Morningstar DBRS Assigns Issuer Rating of A (high) With a Stable Trend to BMW International Investment B.V.

DBRS Limited (Morningstar DBRS) assigned an Issuer Rating of A (high) with a Stable trend to BMW International Investment B.V. (BMWII). BMWII's credit rating is consistent with that of its ultimate parent, BMW AG (BMW or the Company).

KEY CREDIT RATING CONSIDERATIONS
BMW provides a parent guarantee in support of BMWII's most senior class of debt (Medium-Term Notes). This guarantee, as well as Morningstar DBRS' assessment of additional implicit support considerations (including but not limited to business, reputational, and financial factors that are deemed likely to motivate a parent or affiliated company to support its subsidiary issuer), results in a flow-through of BMW's Issuer Rating to BMWII.

CREDIT RATING DRIVERS
Given the flow-through of BMW's credit rating to BMWII, any change in the credit rating of BMW would directly result in a corresponding (i.e., 1-to-1 relationship) change in the credit rating of BMWII. Consistent with the Stable trend, Morningstar DBRS expects the assigned credit rating to remain constant over the medium term, with BMW solidly placed at the current rating category. Though unlikely, a negative credit rating action could result from a significant and sustained deterioration in operating results, leading to a material weakening in the Company's Financial Risk Assessment. Conversely, an upgrade is also unlikely over a similar time horizon in line with the meaningful cost and investment challenges facing the industry, thereby likely precluding a further strengthening in BMW's financial profile to positively affect the credit rating.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
Environmental (E) Factors
Morningstar DBRS considered that the Environmental factor, specifically carbon and greenhouse gas costs, represents a relevant factor as BMW is subject to a wide range of compliance requirements relating to (among other factors) carbon dioxide, fuel efficiency, and emissions control. The Company has been actively investing in its vehicle-electrification strategy. By 2030, BMW is targeting an 80% reduction in carbon emissions per vehicle in production, while also targeting at least a 50% reduction in carbon emissions during a vehicle's use phase. In terms of contribution to sales, the Company is focusing on increasing the share of fully electric vehicle sales to at least 50% by 2030 (from the 2021 level of 4%). Although the E factor results in additional costs for BMW, these are absorbed by the Company's strong financial profile and therefore do not result in any change in the credit ratings or trends assigned to BMW. (For details, please refer to the following commentary: "The Future is Electric: Climate Change and the Global Automotive Sector" at https://dbrs.morningstar.com/research/413419.)

There were no Social or Governance factors that had a relevant or significant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings

Notes:
All figures are in euros unless otherwise noted.

Morningstar DBRS applied the following principal methodology:

Morningstar DBRS Global Corporate Criteria (15 April 2024)
https://dbrs.morningstar.com/research/431186/morningstar-dbrs-global-corporate-criteria

The following methodology has also been applied:

Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024)
https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was not initiated at the request of the rated entity.
The rated entity or its related entities did not participate in the credit rating process for this credit rating action.
Morningstar DBRS did not have access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.
This is an unsolicited credit rating.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed credit ratings:

This credit rating concerns a newly rated issuer. This is the first Morningstar DBRS credit rating on this issuer.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, this is an unsolicited credit rating. This credit rating was not initiated at the request of the issuer.

With Rated Entity or Related Third Party Participation: NO
With Access to Internal Documents: NO
With Access to Management: NO

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Robert Streda, Senior Vice President,
Rating Committee Chair: Anke Rindermann, Managing Director,
Initial Rating Date: BMW AG May 10, 2013
BMW International Investment B.V. May 28, 2024

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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