Summary of expected developments

The Board of Management of Volkswagen AG expects the climate in the automotive industry to remain harsh over the coming years. Although we anticipate a slight recovery in the global market in 2010, the volume reached in 2007 is unlikely to be repeated before 2012. Until then, the markets in the Asia-Pacific region and in North and South America will record the strongest growth. The Volkswagen Group already holds a large share of many of the markets in this region and is therefore able to capture an above-average share of this growth. By setting up new production facilities in countries where the Group has a smaller market share and producing vehicles designed specifically for those countries, we are also leveraging the opportunities resulting from the strong growth in those markets. The new production facility in Chattanooga in the USA will make an important contribution towards this. For the Western European market, we anticipate a recovery starting in 2011. The Volkswagen Group will maintain its leading market position in this region over the coming years and increase its market share. We therefore expect our global deliveries to customers to again be above previous years’ levels in 2011. In the medium term, sales of new cars should increase to 8.0 million units per year. The Chinese joint venture companies will make a significant contribution to this volume growth. The Group’s global market share will continue to grow.

However, the weaker trend in the markets of Western Europe will be a drag on profits over the coming years. Interest and exchange rate volatility will also impact negatively on profits. Therefore, we do not expect to be able to return to the high level of profitability reached in 2007 until after 2011. In the Automotive Division, we anticipate an operating return on sales of more than 5% in the medium term – excluding the integration of Porsche planned for 2011. The ratio of capital expenditure to sales revenue will be at a competitive level of around 6% on average. We also aim to retain our good rating compared with the industry as a whole and to safeguard our high level of liquidity.

With our unique brand portfolio, young and innovative model range, broad international operations with local value added in key regions, synergies in the Group-wide development of models and new technologies, and financial strength, we believe that we are well positioned for the future. The steps taken in the more recent past, such as the construction of new production facilities, the expansion of the brand portfolio and the agreement to establish the strategic partnership with Suzuki, are a key competitive advantage in this regard.

We are meeting growing customer demands for vehicles that are consumption- and emissions-optimized and at the same time offer a high level of driving pleasure through the developments under our drivetrain and fuel strategy. Combustion engines will have a major role to play in future mobility, too. Nevertheless, electric traction will become ever more significant and will be an important form of drivetrain in the future.

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