BMW suffered a "marginal" rise in credit defaults in its single biggest market as its US customers felt the impact of the fall-out from the sub-prime crisis, the group's finance director, Michael Ganal, said yesterday.

Developments in the credit markets have had an effect on the creditworthiness of US customers of the world's biggest premium carmaker, Mr Ganal told BMW's annual accounts press conference in Munich.

"This impact is not direct, since we are not active in the subprime sector.

"But it does have an indirect effect, since the subprime crisis affects the entire US mortgage industry. This is accompanied by the general slowdown of the US economy, which will not fail to affect demand and consumer confidence."

Mr Ganal went on to stress, however, that its customers are wealthy and have "strong incomes".

He added: "Nevertheless, we recorded a marginal increase in credit defaults in our financial services operations, primarily driven by the developments in the US."

Mr Ganal was speaking only days after taking over the finance directorship from Stefan Krause who left BMW suddenly to join Deutsche Bank.

He had previously been director of sales and marketing, a position now held by Ian Robertson, who has moved to Munich from his job of chairman and chief executive of Rolls-Royce Motors Cars.

Mr Robertson, who does not speak German, is the first Briton ever to be appointed to the BMW board.

Mr Ganal said the financial services division's bad debt ratio rose by five basis points to 0.46 per cent in 2007, and return on assets dipped to 1.4 per cent to 1.3 per cent.

Group profits before tax fell by 6.1 per cent from 2006's record level to 3.87 billion euros (£3.04 billion) last year, BMW announced last week.

The comparison with the previous year was skewed, however, by a one off gain from the sale of shares that BMW held in aerospace group Rolls-Royce.

At the net profit level, earnings went through the three billion euros (£2.3 billion) for the first time.

And for the first time in its history, the group sold more than 1.5 million BMW, Mini and Rolls-Royce cars last year - a rise of 9.2 per cent.

Sales of Mini, which BMW builds at Oxford, rose by 18.5 per cent to 222,875 units in 2007. All the petrol engines that go into Mini, about 75 per cent of the total, are built at BMW's global four-cylinder engine plant at Hams Hall in North Warwickshire. Rolls-Royce, based at Goodwood in Sussex, "remains the undisputed market leader in the ultra-luxury segment" with 1,010 sales, a rise of 25.5 per cent over 2006 and the first time it has achieved a four-figure annual sales volume figure.

BMW chairman Norbert Reithofer said the group had met its 2007 targets and had achieved record revenues despite problems in the global economy and the need to meet tougher emissions standards.

These included the continuing weakness of the dollar that affects BMW more than any other premium carmaker.

On emissions, Mr Reithofer said the group currently makes 22 BMW and five Mini models that emit less than than 140 grams of CO2 per kilometre.

The Mini Cooper diesel - the engine for which is made by Magna Steyr in Austria - emits the same amount of carbon dioxide (104g/km) as the Toyota Prius hybrid car and costs more than £4,000 less.

BMW is now developing a battery-powered car and a decision as to whether or not to put it into production will be made later this year, Mr Reithofer said.

BMW is axing 3,100 administration jobs as part of a streamlining programme aimed at boosting efficiencies.

"We are convinced that a company that only develops and builds premium products has to deliver an above-average rate of return as well," Mr Reithofer said.

It aims to drive up its return on capital employed to 26 per cent by 2012 and achieve an EBIT (earnings before interest and tax) return on sales of eight to ten per cent in the same period, he added.

BMW forecast higher underlying profit in 2008 as it keeps margins at its core automotive business at least steady despite high raw material costs and a strong euro.

The company suffered last year from adverse forex and raw material effects of 517 million euros (£407 million) and 288 million (£226 million), respectively - a combined effect that was only a little lower than the 844 million (£664.5 million) it racked up in 2006.

BMW expects that the forex issues will decline this year, with most major currencies practically fully hedged for 2008.

"A spot price of $1.50 per euro or more will not find its way onto our income statement," Mr Ganal said.