Volkswagen Group China – Pioneering the Future Carsten Isensee Executive Vice President Finance, Volkswagen Group China Investor Visit, 1 December 2016, Beijing
1
Disclaimer
The following presentations contain 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. The Volkswagen Group currently faces additional risks and uncertainty related to pending claims and investigations of Volkswagen Group members in a number of jurisdictions in connection with findings of irregularities relating to exhaust emissions from diesel engines in certain Volkswagen Group vehicles. The degree to which the Volkswagen Group may be negatively affected by these ongoing claims and investigations remains uncertain.
Consequently, a negative impact relating to ongoing claims or investigations, 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 Such statements are valid on the date of publication and can be superseded.
This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.
2 Volkswagen Group China
1. Chinese Market
2. Volkswagen Group in China
3. Sales
4. Financials
5. Strategy and Future Development
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 3 Volkswagen’s second home market in comparison
Size of the countries Population
CHINA GERMANY CHINA: 9,562,911 km2 INHABITANTS 1,370 million 81 million
DENSITY (People per km2) 139.6 232.1
GERMANY: 357,021 km2 AVERAGE AGE 37 years 44 years
UNEMPLOYMENT 4.1 % 6.4 %
Economy Car industry
CHINA GERMANY CHINA GERMANY
GDP $ 10,916 billion $ 3,353 billion TOTAL CAR PARK 83 million 44 million
GDP PER CAPITA $ 7,833 $ 41,106 TOTAL MARKET 19.7 million 3.2 million
GDP GROWTH RATE 6.9 % 1.5 % PRODUCTION SITES 172 23
INFLATION 1.4 % 0.2 % DENSITY (Cars per 1,000 Inh.) 84 548
TRADE BALANCE $ 682.3 billion $ 291.7 billion AVERAGE CAR AGE 3.3 9.0
Sources: Data for FY 2015, Statistisches Bundesamt, National Bureau of Statistics of China; IMF; UN DESA: Bundesagentur fuer Arbeit; WTO; IHS; PWC Autofacts, VDA , IHS
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 4 Chinese economy – Declining growth rate towards new normalization
China’s economic growth Real GDP growth comparison
16,000 Nominal GDP (in billion $) 15,378 10% 9.5% 14,199 14,000 9% 12,702 7.9% 7.8% 8% 7.3% 12,000 11,404 6.9% 10,866 11,158 6.7% 7% 6.5% 10,351 6.4% 6.2% 6.3% 10,000 9,491 6% 8,462 8,000 7,492 5% 3.7% 4% 6,000 3%
4,000 2% 0.7% 1% 0.6% 1.8% 1.7% 1.7% 2,000 1.6% 1.5% 1.6% 1.5% 0% 0 2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e 2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e Source: Worldbank & Wind Source: Worldbank & Wind and IHS
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 5 Strong historical car market growth changing towards normalization
Chinese total car market (in ‘000 units) Car market growth comparison
24,598 25,000 20% 18.6% Passenger vehicle market 23,432 22,377 21,583 21,689 19,717 15% 20,000 18,071 11.7% 16,185 9.1% 9.5% 10% 8.1%
15,000 13,641 7.9% 5.0% 12,644 8.8% 4.7% 5% 3.2% 5.6% 1) 4.8% 0.5% 10,000 0% 2.9% -0.1% -1.1% 5,000 -2.2% -5% -2.9% -2.4% -4.2%
0 -10% 2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e 2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e
Source: HIS, 11/2016 Source: IHS, 11/2016 1) 2017 estimate under the assumption of no specific tax cut for cars in China.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 6 Chinese market grows outside tier 1 cities
Market development 2016 vs. 2015 (in ‘000 units) Share of total passenger car market sales Q1: +8.9% Q2: +10.0% Q3: +20.1% by tier city in 2015 2,200 2,100 2,000 1,900 29% 1,800 28% 1,700 1,600 1,500 1,400 2015 1,300 1,200 2016 1,100 1,000 19% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 15% Sales growth by tier city in 2015 17.6% 17.9% 9% 9.2% 10.7%
Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 -9.1% Source: EIU (Economist intelligence unit) Source: EIU (Economist intelligence unit)
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 7 Less developed cities provide new opportunities
Level I cities Level II cities Share of total market
Beijing Dalian Level I share Level II share Shanghai Xi’an
cities 44% Guangzhou Changsha 41% II II 40%
135 136 39% 38% 37% and and
ᴓ cars/1,000 I inhabitants Number of cities 9 26 Level 2015 2016e 2017e 2018e 2019e 2020e Average # of 17.2 8.5 inhabitants (m)
Level III share Level IV share Level III cities Level IV cities Level V cities Level V share Shantou Guyuan Haibei 62% 63%
cities 60% 61% Hengshui Yaan Jinchang 59% Jingdezhen Zigong Turpan V 56% … … … 94 and ᴓ cars/1,000 47 39 inhabitants IV III, Number of cities 68 109 135 Average # of 4.9 4.0 1.7 Level inhabitants (m) 2015 2016e 2017e 2018e 2019e 2020e
Source: EIU (Economist intelligence unit)
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 8 Volkswagen Group is taken considerable efforts to meet the legal requirements of average fleet fuel consumption l/100 km To achieve the legal 8 Requirement 2015: requirements in China 6.9l ≙ 164g CO /km Volkswagen will 7 2 Legal requirement • Develop further 6 emission reducing Requirement 2020: technologies 5.0l ≙ 117g CO2/km 5
4.0l • Actively engage in 4 the NEV market
3 2012 2013 2014 2015 2016 2017 2018 2019 2020 … 2025e
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 9 China 6 regulation – Worldwide toughest emission legislation NOx emission legislation 1) Highlights mg/km Pre-introduction Emission regulation China 6 for gasoline BJ, SH & other key regions engines – WTO draft was published in 200 October 2016 – not final 180 Bench test 160 Implementation on national level planned for 2020 140
120 Beijing and Shanghai may start with similar 100 regulation in 2018 and other key regions in Bench test 2019 80
60 2) Roller bench test NOx emission should fall Bench test 40 below 35 mg/km
20 Further driving emissions need to be reduced 0 dramatically – e.g. CO, THC, PM 2015 2016 2017 2018 2019 2020 1) Schematic overview 2) USA fleet average for NMOG+NOx per model year
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 10 New Energy Vehicle strategy supported by Chinese Government
Subsidies for local NEVs1) Infrastructure investments Number plate access
National subsidies for Target: Charging Easier access to number NEVs infrastructure for 5 plates in some restricted million NEVs by 2020 cities Purchase tax exemption (10% Net Selling Price) • 12,100 charging stations (mainly along the east coast) Free number plates for a • No „circulation tax“ certain amount of NEVs • 4,800,000 charging • Direct subsidy (up to 55,000 RMB for BEV pillars Free parking space for 30,000 RMB for PHEV) NEVs (in discussion) Additional subsidies Beijing from local provinces Free NEV driving lanes Shanghai (in discussion)
1) Subsidies are supposed to run until 2020.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 11
Volkswagen Group China
1. Chinese Market
2. Volkswagen Group in China
3. Sales
4. Financials
5. Strategy and Future Development
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 12 Volkswagen Group China at a glance1)
More than 12 fascinating 1984: first Joint 1990: FAW-VW was More than 95,000 ~320,000 employees 150 models brands Venture Shanghai founded in employees end of within dealer network Changchun VW was founded 2015 in 2015
29 production Around €4.4 billion More than 18% Over 25 million 3.55 million Proportionate plants end of 2015 investments market share in cars delivered deliveries in 2015 operating profit of
planned for 2016 China’s passenger since market entry €5.2 billion in 2015 car market in 2015 1) Data as of end 2015.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 13 Joint Venture structure of Volkswagen Group in China
Start of production 1983 (Santana B2) 1991 (Jetta)
1st JV contract signed 1984 1990
JV contract runs until 2035 2041
Deliveries to customers Volkswagen 1,455 Volkswagen 1,121 in 2015 ŠKODA 281 Audi 512 (in ‘000 vehicles)1) Total 1,736 Total 1,634
Audi 10% VCIC2) 10% SAIC FAW Ownership structure 50% VCIC2) 10% 60% VW AG3) 40% VW AG 20%
1) Excluding imported vehicles of respective brands. 2) Volkswagen (China) Investment Co., Ltd. 100% owned by Volkswagen AG. 3) Including a stake of ŠKODA AUTO a.s.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 14 1) Further entities in China 100% owned by Volkswagen AG2) Joint Venture Companies
FAW-Volkswagen Sales Co. Volkswagen FAW Engine
Changchun Volkswagen Automotive Transmission Dalian
Volkswagen Automotive Audi China Transmission Tianjin Beijing Dalian Volkswagen China Investment Tianjin Company
Qingdao Volkswagen Group Import Shanghai Volkswagen Powertrain Volkswagen Finance China Yizheng Volkswagen Platform Shanghai Chengdu Volkswagen R & Accessory China
SAIC VOLKSWAGEN Sales Co. Volkswagen Group Hong Kong Volkswagen Transmission Volkswagen Hong Kong Foshan Hong Kong Sitech Dongchang Automotive Seating 1) Selection of major companies in the region China. 2) Direct and indirect holdings.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 15 Volkswagen Group in China – A long-term success story
Volkswagen Group development of deliveries to customers (in ‘000 units)
3,675 3,549 3,500 3,271
3,000 2,813
2,500 2,259
1,923 2,000
1,500 1,400
1,024 1,000 910 698 649 711 514 572 500 303 316 337 360 221 240 280 90 140 149 11 16 20 23 41 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 16
Great range of locally produced vehicles…
Golf Golf Sportsvan A3 A3 Limousine Polo Santana Gran Santana Fabia Rapid Spaceback
Jetta Bora Lavida Gran Lavida Lamando Rapid Octavia A4L A6L
Sagitar Magotan
Touran L Tiguan Passat Superb Yeti
Q3 Q5 CC
Data as of June 2016.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 17
… and imported passenger cars serving Chinese customers’ demand
up! Beetle Golf Scirocco Sharan Tiguan Magotan Variant Touareg Phaeton
A1 TT A3 A4 Allroad A5 Q5 A6 A6 Allroad A7/S7 Q7 R8 A8
Boxster Cayman 911 Macan Panamera Cayenne
Flying Spur Continental Bentayga Mulsanne Huracan Aventador Aventador Veyron Coupe Roadster GT Data as of June 2016.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 18 Volkswagen Group production sites all over China
Volkswagen Group production facilities Facts 2015
29 production plants in China • 4 FAW-Volkswagen vehicle plants Urumqi Changchun Changchun (2 plants) Dalian Chengdu Beijing Foshan Tianjin • 8 SAIC VOLKSWAGEN vehicle plants Chengdu Nanjing Shanghai Shanghai (3 plants) Yizheng Nanjing Changzhou Yizheng Changsha Ningbo Ningbo Foshan Urumqi Changsha • 17 Component plants
FAW-Volkswagen vehicle plants SAIC VOLKSWAGEN vehicle plants 3,420 thousand produced cars Component plants 3,270 thousand produced engines MAN Diesel & Turbo Headquarters Volkswagen Group China
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 19 Volkswagen Group China
1. Chinese Market
2. Volkswagen Group in China
3. Sales
4. Financials
5. Strategy and Future Development
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 20 Deliveries to customers by brand January to October 2016
‘000 units Jan.- Oct. 2015 4,000 Jan.- Oct. 2016 +11.3%
3,500 3,218 -5.4% units 2,890 +12.3% 3,214 3,500 3,000 3,039 2,411 3,000 2,500 2,147 2,500 2,000 -1.8% 2,000 1,500 1,500 1,174 1,153 1,000 +5.7% -11.6% 1,000 461 487 +13.8% 500 +12.4% 226 257 233 206 500 49 55 0 0 1)
1) incl. Hong Kong, excl. Ducati.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 21 Volkswagen Group – No. 1 in the Chinese passenger vehicle market
Passenger vehicles market share, YTD October 2016
Market share Rank Group (Delta vs YTD Others Volkswagen Group Oct 2015) 18% 1 Volkswagen Group - 0.8% 31.0%
2 Comp.1 + 0.3% 11.2% Comp. 1
3 Comp. 2 - 0.7% 7.6%
5.5% Comp. 2 4 Comp. 3 + 0.4% 5.1% 5 Comp. 4 - 0.1% Comp. 3 Comp. 4 Source: CKD from China Passenger Car Association (CPCA), CAAM; FBU from insurance data
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 22 Split between locally produced and imported vehicles1)
Deliveries to customers (in ‘000 vehicles) Import business 2016 YTD (deliveries in ‘000 vehicles)
Others 7 1,575 43 Imported
146 55
41 1,497
» Total deliveries in the region China amounted to 3,218 thousand in Jan to Oct 2016 1) incl. Hong Kong, excl. Ducati. All figures shown are rounded.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 23 Strong focus on growth of our well diversified dealer network
Dealer network Well diversified through tier cities
>3,400 Share of Volkswagen Group sales volume, 2015 2,779 2,657 Share of Volkswagen Group dealers, 2015 2,364 361 366 320 18% 405 439 Tier 1 341 19%
1,770 1,835 29% 1,586 Tier 2 26%
2013 2014 2015 … 2019e 28% Tier 3 30%
17% Tier 4 18%
7% Tier 5 8%
All figures shown are rounded. Source for market share by tier city: EIU (Economist intelligence unit)
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 24 Strong residual values of Volkswagen Group models Residual value ranking1) Importance of residual values
CKD Models High and stable residual values are
A0 MPV important due to B Polo CC Touran • Reduced total cost of ownership Legend: A B › leading to attractive leasing Ranking No.1 Passat Lavida Ranking No.2 › important argument for sales team A SUV-A Ranking No.3 • Increased new car sales volume Golf Tiguan › while stabilizing new car prices FBU Models • Increased pre-owned car business and its competitiveness A0 A C
A1 5-doors A3 S7 High and stable residual values finally A0 B D Beetle CC Panamera lead to higher • Brand value A0 B A1 3-doors Magotan Variant • Customer loyalty • Revenue & Profit 1) China Automotive Residual Value Research Committee - RV Report 11/2016; Rankings based on the 3-year residual value
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 25
Volkswagen Group China
1. Chinese Market
2. Volkswagen Group in China
3. Sales
4. Financials
5. Strategy and Future Development
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 26 Strong volume and profit development of Volkswagen Group China
Volkswagen Group deliveries to customers and proportionate operating profit in China
Proportionate operating profit 6,000 6,000
Deliveries to customers € 5,182 € 5,214
5,000 5,000 million)
€ 4,296 €
4,000 € 3,678 € 3,594 4,000
3,000 € 2,616 3,675 3,549 3,000 3,271 2,813 2,000 2,852 2,000 2,259
1,000 1,000
Proportionate op.profit ( in Deliveries to customers (in’000) to customers Deliveries 0 0 2011 2012 2013 2014 2015 Q1-3 2016
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 27 Chinese Joint Ventures generate substantial, self-funded growth and at the same time robust dividend pay-out
Total amount of dividends paid out to Joint Venture partners (in € billion)
Total amount of dividend Chinese Joint Ventures thereof paid to Volkswagen Group 10.0 * Dividend for the year 2015 declared 8.1 *
6.5 6.7
4.6 4.5 3.6 * 2.8 2.8 3.0 2.0 1.2
2011 2012 2013 2014 2015 2016
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 28 Chinese Joint Ventures with strong financial performance in 20151) (January to December 2015 vs. 2014, in € million) FAW-Volkswagen SAIC VOLKSWAGEN SAIC VOLKSWAGEN Automotive Company (40%) Automotive Company (50%) Sales Company (30%)
+ 11.4%
- 5.5% + 12.4% 30,035 42,812 26,018 26,956 40,462 - 0.2% 23,142 4,714 4,705 + 5.4%
3,376 3,558 + 55% + 54.2% 2,170 2,048 1,400 1,328 + 11.1% + 38.8% 404 449 103 143
2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Sales Post-tax Dividends Sales Post-tax Dividends Sales Post-tax Dividends revenue2) profit received3) revenue profit received3) revenue profit received3)
1) Financial data on a 100% basis, Volkswagen Group equity interest in brackets; SAIC VOLKSWAGEN sales revenue is mostly generated from its business with SAIC VOLKSWAGEN, which sells passenger cars for SAIC VOLKSWAGEN. 2) Including sales revenue from sales of imported Audi models 3) Dividends received by the Volkswagen Group related to the previews year‘s local result of our joint ventures.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 29 Another solid operating result for the Volkswagen Group in China
2014 2015 Q1-3 2015 Q1-3 2016
Deliveries to customers (’000 units) 3,675 3,549 2,577 2,852
Production (100%)* (’000 units) 3,528 3,420 2,427 2,801 *SAIC-VW Group / FAW-VW Group Proportionate Operating Profit (€ million) 5,182 5,214 3,777 3,594
Proportionate operating profit development Q1-3 2016 vs 2015
€ - 183 m € 3.777 m + – € 3.594 m
• Volume increase • Mix effect (eg. Passat ramp-up) • Material cost improvements • Major impact due to lower • Improved efficiency with pricing specific programs • Negative currency effect
Q1-3 2015 Q1-3 2016
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 30 Euro decreased significantly vs. Chinese Renminbi over the last decade but is increasing year-to-date
EUR/CNY long-term development CNY decreased 5% on average YTD vs. EUR
12 7.60
- 37% 11 -5% +5% 10 -7%
-10% 9 7.00
8
7
6.40 6 Q1 Q2 Q3 Q4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2015 2016
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 31 Efficiency program to support our margins in a market characterized by increased competition
China efficiency program
Implementation of new culture & Production & Logistics optimization Review of product portfolio lean decision making processes
Change focus from “production Variance Reduction New organizational structure volume maximization” to “cost- • Decrease number of overlapping • Enhance responsibility in China efficiency” models • Flexible and decision-oriented • Improved production processes • Reduce number of component structure • Optimized maintenance variances • Improved information flow and lead-time Shift from “trucks only” to train and Add models in major growth • Entrepreneurial spirit ship transportation within China segments • Project house working Investment plan adjustment environment e.g. NEVs
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 32 Investments of our Joint Ventures in China are fully self-funded
Joint Venture investments Prioritization and focus on investments
Planning Planning Planning November 2014 November 2015 November 2016 Increased investments in New attractive models to development for €22 bn address the needs of our digitalization, new energy discerning Chinese vehicle technology and customers autonomous driving ~ €4.4 bn ~ €4.4 bn
Capacity expansion Ongoing investment plan through investments in adjustment process to take existing and future latest market developments factories for vehicles as into account well as components 2015 - 2019 Ø per year 2016 2017
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 33 Volkswagen Group China
1. Chinese Market
2. Volkswagen Group in China
3. Sales
4. Financials
5. Strategy and Future Development
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 34 Strategy 2025 – We are addressing key opportunities
Mission In close cooperation with our partners, we … Vision … offer tailor-made mobility solutions to our customers “We are a leading … serve our customers’ provider of sustainable diverse needs with a portfolio mobility in China of strong brands with our partners ” … assume responsibility regarding the environment, safety and social issues … act with integrity and build on reliability, quality and passion as the foundation for our work
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 35 New product offering aligned with expected future market trends1)
Body group trends until 20201) New vehicle launches 2016 and to follow2)
Total market volume in 2015 Growth Sedan (in million vehicles) until 20201) Phideon Phideon PHEV Magotan
Sedan +7% New Bora A4L A6 L PHEV
SUV SUV +38% Q7 e-tron Tiguan LWB Kodiaq
Bentayga Tiguan Teramont Van Others
Touran L R8 Coupé C-TREK Others
Golf Sportsvan 911 Boxster A5 Coupé 0 5 10 1) Source: IHS 2) Schematic overview – does not show all models
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 36 Strong growth in SUV segment – 10 additional locally produced SUVs planned over the next three to four years
Passenger Car deliveries by body style (in ‘000 units) Current SUV portfolio of Volkswagen Group in China Total market Volkswagen Group 17,849 3,207 15,308 14% Others 40% 1% SUV 34% + 37% 15% 5% Significant SUV portfolio expansion MPV 4% + 29% 7% planned in 2016 - 2020 Hatchback 9% - 9% 69%
Sedan 52% + 7% 48% … A0 A B C D/E Jan.- Oct. 2015 Jan.- Oct. 2016 Jan.- Oct. 2016
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 37 Volkswagen Group China will be prepared to deliver around 1.5 million zero emission cars to Chinese customers by 2025
Phase 1 Phase 2
Locally produced plug-in Phase 3 hybrids based on current Locally produced pure electric toolkits vehicles based on current Locally produced pure electric vehicles based on scalable toolkits Range: up to 1.000km electric toolkit (MEB) for + + Pure electric: up to 60km different vehicle classes + Pure electric: up to 300km
Pure electric: up to 600km + Speed charging of 80% in just 15min
Audi A6 L e-tron
Volkswagen Phideon PHEV
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 38 Urban Mobility is evolving from traditional transportation to “New Mobility” trends
Traditional Transportation Multimodal and Shared Transport
More Choices Car Ownership Technology
Financing Public and private transit operate in parallel Limited Choices New Business Model On-demand and Government funded Public Transit Connected
Unconnected and suboptimal New Urban Mobility Source: McKinsey “Urban mobility at a tipping point”, September 2015
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 39 Volkswagen Group is exploring business opportunities through strategic partnerships in 4 key areas 1 Ride Sharing Mobility Club •Driver Partnership 2 Program •Premium Mobility •Customized Club Car Sharing vehicles for on- •Executive Mobility 3 demand mobility Club •New business Financial Leasing and •R&D Autonomous model is to be 4 PoC e-Commerce •Car-sharing adopted for the Driving Mobility Club rollout nationwide •Proactive Sourcing •Financial Leasing
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 40 Volkswagen is making digital transformation a top priority with focus on digitalization and autonomous driving
Volkswagen Group Future Centers Our Goal
bf Best in class customer experience, interface design and user friendliness, new interior concepts, integration of infotainment and entertainment systems
20th Century: 21st Century: Engine is the core of the Self-driving system is the automobile core of the automobile Top fields of use
Individual Public • Three new Volkswagen Group Future Centers in Commercial Premium urban transport- Silicon Valley, Potsdam and Beijing vehicles cars • Approach: Designers and digitalization experts work mobility ation hand in hand to create the car of the future Group is building on strong knowledge base – initiative started to get to market ahead of competitors
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 41 Volkswagen and its partners invest in capacity expansion and modernization of factories to lower the CO2 emission output
Production sites and capacity New plants and capacity expansions
Vehicle plants Component plants New vehicle plants Vehicle plants expansions
New component plants New plants New plants Component plant expansion Existing plants Tianjin (FAW-VW) Changchun (FAW-VW) Qingdao (FAW-VW) Qingdao (FAW-VW)
Capacity increase Capacity increase Foshan (FAW-VW) Tianjin (VW ATJ) 3,420 = ~110% Chengdu (FAW-VW) 268 Ningbo (SAIC VW) ŠKODA 2,662 Volkswagen2,662 Audi 490 CO2 measures in place Production 1) Capacity2) Capacity 2) 2015 2015 2020 to reduce emissions 1) Actual production volume in ’000 vehicles 2) Installed capacity on the basis of 250 working days.
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 42 Volkswagen Finance (China) – Gaining share in an expanding market
Growing penetration of financing business Highest customer satisfaction1)
Retail finance penetration (% of deliveries to customers for Volkswagen Group) 2007 2016 H1 2018e 69 69 57 Cash Finance Cash Finance Cash Finance 50 55
90% 63%
10% 37%
8% 25% Total Volkswagen Other Banks Credit 2) 2% 12% Average Finance AFC Cards
1) 2014-2015 China Auto Finance Consumer Behavior Report (Conducted by Ipsos and VWFC) VW FS Others VW FS Others VW FS Others 2) Other Automotive Finance Companies
Financial Services China: Strategic growth dimensions
Leasing / Credits Fleet Management Used Cars New Mobility After Sales / Insurance
Chinese Market Volkswagen Group in China Sales Financials Strategy and Future Development 43 Volkswagen Group Investor Relations – Your point of contact
Worldwide offices Investor Relations in China
Herndon/ USA Beijing/ CN Lennart Schmidt
London/ UK Wolfsburg/ GER CIIA/CEFA, CIRO Investor Relations Manager
Volkswagen Group China No. 3A, Xi Liu Jie, Sanlitun Road Chaoyang District Beijing 100027, P.R. China Phone: +86 106 531 4132 Email: [email protected] www.volkswagenag.com/ir
44 SAIC VOLKSWAGEN TERAMONT
45 SAIC VOLKSWAGEN PHIDEON
46 ŠKODA KODIAQ
47 Audi A6 L
48 C-TREK
49 Panamera 4S Executive
50 Volkswagen Group China – Pioneering the Future Carsten Isensee Executive Vice President Finance, Volkswagen Group China Investor Visit, 1 December 2016, Beijing
51