1. Prof. Dr. Vahland

BILD

Volkswagen in China Prof. Dr. h.c. Winfried Vahland

Executive Vice President of Volkswagen AG President and CEO of Volkswagen Group China

PLACEHOLDER FOR PICTURE

2

Volkswagen in China

Recent Developments

Strategy 2018

South China Strategy

Volkswagen Group China – Investor Conference 2010 in Beijing

3

First contact with China in 1978

4

Why did Volkswagen decide to come to China?

5

Putting China on four wheels

6

Volkswagen Group China is committed to Educational Programs such as Road Safety and Environmental Protection

7

Volkswagen China Investment Company

Beijing

Volkswagen TransmissionShanghai VolkswagenPowertrain

Volkswagen Finance(China) Co., Ltd.

Shanghai

FAW-Volkswagen

Dalian Volkswagen FAW Engine

Changchun Volkswagen FAW Platform

Chengdu

Nanjing

Volkswagen Automatic Transmission

FAW-Volkswagen

Shanghai Volkswagen

Shanghai Volkswagen

VW HK Co. Ltd.

Sitech

Audi China

Volkswagen Beijing Centre

VW Import Co. Ltd.

Volkswagen’s operations in China

• Total Investments 1984-2009: € 7.8bn (2010-2012: € 6.0bn)• Turnover 2009: € 20bn• Deliveries to Customers 2009: 1.400m units• Employees 2009: 43,100

History

• 1984: Shanghai Volkswagen Automotive Co. (SVW) as a joint venture between Volkswagen and Shanghai Automotive Industrial Corporation (or SAIC) was founded. Production milestone in October 2009 – 5,000,000 cars.

• Volkswagen was the automotive pioneer in the modern Chinese market.

• 1990: FAW-Volkswagen Automotive Co. Ltd. was set-up as our second joint venture in China. Production milestone in August 2009 – 3,000,000 cars.

• 2004: Volkswagen China Investment Company was founded to co-ordinate and manage all Volkswagen activities in China.

• Today: Volkswagen is represented by 16 companies in China

Volkswagen Group in China 2009

Source: Volkswagen Group China

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Jetta Sagitar Audi A6L

MagotanNew Bora Audi A4L

Golf A6 Audi Q5CC

Polo Jinqing Polo Jinqu

Passat New LY

Santana

Touran

Santana Vista

Cross Polo

Lavida

Octavia

Fabia

SuperbTiguan LWB

FoundationShare

DeliveriesSales Ranking

Employees

1984SAIC Motor: 50%, VW AG: 50%

690,616No. 1

19,100

1990FAW: 60%, VW AG: 30%, Audi AG: 10%

670,037No. 3

21,300

Successful Partnership with FAW and SAIC


http://www.csvw.com/csvw/index.shtml

http://auto.sina.com.cn/photo/sagitar_ofc/index.shtml

http://auto.sina.com.cn/photo/shvwtouran_mediatd/index.shtml

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Volkswagen

Lamborghini, Bentley

Audi

Local CKD Sales

Import FBU Sales

122.6

527.7 142.4

568.1

FAW-VW

SVW

22.2

16.6

0.6

Total Sales Region China 1,400.0

Sales of Volkswagen in China 2009 (‘000 Units)


10

FAW-VW Volkswagen brand 527.7 Audi brand 142.3 Total 670.0

SVW Volkswagen brand 585.1 Skoda brand 131.8 Total 716.9

Total Region China 1,386.9

Chengdu

NanjingShanghai

Beijing

Changchun

vehicle plant

Vehicle Manufacturing Companies of Volkswagen in China 2009 (‘000 Units)


11

Localization rate

>90%

~60%

>90%

Volkswagen and Audi Parts Export Program:

€ ~1bn

Purchasing Activities of Volkswagen in China


12

Shanghai

Changchun

component plant

Dalian

FAW-VW Engine EA113, EA111; Transmission MQ250, 02K VW/FAW 40/60

VWPF (VW FAW Platform) Platform parts VW/FAW 60/40

VWED (VW FAW Engine Dalian) Engine EA888 VW/FAW 60/40

VWATD (Volkswagen Automatic Transmission Dalian) Transmission DQ200 VW 100

Shanghai Volkswagen Engine EA113, EA827, EA888 VW/SAIC 50/50

VWPT (Shanghai Volkswagen Powertrain) Engine EA111 VW/SAIC 60/40

VWTS (Volkswagen Transmission Shanghai) Transmission MQ200 VW/SAIC/FAW 60/20/20

Sitech-Dongchang Automotive Seating Seats; Seat Components Sitech/Dongchang/Etern 60/20/20

Component Manufacturing Companies of Volkswagen in China


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Volkswagen in China

Recent Developments

Strategy 2018



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Successful Achievements of “Olympic Program” Targets 2005 – 2008

Branding/ Positioning Strongest brand portfolio in China

Products 12-14 new models by the end of 2008

Product Costs Competitive cost structure / competitive suppliers

Sales & Marketing Best in class dealer network and customer evaluation

Corporate Culture

Accelerating the decision process and localized lean management

Capacity, Struc-ture & Synergy 90% capacity utilization / synergies

15

Worldwide Economic Crisis

Olympic program

Strategy 2018

2006 20112005 2008 2009 20122007 2010

2009–2010

Mid-term Challenges

Government support policy

DYnaMic 2010

Source: Volkswagen Group China, schematic development

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Deliveries to Customers 2005 – 2009


Audi

VW

Skoda

2007 2008 2009 2010*2005 20060

500

1,000

‘000 Units

1,500

1 27 5912382 102 120159

629

781844

1,118

712

9101,024

1,400

159

512

572

≥ MarketGrowth

* expected

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China – strong GDP Growth and favorable Automotive Industry Policy

2007 2008

0.7

China

EU

2009

-4.2

0.7

2010 E

GDP growth in %Reduced purchasing tax rate 1

Further subsidy for people living in the countryside2

Higher subsidy for early scrapping3

Support for public new energy vehicles4

2.8

13.0

9.68.7

9.8

Source: Eurostat; Volkswagen Group China

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Deliveries to Customers Q1/2010

Volkswagen Group Volkswagen Audi Skoda Bentley/Lamborghini

284,146

457,259

235,772

362,874

29,01051,449 19,248 42,707 210 229

+60.9%

+53.9%

+77.3% +121.9% +9.0%

2010

2009


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Volkswagen in China

Recent Developments

Strategy 2018



20

1m sales

Chinese Culture

Social Responsibility

1m sales

European Culture

Corporate Responsibility

Strategy 2018 (as of February 2009)

“The Whole Is More Than The Sum Of Its Parts.”

Aristotle

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Four Key Areas of Strategy 2018

Products and

Technology

Production and

Supply

Sales and

Customers

Responsibility and

Partnership

Strategy 2018

Joint Ventures As The Foundation

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Volkswagen Group China reduces Fuel Consumption further than Competitor (Base: 2005)

Main CompetitorVolkswagen Group China

Source: Volkswagen Group China own calculation

-20%

2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009

Flee

t fue

lcon

sum

ptio

n

23

Volkswagen in China

Recent Developments

Strategy 2018



24

1m sales

European Culture

Corporate Responsibility

1m sales

Chinese Culture

Social Responsibility

Strategy 2018 and South China Strategy (as of November 2009)


25

Hong Kong is important to China, especially in the South

Hong Kong is:

Hong Kong

No. 1 FDI1 source of mainland

No. 3 export destination

No. 1 overseas tourist destination

No. 1 overseas media source

Trend-setter and similar consumer behavior with South China Mainland

1 FDI = Foreign Direct Investment

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South China Strategy: Target to achieve National Average Market Share in the near future

Volkswagen Group Sales (‘000 units)Volkswagen Group Market Share %

+40-50% >2.0 times

2009 Future 2009 Future

13.0

Average NationalMarket Share

251

>500


27

Volkswagen Group China is planning significant Volume Growth in the future (‘000 Units)

2018 (E)2010 (E)

≥ MarketGrowth

2005

571

2006

711

2007

910

2008

1,024

2009

1,400

Near Future

2,000


28

Volkswagen Group China Capacity Increase (‘000 Units)


1,400

400More working days (wd)

Further capacity optimization

2010 Mid-term

Upwardflexibility

~30%

250 wd

4 additionalplants

250 wd

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Investment 2010 – 2012:

Published in 2009 €4.4bnRecently added €1.6bnNew investment total €6.0bn

Chengdu

NanjingShanghai

Beijing

Changchun

existing vehicle plant

Volkswagen Group – 4 new Vehicle Plants in China


Guangdong

new vehicle plant

North

East

“Go South Strategy”

“Go West Strategy”+1 SVW plant (location tbd)

BILD

Volkswagen in China Prof. Dr. h.c. Winfried Vahland

Executive Vice President of Volkswagen AG President and CEO of Volkswagen Group China

PLACEHOLDER FOR PICTURE

31

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.

Documents

1. Prof. Dr. Vahland