Annual Report 2004 Nulreport 2004 Annual
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overview of the group chronicle 2004 >>> ANNUAL REPORT 2004 ANNUAL REPORT Automotive Division volkswagen audi commercial remaining brand group brand group vehicles companies > financing > services VOLKSWAGEN AG ANNUAL 2004 REPORT ANNUAL REPORT 2004 VOLKSWAGEN AG MOBILITY 2004 Financial Services Division > dealer and customer > rental business financing > leasing > insurance > fleet business overview of the group chronicle 2004 >>> ANNUAL REPORT 2004 ANNUAL REPORT Automotive Division volkswagen audi commercial remaining brand group brand group vehicles companies > financing > services VOLKSWAGEN AG ANNUAL 2004 REPORT ANNUAL REPORT 2004 VOLKSWAGEN AG MOBILITY 2004 Financial Services Division > dealer and customer > rental business financing > leasing > insurance > fleet business 2 Boards Group Topics Financial Communication 04 Report of the Supervisory Board 12 Automobility 38 Volkswagen shares and bonds 08 The Board of Management 14 ForMotion 44 Value-based management 10 Letter to our Shareholders 46 Corporate Governance contents 16 22 24 30 36 48 ▼ ▼ ▼ ▼ ▼ ▼ volkswagen passenger carscommercial sˇkoda bentley bugatti audi vehicles boards report of the ▼ 4 supervisory board the board ▼ 8 of management letter to ▼ 10 our shareholders group topics automobility ▼ Our work is determined by our 12 customers’ wishes for mobility The desire for flexibility and mobility in the modern world has raised the appeal of automobiles to new heights. formotion ▼ 14 Identifying and exploiting performance potential ForMotion brings about changes. >> volkswagen passenger cars – the joy of mobility 20 ▼ >> commercial vehicles – individual mobility through maximum variability 22 ▼ >> sˇkoda – smart driving for smart drivers ▼ 28 >> bentley – the car of your dreams 34 ▼ >> bugatti – beauty in the fast lane 36 ▼ financial communication volkswagen shares Increased international interest in Volkswagen’s 38 and bonds shares and bonds value-based ▼ Measure performance – Control activities – Add value 44 management corporate ▼▼ Good practice and responsible corporate governance 46 governance >> audi – visions of mobility 52 ▼ >> seat – passion in its genes 58 ▼ >> lamborghini – racing ahead of the competition 64 ▼ Responsibility Divisions Scheduled dates 2005 3 66 Society 86 Business lines and markets 70 Employees 88 Volkswagen brand group 74 Environment 90 Audi brand group 92 Commercial Vehicles 94 Financial Services 54 60 78 96 ▼ ▼ ▼ ▼ seat lamborghini financial services the mobility experience responsibility society ▼ 66 Assuming social responsibility >> Sustainability is the benchmark for a forward-looking corporate policy >> Social commitment reaps rewards employees ▼ 70 Safeguarding the future – for the Group and its employees >> Ensuring competitive jobs in Germany >> Acquiring, preserving and passing on knowledge environment ▼ 74 New ideas for the environment >> Our challenge: To make mobility and environment protection mutually compatible >> The energy of the future: Volkswagen’s fuel strategy is centered on biomass >> financial services – automotive and financial mobility from a single source 82 ▼ divisions business lines ▼ 86 With our multi-brand strategy, we address and markets highly diverse customer groups volkswagen ▼ 88 New Volkswagen brand group models brand group well established in the market 90 audi Increased unit sales and a higher-value brand group model mix lead to success commercial ▼▼ 92 High volume of new registrations lifts the vehicles Caddy to the top of its class financial services ▼ 94 Underscoring our ability to innovate >> the mobility experience – experiencing brand values up close 96 ▼ scheduled dates 2005 ▼ 98 The Annual Report contains the consolidated financial statements of the Volkswagen Group, the combined management report of the Volkswagen Group and of Volkswagen AG, as well as additional information. 4 Boards Group Topics Financial Communication Responsibility Divisions Scheduled dates 2005 > Report of the Supervisory Board The Board of Management Letter to our Shareholders Dear Shareholders, Over the past year, the Supervisory Board dealt extensively with the current position and the development of the Volkswagen Group. In compliance with legal requirements and the German Corporate Governance Code, we provided advice and support to the Board of Management in the running of the Company. We were consulted directly with regard to all decisions of fundamental significance to Volkswagen. The Board of Management provided us with regular, complete and prompt verbal and written reports on issues relating to the development of business, the current position of the Group including the risk situation, risk management and additional matters. The necessary documentation for Supervisory Board meetings was made available to us in good time. In addition, the Board of Management submitted detailed monthly reports to us on the current development of the business situation. As well as the latest volume and financial figures, these reports contained budget figures and the previous year’s comparative figures for the Group, subgroups and individual companies. In addition, the reports presented updated forecasts for the year as a whole. The Supervisory Board was informed in full by the Board of Management, verbally or in writing, about any variations from the defined plans and targets. Together with the Board of Management, we discussed the reasons for these variations in order to take appropriate measures to counteract them. A total of four Supervisory Board meetings were held in the year under review. All members of the Supervisory Board attended more than half of the meetings. Resolutions regarding urgent business transactions were adopted in writing by means of a circulated document. committee activities The Audit Committee held a total of four meetings in 2004. In particular, it dealt with the consolidated financial statements and risk management. Furthermore, it concerned itself with matters relating to financial reports and their audit by the auditors and the review of interim reports. The Presidium of the Supervisory Board was convened prior to each Supervisory Board meeting. The key topics of the meetings were fundamental questions relating to corporate policy and management, as well as personnel changes in the Board of Management. The Presidium also constitutes the Mediation Committee, which was not required to convene during the year. The committees are each composed of two shareholder representatives and two employee representatives. Membership of the committees at the end of 2004 is indicated in the list of Supervisory Board members in the Figures – Data – Facts section of the Annual Report (page 113). REPORT OF THE SUPERVISORY BOARD 5 topics discussed by the supervisory board The main focus of our Supervisory Board meetings was on the current development of sales revenue, earnings and personnel levels within the Group as a whole, as well as in the individual subgroups and companies. In addition, we addressed in detail the general development of the automotive sector. During our meeting on February 27, 2004, the Board of Management presented the ForMotion performance enhancement program. We are confident that the exploitation of this potential for improvement will make a lasting contribution to securing the future of Volkswagen. At our Supervisory Board meeting on April 21, 2004, we authorized the Board of Management of Volkswagen AG to acquire a 50% interest in the Dutch multi-brand fleet management company LeasePlan Corporation N.V., Amsterdam. Further details can be found in the chapter entitled “Legal Matters” in the Figures – Data – Facts section of the Annual Report (page 28). At the Supervisory Board meeting on September 17, 2004, we focused our attention primarily on the strategy of the Volkswagen Group up to the year 2015. At our meeting on November 12, 2004, we discussed in detail the current financial and investment planning of the Volkswagen Group for 2005 and 2006. The Supervisory Board approved the proposals submitted by the Board of Management, including those relating to the investment planning of Volkswagen AG. A further matter for discussion was the outcome of collective agreement negotiations. We consider the settlement to be an acceptable and workable solution for improving the cost structure of the Company, while helping to secure jobs in Germany. corporate governance and declaration of conformity The implementation of the German Corporate Governance Code at Volkswagen was discussed in detail at our meeting on November 12, 2004. One of our topics of discussion was the efficiency of Supervisory Board activities. In this connection, we focused on the timely and extensive provision of information to the Supervisory Board, as well as the exchange of information between the committees and the Supervisory Board as a whole. In addition, we discussed the remuneration structure for the Board of Management, which we subsequently confirmed. On November 12, 2004, together with the Board of Management, we issued the declaration required under section 161 of the German Stock Corporation Act (AktG) regarding compliance with the recommendations of the Code. This can be accessed at all times on the Volkswagen AG website at www.volkswagen-ir.de. The individualized remuneration of the Chairman of the Board of Management and the Chairman of the Supervisory Board is being published by Volkswagen for the first time; this information 6 Boards Group Topics Financial Communication Responsibility Divisions Scheduled dates