. And don't mix up the Chinese New Year. There's always a difference between January and February. That has always to be a year-to-date February number, otherwise you would fail yourself. So taking all this into consideration, we see the chance, and we wrote in our guidance that we can achieve previous year. We didn't say that we want to achieve the previous year. Of course, we also aim for profitable growth and stabilisation, obviously. But given all the facts and given what we did in the network, we can achieve previous year. Even if you compare the numbers year-to-date February, once you saw them already from CAAM, you see that we are still on a very good track compared with all other competitors, whether they are Chinese or traditional ones. From that perspective, I still think what we wrote is absolutely spot on and correct. And with respect to the tariffs, why I am making them in already, Well, I think we have to mention that one, what our assumption is, plus a quarter of an EBIT margin. Yeah, that is also a lot of money. But we will also find some assumptions and some measures in order to compensate should we fail in our assumption. And you saw that last year. Twelve months ago, we've been the only ones mentioning that we bake in 1% extra costs for tariffs, and ultimately they have become one and a half. And we found measures to try to compensate this half percent point. So now we speak about a difference of a quarter percent, and we still have nine and a half months to go. On the other side, we really hope that terrorists will be lowered across the world because free trade would be best for everyone. So that is also a communication from us to everyone. Hope that helps.

Great. Thank you very much, Walter, for your answers. Thank you, Tim. We now have next up in line, Horst Schneider from Bank of America. And there he is, Horst. A good morning to you. And please, the stage is yours.

Yeah, very good morning also to Munich and to the board. I have got two, three questions, please. The first one, is regarding cost versus volumes. What I have got to say is what is really outstanding, Oliver, also what you have achieved over your tenure is basically this level of cost cutting without announcing big major programs and layoffs. Also for 2026, my impression is that a large part of the stability you aim for come from lower cost that of course then raises for me the question what comes after 2026 and here i refer more to the midterm guidance is now the cost cutting potential basically exploited after 2026 and needs the margin growth from 2027 onwards to come more from volume growth and with that the question would be you expect the premium market to grow again or you expect to gain market share. You said today in a media call, Oliver, that you expect not to lose market share to the Chinese OEMs in Europe. I share that view. But you aim to take market share from Chinese OEMs in China or you take more market share from legacy OEMs, from your traditional peers. So what is the tradeoff between volume and costs regarding the midterm guidance? The second question that I have is regarding EVs. I was surprised about this great contribution and reconciliation in Q4. So, Walter, maybe a question for you. Since now, I think BAF leasing in the US is structurally lower in 26. We're going to see this tailwind through 26. This is a major part, basically, for the group earnings. And maybe you can remind us how you treat EV residual values in your portfolio. You constantly write down or you write down, basically, at the end of the contract period, what is now the share of EVs in your leasing portfolio? Thank you.

Thank you very much for your questions, Horst. And of course, it needs to be pointed out, I didn't notice that at first, that you're wearing the right apparel for this call. That's very much appreciated. Thank you for that. And first question then obviously goes to Oliver. You ask about the trade-off between cost and volumes. First of all, the praise how we've handled that in the recent past, but not also a mid-term guidance and how do we expect the premium market to grow and whether we intend to gain market share also in the Chinese market, but specifically in Europe from Chinese competitors. Oliver, over to you, please.

On the fixed cost side, not on the market, we made substantial progress last year and we are of the opinion this is a continuous management task. If you look at our frequency, you can see that. We are against programs, we are against publicly announced programs because that kind of reduces the responsibility of management to take that task very seriously. So we don't talk about it. We try to really do it whenever it's necessary. And of course, these things come in waves. There are years where it's easier, but we every year become more efficient. All the way also started last year already with the help of AI. On the market side, the question is wrongly asked, cost versus volume. I know that... People love to have that orientation to say which way should they go. But it's the wrong question because good contribution matching is the sum of both. And flexibility is the most important thing. If an opportunity arises to create positive or super positive contribution margin, you quickly have to react. So flexibility to quickly react is 10 times more important than to say we push volume or we only concentrate on the upper segment. It's the completely wrong question because that is a result and not a target. So I will never, when people ask you what do we want, we want good contribution margins. And then, of course, these opportunities with quickly changing markets. The core question is how quickly can we get into all these little niches where opportunity rises? And the good thing is the opportunities change currently very much. That means it's not important that you have a strategy to be in that market, that you have the flexibility to react very quickly. And that is what we call anti-fragile. That we have in all segments, all drive trends, we can always very swiftly react and we are after contribution margin and not after cost or after volume in the first place. Thank you.

Thank you, Oliver. Horst, your second question was on EVs, specifically BEF leasing situation in the US and whether it constitutes a tailwind for 2026. Then also the handling of leasing contracts with regards to depreciation and the share of EVs in our leasing portfolio overall and all of these topics at once. I would like to hand over to you, Walter.

All in one. Well, let me start with that. In different markets, we have different penetration ratios. And the US has one of the highest leasing penetration ratios, not to forget the loan. There is also a loan business there. With respect to BEV leasing, because of IRA and this subsidy is more or less coming from the government, leasing was the one and only for BEVs. Because on loan, you wouldn't have received anything. And that was a very high share. Now, with the stop of IRA subsidies from October 1st onwards, that had an impact in the US, of course, on BEF sales, and on top of that, into our leasing portfolio. So in Q4, leasing penetration came down in the U.S. And with that, you have, of course, effects on the elimination part, which I guess you also raised coincidentally the question. Hence, there was a different impact in our segment consolidation, because that is always the contra of the auto business. You do know elimination is mainly for financial services business. So, auto sold a car, and in the group, nothing happened. So, I have to take it out, means minus. If there is less financial services business, there is less minus and it could appear as positive amount, right? That happened in Q4 dedicatedly. Now, you also raised the question with respect how we treat residual values. Well, we always treat it linked at the start of the contract. thinking about where is the residual value in 36 months if it is a 36-month contract. Of course, also 48, 30, you name it. But always, once the customer is signing it, we see every quarter, of course, we are doing our total portfolio re-evaluation, and we do know which prices we have been capable to achieve for the off-lease cars. So that's our prediction model. It's not that easy explained. It's a bit more complex, a lot of math. But that means if you depreciate a car already higher or lower during the course of the contract is already the first topic, right? How big is the depreciation during the contract time? Second, on top of that, with the revaluation, we double check whether we have to adjust across the portfolio. That's what we also do. And that is a permanent approach. Every quarter we are doing that. And this is ending up in our balance sheet. If you have a look for our residual value provisions, that's the second part. The first part you can't see because it's our least out products. You just depreciate. You don't know whether we depreciate it on a straight high level or on a low level. Sorry, I'm not sharing this information. But you see this on top provision. And that is how we deal with that. And that is how we organised with shrinking used car prices, since we had these top prices in 22 and 23. That's why we speak about lower residual value profits than we had previous years, because we see that it comes down gradually, step by step. But it's still positive, but less positive than previous year. And even this effect you see in three segments. You see it in auto, you see it in financial services, and you see it as a contra in consolidation. That's how we deal with the financial services, lease business especially. Hope that helps.

Is cancellation going to be a positive contribution in 2026? Significant positive contribution, right?

whatever you classify as significant, but we can assume if we have less REF leases in the US, you will have less negative consolidations, that way around. But of course, don't forget, we are not just dealing with leases in the US, we have it across the world. UK is getting the IX3, for example, now in Europe already, leases are going there. So there might be contrast, might be different, but yeah, you're right.

Thank you. And all the best for Alibaba.

Thank you very much, Walter. Maybe just a quick statement on how we are proceeding so far. We have obviously quite some interest in our figures and the guidance 2026. For the next callers coming up, and we still have several in line, I kindly ask you to limit yourselves to one question each. We have already answered quite a significant amount of topics and we surely have covered a lot of issues already. So therefore, please limit yourself to one question. Next one up, and we should see him on screen rather soon. There he is, Mike Tindall from HSBC. Good morning, Mike. The stage is yours. Mike, please do me the favor and check whether it works on your side. I'm hoping you can hear me now. Now we can hear you, yes. Thank you.

Fantastic. I will stick to one question then. Just one for Walter, please. If I look at the profits from BBAC, we were at around $270 million in 2025, down from about $1.4 billion in the prior year. When you talk about China achieving the same sort of number for this year, can you just unpick the difference there? How much of that was one-off, and therefore, how much of a recovery is likely in that profitability of BBAC in 2026.

The question goes to you, Walter, regarding profit from BVA in 2025 and an outlook for 2026 with regards to potential one-off effects in 2025 that may have an effect in 2026. Over to you. Right.

Hi, Mike. So I hope you have a look for the right disclosure in our 432-pager. You see two elements where you can see BVA numbers. One is the group consolidated one. There you end up with your 227 million, but that is after PPA, after OCIs, so that is a rather consolidated view. In the disclosure where we present all the shares we have on every legal entity, you see the legal entity view. And there you see more than just 227, rather 1.2 billion euros. So I hope you see the right disclosure. Now with respect to 25 versus 26, all measures in place. We did already a lot of fixed cost cuts in 25 to stabilize the situation. And we have given also a lot of cost targets on the manufacturing cost side, on fixed cost side, which they are driving forward positively. So we assume that we are running more or less stable year on year 25, 26, with our assumption that they hit the cost targets and they've organized also the price targets they have. And I'm so far positive, at least the two first months I saw.

Good. Thank you very much, Walter. And we have the next one in line and we will probably not see him, but only hear him, if I understand that correctly. So there we see you, Stephen. Very good. So Stephen Reitman from Bernstein. Stephen, good morning. And also, please go ahead with your question.

Thank you. First of all, again, congratulations. since 2019, which you've done gracefully, and I think it's a great effect for BMW. My question actually is for Volta, and it's about the cash flow. At the Q3 stage, part of the reason for the reduction in the cash flow guidance last year was the timing mismatch, that the refund you were expecting were not going to occur on tariffs in 2025, so we're going to come in 26. So my question really is about the guidance on the cash flow for 2026. How much of that includes the expected refunds you're getting from the US Treasury for the tariff, for the refunds on tariffs? And can you just generally talk about where you see sort of the refunds from tariffs going forward? Thank you very much.

Thank you very much, Stephen, for your question concerning cash flow and focusing on cash flow only. Question being, coming out of the Q3 statement that we made, we had a clear statement there that a reduction of our cash flow expectation for 2025 came out of a postponed tariff refund and whether that now and to what extent it has an impact on the 2026 guidance. And with that, I hand it over to you, Walter. Please go ahead. Hi, Steven.

Well, we had to reassess our receivables expected in November as, for example, Europe didn't come in place, and I can't put receivables against the EU at the current stage based on which contract. So I had to reduce that one first of all, and hence I would rather speak about receivables of a mid-three-digit million number. um rather than this high level and secondly also with respect to the s authorities we have to say that we see in terms of our volumes in terms of process complexities and also sometimes also effects as results of shutdowns. Numbers came up and down, but ultimately we are running on. I can say that with respect to the 3.75% discount, we handed into the authorities our claim for April 25 to March 26 already. That is not finally confirmed yet by the authorities, but we handed the claims in already. With respect to this procedure, we assume that we are not getting cash back, but we rather can run more or less our tariffs to be paid as a discount of that one. That's more or less the assumption, so that we just pay net rather than getting a gross number to us and the other ones paid by us. That is our current assumption and understanding with the U.S. authorities with respect to going forward. Hope that helps.

Thank you very much, Walter. And also thank you to you, Stephen, to sticking to one question only. We have run over the official time already, but we'll continue with just one question each. I believe we still have three callers in line. First one already on the screen right now, Christian. Christian Freynes from Goldman Sachs. Christian, good morning. And also the stage is yours for your question. Thank you.

thank you very much and also for my part uh oliver thank you and congratulations on your stewardship of the bmw of bmw through what has been a really volatile environment from 2019 to 2026 26 i think the execution has been really impressive you know and underlines your flexibility strategy My question is really on TNR, the new retail strategy. And my question for you, Oliver, would be, you know, what are your thoughts on the strategic importance of shifting to TNR? Why is it so important? And perhaps as part of the same questions as the financial impact. of shifting the BMW brand in 2026 to TNR. Should there be any financial impact that we should expect? Maybe the last one's a little bit further, but thank you.

Thank you very much, Christian, for your question concerning T&R. I will just briefly say the abbreviation stands for the new retail, which is in Europe, our sales model change to direct sales. And you were asking with regards to its strategic importance for the BMW Group. and also financial impact. I would indeed give the question on strategic importance and relevance to you, Oliver, and then an expectation with regards to when BMW will be shifting to T&R and the potential financial impact. Walter will be handing that to you. So, Oliver, please start.

T&R, the new retail, is based on three assumptions. First of all, we are in the business of individual mobility. That means each car we sell is owned by an individual with very specific needs. That's the first assumption. And I think you would agree that this is a valid assumption. The second assumption is the future of understanding a customer is largely based on AI competence. To know what he has owned in the past, what his lifestyle is, what his expectations are, to make him very individual offers for other products is a central function. And the third one is we are already half down the road because we installed TNR in our European operation of MINI and our learning experiences are quite positive. We're not in a rush to implement that, but we are almost 80% through with the preparation of the IT systems. So it doesn't come at one single point. I think there is no way back. We will introduce that step by step because individual mobility will be closely linked to understanding the customer individually. And that is something you can only do as a retailer and not as a wholesaler. Does that mean that we don't need partners? No, it's exactly the other way around. We need dealers, partners, entrepreneurs, just as we did before, but we need central intelligence of understanding the customer. So strategically, we're unwavering. Are we in a rush? No, we do it step by step, just like we have done it with MINI. We introduced it in the first countries in 2022. We're now in 2026. So we will take our time, but there's no way back.

Thank you, Oliver. And Walter, over to you with regards to financial implication.

Well, with respect to the financial implication, it's a positive aspect because we create price stability online and offline. There is no haggling around the pricing from dealer A to dealer B to dealer C, and the customer is just playing this game. So there's stability for everyone. And not to forget, people are starting to change their habits, not running on Google search machines anymore and on our homepages. They run chat GPTs and Cloud, whatever. And that will search for pricing. Currently, under MSRP, under wholesale system, we can advise MSRPs, but ultimately we deal with independent dealers, and the independent dealer is setting their price. Now, we have a mixture of offers by different OEMs. Some are already on direct sales. So they have the transaction price on the list. And others like us on the BMW side, we are running in wholesale, meaning on our homepage is the MSRP and not the transaction price. Now, if JetGPT or cloud or whatever machine is searching for the best price and best offer, surely the one who is organizing and presenting the real transaction price is better off than the other. So that is why Oliver Zipse also mentioned we will run into this direction automatically because that will be the advantage. And to get the same price in the country rather than X different ones. And from our point of view, we also have done a better chance for up-sale procedures online and offline because we can present the product rather than having the discussion at the dealer side about the pure price. It's about the products and all features in it. And finally, the last positive topic on financial impact is stock management, because we can do it centrally, like Oliver mentioned, rather than having a dealer individual stock management. And usually, in total, you will have always too much stock in the pipeline, and that creates price pressure again. So once we do it on a central stock management, we do know in which areas and regions we run which cars and sell which cars. we can optimize that one as well, and that saves, again, further costs. That is our position, so we are looking forward to implement that also for BMW in Europe.

Thank you, Walter, and thank you, Christian, for this very important question. We're now coming to the second to last in line, and we have them on screen already. Stuart Pearson, Oxcap Analytics. Good morning, Stuart. Please, your question.

Yeah, good morning, everyone. Thank you for taking the question. Just quickly, Walter, just to clarify, did I hear correctly, apologies if I missed it, that based on what you're seeing year to date in China, you think profitability there could be flat this year? I wasn't sure if that's what you were trying to say, or if you just meant more in volume terms. But my main question was just on mix, because you're coming out of a period, I guess, that's been relatively strong in that respect. Obviously, you have the X5 change over this year, which in Previous incarnations would have created some volatility. I think it was down 20% volume-wise in 2018. But it sounds like, I think you said you're running three shifts there already. It sounds like maybe this time there'll be minimal disruption from there. So I wonder what you expect from mixed for the full year, but also in Q1. And is it right to assume that with some mixed disruption, I think you mentioned FX would be tougher in Q1 and tariffs as well, that Q1 would be one of the weaker quarters of the year? Thank you.

Thank you, Stuart. And if you don't mind, I would briefly comment on the first question, since we do not guide individually per region. I will leave that up to Volta whether he wants to start guiding on regions now, but that would be my answer at least. And the second one then with regarding to mix, especially with X5 changeover, Volta, I hand that over to you.

Yeah. Hi, Stuart. So, absolutely right, we are not doing country-specific guidance, but the discussion you were referring to was with respect to the legal entity PBA, where I helped Mike to find the right number in our disclosure. So, that was the number. And further on, I elaborated that they also have the fixed cost targets and material cost targets and price targets. and that was the story long now with respect to the effects expectations on folio q1 the expectation on folio is that we are ending up with four to six percent in this corridor with segment automobile of course and yeah we also mentioned already in q3 that we are facing an fx headwind in the first half year and especially in Q1. And why is that? Exchange rates deteriorated, especially end of Q2 2025. That's why we had this big exchange rate effect in the second half year of 2025. If everything stays stable, that will move over into the first half year of 2026 with an exchange rate burden. And I said, rather in Q1, Why is that? Because in Q2, the deterioration started already. Now coming to your strong X5 changeover, we have a good mix. Don't forget that the Neue Klasse starts to kick in in the second half year and X5 is still on a very good sale mode and it's not stopping in whenever during this year. So that's quite positive.

Thank you, Walter. And we're just about to end, but we still have Henning Kossmann from Barclays joining us. So he should be coming up on stage and on screen in just a second.

Yeah. Hi, Stefan. Can you hear me?

Oh, it is via audio only. Sorry about that, Henning. But then please go ahead and ask your question. We can hear you indeed.

Okay, perfect. Thank you so much. I'll try and be brief. So I'll save my congratulations to Oliver, for the Q1 call. My question is on total shareholder return. I'm surprised it hasn't come up yet. So it's probably to Walter. So as a combination of dividend and share buyback, of course, would you say it's fair to assume the moderate decline to your group EBT guidance as a proxy to net profit and ultimately dividend payment as well and draw conclusions to the dividend component of TSR and then on the share buyback, I suppose if you were to conclude the remainder of the existing envelope, that could be up to 1.3 billion or so, but between the two would imply below 4 billion. And separately, I think unlike last year, you also haven't said explicitly at least that the shareholder return could exceed the automotive free cash flow. So I was just wondering if you could help us a little bit with the potential magnitude of TSR. Could it exceed the automotive free cash flow this year? Again, are you prepared to comment on that at this stage? Any more color would be great, I think. Thank you so much.

Thank you for your question, Henning, concerning total shareholder return. Some assumptions on your side, whether our current guidance gives an indication with regards to net profit and potentially dividend payments for the year 2026. And also, as we already stated, for the year 2025, whether we would be willing to exceed the available automotive cash flow in order to follow up with shareholder return payments? And I would hand that question, of course, over to you, Walter, with regards to 2026. Thank you.

Hello, Henning. So, in principle, our framework hasn't changed, right? Our framework is 30 to 40% and share buyback. And usually, we also limit that with free cash flow. And as an exception, last year in 25, we said exclusive to free cash flow situation. And that's what we did. So ultimately, in 25, you shall see with our proposed dividend, which has to run through the annual general meeting, of course, plus share buyback. we would have achieved 4 billion euros cash out, and we have achieved an auto free cash flow of 3.2 billion. So we can do statements that we are overrunning the automotive free cash flow. Usually, I would see that as an exception. But between 30 and 40, there's a lot of room for maneuver. The suggestion we do to the annual general meeting is 36.6% payout, so there is still room for 40. whatever we discuss and I think that is a discussion for in 11 months rather than now. We just can highlight that we sticking to our rules and the share buyback we are running currently the second tranche is going to be ending by August and we also mentioned that we earmarked already the third tranche. So share buybacks are moving on. I think that is all I can say to this topic currently.

Thank you very much, Walter. Ladies and gentlemen, this brings us to the end of our Q&A for the 2026 BMW Group Annual Conference Analyst and Investor Call. Thank you all for making the time to join us here today, and we wish you a great rest of your day. Thank you.