BMW Group’s global finance structure and diversified funding sources insulate BMW Financial Services from potential liquidity concerns brought on by the coronavirus epidemic.
A significant part of the group’s liquidity is held at the level of BMW AG and dispersed to various segments of the company, including its global captive, according to its FY2019 investor relations report released in March. BMW Financial Services lends to customers in 60 countries.
BMW AG shuttered most of its production lines in March in anticipation for a slowdown in originations and sales volumes. The pause in production is a move to “safeguard” the company’s liquidity and its long-term financial stability, BMW noted in an April 6 statement.
BMW Group’s total available liquidity, not including loans and leases refinanced on global capital markets, clocked in at $70.4 billion at the end of the fiscal year 2019. After operating expenses — including financing — BMW Group had $18.9 billion of liquidity left over at the end of the year.
In addition, the automaker added a $8.7 billion syndicated credit line backed by 44 international banks and extended to 2024. This credit line has not been drawn. Net cash flow for its financial services division was $91 million.
From a capital markets perspective, last year BMW Group brought to market $14.5 billion in international bonds. Private placements totaling $4.8 billion were also issued. Moreover, the automaker issued 13 ABS transactions across 10 countries totaling $14.4 billion.
The company also has its own banks in Germany and the U.S., where customer deposits are held and deployed for financing purposes.
BMW Financial Services experienced a 9.9% year-over-year increase in originations to $66.5 billion last year. Still, going forward the captive anticipates the number of new contracts to decrease and risk provisioning expenses to increase. The OEM saw first-quarter 2020 sales decline 20.6% to 477,111 units as a result of COVID-19.