Statement by Prof. Dr.-Ing. Joachim Milberg, Chairman of the Board of Management of BMW AG, at the Press Conference on the Occasion of the Decision on the New BMW Plant

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Munich, 18 July 2001

Ladies and Gentlemen,

welcome to our press conference here in Munich today.

The decision has been taken in favour of Leipzig/Halle

This morning the Board of Management of BMW AG took the decision to build the
new BMW plant in Leipzig/Halle.

The location is within sight of the Leipzig Trade Fair. The area is about 200
hectares in size and has first-class connections to the motorway, the airport
and the railway system.

Approximately 10,000 new jobs will be created at the new location in the medium
term - about 5,500 thereof at the new plant of the BMW Group and approximately
the same number again in the surrounding area. Series production will start in
the year 2005. Following a ramp-up phase, we will reach a capacity of 650 units
a day. We plan to build the BMW 3 Series at the new plant, which will involve
an investment of roughly Euro 1 billion.

We need the new plant because the BMW Group has launched a market and product
offensive new in its dimensions also for our Company. This calls for
appropriate capacities, which I will be referring to once again a bit later.

Consideration of cost factors, flexibility and
process management

In all, Ladies and Gentlemen, we received more than 250 locations proposed in
both Germany and abroad. The last five locations given close consideration -
Augsburg, Leipzig/Halle, Schwerin, Arras in France and Kolin in the Czech
Republic - all fulfilled all the necessary criteria for building our plant.

Given this situation, the plant could have been built and operated at all of
these locations. So the decision was not easy.

The most important criteria to be considered were as follows:

1. The economic viability and the flexibility.
2. The features and the location of our future plant area.
3. The availability of qualified manpower.
4. The use of existing structures in terms of plants, suppliers and logistics.
5. The infrastructure for transport, supplies and waste management.
6. The connection to our sales and distribution network.
7. The process of implementation.

Considering the figures alone - above all the level of wages at the plant,
foreign locations outside of Germany offered certain advantages.

Taking into account the need for flexibility - and here we mean flexibility of
job structures and the integration of the plant into the BMW Plant Network,
process management extending from planning all the way to the start of full
production, as well as designated grants, we had to put mere cost
considerations into a different perspective.

In consideration of all these criteria and their assessment in terms of our
corporate interests, therefore, the decision was ultimately taken in favour of
Leipzig/Halle. This is the location with the best perspectives for our purposes.

Additional capacities for the product offensive of the BMW Group

Ladies and Gentlemen,

Last year the BMW Group resolved a remarkable market and product offensive even
for our Company. This offensive is based on our uncompromising premium brand
strategy with the BMW, MINI and, as of 2003, Rolls-Royce brands. The objective
the BMW Group has given itself is to become the most successful premium
manufacturer in the entire automotive industry.

This is why the BMW model range will be significantly enlarged in the years to
come through the new BMW 1 and 6 model series as well as the expansion of the
X-family. Just a few days ago, furthermore, we introduced the new MINI into the
market, and starting in the year 2003 we will be adding a new Rolls-Royce in
the absolute top segment.

The BMW Group is therefore in a position to offer purchasers premium models
extending from the small car segment through the sports activity vehicle all
the way to the most supreme luxury saloon.

The BMW Group urgently requires capacities for this product offensive. This is
why we have decided to build an all-new BMW plant.

Integration into the plant network of the BMW Group

Our decision in favour of Leipzig/Halle also allows us to integrate the new
plant smoothly and efficiently within the existing BMW Plant Network.

In principle, all of our production plants are prepared for the production of
different models. Retaining our full flexibility, this allows us to cater
perfectly for different customer requirements and to set off the usual
fluctuation in demand.

With this in mind, integration of the new plant within the existing BMW Plant
Network is obviously an important criterion. The essential point for us is to
ensure that all our plants are able to operate at the same consistent and high
level of capacity. This guarantees maximum efficiency and profitability, as we
have proven time and again at our existing locations.

Another factor closely interacting with this consideration is the integration
of our suppliers. In Leipzig/Halle we are able to largely resort to our
existing supplier structure throughout the south of Germany.

In all, this will allow a rapid ramp-up of production and optimum calculation
of the entire ramp-up process.

"BMW's Formula for Work"

Looking at various entrepreneurial and business-related aspects, Ladies and
Gentlemen, we had to consider not only the cost of purchasing and developing
the site, but also our productivity and, accordingly, the cost of labour and
working times. Here, through a high level of flexibility, we wish to achieve a
standard of productivity fulfilling the needs and requirements of the BMW Group.

Over many decades BMW has acquired experience and know-how allowing us to use
conditions in Germany creatively and intelligently to our advantage. This is
achieved above all in constructive talks with the representatives of our
employees.

The cost situation in Germany was an important issue already back in the '80s,
when we took our decision in favour of Regensburg.

Through the consistent optimisation of job structures and flexible working
times - including, among other things, a new spread of personal working hours -
we were able to find an approach both attractive to our associates and at the
same time extending operating hours and, accordingly, the productivity of the
plant.

In all, therefore, we have been able to create and establish attractive
operating conditions in Regensburg.

Now we have also applied what I would like to call BMW's "Formula for Work" at
our new location. Cooperating with the representatives of employees, we have
been able to significantly enhance the degree of flexibility.

The main point, once again, is to further optimise our job structures and work
organisation. This also means disconnecting plant operation periods from
personal working hours and vice versa. This we achieve by way of modular
working time principles, creating highly individualised working time models in
the process. The final result is that we have further increased the useful
time-frame in which we are able to profitably use our plant facilities.

Taking this into consideration, we have agreed on a competitive level of
remuneration appropriate at our new location and based on the state-wide
collective wage agreement.

Clearly, the international human resources principles of the BMW Group also
apply to our new location, including the concept of "performance and
counter-performance" - which I might also refer to as a fair process of "give
and take" - as well as the appropriate allocation of responsibility of the
Company on the one hand and our associates on the other hand.

This requires a competition-oriented and attractive remuneration scheme for our
associates, of the kind we have been practising for a long time at BMW,
allowing associates to participate directly in the success of the Company.

It makes BMW an extremely attractive employer also at the new location, since
we wish to win over the best employees for BMW. Please consider in this context
once again that we see our associates not as a cost factor, but rather as a
factor crucial to success. It is our task as a successful enterprise to provide
the necessary foundation for this philosophy.

"BMW's Formula for Work" proves again that, through the intelligent development
of job structures and our work organisation, we are able to establish agile,
that is flexible and fast, processes, make significant savings and, as the most
important point, create ideal conditions for associates working with a
conscientious and motivated frame of mind.

Ultimately, this gives us a competitive level of productivity.

As I have already stated, our agreements with the representatives of employees
play a significant role in improving our productivity. Another point is that we
see a realistic opportunity in the new German Länder to further improve the
initial economic position through the usual grant programmes.

In conclusion, Ladies and Gentlemen, I would like to thank all towns and
regions for their applications and their support in our process of finding the
right location. Regrettably, we were able to choose only one location, in this
case Leipzig/Halle.

I now thank you for your attention and would be happy to take your questions.