Volkswagen Brand in China

Weiming Soh
Executive Vice President of Volkswagen Group China Sales and Marketing
Page 1

Volkswagen Brand China Investor Conference 2010 in Beijing

Sales Performance and Outlook Marketing Campaigns and New Model Launch Network Strategy Training Strategy and Customer Satisfaction Programs BlueMotionTechnologies and Think Blue Campaign

Page 2

China has been the key region for the Volkswagen Brand worldwide for decades
Regional distribution of deliveries to customers by brand Toyota
5% 28% 17% 1% 23% 12% 2% 26% 14% 34% 5% 9% 0% 26% 9% 1% 16%

CY2009 US China Germany Japan Rest of Europe

Ford
33%

Honda
33% 16%

Source: Volkswagen Group; Global Insight Page 3

Now, China is the largest market for the Volkswagen Brand worldwide
Passenger Car Market Worldwide Jan -March, 2010 Volkswagen Brand Worldwide Jan -March, 2010

China 19%
4% Brazil 2% Russia 4% India

China 33%
13% Brazil 1% Russia 0.2% India Mature markets 53%

Mature markets 71%

Source: Volkswagen Group; based on deliveries to customers Page 4

2009 was a year of Records for the Volkswagen Brand and 2010 is aiming for a new height
Deliveries to customers
000 Units

Market Growth

1,118 844

781 629 511

2005

2006

2007

2008

2009

2010

Remark: Sales forecast is based on PO target (10 million total market forecast)

Page 5

In Q1 2010, Volkswagen Brand also secured its leading market share position on the Chinese Mainland
Market Share by Brand % (Jan-Mar 2010)
Ranking Brand Volkswagen YTD MS % Jan-Mar 10 13.7% 6.0% 6.0% 5.8% 5.7% 5.1% 4.7% 4.5% 3.4% 2.9% 42.2% 1.9% 1.6% YTD MS % 2009 13.2% 7.7% 6.7% 6.4% 5.1% 3.9% 6.8% 5.3% 4.6% 2.7% 37.5% 1.9% 1.4%

Volkswagen
Others Toyota

1
2 3 4 5 6 7 8 9 10

Toyota Honda Nissan BYD Chevrolet Hyundai Buick Chery Suzuki Others Audi Skoda

Honda

Nissan Suzuki Chery Buick Hyundai Chevrolet BYD

Source: Volkswagen Group China; excl. LCVs

Page 6

The latest new models have dramatically improved the image of the Volkswagen Brand in the past few years
Sales of Shanghai Volkswagen
+Touran +Lavida +New + Tiguan Passat LY

Sales of FAW-Volkswagen
+ Sagitar +New Bora +Golf A6 + Magotan +CC

55%

60% 72% 80%

56%

60%

67%

72%

Santana

Jetta

2007

2008

2009

2010

2007

2008
Old models

2009
New models

2010

Remarks: Average share of old models of SVW and FAW-VW is 24% in Y2010 Source: Volkswagen Group China Page 7

SVW delivered 568,071 Volkswagen Brand cars in 2009, up 29%

Sales
2009
2009

No. 1 sales in China 2009 Passat Lingyu sales volume > 100,000 units Polo sales volume > 100,000 units Utilization of TSI+DSG and EA 888 engine technology Tiguan LWB launch

Lavida

Santana/ Passat Vista

Polo

Touran

Source: Volkswagen Group China Page 8

2010

FAW-VW delivered 527,670 Volkswagen Brand cars in 2009, up 35%

Sales
2009
2009

Magotan sales volume > 70,000 units Sagitar sales volume > 100,000 units Golf A6 successfully launched, 60% of which are TSI+DSG models Launch of Golf GTI and CC Volume breakthrough on Magotan 1.4 TSI+DSG

Jetta

New Bora

Sagitar Magotan Golf A6

Source: Volkswagen Group China Page 9

2010

Volkswagen Import Company (VICo) in China is young, but has great potential
Business Startup 2004 2005 Infrastructure Setup
Network, Training, Process, etc.

Accelerate Growth
Individual, Motorsports, Bluemotion

Volkswagen Worldwide Target

2006

2007

2008

2009

2010

2011

2012
Target
Phaeton No. 1

20,162
Touareg No. 1

11,108 645 Sales volume as todays: 2,026 5,015 7,850

New Beetle No. 2

India

Ukraine

Hungary

Czech

Poland

Japan

Austria

Russia

Scirocco

No. 2

Source: Volkswagen Group China Page 10

Volkswagen Import China (VICo) has achieved a remarkable growth among the key competitors
+224%
+159%
17,998

Total Import Market +145% +193%

+116% +78% +111% +218%

+179%
20,811

+283%

Jan Mar 2009 Jan Mar 2010 13,676

9,976

6,898 4,954
6,937 7,448 3,567 2,020

3,590
83

3,083

2,811

1,691

175

11

35

MercedesBenz

BMW

Lexus

Volkswagen

Audi

Porsche

Volvo

Bentley

Lamborghini

Source: Volkswagen Group China Page 11

By March 2010, Volkswagen Hong Kong reached 10.5% market share (cumulative)
Volkswagen Brand Market Share in Jan-Mar, 2010
Jan-Mar, 2010
Competitor 1 Competitor 2 Competitor 3

Strategic Challenge for Volkswagen Brand m/s %

VWHK established 6 7 4.3% 2007 5.5% 5

19.9% 13.2% 11.2% 10.5% 7 4.5% 2006

9.1%

Competitor 4

10.5% 10.1% 2008 2009 2010 6.1% 4.9% 3.9% 2.6% 7.5% Jan. Feb. Mar.

Competitor 5 Competitor 6 Competitor 7

Volkswagen Brand MS in Q1 2010 11.2% 12.7%

Source: Volkswagen Group China Page 12

Volkswagen Brand made integrated efforts to strengthen its presence in Hong Kong
The first worldwide VW city showroom, and the biggest showroom in Hong Kong Largest Test Drive Initiative ever in Hong Kong Aggressive marketing strategy (e.g. Taxi advertisement) State-of-the-art workshop facility in Tsuen Wan

Source: Volkswagen Group China Page 13

Volkswagen Brand China Investor Conference 2010 in Beijing

Sales Performance and Outlook Marketing Campaigns and New Model Launch Network Strategy Training Strategy and Customer Satisfaction Programs BlueMotionTechnologies and Think Blue Campaign

Page 14

Volkswagen Motorsport swept China and scooped 1st and 2nd positions in Macau Grand Prix
Scirocco Cup Race of Champion Grand Prix F3 Race

Source: Volkswagen Group China Page 15

Successful TSI+DSG promotion provided a solid foundation to accelerate sales in 2010

2009 Event : Discover Volkswagen TSI+DSG in Dalian & Shanghai Dalian VWED (TSI factory) & Shanghai VWATD (DSG factory)/VWPT (TSI factory) SEE
Display of cut-away engines 1.4TSI, 1.8TSI and 2.0TSI, 7-DSG and 6-DSG exponents Full product-line

TOUCH
Factory tour with experts First time visit of VWATD (Dalian) Introduction of TSI+DSG product knowledge & competitive advantages

FEEL
Test drive with integration of 200 m Acceleration Game to experience power of the engines Fuel Duel game to promote minimum fuel consumption

2010 Event : Production of DSG started in Volkswagen Automatic Transmission Factory in Dalian
Start of Production ceremony on May, 11th, 2010 Dalian factory will produce 300,000 Units of 7-speed DSG transmission every year and gradually expand to capacity of 600,000
Source: Volkswagen Group China

Page 16

In 2010, the Volkswagen Brand will launch 9 new models/series including CKD and FBU imports
Golf GTI Jetta A2 FL Tiguan CC

Jan

Feb

GTI

Jetta Tiguan A2 FL LWB

Beijing Motor May Show

CC

R New Sep Strategy Phaeton

Oct

New Touareg

R and R-line models

New Phaeton

New Touareg /Hybrid

Source: Volkswagen Group China Page 17

Volkswagen Brand China Investor Conference 2010 in Beijing

Sales Performance and Outlook Marketing Campaigns and New Model Launch Network Strategy Training Strategy and Customer Satisfaction Programs BlueMotionTechnologies and Think Blue Campaign

Page 18

Strategic dealer network expansion plan to fulfill volume ambition

Volkswagen Brand dealer network expansion plan +85% +600
>1,750

+200
>1,150 950

2009
Source: Volkswagen Group China Page 19

2010 (E)

Future

Volkswagen Brand develops different dealership formats and master plan for China
4S Dealership (Umbrella Facelift) 4S Dealership (New Build)

City Showroom

Phaeton Center

2nd Tier

Source: Volkswagen Group China Page 20

Volkswagen Brand China Investor Conference 2010 in Beijing

Sales Performance and Outlook Marketing Campaigns and New Model Launch Network Strategy Training Strategy and Customer Satisfaction Programs BlueMotionTechnologies and Think Blue Campaign

Page 21

Volkswagen Brand China will enhance the training infrastructure to meet future challenges
Today
Future Strategy & Programs Current Strategy & Programs
Individual Training Strategies Individual Training Standards Locally Developed Programs National Training Strategies International Volkswagen Standards Localized International Programs Build the industry leading Training Academy Develop Management Qualification & Trainer Qualification Implant Volkswagen Train-the-Trainer standard & China TtT certification program

Future
Best Quality No. 1 Customer Satisfaction Top-of-mind Brand Image Top Performer Attraction/Retention

Source: Volkswagen Group China

Page 22

Major programs have been identified to meet customer satisfaction target

Customer Satisfaction China Major Programs 2010
Dealer operation standards and process & audit

Targets

Technical and no-technical training

Dealer Number
FAW-VW SVW 2nd Tier Dealers SVW 1st Tier Dealers VICo Official Sales target

Sales1 (000)

2,500

2,000 1,978 1,773 1,635 1,407

1,323 1,130 550 485 415 1,648 1,463 645

2,000

1,600

1,500

1,116

1,200

Network development

Top in Volume Brand

1,000

938 350

800 231 266 400

154 491 50 70
2010(E)

214 544 80
2011(E)

500

81

592 90
2012(E)

642 95
2013(E)

457 0
2009

Dealer support

Dealer commercial policy and incentive programs

Source: Volkswagen Group China Page 23

Volkswagen Brand China Investor Conference 2010 in Beijing

Sales Performance and Outlook Marketing Campaigns and New Model Launch Network Strategy Training Strategy and Customer Satisfaction Programs BlueMotionTechnologies and Think Blue Campaign

Page 24

Volkswagen introduced BlueMotionTechnologies in China

Natural Resources (Oil, Gas) Increase efficiency Renewable Energies

CNG TDI BlueMotion TwinDrive E-Drive TSI DSG Hybrid Fuel Cell

Natural Resources (Oil, Gas)

Increase efficiency

Renewable Energies

Source: Volkswagen Group China Page 25

Comprehensive brand campaign of Think Blue is being launched in China starting from 2010 Beijing Auto show

Auto Show

Internet

360 Brand Campaign

Eco-Driving Promotion Advertisement

Model Range

Mobile Marketing

Source: Volkswagen Group China Page 26

Volkswagen Brand in China

Weiming Soh
Executive Vice President of Volkswagen Group China Sales and Marketing
Page 27

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.