Volkswagen in the U.S.

: An Evolving Growth Story
Deutsche Bank Global Auto Industry Conference
Michael Lohscheller – EVP & CFO, Volkswagen Group of America, Inc.
Detroit, 10 January 2012

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 Such statements are valid on the date of publication and can be superseded.

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Agenda Volkswagen Group sales update Volkswagen’s profitable growth in the U. market 3 .S.

market Volkswagen’s profitable growth in the US market 4 .S.Agenda Volkswagen Group sales update Volkswagen’s profitable growth in the U.

1% VW Group: 14. 2) preliminary Scania (Jan-Sept) figures 5 .4% 5.5% VW Group 21.4% North America Car market Cars + LCV Western Europe Car market VW Group Central & Eastern Europe Car market 26.4% 9.8% 1) incl. 2010 January to October 2011 vs.1% VW Group 30.3% 8.8% -1.1% 2.7% 11.6% 6.World car markets and Volkswagen Group deliveries to customers1.2) January to December 2011 vs.5% 19.5% South America Car market VW Group Rest of World Car market VW Group Asia Pacific Car market VW Group 22. 2010 World Car market: 5.

2010 ´000 units 14.000 2.000 5.Volkswagen Group – deliveries to customers by market1.183 7.1% 2.216 8.8% 2.000 7.5% 21.150 19.000 4. 2) preliminary January to December 2010 January to December 2011 8.6% 549 427 Western Europe 557 Central & Eastern Europe Rest of World Scania (Jan-Sept) figures 6 .000 8.4% 5.569 22.000 3.000 1.2) January to December 2011 vs.000 0 Volkswagen Group 1) incl.000 6.144 667 902 948 264 North America South America Asia Pacific 324 2.4% 9.896 3.8% 30.

8% 3.2% 1.4% 35.000 8.000 4.503 19.303 14.000 2. 2) preliminary 4.000 3.9% 21.091 5.1% 6.000 5.092 1.4% 9.1% 36.183 8.000 7.216 January to December 2010 January to December 2011 13.000 1.Volkswagen Group – deliveries to customers by brands1.000 0 Volkswagen Group 1) incl.000 7.4% 436 529 44 59 763 876 340 350 5 7 Bentley Volkswagen Passenger Cars Audi ŠKODA SEAT Commercial Vehicles Scania Scania (Jan-Sept) figures 7 . 2010 ´000 units 14.2) January to December 2011 vs.

S. market 8 .Agenda Volkswagen Group sales update Volkswagen’s profitable growth in the U.

New Jersey. Jan.Volkswagen Group of America – Overview Brands Locations • • • • Group Sales 2011: > 444. Inc. MI • New factory in Chattanooga. Virginia • Group Quality/Technical Facilities Auburn Hills.300 employees Finance company: VW Credit. Rhode Island and Texas • Parts distribution centers in California. YTD 20101 Group Market share YTD 2011: 3. Texas and Wisconsin • Financial Service Center in Auburn Hills (Remarketing & Auction) as well as in Illinois and Oregon Source: 1Autodata Motor Intelligence. Georgia. YTD 20101 Over 4. Locations in USA: • Corporate Headquarters in Herndon.4 percentage points vs.5% in USA / + 0. 2012 9 .000 units in USA / + 23 % vs. Tennessee • Corporate Design Center and Electronic Research Laboratory (ERL) in California • Ports and post production facilities in California. Florida.

more fuel efficient vehicles Population growth. immigration 18 17 16 15 14 13 12 11 10 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 FC FC FC Source: Volkswagen Group of America. Market Development Gradual economic recovery Mil.S. PwC/Autofacts 10 ..Expected Overall U. Units Job growth Housing market recovery Improved consumer confidence Fleet renewal. Inc.

5 – 14 million units in 2012 depending on economic conditions.000 units – the first time in 39 years.    11 . Achieve profit at an operating level in 2012 for the second consecutive year for U. Sales Operations Passat and Beetle with first full-year of sales.S. Market forecast between 13. followed later by the all-new Jetta Hybrid.Business Objectives 2012    Build on fundamentals that contribute to sustainable and profitable growth Out-perform market with double-digit growth Volkswagen Group of America to continue sales momentum in 2012 and aim to sell over 500. Refreshed CC to hit the market this spring.

S. story Product.Volkswagen Group in America – Writing a New Chapter Clear global vision Leading in customer satisfaction and quality Top employer Volkswagen Group profit before tax margin > 8%1 Volumes > 10 million units p.a.1 New chapter in U. technologies and people 1 Global Volkswagen Group Targets 12 .

Then to the 1990s... 13 .Volkswagen in America – Then and … Flashback to the 1960s...

Customer Experience Financial – move towards Break-even 14 . Quality. car market is recovering.Key Messages U.S. but at a slower pace Executing 2018 Growth Strategy Broad-based Momentum established Volkswagen brand improvements beginning to emerge across Business Brand.

830 +26% December YTD 2010 December YTD 2011 Market Share: 2.2% Source: Autodata Motor Intelligence.U. 2012 Market Share: 2.S. Jan.400 256. Volkswagen Brand Sales Development 2010-2011 324.5% 15 .

0% -20.9 20.4% -23.9 100.000 50.3 1152. Jan.000] 478.277) (31.5% -3.669 12.0% 20.1 98.1% 11.686 223.4 1773. 2010 300.3% -28.7 1519. 2012 16 .Total Market Segmentation 2011 vs.181) (7.000 0 (50.5 1449.2% 17.0% 40.4 222.3% Total Segment Volume [in 1.536 149.000 150.3% 10.876 95.3 901.4% 14.0% Changes in % 80.000 100.1 300.8% 2.1 124.5 170.9% 11.3% 20.9 167.9 90.9% 13.5% -4.228 Changes in Units 250.000) VW Growth Segments 43.0% 0.0% -6.086 202.244 17.575 31.4% 18.7% 8.5 297.425 4.1% 1.791 153.523) (30.000 200.0% -40.3% Source: Autodata Motor Intelligence.4 811.0 2142.183 (33.101) (8.088 20.757 79.304) 4.5 472.000 261.4% 11.0% 60.

Volkswagen U.S. Sales Development 1952 .2011 & Target (‘000) 800 800 k in 2018 600 400 > 324 k in 2011 200 Source: Internal 17 .

Market VW Goals Consumer “First choice” Sustainable profitability 800. Inc.S.Foundations to Fix Underperformance in U. 18 .000 unit sales Deliveries to Customers Consideration Initial Quality (IQS) Loyalty Throughput per dealer Used VW Car sales Challenges 2011 2018 2011 Q3 2018 2011 2018 2011 Q3 2018 2011 2018 2011 2018 Focus Product Brand Development Quality Customer Experience Network Used Cars/Fleet Source: Volkswagen Group of America.

Product Portfolio Continues to Develop Passat Beetle Jetta GLI Golf R Tiguan CC 19 .

Better Engineering for All Committed to Delivering „Better“ Product Insight Giving people a ration alibi.Passat Delivers Volkswagen Core Values Brand Positioning Human Insight People want permission to buy what they desire. They just don´t buy our cars. by delivering better engineering at an affordable price. Engineering Technology Fit and Finish Handling and Driver Experience …Priced within Reach 20 . Core Tenets Elevating Every Segment Brand Insight People love our brand.

Urban Science Jetta Sales Jetta Leads Brand Leads 21 .Creating Brand Momentum Prior to the Passat Launch Key 2011 Brand Momentum Moments Metric Brand Sales Results ’11 vs.. ’10 +26% +54% +79% +57% • Chattanooga • Think Blue • Oprah • Brand Campaign • Global Beetle • Super Bowl • Jetta Source: Volkswagen Group of America. Inc. Polk.

Passat – Priced for the Market $32.5L TDI Passat V6 Passat Camry 2010 Accord Altima Fusion Malibu Sonata 22 .995 Passat Passat 2.950 $19.

Quality & Safety Awards Best Full-line Manufacturer Small Multi-Function ― Golf Mid-Size Car ― Jetta Entry Utility ― Tiguan Volkswagen ranks 2nd among Volume Makes Compact Sporty Car ― GTI & EOS Compact Car ― Golf & Jetta Compact Crossover SUV ― Tiguan Entry Premium Car ― CC Mid-Size Premium Crossover SUV ― Touareg IIHS Top Safety Pick Award: 2012 Volkswagen Passat 23 .

Marketing/IT/Facilities Integrated customer approach Local funding 24 .Key Profit Drivers Product Pricing Localization of cars and components Parts & Accessories Cost Efficiencies Financial Services Introduction of products in the sweet spot of their segments Competitive entry prices while maintaining price premium Revenue management Increase of localized cars to 75% for Volkswagen Brand High localization of parts and components Localized MDO (Market Delivery Options) strategy Increase revenue per car Leveraging efficiencies of the group: .

Financial Highlights 2011 Jetta Success Passat and Beetle Launch Revenue per Car Increase Incentive Reduction Marketing Efficiencies Parts Business Increase of Used Car Proceeds Successful Local Funding Improved Dealer Profitability 25 .

Jetta. Beetle Passat Jetta / Beetle 85% 85% Local Content Sourcing in North America Local Content 26 .Local Content of Passat.

2012 27 .Volkswagen incentives are 16% lower year over year and 29% below the industry average (December YTD) USD / unit CYTD 2010 CYTD 2011 VW CYTD 2011 4.000 -16% 2.000 0 Hyundai Kia Mazda Toyota Honda Nissan Ford Chev Mit Chrysler Dodge Industry Industry Average Source: AutoData Motor Intelligence.000 3. Jan.000 -29% 1.

YTD 2010 Nov..Dealer Profitability & Value of the Volkswagen Brand Franchise Return on Sales VW National ’10 vs.4% 2. YTD 2011 Source: Volkswagen Group of America. 2011 28 . ‘11 in % Volkswagen brand ranks 3 in dealer confidence in the value of the franchise (next 12 months) 2. National Automobile Dealers Association. Inc.2% Nov.

Inc.: An Evolving Growth Story Deutsche Bank Global Auto Industry Conference Michael Lohscheller – EVP & CFO.Volkswagen in the U. Volkswagen Group of America.S. Detroit. 10 January 2012 .

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