Volkswagen Group China - J.P. Morgan: China Conference 2012 · Lamborghini, Bentley, Seat Audi Locally Produced (‘000 Units) Import FBU1) (‘000 Units) FAW-VW SVW Deliveries of

Volkswagen Group China- J.P. Morgan: China Conference 2012 -

Dr. Jörg MullBeijing, June 14th, 2012

Our Momentum in China

Outlook Market Development

Investments Volkswagen Group China

Technologies Volkswagen Group China

Brand Images Volkswagen Group China

2

Content

Comeback of a world power

Rest ofthe world

Europe &N. America

India

China

Share world BIP(Year 1 – 2009; in %)

Year

Source: McKinsey

"For Chinese leadership, it is not surprising that China is on the verge of becoming a superpower, but rather that they have not been for the last 300 years" Henry Kissinger, former US Secretary of State

Fall of RomanEmpire

Mohammad‘sHegira

Marco Polo‘strips to Asia

Discovery ofAmerica

French and US Revolution

Oilcrisis

IndustrialRevolution

InternetRevolution

100

80

60

40

20

00 500 1000 1500 2009

Japan

3

Introduction of Volkswagen Group China (VGC)

Volkswagen production facilities in China History1985: Founding of Shanghai Volkswagen Automotive Co. (SVW) as joint venture with Shanghai Automotive Industrial Corporation (SAIC). 7.5 million vehicles as of February 2012.

1991: Founding of FAW-Volkswagen Automotive Co. Ltd. (FAW-VW) as second joint venture with First Automotive Work (FAW). 5.5 million vehicles as of February 2012.

2004: Founding of Volkswagen Group China for coordination and management of activities of Volkswagen Group within China.

Today: 17 Volkswagen companies and subsidiaries respectively (including finance and sales companies).

Total investments 1985-2011Employees 2011

12.4 Billion €48,058

Volkswagen Transmission

Shanghai VolkswagenPowertrain

FAW-Volkswagen(Volkswagen, Audi)

Volkswagen FAW Engine

Volkswagen FAW Platform

Shanghai Volkswagen

Shanghai Volkswagen(Volkswagen, ŠKODA)

Volkswagen AutomaticTransmission

Volkswagen China Investment Company

Beijing

Shanghai

DalianChangchun

Chengdu Nanjing

FAW-Volkswagen

Car production plants

Component plants

Headquarter Volkswagen Group China

4

First connections of Volkswagen with the Chinese automobile industry

5

Volkswagen as pioneer in China

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012

1985 2011

1985 2011

6

Successful partnership with FAW and SAIC

Octavia RSFabia Scout SuperbOctaviaFabia

Polo HB

CrossPolo

Polo NB

Touran TiguanLavida

Santana Santana Vista

PassatCC

SagitarJetta Bora

Golf Golf GTI Magotan

A6LA4L Q5

1991

FAW 60%, VW AG 30%, AUDI AG 10%

993,000

1985

SAIC Motor 50%, VW AG 50%

1,141,000

Foundation

Share

Deliveries 2011

Foundation

Share

Deliveries 2011

7

Deliveries to Customers (‘000 Units)New record 2011:

2.0 million vehicles

Volume doubled in the last 3 years

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120

400

800

1,200

2,000

2,4002,259

1,723

313220

1,600

Volkswagen GroupVolkswagenAudiŠKODA

2,259 thousand vehicles delivered to customers in 2011

8

In Jan-May 2012, the Volkswagen Group maintained its Number 1 position by market share in China Mainland

Rank Brand/Group Trends ofmarket share

Changes ofmarket share

1 Volkswagen Group + 1.6%

2 GM Group - 0.3%

3 Hyundai Group + 0.4%

4 Toyota Group + 0.8%

5 Nissan Group + 0.2%

6 Honda Group 0.0%

7 BYD - 0.6%

8 PSA Group + 0.1%

9 Geely Group - 0.5%

10 Great Wall + 0.2%

Others - 1.8%

9

cc

NissanToyota

GreatWallGeely

PSABYD

Honda

Hyundai

GM

VolkswagenOthers(i.e. localbrands) 20%

33%

3%3%

3%3%

4% 6%6%

9%

10%

VW, VWN

Lamborghini, Bentley, Seat

Audi

Locally Produced(‘000 Units)

Import FBU1)

(‘000 Units)

FAW-VW

SVW

Deliveries of Volkswagen in China January to May 2012

1) incl. Hongkong; Source: Volkswagen Group China

Ʃ 65.8 Ʃ 1,016.8

33.4

31.1

1.3

Total Deliveries Region China 1,082.6

10

354.9 129.5

100.6431.8

Volkswagen Group China – Achievements

Source: Volkswagen Group China

1) SVW Group/FAW-VW Group

Deliveries to Customers

Production (100%)1)

Operating profit (quotal)1)

(’000 Units)

(’000 Units)

(€ m)

1,024

975

395

2008

1,400

1,387

831

2009 2010

1,923

1,914

1,907

2011

2,259

2,202

2,616

Q1/2012

634

611

848

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12

Content

Chinese automotive market as the biggest worldwide

China

JapanUSA

GermanySouth Korea

million vehicles

Source: IHS Global Insight, March 2012

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012E 2013E 2014E

Production Volume of Passenger Cars and Commercial Vehicles 2007 – 2014E

13

After a strong boom in the past two years, passenger car market growth in China is stabilizing

2003

1) Estimate; Data Source: CKD – CPCA; FBU - Registration

2011201020092008

2,266

5,503

8,482

11,457

Total Passenger Car Market –China (incl. HK)(‘000 Units)

12,386

2012E

5-10%1)

+9%+35%

+54%

CAGR +19%

14

Total passenger car market in China will develop further in the future

Source: Volkswagen Group China / IHS Global Insight

2020E2011

12,386

>15,000

>20,000

>7%

2013E2012E

Average AnnualGrowth Rate

5-10%

>8%

Total Passenger Car Market –China (incl. HK)(‘000 Units)

15

Source: Deutsche Bank, Last update May 2012

Q4/09

10.7%

Q3/09

8.9%7.9%

6.1%

Q2/09Q1/09 Q4/10Q3/10Q2/10Q1/10

11.9%

9.6%10.3% 9.8%

Q1/11

9.7% 9.5%

Q2/11

9.1%

Q3/11

8.9%

Q4/11 Q2/12E Q3/12E Q4/12EQ1/12

8.1%8.1% 8.7% 8.8%

2011 GDP reached a 9.2% growth year on year, and the economy is now in a path of stable growth

CAGR 9.2%

CAGR 8.5%

CAGR 10.3%

CAGR 9.2%

2011 2012(forecast)

20102009

16

Current 5-year-plan: New growth model with focus on domestic market

11th 5-year-plan 2006-2010

12th 5-year-plan 2011-2015

Multi-National-Companies and infrastructure projects as growth generatorBig growth in manufacturing tradeJobs in cities to keep unemployment lowInternationally comparable price stability and well-adjusted foreign trade balance

Domestic consumption as growth acceleratorMegacities as growth generator Focus on environmental protection and energy efficiencyEncouragement of own innovationsSocial stability due to balanced allocation of prosperity Selective policies for foreign investment as well as globalization of Chinese companies

Up to now:Focus on export and quantitative growth

Now:Focus on domestic market and qualitative growth

17

Mega and small cities will be the engine of GDP growth

Remark: 6 mega cities in 2010 (Shanghai, Beijing, Chongqing, Shenzhen, Tianjin, Guangzhou)Source: McKinsey Insights China – Macroeconomic model updated April 2012

Distribution by city size2005819 cities

2020865 cities

% of GDP2005 2020

City Level (Urban Population)

Big town (<0.5M)

Small (0.5-1.5M)

Mid-sized (1.5-5.0M)

Big (5-10M)

Mega (10M+)

New cities

3

7

5

6

52

33

169

166

378

46544

202

58

12

3

424

335

85

11

10 1313 2727

2222

2727

1515

1212

2626

1010

2323 2626

18

Zhejiang

Heilongjiang

Jilin Liaoning

Hebei Tianjin

Shandong

Henan

Anhui Jiangsu

Jiangxi

Fujian

Guangdong

Hunan

Hubei

Hainan

Beijing

Shanghai

Inner Mongolia

Shanxi

Guangxi

Yunnan Guizhou

Sichuan

Shaanxi

Ningxia Gansu

Qinghai Tibet

Xinjiang

Chongqing

GDP Growth development is expected to differentiate more strongly between the various Chinese regions

Source: Provincial Government Report

Estimate of Chinese GDP 2012 per Province

Province ExpectedGrowth 2012

Total GDP 2011 (trillion RMB)

Inner Mongolia 15.0% 1.40Guizhou 14.0% 0.56

Chongqing 13.5% 1.00Shaanxi 13.0% 1.20Hainan 13.0% 0.25Anhui 12.6% 1.50

Sichuan 12.0% 2.00Heilongjiang 12.0% 1.10

Tianjin 12.0% 1.10Shanxi 12.0% 1.10

Jilin 12.0% 1.04Gansu 12.0% 0.52Ningxia 12.0% 0.21Qinghai 12.0% 0.16Yunnan 12.0% 0.88Liaoning 11.0% 2.20Hunan 11.0% 1.96Fujian 11.0% 1.75Guanxi 11.0% 1.20Xinjiang 11.0% 0.66

Tibet 11.0% 0.06Henan 10.0% 2.70Hubei 10.0% 1.80Jiangxi 10.0% 1.20

Shangdong 9.5% 4.54Hebei 9.0% 2.40

Guangdong 8.5% 5.30Zhejiang 8.5% 3.18Jiangsu 8%-10% 4.80

Shanghai 8.0% 1.92Beijing 8.0% 1.60

Expected GDP Growth 2012

12-15%

10-12%

8-10%

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Content






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Go West and Go South Strategy for further growth

Existing production siteNew production site

Urumqi

Chengdu

Changchun

Dalian

NanjingYizheng

Shanghai

NingboFoshan

Beijing

Planned investments 2012-201614.0 Billion €

“Go South Strategy”

“Go West Strategy”

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Further strengthening of partnerships with SAIC and FAW

SAIC FAW

Signing ceremony April 23rd, 2012 in WolfsburgAgreement about Urumqi plant

Signing ceremony April 23rd, 2012 in WolfsburgIntension to extend JV contract with FAW

22

Volkswagen Group China: Planned product portfolio in 2015 with 75 models

Note: number of product models

Commercial Vehicles

CKD 32 FBU 43 75

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Content






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Volkswagen Passat – Special design elements for Chinese customers

Radiator grill Tail lamps Speaker covering Tire program

25

Passat USA

Passat China

Latest TSI- and DSG-technologies of Volkswagen Group for China

2010

RecuperationStart-stop

Rolling friction

Fleet emissions

Future‘s technology

Optimized gearsNew enginegeneration

New TSI generation

Prototypes with innovative Technologies

e-Traction

[CO2/km] [Volume]

26

NEVs for sustainable transportation

2012 2013 2014 2015 2016 2017 2018

PHEV series production

HEV Series production

BEV “From Demonstration to Mass Market”

Phase 1: Demonstration2010 to 2013/14

Phase 2: Start series production2014 to 2018

Field test> 100 vehiclesVarious models

SeriesRange 100-200 km> 10,000 vehicles2 models

Phase 3: Mass marketAfter 2018

Series, e-optimizedRange options> 100,000 vehicles

27

Green factories for sustainable production (example Chengdu)

Press ShopPress Shop Body ShopBody Shop Paint ShopPaint Shop AssemblyAssembly

Permanent operation instead of switch on/ofOptimization of cuts100% recycling of metal waste

Spot welding instead of weld seamModern laser technologyHeat exchanger instead of airconditioning

Integration of filler characteristic into base coatDry cleaning process instead of venturiwashing process

Leak test with closed water circulationDrying with compressor instead of pressed airModern conveyor technique

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Content






29

Introduction of new brand SEAT in Chinese market

SEAT‘s unique mix of creativity, design flair and dynamic driving pleasure combines with the highest standards of technology, engineering, quality and durability.We call it Enjoyneering.

James Muir,CEO of SEAT

30

Awards for brands and products of Volkswagen Group China

Volkswagen Audi ŠKODA

• Annual Best Import Brand(Motor Trend)

• 2010-2011 Best Innovative Brand(General Assembly On China Brands and Communications 2011, Top Brands Contributors Awarding Ceremony)

• 2011 China Low-Carbon Emission Auto Brand –VW Touareg Hybrid(Xinhua Agency, International Herald Leader)

• „The Best Cars 2012“: 3 brand awards and3 model awards(Auto Motor Sport)

• 2012 Annual Luxury Car –Audi A8L(China Auto Pictorial)

• Most Popular Import –Audi A1(Car and Driver)

• The Best Branding of 2011 (China Times and Auto Business)

• The Champion of Joint Venture Brand(Lian Xin Tian Xia)

• Customer Loyalty & ŠKODA “Human Touch” (Auto Driving and Service, Sohu Auto, Business Unit, Shanghai Evening Post)

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Santana as a Heritage

250,000

200,000

150,000

200019951990

100,000

50,000

020102005

Deliveries toCustomers

ca. 10% of total group sales



Santana B2

Santana B2 Variant

Santana 2000/3000/Vista

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“People´s Car Project”: Brand digitization and customer interaction

INSPIREUsers get inspiration for own ideas and creations

CREATEUsers visualize und describe their ideas

BUILDUsers get updates about their ideas’ status, process and result

COMPETEUsers value ideas of other users

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Disclaimer

This presentation contains 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.

Consequently, 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 superceded.

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

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Documents

Volkswagen Group China - J.P. Morgan: China Conference 2012 · Lamborghini, Bentley, Seat Audi Locally Produced (‘000 Units) Import FBU1) (‘000 Units) FAW-VW SVW Deliveries of