Despite growing its financing volumes
during the first quarter of this year, BMW reported that its
Financial Services division’s earnings were “adversely affected by
the impact of the financial crisis”.
Thus while the total business volume on the captive’s balance sheet
jumped year on year by 10.4 per cent to €50.5bn (£39.8bn), the
total number of lease and finance contracts with dealers and
customers grew by 15.6 per cent to 2,701,860, and the segment’s Q1
2008 revenues grew by 25.1 per cent compared with Q1 2007 to €3.9bn
(£3bn), the pre-tax profit fell by 54.1 per cent €84m (£66m).

The fall in pre-tax profits was due to the “higher risk
provision expense”, BMW said. “The additional expense for risk
provision recorded by the Financial Services segment in the first
quarter was €79m”, BMW stated, also it added that based on current
projections this first quarter provision “will be sufficient for
the remainder of the year.”

A new scheme to optimise the returns from the remarketing of
end-of-lease vehicles meant that the Financial Services segment,
along with the Automobile division, incurred further expenses.

 Motor Finance Issue: 43 – May 08
Published for the web: May 23 08 16:1
Last Updated: May 23 08 16:1