Have you ever experienced a once-in-a-lifetime opportunity when everything counts, and your impact makes the difference in shaping the world of tomorrow? It's time to unleash the full potential of the Neue Klasse.
We love to go over the edge 'cause we love driving. Our first super brain with the all-new Dynamic Performance Control, up to 10 times higher driving performance, developed 100% in-house. This is our second super brain. It makes the already perfect BMW automated driving system even more powerful, more BMW than ever before.
We also evolve beyond our company. This means partnering with the best. In close cooperation with our suppliers, we are further reducing CO2 emissions, conserving finite resources, and creating closed material loops.
Innovations drive future solutions. We involve and empower our employees. To me, Neue Klasse also means new skills, new forms of collaboration, new facilities, a new mindset. That's how we take our 155,000 employees on their journey.
We have strong teams to set up an entirely new generation of cars using cutting-edge technologies and outstanding expertise. We will roll out the Neue Klasse across our global production network. In 2025, the Neue Klasse becomes reality.
Already today, we merge real and digital worlds to create unique experiences for our customers, natural, emotional, and personal. The new BMW iDrive is the perfect example of how we take this to the next level.
Fully digital cars developed by a truly digital company, we are clearly committed to that. Digital tools and AI support us in taking the right decisions.
We're thinking beyond a single car or segment. It's about the entire brand and the company as a whole. We've already shown you the future of our iconic sedans. With the BMW Vision Neue Klasse X, we are leveling up and lifting the Neue Klasse into a whole new dimension. Ladies and gentlemen, in 1999, 25 years ago, BMW presented the first X5, the founder of the sporty SAV segment, and since then, the X family has been a pillar of the BMW brand. Around 12 million X vehicles have already been sold because today, the X family covers all customer wishes in this segment, from X1 to luxury class with the X7 and XM. And now, the BMW Vision Neue Klasse X looks ahead to the future of BMW and a totally new generation of BMW X models. This future doesn't start on some far-off date.
It begins next year, when we turn vision into reality that our customers can experience for themselves. With the BMW Vision Neue Klasse X, we're opening up a whole new dimension for the Neue Klasse. So why are we focusing on an X model? Because we aren't just ramping up e-mobility in niche models, but in our most successful, highest volume segments. From 2025 on, we expect demand for all-electric vehicles to increase significantly. This is precisely when we will be releasing the Neue Klasse onto the market. From sporty sedans, which we have shown already last year at the IAA Mobility, with a BMW Vision Neue Klasse to an ultra-modern X family, we will offer a variety of models that excite our customers today and, of course, in the future. The Neue Klasse represents a start into a completely new model generator. It is redefining the BMW brand.
With the Neue Klasse, we are taking BMW into the future in design, technology, and the philosophy of the brand. For the first time, we are showcasing the systematic implementation of the automotive industry, three major areas of future mobility combined: and this means electric, fully digital, and with a clear focus on sustainability. We have significantly improved each of these aspects. Just take the sixth generation of our battery cells, which we will use for the first time in the Neue Klasse. Quantum leaps in energy density will provide our customers 30% more range and 30% faster charging. The potential of digitalization can also be experienced in the Neue Klasse in totally new ways. This is made possible by completely new electronic control units. We call them our super brains. In total, we are using four of these super brains in the Neue Klasse.
Each one comes with computing power that is up to 10 times faster than current systems, and our completely redesigned iDrive redefines the interface between humans and machines. And at the same time, we are also making impressive advances in the field of sustainability. We're turning all the dials. In this way, we can significantly reduce our product's carbon footprint and move even closer to circular use of raw materials. And we are sticking to this path, also because our customers expect it from us. And the most important thing is, these developments do not just benefit the Neue Klasse, they benefit all future BMW models. Ladies and gentlemen, all of this shows that with the Neue Klasse, we aren't just opening the next chapter in the history of mobility, we are writing a whole new book. More sheer driving pleasure, more digital experiences, more sustainability.
In other words, more BMW than ever before. And now, ladies and gentlemen, who better to present the design of the BMW Vision Neue Klasse X than Adrian van Hooydonk? Welcome, Adrian.
Thank you. Ladies and gentlemen, the BMW Vision Neue Klasse X shows you the new design direction or archetype for our future X models. In the exterior, we have typical BMW X proportions, a two-box design with a lot of presence and emphasis on all four wheels. The form language is clean and robust. The car shows wheel clearance and presence of an SUV, but no spats or add-on parts, just a strong, monolithic shape. The front end shows yet another interpretation of the BMW face, in which we replace chrome with light. The vertically designed kidney icon matches the more upright overall appearance of an SUV and will therefore be the reserve for all our X models. It is part of daytime running light and will make our cars very recognizable by day and by night.
Also, the rear shows a new light signature, broad shoulders, and very crisp lines, for example, around the BMW emblem. Overall, the BMW Vision Neue Klasse looks clean and strong. A lot of new technology and sensors are cleverly integrated, making this vehicle more intelligent than ever before, but above all, a very recognizable BMW. In the interior, the driving experience remains our focus, putting the driver at ease and in control. And as for all upcoming Neue Klasse models, the key element is our new BMW Panoramic Vision Display. This display uses the whole width of the windscreen and will be visible for all passengers. Together with our free-cut central display and our new iconic steering wheel, these elements are the cornerstones of our new iDrive system. Today, we'd like to share with you a few more details of that all-new iDrive system.
The Panoramic Vision Display will be highly customizable by the user. You will be able to select your preferred set of information icons in a very easy way, making the car your very own. And those personal preferences will be linked to your driver profile, of course, which means you will always have the right information at the right time, in the right place, everything at a glance. Our free-cut central display is positioned closer to the driver and passenger, ideal for touch input. The central display is very new in its shape, but the basic layout is building on our current Operating System 9 layout. This means that you will find direct touch access to your most used functions, like navigation, infotainment, or climate control. Overall, these new digital aspects of our cars will make them more intelligent and much easier to use.
At the same time, it will allow us to design much cleaner and warmer interiors. The materials we are developing for the Neue Klasse will help to reduce the CO2 footprint and will create a very personal living environment on four wheels. Now, with the two vision cars for Neue Klasse, we are showing how we are going to change the look and feel of the BMW brand. Many aspects of our cars will be completely new, and yet we believe that the Neue Klasse will reflect the very essence of the BMW brand. Thank you very much.
Ladies and gentlemen, you certainly couldn't ask for more BMW or more future. With the Neue Klasse, we are rethinking individual mobility from the ground up. What is more consistent than to apply this new approach to everything that defines the core of the BMW brand? First of all, that refers to the BMW X philosophy embodied by the BMW Vision Neue Klasse X. Sportiness is also at the heart of every BMW, and it is this characteristic that the BMW Vision Neue Klasse completely reimagines in a sporty sedan. Today, you can see both vision vehicles together on one stage for the very first time. On the one hand, it shows how consistent the Neue Klasse is in terms of design, technology, and the relevant parameters for sustainability. On the other, it demonstrates how broad the Neue Klasse is.
Here, you can see the two bookends of what we can imagine. But of course, there's still plenty of room for other models and innovations in between. I can promise you today that we will be taking both of these vision vehicles from the stage to the roads in a very similar form very soon. At least six different Neue Klasse models will be released in the first 24 months following the start of production. I call this an unprecedented and highly ambitious timeline. But if anyone can do it, then it is us at BMW. The Neue Klasse will significantly accelerate our ramp-up of e-mobility once again. But BEVs, along with our models in the upper premium and luxury segment, are already our biggest growth drivers. Last year, we sold more than 375,000 all-electric vehicles.
This year, once again, our fully electric vehicles should see significant double-digit growth. We will soon have sold more than 1 million BEVs worldwide, including plug-in hybrids. We already passed the milestone of 2 million electrified vehicles. Plug-in hybrids are especially popular with our European customers, and that is one of the reasons why it only took us just over 2 years to double our overall XEV deliveries from 1 to 2 million. For the BMW Group overall, we are anticipating a slight increase in sales in 2024. The foundation for this is our wide range of drive technologies, all of which we are systematically further developing, and in this way, we can ensure we always offer the right products and services at the right time. This also substantially reduces our carbon footprint.
At the end of 2023, we outperformed the CO₂ limit set for us by the European Union by more than 20%, and this shows that our strategy not only reflects customer requirements, but also ensures effective CO₂ reduction. Climate protection cannot be achieved successfully if it does not take customer needs into account. It just doesn't work. And that is why we believe a comprehensive review of CO₂ fleet legislation in the EU is essential. Regulatory frameworks that ignore customer needs and market realities cannot be successful, especially if they are unable to create the necessary conditions for alternative technologies. Then they only provide objectives but exclude possible solutions. By the end of this year, we will have more than 15 fully electric models in our lineup from MINI, BMW, and Rolls-Royce, as well as BMW Motorrad.
No matter if on two wheels or on four wheels, we always offer the best of everything. As promised, we offer at least one all-electric model for every brand, as well as in every of our core segments. This dynamism is reflected in our share of the global BEV market. At 4.1%, it is already significantly higher than our share of the total global market, which is at 3.3%.... We still expect half our deliveries to be all electric before 2030. However, growth in BEVs worldwide is not linear. That was always clear to us. Development is volatile and market-specific due to several factors. We remain as flexible as possible. That has been our strategy for years, and we have reflected that efficiently in our architectures.
We continue to prudently steer our BEV ramp-up in line with differentiated demand in global regions, and we have been successful. For us, it is important to always maintain a realistic view of the development of e-mobility. BEV growth does not benefit from a purely ideological approach, but from long-term planning and consistent implementation of goals, and that is why we are creating the best possible conditions for this in our production network and supply chain on a global scale. The first production vehicles of the Neue Klasse will start rolling off the line at our new plant, Debrecen, in the second half of 2025, and that is where the first SAV model on our new fully electric architecture will be launched.
The sporty sedan, on the other hand, will ramp up from 2026 at our plant in Munich, which we are currently gearing up for the start of production. Every second BMW produced at Plant Munich is already today fully electric, and from late 2027 onwards, our more than 100-year-old main plant will exclusively build electric vehicles. We will also be manufacturing the Neue Klasse at our plants in San Luis Potosí in Mexico and Shenyang in China. And this perfectly demonstrates whether at a greenfield site or a traditional location, whether in Europe, Asia, or the Americas, we are mastering the complexity and leading all our production sites into the future. As you know, to master e-mobility, you need powerful batteries. We've made it our mission to understand every aspect of battery cells, from cell composition and cell format, all the way to industrial manufacturing.
We are able to recreate the entire process at our Battery Cell Competence Center here in Munich and the Cell Manufacturing Competence Center in Parsdorf in Bavaria. We are also applying our local-for-local principle to cell production for our batteries. Facilities will be located in direct proximity to our vehicle plants. This has led us to build our own production facilities for Gen 5, as we are now doing in Thailand, and for the sixth generation of BMW high-voltage batteries in Hungary, the United States of America, Mexico, and China. This ensures short transport distances and secures our supply against unforeseen events around the globe. From 2026, Gen 6 batteries for our plants in Bavaria will come from our new location in Irlbach, Straßkirchen. Establishing an industrial site like this is no longer a straightforward process, especially in Germany.
We sought frank and open discussions with the residents in the early stages and explained the sustainable design and the advantages of our location in Lower Bavaria to them. This is how we build trust, and we are very pleased that residents voted strongly in support of our new site. We see this as confirmation of our efforts. The future of e-mobility also entails integrating vehicles into the power grid. With the Neue Klasse, we're introducing bi-directional charging, which we have already tested extensively. Our customers can feed electrical energy stored in the vehicle back into their own house, electrical devices like your e-bike or the public power grid. This lowers electricity costs and helps stabilize networks. As you can see, with the Neue Klasse, we are taking mobility to a new level and at the same time becoming an entirely new company.
All BMW models will benefit from the innovations of the Neue Klasse, and that means in the future, you will recognize the Neue Klasse in every BMW. We are laying the foundation for this right here, right now, because this is the best way we can continually fulfill our aspiration: strong today and strong tomorrow. Later, I will show you how we are accomplishing this today with new models like the BMW 5 Series Touring and the new MINI Aceman. Ultimately, it is our strong products that generate strong results. Our CFO, Walter Mertl, will tell you more. We will see each other again after that.
Ladies and gentlemen, good morning. 2023 was another successful year for the BMW Group. We delivered strong results in the current business, while securing our future viability through targeted investments. Strong demand for our attractive products, better availability of vehicles, and an easing of the supply situation led to a positive volume development. After the halfway mark in the year, we accordingly raised our guidance for both deliveries and EBIT margin in the automotive segment. Thanks to our disciplined management of the business, we delivered yet again on all our targets. I now take you through our results. For the full year, we delivered 2.55 million vehicles worldwide, which is 6.4% over 2022. We achieved significant growth with our all-electric vehicles. Deliveries reached more than 375,000 units, or approximately 15% of total sales.
At 9.8%, the EBIT margin in the automotive segment was well within the increased corridor of 9%-10.5%. Excluding depreciation and amortization for BBA assets from the purchase price allocation of EUR 1.4 billion, the EBIT margin was 10.8%. The group EBIT margin of 11% exceeded our strategic target of 10% again. We also continued to reduce CO2 emissions in our European fleet. With 102.1 grams per kilometer, we were at 26.4 grams, in other words, 20.5% below the target set by the European Union. At group level, our revenues reached EUR 155.5 billion, which is 9% higher than 2022. Adjusted for currency translation effects, revenues increased by 13.1%.
The increase was driven by the higher delivery volumes and positive product mix effects. In 2023, our earnings before tax at group level amounted to EUR 17.1 billion. It is important to note that group earnings in 2022 of EUR 23.5 billion included a one-off profit of EUR 7.7 billion. This was due to a technical accounting effect related to BBA full consolidation, namely the revaluation of our existing equity interests. Without this effect, group earnings in 2023 were EUR 1.3 billion, or 8% above 2022. This also translates through to earnings per share that were at €15.70 in 2022, excluding the one-off profits from BBA.
In 2023, earnings per share of EUR 17.70 were at 12.8% above the previous year. That brings me to the results of the individual segments. I'll start with the automotive segment. The BMW Group delivered 2.55 million vehicles to customers worldwide in 2023. This corresponds to solid growth of 6.4%, in line with our increased guidance. Momentum came in particular from models in the upper price segment, such as the BMW 7 Series, X7, and iX, as well as from the all-new BMW X1. Our all-electric vehicles continue to be a key growth driver. In 2023, BEVs made up almost 15% of our total sales. We also delivered over 190,000 plug-in hybrid vehicles.
In total, electrified vehicles therefore accounted for over 22% of sales during the year. Revenues for the automotive segment totaled EUR 132.3 billion. This amounts to a 7% increase year-on-year. At almost EUR 13 billion, the segment's operating result was over 20% higher than 2022. This resulted in an EBIT margin of 9.8%. This is both at the higher end of our long-term strategic target corridor of 8%-10%, and well within the increased target corridor of 9%-10.5% for the year 2023. Looking at the operating result in detail, the increase in automotive EBIT benefited from a net effect of volume, model, mix, and pricing, yielding a tailwind of EUR 2.4 billion.
This was mainly driven by the higher volume and higher share of top-end vehicles, including BMW M models, which compensated for the higher BEV share. As expected, we saw some price normalization in the new car and used car markets through the end of the year. Compared to 2022, we see that EBIT in 2023 was impacted by EUR 600 million from the net balance of currency and raw material positions. This difference is mainly due to currency effects from the development of the Chinese renminbi and US dollar. Given lower raw material prices through the end of the year, we saw a slight tailwind compared to 2022. However, this was overcompensated by headwinds from increased supplier payments.
As planned, research and development expenditure rose significantly to EUR 7.8 billion, almost EUR 600 million higher than the previous year. The R&D ratio for the year came in at 5%. Due to higher revenues, this is the same level as 2022, although overall spending increased year on year. Expenditure for R&D mainly focused on three areas: the electrification and digitalization of the fleet, automated driving functions, and expenditure for new models. Due to higher expenses, mostly for IT projects, selling and administrative expenses increased by about EUR 400 million. The position other cost changes reflects, among others, higher material costs, as mentioned at Q3, as well as lower residual value profits than the previous year. In 2022, a negative one-off impact of EUR 1.8 billion was due to effects related to the first-time consolidation of BBA.
Moving on to the free cash flow result for 2023. At year-end, free cash flow in the automotive segment reached EUR 6.9 billion. It should be noted that free cash flow in the previous year included a positive effect of over EUR 5 billion in net cash acquired from BBA. Without this effect, our free cash flow in 2023 was almost EUR 900 million higher year-on-year, or an increase of 13%. The change in working capital of EUR 2.7 billion mainly reflects the increase in inventories to maintain stock levels in markets worldwide. This ensured we have sufficient supply, including for new models, to meet the robust global market demand entering the new year. Capital expenditure for the year totaled EUR 8.8 billion.
Our investment in 2023 primarily focused on the fifth and sixth generation battery cell technology, digitalization of products and processes, and vehicle projects. In addition, we invested in construction of our plants, for example, in Debrecen, Hungary, where we will launch the Neue Klasse next year. The CapEx ratio for the year was 5.7%. Changes in provisions had a positive impact on free cash flow of EUR 1.5 billion. The position other items reflects primarily tax payments. That brings me to our financial services segment, a key enabler for our business. Financial services is already an integral part of the customer journey and will become even more important with the rollout of our direct agency sales model.
In 2023, the number of new financing and leasing contracts concluded with retail customers came in at the same level as the previous year, with 1.5 million new contracts. This is a very solid result, considering the business environment with elevated interest rates and highly competitive landscape. Business developed positively quarter-on-quarter. While new contracts with end customers were down 20% in Q1, year-on-year, in Q4, contracts were up by 17% year-on-year. The share of new BMW Group vehicles, either leased or financed by the financial services segment, stood at 38.2% in 2023. Average financing volume per vehicle increased due to an improved product mix in the automotive business. Overall, new business volume increased by 3.4% to EUR 57.3 billion.
Segment earnings before tax amounted to EUR 2.96 billion. The decrease reflects primarily two factors: higher refinancing costs due to rising interest rates, as well as the overall declining contract portfolio. Revenues from the resale of end-of-lease vehicles remained at a high level, but fell lower than previous year as used car prices started to normalize. We expect this trend to continue in 2024, leading to a lower result from off-lease vehicles. At 1.8%, the credit loss ratio remained at low level. After increasing the target range for the year to between 16% and 19% in August, return on equity reached 17.2% for the full year. That brings me to the motorcycle segment. In its hundredth anniversary year, the BMW Motorrad brand achieved record deliveries with over 209,000 units, an impressive accomplishment.
All major sales regions saw growth in 2023, with particular momentum coming from Europe, with 4.7%, and China, with 2.8%. The EBIT margin for the segment reached 8.1%. At EUR 259 million, the segment's operating result was at the same level as 2022. Finally, you see the combined result from the other entities segment and inter-segment eliminations. Other entities recorded a loss in earnings before tax of EUR 100 million. The decrease compared to 2022 was mainly driven by negative fair value measurement effects on interest rate hedging transactions. Consolidations increased in earnings before tax to EUR 1.3 billion. Lower eliminations associated with the leasing business had a positive effect compared to the previous year.
Ladies and gentlemen, at the BMW Group, we remain focused on ensuring that our shareholders benefit from the company's success. The Board of Management and the Supervisory Board will therefore propose a dividend of 6 EUR per share of common stock and 6.02 EUR per share of preferred stock to the annual general meeting. This results in a total dividend payout of approximately EUR 3.8 billion. The higher dividend payout and earnings per share in 2022 reflected considerable one-off effects from the consolidation of BBA in our group profit. Adjusted for the one-off effect, the dividend, as well as earnings per share, are higher in 2023. The proposed dividend for 2023 represents a payout ratio of 33.7%. This is within our long-term strategic target range of 30%-40%, and also notably higher than the payout ratio in 2022.
At the end of June 2023, we successfully concluded the first program of our share buyback at EUR 2 billion, which was approved at the annual general meeting in May 2022. On July 3 last year, we launched a second program of up to EUR 2 billion, with the first tranche concluding on December 31. In total, EUR 1.2 billion in share buyback were completed in 2023. The second tranche, with a volume of EUR 500 million, started on January 2 and will be carried out by June 28, 2024, at the latest. The second share buyback program will be completed by December 31, 2025, at the latest. Taking the proposed dividend and last year's share buyback together, the total payout of EUR 5 billion represents 92% of auto free cash flow available to BMW AG's shareholders.
This underscores the financial strength and robust cash flow generated by our operations, which supports optimal shareholder return. Moving on from 2023, what are we expecting in 2024? In the automotive segment, we expect slight growth in volumes, driven by our young and attractive product portfolio. Specifically, we should see significant growth of our BEV share, as well as a double-digit growth in the upper segment. We anticipate an increase in material costs and supplier payments. However, this should be offset by a net tailwind from FX and commodities. The net impact of volume, mix, and price should be slightly positive, and we will take our disciplined approach forward into 2024. At the same time, lower profits from off-lease vehicles will weigh on auto EBIT. In 2024, we will hit our CapEx and R&D peak, as planned and communicated.
The continued implementation of our electrification and digitalization strategy will lead to greater research and development costs. Expenditures related to the Neue Klasse, such as further development of the sixth-generation battery technology and preparation in the production network, will also impact the group's earnings and result in greater capital expenditure. For the current financial year, we therefore expect a CapEx ratio above 6% and an R&D ratio above 5%. After 2024, both ratios will gradually return to our strategic corridors, which remain unchanged. That means for CapEx, less than 5%, and for the R&D ratio, between 4% and 5%. Despite the significant investment in future technologies, we will generate above EUR 6 billion in automotive free cash flow in 2024. Financial services will benefit from the higher auto sales and stabilization of the interest rate environment.
However, a decline in used car values will negatively impact the result, and given the higher lease penetration rate, we will see a lower eliminations result. What do we expect for our key performance indicators in 2024? In the automotive segment, deliveries of BMW, MINI, and Rolls-Royce brand vehicles are expected to rise slightly year-on-year. The segment's EBIT margin should fall within our strategic target corridor of 8%-10%. The share of all-electric vehicles relative to the total deliveries is expected to increase significantly compared to 2023. In the motorcycle segments, deliveries are expected to increase slightly, with an EBIT margin within our target range of 8%-10%. Return on equity in the financial services segment is forecast to land between 14%-17%.
As expected, the supply of and demand for vehicles is continuing to stabilize. It is therefore expected that revenues from remarketing lease returns will fall further compared to 2023. For the group's pre-tax profit, we expect a slight decrease. This is due primarily to the high level of expenses for research and development and capital expenditures, as outlined before. The decrease in the financial services business will also contribute to the slight decrease in group profit before tax. The group's headcount is forecast to increase slightly. Ladies and gentlemen, at the BMW Group, our strong brands and attractive products have long formed the foundation for our success and will continue to do so in the future. We allocate our capital in investments efficiently, in line with our long-term strategy. At the same time, we remain focused on cost discipline and profitability.
Our strategic perspective gives us clarity on our consistent path going forward, while our operational excellence secures our future competitive advantage and the overall health of the business. Our high flexibility allows us to meet market demand and consistently deliver on targets, and in 2023, it underpinned our profitable growth. The increase in our BEV sales to almost 15% put us in a strong position to overachieve the CO2 targets. We also recorded growth in the upper segment, resulting in a balanced and profitable mix. As you know, our industry is known for its high complexity, for long life cycles, and for tough regulatory requirements, which are ever-increasing. That is why our planning horizon always spans several years. As the Vision Neue Klasse X proves, our strategy ensures that we anticipate trends in the industry to remain ahead.
We are fully committed to deliver on our long-term strategic target of an 8%-10% EBIT margin every year, and we deliver what we promise. We have the right product lineup and the flexibility to meet customer needs across the globe, and our product offering is growing. We will therefore continue with our profitable growth and also fulfill our targets, assuming market conditions remain stable. As everyone has seen in the BEV market in China, this is not always a given. At the BMW Group, we will maintain our balanced steering of multiple individual objectives to achieve all of our strategic priorities. Our strong performance today is paving our road to tomorrow's continued success. We remain confident about 2024 financial year and beyond... and now it's time to hear from Oliver again.
He'll show you what we have in the pipeline across all brands to drive our success in the coming years.
Ladies and gentlemen, our BMW Motorrad brand is well on its way to emission-free mobility in urban spaces. I like to ride a motorbike myself whenever I have the time, so I'm delighted that we are launching many new models this year. Three of them stand out particularly. Here you can see the new CE 02. It is the second fully electric model after the CE 04 standing next to it, which is the undisputed market leader in its segment. There's something special about the new CE 02 that makes it particularly appealing to young people. In Germany and other countries, you only have to be 15 years old to ride it. The M 1000 XR is already the second M motorcycle model. There are also a lot of fans eagerly awaiting the R 1300 GS Adventure.
A comprehensive offering on two wheels, whatever customers are looking for, they will find it at BMW Motorrad. Just like BMW Motorrad, our MINI brand has a passionate fan community around the globe. With our new MINI family, we're taking the brand into a new dimension, just as the Neue Klasse is doing for the BMW brand. And now MINI is gearing up for a world premiere, the Aceman. This will be the third member of the new MINI family and the first MINI we're offering exclusively as an all-electric vehicle. And even if it's still camouflaged, I can promise you it is unmistakably a MINI inside and out. Signature design, go-kart feeling, and digitally in tune with the times. And all this combined with a minimal ecological footprint, and that describes not only the Aceman, but the entire new MINI family.
The Aceman fills the gap between the Cooper and the Countryman, which has grown significantly bigger. The all-new Countryman has been well-received, whether with a combustion engine or all-electric. The all-new Cooper, which will be available starting in May, is already sold out for the next four months. Our new MINI family will be built at our Spotlight joint venture in China, in Oxford, U.K., and for the first time in Germany at our plant in Leipzig. In the second half of the year, we will launch the all-new MINI Convertible, which many fans are eagerly waiting for. Together with a five-door MINI Cooper, our new MINI family will then be complete. Now, let's jump from one end of our portfolio to the other. From the MINI typical go-kart feeling to our ultra-luxury marque. Spectre is the first battery electric Rolls-Royce model to hit the showrooms.
With its all-electric drivetrain, we are bringing the driving experience at Rolls-Royce to a whole new level that feels effortless, just like a magic carpet ride. We've never had so many pre-orders for a Rolls-Royce model, and this shows that our exclusive customers acknowledge how perfectly Rolls-Royce and electrification fit together. Rolls-Royce is an unparalleled success story. Our luxury brand, with its unique product portfolio, has never been as strong and as differentiated as it is today. And let's not forget the significant contribution margin it earns for the company. And now, ladies and gentlemen, as promised, the new BMW i5 Touring. BMW's where touring meets eDrive. No one else in the segment has a vehicle like this on offer. The i5 Touring will be available from May. It delivers an electric range of over 500 kilometers and is especially popular in Europe.
The i5 Series Sedan and the i5 will also be available exclusively in China with a longer wheelbase. Both will be built at BMW's Brilliance plant in Dadong. Our high-performance brand, BMW M, also offers a technological spectrum. With the i4 M50, the i5 M60 Sedan, the i5 M60 Touring, the iX M60, and the i7 M70, we have five all-electric models on offer. And by the way, the all-electric i4 M50 is yet again our best-selling BMW M model. And this year, fans can especially look forward to the new edition of the M5, first as a Sedan and later also as a Touring. Both M variants come with an impressive, partially electrified drivetrain. With the BMW My Hybrid system, they are able to drive more than 70 kilometers on electric power alone. Our plug-in hybrids remain an important element of our drivetrain portfolio. And why?
Because they provide a boost to e-mobility that should not be underestimated. Many customers discover and come to appreciate the advantages of electric driving in this way. The 5 Series and the 5 Series Touring are concrete examples of how BMW is implementing a variety of drivetrains to meet very diverse customer needs. All of this is based on our flexible architecture, which enables us to cover the entire spectrum, from powerful BEVs to smart plug-in hybrids, all the way to highly efficient combustion engines and, of course, high-performance M models. The success of this approach has been reflected in our key figures for several years now in sales and profit margins. With our broad technological approach, we are already thinking one step ahead. We have been testing the BMW iX5 Hydrogen in selected countries under everyday conditions since last year.
Our pilot fleet's world tour has raised awareness of the role hydrogen can play in the energy transition, not just for mobility, but industry-wide. Our vehicles performed well under various climate and traffic conditions, and the public response has been overwhelmingly positive. This was no surprise to us, since hydrogen fuel cell drivetrains combine the best of both worlds: the advantages of an emission-free e-drive with a fast refueling people are used to. That's why we see hydrogen as an additional alternative drive technology that could make a lot of sense in the mid to long term. And for us, our aspiration to be strong tomorrow means being already strong today. This is especially true of the new edition of the best-selling X model, the BMW X3, which will be released later this year.
The new X3 will be available with a choice of highly efficient combustion engines or as a plug-in hybrid. At the same time, we are preparing for the next major leap. The Neue Klasse is built on a separate new architecture, already tailored today to the electric vehicles of tomorrow. This enables us to make the best possible use of economies of scale as demand for electric model grows. Vehicle architectures are important, but they are not the decisive lever. That would be our technology clusters. They enable innovations and technological advances to be scaled efficiently across all architectures. Behind this is a modular principle that allows us to roll our technologies to different vehicle concept and segments, and this ensures that the innovations of the Neue Klasse will benefit the entire BMW model lineup in the coming years.
We don't divide our products into old and new, but always offer our customers the latest technology, regardless of the vehicle's powertrain. We are using the Neue Klasse as our innovation and technology booster for the entire portfolio and for all major future mobility topics that we implement in our vehicles, including our design. The Neue Klasse is our impulse, initiator, and enabler to roll out new technologies over the next few years. As you can see, we will continue to serve all markets according to their needs, providing top products in all segments. The full range of four drive technologies, regardless of which architecture they're built on, is just one aspect here. The BMW Group is a tech company. The ability to manage this complexity, to orchestrate, scale, and further develop technologies, is one of the BMW Group's greatest strength and a unique selling point.
With this in mind, we offer our customers the best coherent overall package. This is our aspiration and our goal. It might even be the most important secret ingredient in our company's success. We already showcase our innovative strength in automated driving with models like the BMW 5 Series and BMW 7 Series. The new BMW 5 Series was the first car in Germany approved for partially automated driving at up to 130 kilometers per hour on motorways. A completely new feature is the Active Line Change Assistant with eye confirmation. The driver simply glances briefly in the exterior mirror, and the car changes lanes. Starting in March 2024, our customers will be able to experience Level 3, highly automated driving in the BMW 7 Series.... This means you can let go of the wheel and temporarily turn your attention to something else.
Your 7 Series takes care of speed and distance control all by itself, as well as lane tracking. The steps to automated driving is one of the three main stories of the online version of the BMW Group Report 2023. I invite you to click through our online report. Our award-winning online report will once again provide you with a compact overview of everything we are working on. You can experience what moves us, and try out our interactive KPI calculator. Just like the title says, Driving the Next Era. Our spectacular vision vehicles show the direction in which we are taking mobility, in line with the major topics of the future. The most important aspect for our customer is, what does it feel like on the road?
In the board of management, we already got to drive a pre-series model of the Neue Klasse, and we all agree that it is sheer driving pleasure at a whole new level. This is something only we can do. It is typically BMW. A lot of people talk about transformation, and that is when one thing replaces another. But in our industry, it is more a case of things happening at the same time, parallel approaches that still unmistakably move us forwards. And that is why the BMW Group is committed to continuous and simultaneous progress through bold leaps in innovation and responsible action. And that brings us full circle, strong today and strong tomorrow. Thank you.
Ladies and gentlemen, now it is your turn. At 10:30 A.M., we will start with our first Q&A session for journalists, which will be held in German. An English translation will be offered through the streaming site. All members of the board of management will be available for your questions. The second Q&A for investors and analysts in English will begin at 12:30 P.M. For this session, Oliver Zipse and Walter Mertl will take your questions. We are looking forward to having you in our Q&A session soon. Feel free to video call so that we can see you here in the room. We would appreciate if you already started dialing in. We will now get the studio ready and see you again at 10:30 A.M. Thank you very much.
Welcome back, ladies and gentlemen, dear colleagues. Let me now introduce the members of the management board to you, starting on the far right. That is the far left for you. There we've got Milan Nedeljković, Production. Next to him, Ilka Horstmeier, member of the management board of BMW AG, in charge of People and Real Estate. Then Walter Mertl, Finance. To my left, of course, our Chairman of the Board of Management, Oliver Zipse. Next to him, Frank Weber, Development. And then, here we've got our new member on the management board for Customers, Brands, and Sales, Jochen Goller, and next to him, Joachim Post, Purchasing and Supplier Network. We will stream your questions into the room also with the video, if you like.
Please use the raise hand function if you want to ask a question, and please bear in mind, your video will appear on the screen behind us until your question has been fully answered. This year, again, we've got participants who have joined us from all over the world. Therefore, we kindly ask for your understanding if there are some short technical delays. Please bear in mind, this Q&A session will take place in German. Of course, we offer simultaneous translation into English, and you can also ask your question in English, if you like. Our management board members will answer in German, and you will then get the simultaneous translation into English. Now, without further ado, let's now turn to the first question, and the first question is going to be asked by Nick Gibbs, by Automotive News. Nick, the floor is yours.
Thank you very much. Sorry, I'm just unmuting myself there. Thank you very much for taking my question. My question is about a comment that you made, Mr. Zipse, that you... In which you said that you believe a comprehensive review of CO2 fleet legislation in the EU is essential. You also stated that you're in a strong position to overachieve the CO2 targets. What is changing, and what would you like to happen in that comprehensive review? Thank you.
Thanks, Nick Gibbs. Oliver Zipse, please.
Well, Nick, what we are experiencing here in Europe-
... is a three-stage adjustment of legislation. The first stage will already start next year, 2025, with a -25% reduction of CO2 emissions in the fleet for every OEM. And then there's another tightening in the year 2030, with -55%, and then finally, -100% in 2035. Now, what's important is to have a review to be held in 2026 to see to what extent the OEMs achieve the targets that have been set for them under the given constraints. Because first of all, we've got to have the development of the charging infrastructure in all countries of Europe, how it's going to evolve, not only in Germany. Secondly, we also need to see how customers behave in the years between 2025 and 2030. And then, of course, the third key question is, which OEMs can keep up with the very rapid technological development?
I think this three-stage character, that is what we've got to bear in mind, and we must not only steer at 2035. Already in 2025, we will see a much tighter competition in terms of achieving the CO2 targets, and that's something what we have to closely monitor to see how it evolves for customers and also for the entire industry. Because I think we also need to take a pragmatic approach when it comes to real climate protection. It's no help if we have got a legislation which is not effective in terms of climate protection. And a similar pragmatic approach is what we see with the EPA regulation in the US, where, of course, they have major pressure that they apply, but of course, they're very flexible in terms of the timing.
Well, thanks so far.
Thank Nick Gibbs for that question, and the next question now is by Laurent Meillaud from Auto News.
Yes. Hello, everybody. My question is for Mr. Zipse. It's about hydrogen. It seems to me that the Neue Klasse platform is compliant with fuel cells, so the question is, will you launch a new model series in the next years, and have you made the decision yet or not? Thank you.
Thanks a lot. So that was a question on hydrogen, and once again, Mr. Zipse.
Well, as we've stated several times, our drive technology is based upon five elements. Well, you have heard about four of them: gasoline, diesel, plug-in hybrid, and BEVs. But if you look at development all over the world, and especially in the U.S., if you look at the investments in hydrogen, not only in terms of individual mobility, but also for the industry as a whole, and there's something similar happening in Korea, Japan, and in China, and in our country, to a somewhat slower extent. So you can see that fifth element is getting more and more relevant. I think. Currently, we're too much stuck in a discussion of whether it's green or blue hydrogen.
But what we tend to ignore is that this is an important technology for zero-emission driving, and with very short charging times, emission-free mobility can thus be achieved. At the same time, we can use an existing refueling infrastructure, and that's something which that sometimes is a bit shifted to the background in that overall discussion. And I think it's not gonna be the dominating drive in the next ten years, certainly not. Electromobility will be the dominant one. But for a technology-focusing OEM like BMW, I think it's the right approach to offer a vehicle of this technology towards the end of the decade.
Thanks, and this takes us to the third question, which is Christina Amann from Reuters, please.
Good morning. I hope you can hear me well. Yes, we can. Wonderful. And now we can also see you, including a green flower right behind you.
I've got a couple of questions. On the one hand, about the margin, you're really sticking to the 8%, and will you continue to do so? Is going to be enough in the long run, or will you have to adjust that margin target in the next few years? And the second question is also related to that: Do you still intend to make sure that the Neue Klasse will also reach that kind of margin? And when do you want to generate the same kind of money with electromobility as with combustion engines? And did I get you right, that revenues will be slightly declining next year?
Now, if the margin stays the same, and if profits decrease while deliveries increase, that means that revenues would have to be stable or slightly decreasing. Please help me out on this one. And next question is: How confident are you about your BEV numbers? Because, P has more than 50% before 30%. Now, looking at the current market development, will you have to adjust your expectation? All right, so these have been four questions, Ms. Amann. We start with the first three, margin, parity, and revenues. That's something for Mr. Walter Mertl. Good morning, Ms. Amann. I'm happy to answer your questions. The 8%-10% is not only our strategic range for our automotive EBIT margin, and we have also proven that we are able to achieve that range, also last year. And we've got the same plan in our long-term planning.
We've got a very good mix in the year 2023 alone, and we expect that the same will happen in 2024, which means in terms of the portfolio, we can organize everything properly to stay within that 8%-10% range. I think that's an important message, which really deserves to be repeated several times. Margin parity. Now, here, there's nothing really new either. You know that with the Neue Klasse, of course, we are massively working on reducing the cost of production, and next year, with the start of production, we will launch our new products. The so-called margin parity, however, will only be achieved with the step-by-step ramp-up of the Neue Klasse.
Margin parity as such, now, here, the question is always what you look at specifically, whether you look at individual models and compare them, or you compare an average of UKL and GKL. I can only emphasize that we achieve good margins with all of our BEVs, and we achieve our minimum returns. That's something I'd like to emphasize at this point. Now, regarding revenues, very quickly. Now, I do not see any decline in revenues. We do see an increase in volume and also in revenues. That's how we have started into the new year. Good. Thank you very much.
Thanks also, Ms. Hermann, for your questions, and now we've got the next question by Daniel Zwick from Die Welt.
Hello. Good morning from Berlin. Good morning from Berlin. Can you hear me? Yes, we can hear you. We can also see you.
I've got two aspects I'd like to touch upon. On the one hand, the BEV development this year in Germany. Now, in terms of electromobility, we see a somewhat subdued sentiment, and where do you see the highest growth rates for electromobility this year? Because it seems you're sticking to your targets. And then, two more things on raw materials. Raw material prices, of course, do have a massive impact onto your margin parity between BEVs and combustion engines. Now, you've got a lot of direct contracts also with raw material suppliers. Now, how high is the share of raw material costs which are covered by such direct contracts? Which means, how dependent are you on the volatility of the raw material prices? And secondly, with your raw materials, do you also cover larger parts of the supply chain?
So do you have any plans to enter into refinery and cathode materials, and to conclude respective contracts with supplier s?
Well, thanks, Mr. Zwick. Now I'm looking to my far left, so to Jochen Goller and Joachim Post. We're starting with Jochen Goller and the BEV development in Germany and beyond. Jochen, please.
Good morning, Mr. Zwick. Now, last year, we have successfully ramped up our electromobility. Mr. Zipse mentioned it, 375,000 BEVs, and also a very stable PHEV share. More than 170,000-180,000 PHEVs have been sold, and for this year, again, we see a strong demand for our BEVs, and also a stable demand for the PHEVs. So I think the reality in the market is much better than the sentiment, and we have invested massively in our models.
Our 5 Series is ramping up, including the i5, and that's why we also see strong growth for BEVs in all regions worldwide, also in Germany, and we also see a stable demand for PHEVs. Thanks, Jochen, and this takes us to the second part of the question. That was everything about raw materials, prices, dependency, volatility. Joachim Post, please. Well, fundamentally, with raw materials, we've got a highly integrated strategy within the group, which also means that wherever possible, we use financial derivatives for hedging of raw material prices. Thus, any volatility of raw materials can be buffered through financial derivatives. And secondly, of course, that applies especially to battery raw materials, is to conclude direct contracts with suppliers in order to have reliable access to raw materials. Now, you mentioned the potential investments in refineries or cathode materials.
Now, in battery cell production and also in the supply chain, we do have a focus on a well-developed supplier market, which exists there. And of course, of course, we have a high degree of volatility in that market, and that's why we decided to use the full potential of the market through multiple sourcing strategies.
Well, thank you very much. That was our colleague, Daniel Zwick, from Die Welt, and the next question is also coming up. That is Bill Boston from The Wall Street Journal. Hi, Bill. Bill, can you hear us? We cannot hear you.
Okay, there we go. Sorry, just technical. Yeah, alles klar. Aber ich bin jetzt da.
Ja.
Ich hab drei kurze Fragen.
I have three short questions. Number one, Mr. Zipse, what do you think of the considerations in Europe and the United States to fight Chinese car imports? Is that the right thing to do or not? Number two, in the last year, if I understood correctly, you had about 7% plug-in hybrids delivered last year. Due to the currently weaker demand for BEVs in Europe and the United States, is the delivery share in this year when it comes to PHEVs, is it going to increase?
Eventuell in den USA auch stärker nach PHEVs ausrichtet.
Are you also going to have to realign the production in the United States more towards PHEVs than just BEVs? And the last question is-
Wir haben das erwähnt-
You've mentioned it.
President Biden had-
President Biden-
Etwas gelockert
... sort of eased the framework for car manufacturers. If you were to apply this to Europe, how would that look like in Europe? What would have to be done specifically in order to have sort of an easing for the car manufacturer conditions in order to also achieve the climate goals? Thank you.
Thank you very much, Bill. I would say, number one, China and cars and the ban, and President Biden and the regulatory element, also when it comes to Europe and climate, that would be Mr. Zipse, and then the second part would be Mr. Goller. Mr. Zipse.
Thank you very much for your questions. I think what's very important is free trade needs to be our North Star, our guiding principle, and at BMW, we really fight for that. When it comes to the EU anti-subsidy investigation, we have a very clear position. The European automotive industry, when it comes to the BMW Group, is not massively damaged by the import of Chinese automobiles, nor is it in the interest of the EU to further impose customs on these products. We've always been of this opinion, and we once again confirm this. The second thing is that you're certainly alluding to the EPA's past easing in regulations that was passed not too long ago. I think we have to see. I think the approach is going to be the same going forward, and of course, no details have been published just yet.
It's going to be challenging, but as we're used to from the United States, you just have to deal with it in a pragmatic way. So it's not as ideological when it comes to the timeline here, and we are very happy with that. We will continue to exist in a very demanding regulatory environment, like you can see in Europe. We already outperform the regulatory demands by 20%. So we'll just look at the United States and, and, you know, what's coming out of there. But we think it's, it's wrong, you know, to make a comparison with Europe, to set the exact point in time when certain targets have to be met, especially when it's about pure exit strategies. Thank you very much. The second part of the question was regarding PHEVs. So Bill Boston wanted to know whether that is going to increase. Jochen Goller?
Good morning. Now, also coming back to last year, it's going to also be a trend for this year, across all global regions, we've seen a significant increase for BEV volumes with a stable PHEV sales situation. Also for this year, we're expecting a significant increase of the BEVs as well as a stability of the PHEVs. The good thing is that due to our flexible drive strategy, we can always mix in more PHEVs. So for example, we see a very strong demand for our X5 plug-in hybrid. So globally speaking, we expect a strong BEV growth and a stable PHEV situation, but we are absolutely capable to react flexibly to regional differences.
Right. This much for our friend and colleague, Bill Boston. Thank you very much. Next question is from Markus Klausen at Dow Jones.
Yeah. Hello, good morning. Good morning.
Thank you very much for allowing me to ask these questions. I have two questions, number one, about the Chinese market, number two, about the price development at leasing returns. In Q4, you were able to increase Chinese revenue in double digits. What do you expect for the current quarter and also for the full year in China? Maybe you can also say something on the Chinese market in general, you know, the price environment. The second question is the leasing returns. That apparently is going to significantly go down. The momentum seems to expedite here. Looking at the ongoing development of the year, can you tell us any more about this? Can you give us a bit of explanation as well, and do you see a bottoming out?
Sure. Thank you very much. First, Jochen Goller, and then leasing returns, Walter Mertl. Jochen, please.
Good morning, Mr. Klausen. China. Last year, we were slightly outperforming the Chinese market with the BMW brand. The market grew about 5%, so we really proved ourselves. This year, we're assuming a slight growth of the overall Chinese market, and the same thing, of course, we also want to achieve for the BMW Group. We definitely want to continue to growth, to grow in the market and be competitive. The price situation, of course, the market is harder. There's lots of new market entrants, but we definitely set ourselves up for that as well. We have very much invested in local products. Our new i5 series is only ramping up in the long wheelbase version, both as an ICE as well as an i5 version, and we also have a model change with the new X3.
So it's a very important model, and that's why we are absolutely confident that even this year we're going to be able to grow slightly with the Chinese market. Thank you very much, Jochen. Second part, the outlook for leasing returns, Walter Mertl. Walter? Oh, sorry. And yes, also good morning. In 2023, we already found out that we had higher positive residual values in the first half year than in the second half year. Now, what is that due to? The availability of new vehicles of all manufacturers is now basically a given across the board. Again, that's why, of course, there's more pressure on used car buys, as you can, for example, also see in the Manheim index for other companies as well.
We assume that this trend is going to continue in this way and is also going to materialize at a lower level in the first half of 2024 than in the second half of 2023, and that's why we're assuming that these positive residual value revenues that we generated, we still will have them. We will have them at a lower level than last year, though.
Thank you very much. That was Markus Klausen. We are now moving on to the next question. The next question is Max Hägler from Zeit.
Good morning to my hometown. Two questions. Yes, I know you can say this so nicely sitting in Hamburg, but Mr. Hägler, I can tell you don't forget us. You keep thinking about us, so that's great. Thank you. Yeah, very happy to always be back in Munich, whether virtually or in person. But back to business.
Yes, absolutely. Now, you've already spoken a little bit about the business, but speaking of the ICE exit in Europe, 2026, this assessment, this evaluation, we've already talked about it, but what is supposed to come out of that? And then also the EVP fraction, which, which is relatively close to you, politically speaking, of course, announced an exit from the exit. So is your exit to not set an exit goal at all, so completely scratch 2035 and the market is supposed to regulate it? I didn't quite understand that. That's question one. And then, Mr. Luca de Meo, your colleague and ACEA head, presented a large paper. I don't know if it was as a Renault head or ACEA, where it says, "More European cooperation, especially with software, more economic steering via Brussels," and then also regarding the ICE situation, an adjustment of the intermediate targets.
Do you agree with all of that as BMW, or what is your stance on that as ACEA paper? Thank you. Thank you. I think both of those questions go to our CEO. I would like to just remind you that Mr. Zipse was the president until just recently at ACEA, so of course, Mr. de Meo, of course, was the successor. So of course, there's a very good alignment between the German position, BMW, and ACEA. So that's why. Now, Oliver, over to you.
Mr. Hägler, good morning. I think it's about a maximum climate impact. I think they are really looking at one specific technology and fighting it too much, almost with ideological arguments. It's simply about maximum climate efficiency or climate impact, similar to what the United States is doing, as we just discussed.
What is very clear, not taking into account market behavior and infrastructure, you cannot pass such an exit, because that would immediately lead to not achieving the maximum climate impact. That's the thing. It's really not, really not about defending a particular attitude or a certain technology. If we're looking at it today, and if the development continues the way that it has, only counting on one technology, it's going to be very expensive, and the market won't go along with it. And in European politics, that's not something that is taken into account, that it's the free decision of millions of customers. You know, they're trying to sort of regulate the behavior of these people, and I think in 2026, that's important to recognize. It's important to recognize that it's about free market and end customers, and private customers as well, right?
It's not just like, the energy infrastructure, where you can switch something off and then something else happens automatically. I think that's going to come out in 2026, that at least market realities are what they are. You know, with any sort of requirements that you have, that's what we're about as well. What's gonna be the outcome, I can't tell you, but at the moment, the interplay between raw material availability, market behavior, and the set building up of infrastructure seems to be inconsistent. But you know this position, that's nothing new. And I also think in 2025, end of 2025, the world will notice that it's not that easy, so we're going, of course, in with 25% CO2 reduction.
So I think the world at the end of next year is gonna be a different one than what we're looking at today, because the pressure then will be significant for the European automotive industry. But we are very positive that we will be able to achieve this. Luca de Meo's letter is a letter that I think is good, but the sender is the head of Renault, not the ACEA Association. There's a coincidence, but that's just how it is. We agree on many things. Where we are of a different opinion, which probably is not a surprise, is regarding the overblown potential risk of Chinese vehicle imports. We take a significantly more relaxed stance on that, because nobody can just come into a European market overnight, you know, a market as large as Europe, and just take it over.
Of course, you're also going to have to embrace competition. Then we will simply embark into this competitive environment, if that's what it is. And also the clear focus type that only one vehicle type, small cars, will become dominant, again, no surprise, we are of a different opinion. Because, of course, we want to cover all the markets. For other things, like the closer collaboration and, and for the review of the climate targets, you know, all of those elements, of course, we absolutely agree with. I think those are correct. Maybe just one short addition. We are going to, of course, see this letter as a good point of discussion in the automotive industry.
Next, Andreas Höß, Münchner Merkur. Here we go. Hello, and good morning from Munich. From Munich to Munich.
Good morning, Mr. Höß. We can hear and see you. Feel free to get started.
Fantastic. So many interesting topics have already been discussed, you know, the ICE exit, et cetera. So a question on a more unpleasant thing. We saw that there were rather a lot of recalls in the last few weeks with the coolers. You know, it had to do with the coolers. There was also a braking system issue with Conti, and then also, of course, the X3. I think there was also about 30,000 in Europe - 30,000 cars in Europe that were affected. Is this something normal or will this once again burden the business next year as well? And maybe just speaking of the defeat device, what is the current update? As of June, there was supposed to be an update. Is that still coming? I think BMW could also go into the revision.
Well, maybe I can just comment on the EGR cooler exchange. Of course, we're always trying to make sure that the customer are happy. And of course, if there are any unhappiness or if there is any unhappiness, it is very important for us to recall these cars, because, of course, customer satisfaction and happiness is number one. Since 2018, we have introduced extensive measures that have led to a significant reduction of these cases of leaking EGR coolers. Furthermore, of course, together with another supplier, we have further optimized a new EGR cooler generation, and that, of course, is now still in the execution phase, and we will simply take some time to do this. But it's very important that we always inform all the customers, and they have been informed accordingly as well. So that's just ahead of time.
Now I don't know how far you want to go to get a general answer. Is that already enough, Mr. Höß? You need to help me. Yes, I just wanted to know if this is still at a normal scope, because there's always recalls. So was this all in a normal scope or was it more than before? Well, it's never normal, right? Because recalls are always unpleasant and, you know, we definitely don't love that. So for all of these topics, we can only apologize to the customers, and we're always trying to tackle these things as quickly as possible. I think that's how I would answer it.
Yeah.
Right?
Good.
Right, and then the second part on the defeat devices is that, is there an update available? Well, we're currently in alignment with the KBA, so the ruling is not legally binding yet, so we are currently still in alignment with the courts.
Okay, fantastic. Thank you very much, Mr. Höß.
Now, the next question is Regina Ehm-Klier from Passauer Neue Presse. We always have a bit of a delay, says Mr. Schöberl.
Yes. Can you hear me now?
Yes, we can hear you.
Yeah. Unfortunately, you cannot see me. I do not have a camera. I'm sorry. Next time I'll join you with a camera.
All right, then your question, please.
Yes. That's about digitalization. Mr. Zipse, you've got a nice digitalization portfolio in the Neue Klasse. Now, to what extent is that compatible with the new, very strict EU data privacy regulation? Are there any issues in that regard? And then my second question, it's about the Bavarian plants. You just talked about the Irlbach-Straßkirchen plant, and the plants in Regensburg, Dingolfing, and Leipzig are going to receive supplies from there, but you did not mention Munich. Could it be that Neue Klasse will be launched somewhat later?... Vielen Dank! Except for Munich. Well, thanks, Ms. Amann. I just had to make some adjustments in terms of answers. I'd say digitalization is for Mr. Weber from our development department, and of course, then the Bavarian plants, that's a question for our head of production, Milan Nedeljković. So, Mr.
Weber, about digitalization of the Neue Klasse. Thanks, Ms. Ehm-Klier , for that question. Now, as you probably will know, data privacy and protecting personal data is the most important asset, which we also view this way at BMW, and we do not use anything which does not guarantee that. That means we're also operating our own cloud. So the personal data you're using in your car will always stay within the BMW world, and thus, the new digital world is absolute safe and secure in a BMW. Thanks. The Bavarian plans at Neue Klasse, Milan, please.
Good morning, Ms. Ehm-Klier . Now, as you will certainly know, we will start the Neue Klasse in Debrecen, our new factory in Hungary.
But then we'll have a quick rollout into our global production network, and the Munich plant especially will be one of the first German plants where we'll also have to start off production of Neue Klasse. And currently, we are also getting the production equipment there and the buildings ready for assembling the Neue Klasse in a new hall there. All in all, Neue Klasse will be integrated into our existing production network, that is, the existing assembly halls and buildings, which means we're using the full flexibility of our production system. Now, so much for the question from Regina Ehm-Klier. We continue with the next question, which is by Markus Fasse from Handelsblatt.
Yeah, good morning. Good morning. I've got two questions, the first one for Mr. Weber once again.
Now, I'd like to know what the next steps will be in automated driving and the Level 3 function. You're introducing it in the 7 Series at a speed of 60. Now, how quickly can you go up to 100 kilometers per hour, and what's the rollout for the Neue Klasse? When and where will we there see Level 3? So that was the first question. Second question, maybe more for Mr. Zipse, because he said that BMW is a tech company now. And I would like to know... Now, Apple has decided to exit their car development. Now, do you feel somewhat satisfied that this kind of a tech company quits that business because they've realized how complicated it is to build a car?
What are the areas, the technological areas, which you want to occupy in the next couple of years in order to be able to say, in 10 years, that BMW is a tech company, which is also a leading one, in contrast to Apple?
Well, as it is a highly topical question, our CEO will start right away.
Good morning, Mr. Fasse. Well, we have not just become a tech company right now. We've always been a tech company. I just said that this still applies. We are a tech company, and today, probably more than ever, because highly complex technologies have to be combined in a single product, although these technologies are highly diverse. And this is a core skill of BMW, namely bringing together highly diverse technologies in a single product and making this look very easygoing, although it's so highly complex.
And if you look at the future, then it is very difficult to master this complex technology. And if somebody, four years ago, thought that they could come up with an entirely different user interface, which is very much different from what we've got traditionally, and if you now look at the Neue Klasse, then you will wonder, what could be a USP if you launch a new product there? So let me once again emphasize, we are not afraid of tech companies because we are one ourselves. And then there was the first part of the question, namely the status about Level 3 automated driving, and I think that's a question for Mr. Weber.
Thanks, Mr. Fasse, for your question.
Now, based upon what we are already doing quite successfully today, namely Level 3 in the 7 Series, there's a hands-off highway function which we introduced in the 5 Series last year, which I think is also benchmark in the industry. Now, that journey is going to continue systematically. So Neue Klasse will have a fully revised tech stack, which we are developing together with Qualcomm and Valeo. And of course, rest assured, the Level 3 functions then will also be available at higher speeds or even Level 4 functions for parking, which means that the car will park automatically, even without having anybody sitting in the car. So the journey continues from one generation to the next.
Thanks, Markus Fasse.
Now, we've got 20 minutes left for your questions, and we've already received a couple of questions in writing, and there's one for Ms. Horstmeier. Let me read this out. Skilled labor shortage is a very relevant issue these days. Do you still find those employees at BMW that you need? Yes, that's indeed a highly decisive question, because as Mr. Mertl and Mr. Zipse already told you, we want to continue our successful growth story, and that also means that this year we also want to grow our workforce. And that means in Germany, we expect to hire up to 4,000 new employees, which of course is also going to be driven by growth in our output in Germany. And then, of course, we also want to invest in future technologies such as drive technologies, but also software engineering.
Currently, we've got a good volume of applications, so we believe that we can find the necessary skilled workers that we need, and that the spots for traineeships in 2024 have already been fully filled. Apart from that, of course, we also transfer and reskill and upskill our employees here at our Munich plant, for example, for new technologies. All in all, it is certain that we benefit from our good image on the labor market and our reliability as an employer. We've got attractive jobs and attractive working environment, and also fair and appropriate compensation. Thank you, Miss Ilka Horstmeier. We continue with the next question, which is by Wilfried Eckl-Dorna from Bloomberg News. I hope you can hear me. I've got a very simple question for you. What about pricing this year, Mr. Zipse and colleagues?
Can you maintain the price level, or is there also a strong competition in terms of prices which worries you? Now, thank you very much. We had some difficulties hearing you. The sound quality was very poor, poor. You asked about the pricing strategy and competition for prices also in China and BEVs. Mr. Goller.
Now, of course, in terms of pricing, it's always a regional question. In the last few years, we were able to obtain the prices for our premium products as planned, and in some cases, we also increased them. Of course, you've got to have a look at the rate of inflation and the interest rates, and you also have to look at the pricing of the competitors' prices.
And this year, we once again expect that we'll be able to apply an appropriate price increase, depending on the respective regions, but also depending on competitors. Thank you very much. That's been the question from Bloomberg News, from Wilfried Eckl-Dorna. And the next one is Lennart Wermke from Automobilwoche. Thank you very much. Now, recently, you decided to build a Gen5 battery assembly factory, and Asia is a very promising growth region. So what could happen there in a few years, strategically speaking? What are the right cars for that region? Will it be BEVs only? Will CKD assembly alone be enough? And the second question is, your business report says that all major BMW plants have seen an increase in output. However, in Spartanburg, there's been -1.3%, and I would like to know what the reason for that was.
Now, we did have a bit of a sound problem there as well, but I think Mr. Nedeljković can answer that question. Well, thanks, Mr. Wermke, for that question. Let me start with your question about growth. Yes, last year, we produced more than 2.6 million vehicles in the group, which is an all-time high. And accordingly, in most plants, we also have seen a record output. In the U.S. specifically, now in the year before last year, the X5 had also been localized out of Spartanburg towards China, and that means we've got an additional production plant of the X5 in China now. But all in all, that did not have any major impact on the capacities in China, namely only a 1.3 decrease in Spartanburg, although the X5 is now manufactured at two locations, which all in all, still represents a strong growth.
Now, when it comes to the Asian region, now we do have a footprint in several countries with small CKD plants, also in China and in Thailand, where we also have a localization of the PHEV battery a few years ago. And now, the next step is to have the Gen 5 and a PHEV and all-electric model, which means we're keeping a close eye on that market and the overall region. Thank you very much, Lennart Wermke. We've got the next question from Manager Magazin, and that's Mr. Henning Hinze. Good morning. I've got two brief questions. The first one is about a statement made by Mr. Zipse. He said, "As of 2025, he expects a massive increase in BEV demand." Now, where, where will that demand actually come from, regionally speaking, and also for what reasons do you think? And then we've got a question for Mr. Goller.
In various regions, you're going to introduce respective new models before you launch, and you will first try to go through some learning effects in Europe, especially in Germany, until 2026, and whether the change in the market demand and the return of discount battles, whether this will have also an impact on a successor model? Well, we start with our CEO. Good morning, Mr. Hinze. Now, you know that we always plan in the long run, and of course, we also look at every single technology also for the various regions. Now, first of all, the BEV share today is already growing rapidly. Last year, more than 70%, and this year again, we will see another double-digit growth rate.
And then, of course, on top of that, there's the regulatory requirements, but that is applied in Europe only in 2025. Next year, -25% for the fleet, and of course, that is going to have a massive impact also onto the entire competitive segment. Now, looking at Europe alone, we will see a massive increase in Europe alone, and that's not based on subsidies. And the second part, of course, markets are also supply-driven, and I, I can only speak for ourselves. Late this year, we will have 15 BEV models for all brands, from the MINI to the Rolls-Royce, where we see a major demand coming up. So that growth will be quite natural due to our offerings and our respective policy that we have.
And exactly in that very, very moment when, where we expect that massive leap, that's exactly when we're going to launch the Neue Klasse with a specific new product offering. So that's the combination of regulation, product offering, and global region. And within that combination, we believe that, we believe that as of 2025, we will see a massive increase in demand for BEVs. And, well, if, if, if the percentage increase is always the same, then in sheer numbers it's always going to increase massively, and that's why we believe that by 2030, half of our products that we sell worldwide will be electric. And the second part of that question was about the agency model, namely, what is your experience so far? And that's a question for Jochen Goller. Jochen, please.
Good morning, Mr. Hinze. Now, the agency model. Now, why are we introducing the new agency model? We want to have an end-to-end customer experience between offline, online, dealership visit, and we want to be able to offer customers the right model, even in a better way. And that's what we ensure with this new model, and that's not related to demand volatility. We start in January with MINI in Sweden and Poland, and then we will roll out that portfolio successively. And in certain waves now, the other markets will also switch to the new model. And the focus is on Europe, so we're not talking about overseas, but Europe. And the first experience has been very positive. I've been to those markets myself. I talked to dealers and also the first customers, and they like this way of a consistent customer experience.
Of course, there's still a lot to be done. I mean, if you've got 30 markets that have to be switched over, but the first customer feedback is positive, and that's why we will continue to roll this out for the MINI brand in Europe.
Thank you very much. That's been our colleague, Henning Hinze, from Manager Magazin, and we continue with the next question by Thomas Magenheim from the RedaktionsNetzwerk Deutschland.
Right. Hello, everyone. I have three short questions. Number one, can you imagine that in 2024 we have a year where we're not gonna see any more ICE growth at BMW? You said overall, slight revenue growth, strong growth at BEV models and electric models in general. If we look at it on the flip side of the coin, maybe ICEs won't grow any more this year. Second question, Mr. Zipse, I believe you spoke of a global market share of 3.3%, but you said, electrically speaking, we are much higher, but you didn't really tell us where the electric share is. Could you please tell us that? And the third question is, 2024, you had slightly lower before-tax earnings. So if we're looking at the prior year level of 9.8%, is it a one point-- is it a one-time slump?
Is your plan that in 2025, the return is going back up again? Looking forward to your answers. Right, thank you very much. The first two questions, you know, internal combustion engine growth or lack thereof, and the global BEV share, that's gonna be Jochen Goller, and then the margin, that's gonna be Walter Mertl. Jochen, please.
Of course, at the moment, we can only give you a forecast for the full year. Now, we're forecasting that the BEV share is going to grow very strongly, and our combustion engine share will stay overall stable. Of course, it depends on the region. I'm imagining that in the United States, across the entire year, we're probably going to be seeing additional growth in the combustion engine market. And, you know, the first 2 months, if we're looking at the sales numbers year to date, globally speaking, our ICE volume has grown. So for the full year, we see this as definitely stable, probably slightly different developments in the different sales regions. But moving on to the BEV share, if I know it, I think we're at about 4.1%-4.2%.
That's our BEV share of the global market, whereas 3.3%, of course, across the overall market. So a significantly higher share of the BEVs, and I think that also really just shows us the strength of the product portfolio.
Right. Fantastic. Thank you very much, Jochen. The second part of the question now goes into the margin, one-time decline in 2024 and development in 2025. Walter Mertl, please. Good morning. With our auto EBIT margin that is between 8%-10% in the long run, I need to tell you ahead of time, we feel really good with that. But what happens compared to, you know, in comparison with 2023, it's of course, a normalization of the used car prices, and that's why we're going to have less positive contributions than before. Besides that, we had a very balanced volume mix and price share year-on-year, if that was a follow-up question, potentially.
Also looking at tailwinds, as we've said in the speech, if we have tailwinds of raw materials and currency effects, we still see an offset of the higher material cost that has been in effect since, especially the second half of 2023, and that's why our margin range will continue to be 8%-10% and will operate in such. Fantastic. Thank you very much. Moving on to the last question, that's going to be Lutz Meier from Capital. Hello, good morning. Good morning. Good morning, Mr. Meier, we can see and hear you. Fantastic, thank you very much for allowing me to be the last question. Yes, but, you know, we save the best for last, so use your big chance. Right. Thank you. Now, two quick questions on the Neue Klasse.
Number one, the investments, which are very high, as you said, but you didn't really tell us exactly how high. But maybe you could tell us a bit more about that, about how that breaks down. Why is that so expensive? Where is that investment going? Of course, you're switching production. Of course, you have a completely new digital control. Of course, you have the drivetrain. But how are these enormous investments breaking down? Why are they so high? Question one. Question two, on the actual unit numbers that you're expecting for the Neue Klasse, you have explained that, of course, it has to ramp up to the maximum unit number. So once that has been achieved, which share of your overall sales will the Neue Klasse have? Thank you. All right, I will hand this over to Frank Weber, both questions, and possibly Mr.
Zipse is going to add to that. But let's start with Frank Weber, Neue Klasse investment breakdown, and so on and so forth.
Right. Thank you very much for your question, Mr. Meier. We've said it multiple times, this is the largest investment of the company's history that we have here with the Neue Klasse. But I do want to tell you as much, this does not only affect the derivatives of the Neue Klasse, this is an investment in the company overall. Now, what do I mean by that? We're taking this on board, that when the new Neue Klasse comes, we're bringing all technologies to the absolute state-of-the-art. That's e-machines, batteries, the entire digital realm, the board network, driver assistance systems, control units. So all of this, of course, is fantastic. And for example, the control unit is basically leapfrogging a generation.
Now, without giving you the exact numbers, you can imagine just on the development side, what we need here in order to have all domains across the board reworked and updated basically simultaneously, while taking into account that you're not just going into the models of the Neue Klasse, but that they will be available to the entire product portfolio. And then, of course, on top of all of this, the Neue Klasse was optimized as a product, and therefore, of course, has also or is also providing efficient production for all their products.
And that's why we've decided to have the Neue Klasse starting in Dingolfing, and that's why we're currently earmarking the production capacity that we need for the Neue Klasse, and of course, also for the new batteries that we need for the Neue Klasse, that will also have to be established close to the plant. And if you do the math, right, if you add all of this up, we're speaking of a significant share, but we cannot give you the absolute numbers, of course. Fantastic. Thank you very much. These were the questions. This was the BMW Annual Conference. We are now a little bit ahead of time, but we will wrap up this conference. Thank you very much, and maybe just one quick note, at 12:30 P.M., our second Q&A round will start.
This will be only, quote, unquote, "with Oliver Zipse and Walter Mertl." This will be our analyst call and investor call. That's where my colleague, Ritu Chandy, will be the moderator. Ladies and gentlemen, with that, thank you very much for your attention. It was great to have you here. Of course, we also saw most of you. That was also fantastic. With that being said, nothing but the best, and see you soon at BMW. Goodbye.