Confidential

Volkswagen Group Capital Markets Day 2017 Global economy, market trends & regions

Fred Kappler Head of Group Sales

Capital Markets Day, 14th of March 2017 Confidential

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Capital Markets Day, 14th of March 2017 Confidential

Expanding political and economic challenges increase risks to the growth of new vehicle demand

Brexit UK heading for a “hard” break-up with the EU Populistic US parties on the rise in Uncertainties around key European trade framework countries threatening the EU Global Challenges +2.5% „Junk“ Purchase tax increase Brazil’s investment from 5% to 7.5% in rating from S&P 2017 in China for as well as Moody’s vehicles with 0.1% engine ≤ 1.6 l 2016 GDP growth at lowest rate since 2009 (source: IHS) 3 Capital Markets Day, 14th of March 2017 Confidential

Currency devaluation has weakened consumers’ purchasing power in key markets; continued low oil prices have affected Russia Foreign Exchange Continued weak oil price (Brent in USD/Barrel)

vs. Euro vs. USD 01.01.2014; since 01.01.2015 since 01.01.2015 111 -25% Turkey -35% (Lira)

-8% -20% (Pound Sterling) 02.01.2015; 56 09.02.2017; 56 -1%Brazil -13% (Real)

South Africa 3% -10% 15.01.2016; (Rand) 29 -27 % vs. Jan 2014 -44 % vs. Jan 2014 15%Russia 5% (Rouble) -50%

Source: xe.com (23.02.2017) Source: Federal Reserve (09.02.2017) 4 Capital Markets Day, 14th of March 2017 Confidential

Outlook 2017: Slight recovery in passenger car demand in BRIC markets contrasts with stagnation in TRIAD Economic development (GDP: % Y/Y) Total market passenger – Annual growth rate

Sharp slowdown in recent years BRIC recovering slowly as main driver of the car market 9.6% BRIC 5.5% 7.3% TRIAD BRIC BRA+RUS CHN+IND 5.1% 6.5% 4.1% 0.8% 0,3% (% Y/Y) 25%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3% Slow recovery in USA, West Europe and 0% TRIAD -2% 2.3% 1.5% 1.1% 0.1% -0.3% -1.1%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 IHS Feb 2017 Forecast

Source: GDP: IHS Jan 2017| TRIAD = USA + WEU + Japan | Total market for passenger cars in North and South America defined as per ‘Light Vehicles’ (includes light commercial vehicles) 5 Capital Markets Day, 14th of March 2017 Confidential

Car Market Outlook 2020: Stagnation in USA and Europe; recovery in Brazil from a low base; slower growth rates in China; India with solid growth

-1,0% -0,9% +0.9% -1.6% 17,6 17,4 17,2 +9.6% +33.3%

USA 14.0 14.1 13.9

INDIA 4.4 3.0 3.3 Vehicles (mn.) Vehicles Vehicles (mn.) Vehicles (mn.) Vehicles WEST EUROPE 2016 2017 2020 2016 2017 2020 2016 2017 2020

+1.6% +6.0%

88.3 82.0 83.3 +2.1% +8.0% 25.4 23.1 23.5 +1.1% +9.7% CHINA BRAZIL WORLD 2.0 2.0 2.2 Vehicles (mn.) Vehicles Vehicles (mn.) Vehicles Vehicles (mn.) Vehicles 2016 2017 2020 2016 2017 2020 2016 2017 2020

Source: IHS Global Sales forecast 2017M01; Total market for passenger cars in North and South America defined as per ‘Light Vehicles’ (includes light commercial vehicles) 6 Capital Markets Day, 14th of March 2017 Confidential

Global segment trends show increasing preference for SUV/CUVs across key markets

Growth in A0, A and B Downsizing to A0 Sedans USA ‘Light truck’ market SUV/CUV, while benefits due to

reaches historical high RUSSIA and MPVs deteriorating economic share in 2016 suffer situation WEST EUROPE

Demand for smaller Premium Market declines SUV/CUVs continue to INDIA

SUV/CUV continues to CHINA BRAZIL faster than the total win share from Sedans, grow, while Hatchbacks market in 2016 MPV to grow suffer

7 Capital Markets Day, 14th of March 2017 Confidential

SUV/CUV to be the top selling bodystyle in many markets (Vol. Thd. Ø 2017-25)

WEST EUROPE WORLD 1) RUSSIA 4.790 5.466 950 1.431 671 856 629 310 112 32.949 7 SUV/CUV MPV Estate SUV/CUVSedan Hatchback MPV Estate

USA 1) CHINA 24.493 7.304 11.893 10.294 4.739 17.619 902 542 1.900 1.545 62 244 SUV/CUV Sedan Hatchback MPV Estate SUV/CUV Sedan Hatchback MPV Estate

BRAZIL 1) INDIA

4.955 1.943 1.366 1.034 2.266 985 496 597 29 2 306 0

SUV/CUV Sedan Hatchback MPV Estate SUV/CUV Sedan Hatchback MPV Estate SUV/CUV Sedan Hatchback MPV Estate

Source: IHS Global Sales forecast 2017M01; 1)Total market for passenger cars in North and South America defined as per ‘Light Vehicles’ (includes light commercial vehicles) 8 Capital Markets Day, 14th of March 2017 Confidential

Volkswagen Group product roadmap aligned with expected future market trends Body group trends until 2020 Upcoming Models

Volume in 2016 until 2020 SUV 01020

SUV +24% Q5 Kodiaq Teramont (CN) Atlas (US) Tiguan Allspace (US) T-Roc Arona Sedan -1% Sedan Hatchback +3%

Pick-Up +7%

MPV -3% Phideon (CN)A6L e-tron (CN)Octavia FL Arteon A8 Jetta (US)

Transporter +7% Hatchback

Micro +1%

Estate -7% Golf FLLeon FL Rapid FL Polo Ibiza +11% City Van Other +7%

Vehicles (mn.) Total market +8% A5 SportbackCrafter Panamera Sport Turismo A7 Sportback other

Source: IHS Global Sales forecast 2017M01; Cars + LCVs; all figures rounded 9 Capital Markets Day, 14th of March 2017 Confidential

E-Mobility: Global Spotlights USA CHINA

Government • Tougher CO2 regulations EUROPE • Big legislative differences • Non-monetary incentives Measures drive OEMs between countries and legislation drives BEV and PHEV demand Industry • ZEV credits and upstream • Switch from PHEV to Push emissions lead to BEV push towards BEV in long-term • Local OEMs increasingly active in the EV development Consumer • Cheap fuel to delay the • Demand driven by Demand acceptance of EVs competitive TCO of EVs

Source: IHS Markit 10 Capital Markets Day, 14th of March 2017 Confidential

External Forecast for E-Mobility: China is expected to lead the overall demand for Electric Vehicles, while the USA and Europe will lag behind

Electric Vehicles 25% Market Share 21% 20%

14% 15% 14%

13% 10% 8% 8% 8% 5% 4% 4%

0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 China 2% 3% 5% 8% 12% 14% 17% 19% 21% USA 1% 2% 3% 4% 6% 8% 10% 12% 14% Europe* 2% 2% 3% 4% 6% 8% 9% 11% 13%

Source: IHS Markit *Europe: EU-28 11 Capital Markets Day, 14th of March 2017 Confidential

Volkswagen Group Capital Markets Day 2017 Global economy, Car market trends & regions

Fred Kappler Head of Group Sales

Capital Markets Day, 14th of March 2017