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Volkswagen Group

Frank Witter
Chief Financial Officer
Barclays and Exane BNP Paribas Motor Show Conference 2017,
Geneva, 7 March 2017
Disclaimer

The following presentations contain forward-looking statements and information on the business development of the Volkswagen Group. These statements
may be spoken or written and can be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or
words with similar meaning. These statements are based on assumptions relating to the development of the economies of individual countries, and in
particular of the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time
of going to press. The estimates given involve a degree of risk, and the actual developments may differ from those forecast. The Volkswagen Group currently
faces additional risks and uncertainty related to pending claims and investigations of Volkswagen Group members in a number of jurisdictions in connection
with findings of irregularities relating to exhaust emissions from diesel engines in certain Volkswagen Group vehicles. The degree to which the Volkswagen
Group may be negatively affected by these ongoing claims and investigations remains uncertain.

Consequently, a negative impact relating to ongoing claims or investigations, any unexpected fall in demand or economic stagnation in our key sales
markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact on the development of our
business. The same applies in the event of a significant shift in current exchange rates relative to the US dollar, sterling, yen, Brazilian real, Chinese renminbi
and Czech koruna.

If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from
those expressed or implied by such statements.

We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superseded.

This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.

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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Stand: DD Month YYYY Department: XXXX-XX 3


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Stand: DD Month YYYY Department: XXXX-XX 5
Stand: DD Month YYYY Department: XXXX-XX 6
Stand: DD Month YYYY Department: XXXX-XX 7
Stand: DD Month YYYY Department: XXXX-XX 8
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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Development Volkswagen Group car deliveries to customers 1)


(in comparison to previous year)
World Car Market: +2.4% +4.7% +7.1% +7.5% +5.4%

In `000 units

12,000 +3.4%

10,000 9,321 9,636

8,000

6,000
+0.6% +1.9% +3.8% +7.2%
4,000
2,340 2,353 2,390 2,435 2,251 2,337 2,341 2,510
2,000

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Full Year Full Year


2015 2016 2015 2016 2015 2016 2015 2016 2015 2016
1) Figures excl. Volkswagen Commercial Vehicles, Scania and MAN.
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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

World car market vs. Volkswagen Group car deliveries to customers 1)


(Growth y-o-y in deliveries to customers, January to December 2016 vs. 2015)

Car Market VW Group Car Market VW Group Car Market VW Group


Cars + LCV
5.8%
5.8%
1.8% 0.6% 1.7%
-2.3%

North America Western Europe Central & Eastern Europe

Car Market VW Group


Cars + LCV Car Market VW Group Car Market VW Group
11.9% 9.8%
5.4% 3.4%
-11.5%
-26.0%

South America World Asia Pacific

1) Figures excl. Volkswagen Commercial Vehicles, Scania and MAN Commercial Vehicles.
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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

World car market vs. Volkswagen Group car deliveries to customers 1)


(Growth y-o-y in deliveries to customers, January 2017 vs. 2016)

Car Market VW Group Car Market VW Group Car Market VW Group


Cars + LCV 14.5%
8.9% 9.3%
5.1% 5.6%

-1.1%

North America Western Europe Central & Eastern Europe

Car Market VW Group


Cars + LCV Car Market VW Group Car Market VW Group
11.8% 9.8% 0.5%
-2.6%

-4.7% -14.0%

South America World Asia Pacific

1) Figures excl. Volkswagen Commercial Vehicles, Scania and MAN Commercial Vehicles.
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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Deliveries to customers by brands


(January to December 2016 vs. 2015)
January – December 2015
‘000 units 1)
+3.7% January – December 2016
12,000
10,297 Passenger Cars Commercial Vehicles
9,931
10,000

+2.7%
8,000

5,823 5,980
6,000

4,000 +3.6%
+6.7%
1,803 1,868 +2.2%
2,000 +5.6% +10.9% -0.2%
1,056 1,126 +6.2%
400 409 225 238 431 478
102 102 77 81

Volkswagen 2)
Group
1) Incl. all brands of Volkswagen Group (Passenger Cars and Commercial Vehicles); +3.4% excl. Volkswagen Commercial Vehicles, Scania and MAN.
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2) MAN Commercial Vehicles incl. MAN Latin America Trucks and Busses GVW > 5t
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Deliveries to customers by brands


(January 2017 vs. 2016)
January 2016
‘000 units
January 2017
1,200
1) Passenger Cars Commercial Vehicles
-4.0%
848
814
800
-4.9%
521 496

400
-13.5% +2.4%
+16.5%
143 124 +0.5% +12.1% -5.1%
92 94 +3.3%
28 32 20 20 31 35 7 6 5 6
0
Volkswagen 2)
Group
1) Incl. all brands of Volkswagen Group (Passenger Cars and Commercial Vehicles); -4.7% excl. Volkswagen Commercial Vehicles, Scania and MAN.
14
2) MAN Commercial Vehicles incl. MAN Latin America Trucks and Busses GVW > 5t
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Deliveries to customers by markets 1)


(January to December 2016 vs. 2015)
January – December 2015
+3.7%
January – December 2016
12,000
10,297
9,931
10,000

8,000

+3.0% +9.7%
6,000
4,319
3,935
4,000 3,431 3,533

+6.9% +0.8% -24.5% -6.9%


2,000
658 932 939
615 559 422 459 427

Volkswagen Western Central & North America South America Asia Pacific Rest of World
Group Europe Eastern Europe
1) Incl. all brands of Volkswagen Group (Passenger Cars and Commercial Vehicles); +3.4% excl. Volkswagen Commercial Vehicles, Scania and MAN. 15
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Deliveries to customers by markets 1)


(January 2017 vs. 2016)
January 2016
-4.0% January 2017
1,000
848
814
800

600 -13.9%
427
+5.8% 368
400
249 263
+13.6% +9.0% +8.6% -12.7%
200
44 50 61 67
36 40 30 27
0
Volkswagen Western Central & North America South America Asia Pacific Rest of World
Group Europe Eastern Europe
1) Incl. all brands of Volkswagen Group (Passenger Cars and Commercial Vehicles); -4.7% excl. Volkswagen Commercial Vehicles, Scania and MAN. 16
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Passenger car market forecast 2017

20.8 21 21.2 14 14
13.2

2.7 2.6 2.8

2015 2016 2017 2015 2016 2017 2015 2016 2017

North America 1) Western Europe Eastern Europe

77.6 79.8 81.3


31.9 33.9 34.8
4.3 3.7 3.8

2015 2016 2017 2015 2016 2017 2015 2016 2017

South America 1) World Asia Pacific

Source: IHS Economics as of November 2016


1) Passenger cars and Light Commercial Vehicles 17
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Financial highlights – Volkswagen Group


(January to December 2016 vs. 2015)
Sales revenue Operating profit Profit before tax2) Profit after tax2) Dividend
€ million € million € million € million € per preferred share3)
+1.9%
217.3 +14.0%
213.3 14.61)
12.81) 7.3
2.06
5.4
6.7%
7.12)

6.0% 3.4%
3.3%
0.17

-1.3 -1.4
-4.12)
2015 2016 2015 2016 2015 2016 2015 2016 2015 2016
1) Before Special items 3) Dividend proposal to Annual General x.x% Operating profit / profit before tax in %
2) After Special items Meeting on 10 May 2017 for preferred shares of sales revenue 18
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Key financial figures 1)


(January to December 2016 vs. 2015)
thousand vehicles / € million 2016 2015 +/- (%)
Vehicle Sales 2) 10,391 10,010 +3.8

Sales revenue 217,267 213,292 +1.9

Operating profit before Special Items 14,623 12,824 +14.0

% of sales revenue 6.7 6.0

Operating profit 7,103 -4,069 x

% of sales revenue 3.3 -1.9

Financial result 189 2,768 x

Profit before tax 7,292 -1,301 x

% Return on sales before tax 3.4 -0.6

Profit after tax 5,379 -1,361 x

1) All figures shown are rounded, so minor discrepancies may arise from addition of these amounts. Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.
2) Volume data including the unconsolidated Chinese joint ventures. 19
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Automotive Division – Robust Liquidity1) 2)


(January to December 2016, in € billion)
Automotive cash flow performance 2016 vs. 2015 Automotive Division - Net Liquidity

target minimum liquidity


25

20 30 27.2
24.5
15 25
-12.8

10 20.3 20 17.7
16.9

5 -3.1 15
4.3
10
-12.7
20153) 23.8 -2.2 8.9
(6.9%4)) 5
Cash flow Capex Other Net
from operation investing cash flow 0
activities cash flow 2013 2014 2015 2016
1) All figures shown are rounded, minor discrepancies may arise from addition of these amounts.
2) Including allocation of consolidation adjustments between Automotive and Services divisions.
3) prior- year figures adjusted 4) Capital expenditure for property, plant and equipment in% of Automotive sales revenue. 20
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Outlook for 2017


+ 3.7%
Deliveries to
customers 9,931
10,297 Deliveries to customers
(‘000 vehicles)
moderately above prior year

+ 1.9%
217.3
Sales revenue
(€ billion)
213.3 Sales revenue
Up to 4% above prior year level

Operating return 6.7 *


on sales
(%)
6.0*
Operating return on sales
between 6.0% and 7.0%
*)before Special Items 2015 2016
Full Year

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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Special Items: Diesel related and other


(In € bn) Diesel Other Total

Legal 7.0 Restructuring:


Other items 9.2 Truck Business 0.2
2015 Passenger Cars South America 0.2
Airbags Takata 0.3
16.2 0.7 16.9

Mainly legal risks 6.4 Scania Anti-Trust Proceedings 0.4


Others 0.7
2016
1.1 7.5

Total to date 22.6 1.8 24.4

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US Diesel-related settlements (status 16 February 2017)

Issue 2.0L TDI 3.0L TDI Criminal & civil-related claims VW-Branded Franchise Dealers
Scope • ~475,000 vehicles • ~78,000 vehicles • 2.0L + 3.0L TDI • 2.0L, 3.0L and other matters asserted
concerning the value of the franchise

With • US Federal & State Regulators • US Federal & State Regulators (DOJ, EPA, • DOJ (incl. on behalf of EPA), Customs & • 644 VW-Branded Franchise Dealers
(DOJ, EPA, CARB, FTC) CARB, FTC) Border Protection
whom? • Private Plaintiffs represented through • Private Plaintiffs represented through
Plaintiffs’ Steering Committee (PSC) Plaintiffs’ Steering Committee (PSC)

Claims • As of February 12, 2017, 306,663 • As of February 1, 2017 all proposed • Finalized; plea agreement and consent • As of February 14, 2017, 91% of class
customers have been issued offers and agreements submitted but pending U.S. decree both require U.S. federal court members submitted individual
status 249,172 offers have been accepted. federal court approval approval releases to receive initial payment, and
• More than 25% of the 475,000 affected Volkswagen has already paid out half
2.0L vehicles have already been either of the settlement proceeds.
modified or taken off the road.

Approval • Per October 2016 max funding pool of • Pay up to ~ $1.2 billion total benefits in • Combined fines & penalties $4.3bn: • Final Approval granted on
~$10bn eligible for: settlement program to: o Plea agreement incl. guilty plea January 23, 2017
status o Buyback/Lease terminations or o Recall and repair ~58,000 vehicles o Criminal fine of $2.8bn o $1,193 billion cash component,
o Emissions modifications (~70k to originally certified emissions o Independent monitor as well as additional non-cash
vehicles approved per Jan 2017) standards; or offer buyback, o Federal environmental and benefits
o + Cash payments for affected trade-in, lease termination or customs-related civil
customers emissions modifications for claims $1.45bn
• Pay $2.7bn over 3 years to environmental ~20,000 older vehicles o DOJ civil FIRREA penalty $50m
trust o + cash payments for all eligible
• Invest $2bn over 10 years in zero class members
emission infrastructure • Pay $225m into environmental trust,
• Resolution with 44 states, the District of $25m to CARB to support ZEV in CA
Columbia and Puerto Rico (~$603m incl. • Final approval hearing to be held on May
3.0L) 11, 2017

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TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Our 5 priorities: Focus on crisis management and realignment


 Implementation of technical solutions launched in Germany
Customer solutions  Schedule for further refits in Europe to be adapted in consultation with authorities
 Agreement in principle reached with U.S. authorities

 Process audit by Group Audit already completed at 2015 year-end,


Investigation proposed measures being rapidly implemented
 Detailed investigation of facts by Jones Day ongoing

 New management team in place


Structure
 Intensive work on new structures and leaner processes

 Numerous individual changes made to renew corporate and


Mindset leadership culture
 Structured change process initiated

 Development of “TOGETHER Strategy 2025" proceeding to plan


Destination  Key financial targets with focus on profitability already communicated
 Milestones and brand specific KPI’s will be implemented into next planning round
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Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Product roadmap aligns with expected future market trends


Body group trends until 20201) Upcoming models

Volume in 20161) until 2020 SUV

SUV +22% Kodiaq Atlas (US) T-Roc


Q5 Teramont (CN) Tiguan Allspace (US) Arona
Sedan +4%
Hatchback Sedan
+7%
Pick-Up +7% A6L e-tron (CN) Arteon Jetta (US)
MPV Phideon (CN) Octavia FL A8
-3%
Transporter +7% Hatchback

Micro Van +11%


Golf FL Rapid FL Ibiza
Estate -5% C-Trek (CN) Leon FL Polo

City Van +9% Other


Coupe +11%
million 0 Panamera other
10 20 A5 Sportback
Crafter
Sport Turismo A7 Sportback
Total market +10%
1) Source: IHS as of Dec. 2016; 2016 preliminary figures, all figures rounded. 25
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen brand has significant potential for improvement


Underperformance in the US car market

Falling market shares in price-sensitive markets of Brazil, India and ASEAN

Inconsistent brand image in the regions

High increase in fixed costs

Growing productivity gap compared to competitors

High product complexity is weakening ability to compete in volume segment

Product portfolio is lagging behind international trends and requirements of local customers

High level of vertical integration / need for investment in fields without differentiation from competitors

Centralised, functional and hierarchical organisation

Insufficient generation of returns/cash

26
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen brand has important qualities that enable it to take


the lead in the volume segment
Globally acknowledged and established brand and strong customer loyalty

High-quality portfolio – cars with character


Golf, GTI, Tiguan, Passat, Jetta and Magotan

Global presence and scalable platforms: Volkswagen Group backbone

Unsurpassed market leadership in China, market leadership in Europe,


and corresponding better price position of products

Committed, highly qualified workforce that identifies with the brand

Quality orientation, an eye for detail, and superb technical expertise

27
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Increase in competitiveness and safeguarding the future are the focus


points of the Future Pact agreement
Secure the Future
Working Group 1 • Increase of productivity by 25% • 4 additional models:
Production • Reduction of plant costs 2 conventional and 2 MEB vehicles

Working Group 2 • Increase of productivity by 25% • Investments in:


Components • Discontinuation of unprofitable products • Electric drive trains
• Pilot facility battery cell
• Battery system
Working Group 3 • Reduction of hardware-oriented • Competency/capacity increase in autonomous
Technical development work driving, electrification, connectivity etc.
Development • Increased efficiency in development processes

Working Group 4 • Reduction of bureaucracy • Creation of employment


Administration in new business segments

Reduction in workforce based on demographic curve


28
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Strategic realignment of Volkswagen brand will take place


in three phases Leap to the top of Major
electric mobility transformation
Radical restructuring
2 3
1

• Restructuring • MEB offensive • New business models


• Development • Extension • Mobility solutions
of expertise of earnings base worldwide
• Acceleration • Growth
• SUV offensive • Excellence

2015 2020 2025 2030


Diesel crisis Leading and profitable Global leader in e-mobility Global leader
2% RoS* volume manufacturer 6% RoS** in auto-mobility
4% RoS** >6% RoS**
*) before special items **) Operating return based on adjusted sales revenue (without turnover from multi brand sales companies)
29
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen brand image in critical markets will be


improved step by step and brought in line with Europe
Transfer price

Premium Brand positioning Measures for a globally consistent


Top of Volume brand positioning
• SUV and BEV offensive
• Customer-relevant innovation
• Price positioning depending on brand
strength and purchasing power in the
 target group of the aspiring middle class
• Strengthen brand image by means
Volume of uniform brand leadership across
the world

Weak Strong Brand image


30
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Realignment of product strategy oriented towards the three phases


of the Transform 2025+ strategy Leap to the top of Major
transformation
Radical restructuring electric mobility
3
2
1
New mobility
2nd MEB wave
1st MEB wave
SUV campaign Transformation
Conventional product portfolio
Toolkit strategy
Engines strategy

2015 2020 2025 2030


Diesel crisis Leading and profitable Global leader in e-mobility Global leader
2% RoS* volume manufacturer 6% RoS** in auto-mobility
4% RoS** >6% RoS**
*) before special items **) Operating return based on adjusted sales revenue (without turnover from multi brand sales companies)
31
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Reducing complexity leads to lower expenditure, frees up resources


and increases productivity
Business field Reduced number of variants
>15,000
Sucessors / new vehicles -30 to -60% fewer component
variants
Platforms -40%
Drivetrains -30 to -40%

>€700 million
lower initial investment

32
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

The number of platforms will be reduced consistently


to create economies of scale worldwide
MEB

MQB
Currently
Incl. global MQB
13 PQx

PQ12 Further steps tbd.


2012 2019 2026 2030
New toolkit MEB enables cost and concept leadership for electric vehicles
(MEB)

Conventional toolkit Using MQB for second product life cycle minimises the expenditure necessary for the transformation
(MQB) (no further changes to platform basis necessary)

Old platforms Avoiding expenses for maintaining and upgrading vehicles by discontinuing eleven of the PQ platforms
(PQx)

33
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

The Volkswagen brand will implement MEB to make electric vehicles


affordable and profitable Key measures
• Concept determined by: customer
benefit and package for cost-optimized
implementation of e-components
• MEB: economies of scale from use of
MEB across entire Group
• “Design for manufacturing“:
higher productivity,
shorter manufacturing time
• Lower material and distribution costs
• Significant reduction in variants
• Early involvement of suppliers

34
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen brand is planning a strong comeback in the USA


Focus on US Core Segments Key measures
• Extend SUV offering,
focus on US core segments (SUVs, sedans)

• Market-oriented pricing

Atlas Tiguan • Market-oriented alignment to local standards and


customer expectations

• Reduce material, product and fixed costs

• “Electrify America”: infrastructure and locally


produced cars from 2021

Jetta Passat
35
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

A product offensive will initiate a new growth phase in South America


Product offensive in South America Key measures
• Restructuring: reduce capacities
and fixed costs

• Increase productivity, align products to local


requirements
Polo Global Polo Sedan Global
• Product offensive, €2.5 bn investment

• New brand positioning

• New growth strategy for Latin America

Small SUV Global

36
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Product line organisation and regionalisation are making us faster


and more entrepreneurial
Regionalisation
Product line organisation

Head NAR

F V E B P S GS

G1 – Small G3 – Mid- & Fullsize


Head SAM
CEO
F V E B P S VWA

G2 – Compact G4 – e-Mobility
Head CHN
GS, G1-
F V E 3 G4 Project EBO*

New organisation model implemented in all product lines New organisation model implemented for the regions

*) EBO = Budget Car Organisation 37


Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen Brand new mission statement

Enthusiastic Secure
We are putting the future customers earnings power
into series production –
as the global leader
Volkswagen for e-mobility.

We drive our customers
TRANSFORM
Moving and society forwards –
People
Forward
with passion and innovation. 2025+
We use our strengths– A strong
to shape the transformation team that gets Sustainable
together. things moving mobility

38
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

12 KPIs measure the achievement of the strategy in four targets


Enthusiastic customers Secure earnings power
• Best-in-class recommendation • Secure operating return
from enthusiastic customers
Enthusiastic • Secure return on investment
• Top quality for the customer customers Future-
proof earning
power
• Ensuring financial viability
• Direct customer contact
in a digital environment TRANSFORM
2025+
A strong team that gets Sustainable mobility
A strong
things moving team
• Global market leader in electric mobility
that gets Sustainable
things moving mobility
• Vibrant corporate culture
• Integrity as a guiding principle
and dedicated employees
• Reducing our carbon footprint
• Employer of choice for top talents

• Great diversity and expertise in our team

39
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Core challenges in the commercial vehicle industry ...


Strong correlation to GDP in developed world
Cyclical markets
Not all regions hit by economic downturns at the same time

Further Local OEMs dominating in BRIC markets


globalization Improving infrastructure, stronger regulations open opportunities for Volkswagen

Emission Europe with aggressive regulations, focus shifting to diesel lock-outs


regulations BRIC trailing behind, but with ambitious roadmap

Platooning and partly-autonomous driving as transition solutions


Connectivity &
digitalization Data management for customers and traffic of broad interest

After sales and new After sales increasingly important as alternative source of revenues
business
New business models (e.g. enhanced telematics) can stabilize revenues
opportunities

40
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

... require Volkswagen truck brands to cooperate closely


Global market reach to ensure sufficient
Close cooperation
volume in local up- & downturns
Cyclical markets going forward
Reduced fixed costs through modularization
and shared components
Further
globalization
“Navistar alliance: 16.6% equity, $256m,
closure H1 2017”
Emission
regulations

Connectivity & Combined R&D know-how for competitive


digitalization product development

After sales and Additional value through customer services


new business
opportunities

41
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Deep roots and strong market position combined with further growth
potential continues robust performance in China
Deliveries to customers – strong Jan-Dec 2016 Strong operational & financial track record

(thousand units)
2015 2016 +12.2% (in € bn)
5.2 5.2 Proportionate
3,982 4.3 4.5 Operating Profit
3,548 3.7 3.6 3.6
2.8 3.0
2.6
1.9 2.0 Dividends paid to
1.2 Volkswagen Group
898 956 845 907 835 992 971 1,128 0.8

Q1 Q2 Q3 Q4 Jan-Dec 2010 2011 2012 2013 2014 2015 Q1-Q3 '16

Implementation of locally produced NEVs 10 additional SUVs within the next 3-4 years

Phase 1
Phase 2
Phase 3

A6 L e-tron Phideon
PHEV
Pure Electric
further Plug- Vehicles based on Electric toolkit
in Hybrids current toolkits (MEB)

42
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen Financial Services1): global, well diversified and successful


Strong global presence Continuous portfolio expansion

in ‘000 contracts
7,064
6,322
4,549 Total
3,796 portfolio
3,281 2,692
2,246 2,691 2,274 2,518
1,964 2,148 1,808 1,983 15,818
1,508 1,524 1,623
1,505
4,551 4,946 5,560 5,833 6,062
3,163 3,567 3,712 3,930

2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016


Financing Leasing Insurance / Services

Rising penetration rates Diversified funding structure

Equity, liabilities to Asset backed securitization


48.8% w/o China
44.3% 44.5% 46.9% affiliated companies, 17%
40.7% 28%
36.3% other
32.5% 32.9% 34.9%
with China
33%
30.6% 31.3% 33.2% 22%
26.4% 25.0% 24.7% 25.4% 27.5% 28.9% Bonds,
Commercial Paper,
Customer deposits liabilities to financial
institutions
30.09.2016: €162.7 bn

1) Excluding Financial Services activities of Scania, Porsche AG and Porsche Holding Salzburg; including MAN Financial Services 43
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Challenging emission regulations, trends and business transformation


opportunities
… CO2 and EU6 regulations … Market / consumer trends
Status and forecast of CO₂-regulations

Shorter
270 EU US-LDV China
Grams CO2 per kilometer, normalized to NEDC

(PC+LDT)
Digitalization
250 lifecycles
230
US baseline: 219
210

China baseline: 185 SUV


190
E-mobility
trend
170
China 2015: 167
150

130 US 2025:107
EU baseline: 142 Automated Shift in
110 driving priorities
EU 2020: 95
90
2000 2005 2010 2015 2020 2025

44
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Roadmap battery cell chemistry and energy density1)


range* Up to 700 km
1000 Wh/l
all solid state

Up to 500 km
* basis: eGolf with comparable battery volume 800 Wh/l
improved anode
and cathode
Up to 420 km
700 Wh/l
Up to 380 km
Up to 300 km 650 Wh/l
Up to 190 km 410 Wh/l
230 Wh/l
New battery
Lithium ion technology technologies
2014 2017 2018 2020 2025
1) Energy density reflects volume in liters (Wh/l)
45
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Roadmap battery cost


€ / kWh
400
battery system

300

MQB
200
MEB Target:
battery cell < 100€ / kWh
100

2013 2020
46
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Analysis of the value chain to achieve the target of <€100 / kWh


Case, electronics and
Commodity Raw material Cell / Formats Module incl. assembly
sub components assembly

Pouch
e.g. NMC
Lithium (Lithium Nickel Manganese
Cobalt Oxide)
Nickel Prizmatic
Manganese
1.1.1
Cobalt
6.2.2
Graphite Round
8.1.1

70% added value 10% 20%

Main factor to achieve target


47
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

High-power charging (HPC) infrastructure essential for volume targets


High-Power Charging (HPC)

~ 290 charging stations 400 charging stations

HPC for Long Distance Driving

Station Network along Highways

Power >150kW up to 320kW

CCS Standard

48
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

The Volkswagen Group strives for a worldwide leading position in Mobility


Services

> Goal: Top Provider of Mobility Services


> Until 2020 we will implement a comprehensive
portfolio of digital services for all brands
> To generate a sustainable competitive advantage,
we will build up new core competences

49
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

The founding of MOIA creates the framework for future mobility

Develop profitable business models


for the Group and brands
Focus on Mobility on Demand
Support traditional Group brands
concerning product design and
technical requirements of the vehicles
„Best of Best“ Management Team
bundling know how from the
automotive-, software- and services
industry
50
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

Volkswagen is making digital transformation a top priority concentrating


on digitalization and autonomous driving
Volkswagen Group Future Centers Autonomous driving
• 91% of accidents caused by human error  reduce number of
accidents
bf
• People spend more than 4 years of their life in the car on average 
make that time usable for the driver
• Huge potential for trucks  significantly higher productivity
• Car parked most of the day  customer achieves best return on
investment by fully utilizing the car
• Infrastructure limited  has to be used more efficiently
21st Century:
20th Century: Engine is the core
• Three new Volkswagen Group Future Centers in Silicon Valley, Self-driving system is the core of
of the automobile
Potsdam and Beijing the automobile
• Approach: designers and digitalization experts work hand in hand to
Top fields of use
create the car of the future Individual Public
Commercial
urban Premium cars transport-
• Goal: best in class customer experience, interface design and user vehicles
mobility ation
friendliness, new interior concepts, integration of infotainment and
entertainment systems Group is building on strong knowledge base – initiative started to
get to market ahead of competitors

51
Volkswagen Brand
Volkswagen going forward Group Volkswagen Truck & Bus Regions / FS Trends
Strategy 2025+

New co-operations and initiatives

52
“Together, we will create
a new Volkswagen
PLACEHOLDER FOR PICTURE
and play a key role in designing
the mobility world
of tomorrow” M. Müller, CEO, June 16th 2016

53
Events 2017

14. March 2017 Annual Media Conference, Investor and Analyst Conference 2017

14. March 2017 Capital Markets Day

3. May 2017 Interim Report January - March 2017, Investor and Analyst Conference Call

10. May 2017 Annual General Meeting 2017

27. July 2017 Half-Yearly Financial Report 2017, Investor and Analyst Conference Call

27. October 2017 Interim Report January - September 2017, Investor and Analyst Conference Call

54
Investor Relations Team

Oliver Larkin (Wolfsburg / London office) Ulrich Hauswaldt (Wolfsburg office)


Group Head of Investor Relations Investor Relations Officer
E-Mail: Oliver.Larkin1@volkswagen.de E-Mail: Ulrich.Hauswaldt@volkswagen.de
Telephone: +49 5361 9 49840 Telephone: +49 5361 9 42224

Helen Beckermann (Wolfsburg office) Thomas Küter (Wolfsburg office)


Senior Investor Relations Manager Investor Relations Manager
E-Mail: Helen.Beckermann@volkswagen.de E-Mail: Thomas.Kueter@volkswagen.de
Telephone: +49 5361 9 49015 Telephone: + 49 5361 9 40765

Alexander Hunger (Wolfsburg office) Lennart Schmidt (China office)


Investor Relations Manager
Senior Investor Relations Officer
E-Mail: Lennart.Schmidt@volkswagen.com.cn
E-Mail: Alexander.Hunger@volkswagen.de
Telephone: + 86 10 6531 4732
Telephone: +49 5361 9 47420

Andreas Kowalczyk (Wolfsburg office) Andreas Buchta (US office)


Investor Relations Officer General Manager Investor Relations America
E-Mail: Andreas.Kowalczyk@volkswagen.de E-Mail: Andreas.Buchta@vw.com
Telephone: +49 5361 9 23183 Telephone: +1 703 364 7220

55
Volkswagen Group
Appendix

56
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Analysis of operating profit 1)


(January to September 2016 vs. 2015)
€ billion
14.0
-1.2
12.0 0.0
-1.1 0.3 0.2
10.0 0.8 -1.2 2.1
-2.6
8.0
6.9
6.0 11.3
10.2
8.6
4.0

2.0 3.3
0.0

Jan – Sept Special Jan – Sept Volume/ Exchange Product Fixed Commercial Power Financial Jan – Sept Special Jan – Sept
2015 Items 2015 Mix/ Prices rates costs costs Vehicles Engineering Services 2016 Items 2016
after before Division before after
Special Items Special Items Passenger Cars Special Items Special Items

1) All figures shown are rounded, minor discrepancies may arise from addition of these amounts.
57
TOGETHER – Strategy 2025 Financials Outlook 2017 Diesel Status Volkswagen going forward

Volkswagen Group – Analysis by business line 1)


(January to September 2016 vs. 2015) Vehicle sales Sales revenue Operating profit
thousand vehicles/ € million 2016 2015 2016 2015 2016 2015
Volkswagen Passenger Cars 3,234 3,343 77,725 79,972 1,244 2,229
Audi 1,166 1,158 44,017 43,695 3,918 4,024
ŠKODA 606 605 10,113 9,280 940 734
SEAT 400 404 6,535 6,388 137 12
Bentley 8 7 1,411 1,364 54 57
Porsche2) 177 169 16,470 16,471 2,858 2,546
Volkswagen Commercial Vehicles 342 335 8,045 7,537 392 313
Scania2) 60 56 8,272 7,686 802 748
MAN Commercial Vehicles 74 74 7,213 7,247 204 52
MAN Power Engineering - - 2,567 2,756 176 227
VW China3) 2,803 2,492 - - - -
Other -1,217 -1,204 -42,771 -41,538 -993 -2,126
Volkswagen Financial Services - - 20,337 19,403 1,534 1,381
Volkswagen Group before Special Items - - - - 11,267 10,197
Special Items - - - - -2,620 -6,855
Volkswagen Group 7,653 7,440 159,932 160,263 8,647 3,342
Automotive Division5) 7,653 7,440 136,889 138,302 6,841 1,726
of which: Passenger Cars 7,178 6,974 111,044 113,325 6,359 1,203
of which: Commercial Vehicles 475 466 23,278 22,221 491 489
of which: Power Engineering - - 2,567 2,756 -9 34
Financial Services Division - - 23,042 21,961 1,806 1,615
1) All figures shown are rounded, minor discrepancies may arise from addition of these amounts. 2) Incl. financial services. 3) Sales revenue and operating profit of the JV’s in China are not included in the Group figures. The Chinese companies
are accounted for using the equity method and recorded an operating profit (proportionate) of € 3,594 million (€3,777 million). 4) Mainly intragroup items, in particular from elimination of intercompany profits; incl. depreciation and amortization 58
of identifiable assets as part of the PPA for Scania, Porsche Holding Salzburg, MAN and Porsche. 5) Including allocation of consolidation adjustments between Automotive and Financial Services divisions.
Rating Volkswagen Group

Aaa AAA
Aa1 AA+
Aa2 AA
Aa3 AA-
Investment

Volkswagen Bank GmbH (N)


A+
grade

A1
A2 VW FS AG (N) A
A3 Volkswagen AG (N) A- Volkswagen Bank GmbH (N)

Baa1 BBB+ Volkswagen AG (N), VW FS AG (N)


Baa2 BBB
Baa3 BBB-

Ba1 BB+
Subinvestment

Ba2 BB
Ba3 BB-
grade

B1 B+
B2 B
--- B-- - -

Outlook -> (P)ositive, (S)table, (N)egative, RfD = Ratings under review for Downgrade, RfU = Ratings under review for Upgrade
59
Modular toolkits – Brand responsibilities

MQB MLB MSB MNB MMB MEB

Modular Modular Modular Standard Modular Light Modular


Modular
Transverse Longitudinal Drivetrain Commercial Mid-engine Electric
Toolkit Vehicle Toolkit Toolkit
Toolkit Toolkit Toolkit

60
We have defined central fields of action for each phase
Major
Leap to the top of transformation
electric mobility 3
Radical restructuring
2
1
• Assert a global brand position – Top of • First choice for the aspiring • Leading digital ecosystem in the mobility
Volume middle class sector
• SUV as launch pad for emotionalization • Leader in transformation of the car industry • Business model for
and earnings power • Secure earnings from classic product • Autonomous driving
• Basis for market leadership in electric portfolio • Profitable coverage of new fields of mobility
mobility • First manufacturer with 1 million electric • Emission-free driving
• Create basis for market leadership in vehicles • Global and tailored vehicle portfolio
connectivity • Cost leadership in electric mobility
• Europe/China: secure market leadership • Leading digital ecosystem in the automotive
• Turnaround NAR sector
• Successful in economy regions/markets • Establish basis for autonomous mobility and
(SAM, RUS, IND) future business models
• Direct customer relationship, new sales • Profitable in NAR
and distribution concept • Growth and profitability in economy
• Implement „Future Pact“ segment
• Redirect resources • Operational excellence throughout the
• Decentralize organisation and make it entire value chain
more agile
• Concentrate on value creation in all 2020 2030
2015 business areas 2025 Global leader
Leading and profitable
Diesel crisis • New corporate culture, anchor
Global leader in e-mobility in auto-mobility
entrepreneurial thinking volume manufacturer
2% RoS* 4% RoS** 6% RoS** >6% RoS**
*) before special items **) Operating return based on adjusted sales revenue (without turnover from multi brand sales companies) 61
The SUV offensive has a global impact: Investment channeled into
high earnings and high growth segments

Small SUV T-Roc Compact SUV Compact SUV

Tiguan Tiguan Allspace Touareg Atlas

62
Volkswagen brand is planning an industry-leading ecosystem

Apps/ Services

63
Volkswagen Atlas

64
Volkswagen I.D

65
Audi Q5

66
Porsche 718 Boxster

67
ŠKODA KODIAQ

68
SEAT Ateca

69
Bentley Bentayga

70
Lamborghini Centenario

71
Bugatti Chiron

72
Volkswagen Crafter

73
MAN TGX

74
Scania R500 4x2

75
Volkswagen Group
Frank Witter
Chief Financial Officer
Barclays and Exane BNP Paribas Motor Show Conference 2017,
Geneva, 7 March 2017