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The new Passat: Defining the future Prof. Dr. Martin Winterkorn Chairman of the Board of Management, Volkswagen Aktiengesellschaft Sardinia, 13 October 2014 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. 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 rinminbi 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 Such statements are valid on the date of publication and can be superceded. This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities. The Passat redefines premium in the business class Sharp lines create a Powerful and sporty and elegant efficient drives appearance Premium interior State of the art characteristics connectivity Generous space with Innovative intuitively controlled assistance systems features Substantial weight reduction and improved fuel economy 1 Up to 20% lower fuel consumption New Passat: up to 85 kg lighter than the previous model 1 and CO2 emissions Body - 20% -33kg - 20% 4.9 Drivetrain 115 -9kg Engine -40kg Fuel consumption CO2 emissions Electronics (l/100 km) (g/km) -3kg Passat 1.4 TSI ACT BMT (110 kW) Predecessor 1 Model dependent Passat GTE plug-in hybrid to be launched in 2015 Introduction of Passat family Further Passat Derivatives 2014 2015 2016 System output of 218 hp1 Up to 50 km in electric mode Total driving range of more than 1,000 km Standard fuel consumption <2.0 l/100 km 2 (equivalent to <45 g/km CO2) 1 1.4-litre TSI engine (115 kW / 156 hp) combined with an electric engine (85 kW / 115 hp); fusion of the two drive units generates a system power of 160 kW / 218 hp 2 Preliminary numbers, the vehicle is not yet offered for sale Strong history of introducing innovative features is continued 2014 Passat VIII 2010 Passat VII Easy Close Light Park Assist 3.0 2005 Passat VI Trailer Assist 1973 Passat I Emergency Assist Traffic Jam Assist Area View with Obstacle Detection Panorama Sunroof Active Info Display Park Assist Driving Mode Selection City Emergency Braking LED Headlights DSG Lane Assist with Cornering Light Electronic Parking Brake Rear View Camera Car-Net Mobile Online Services Front-wheel Drive Keyless Access / Start Harddrive Water Cooling Proactive Occupant Protection BlueMotion Technology LED Daytime Lights Rear Traffic Alert (Parking) Large Rear Hatch Common Rail TDI Tyre Pressure Fuel Injection Engine City Emergency Braking DCC Monitoring System with Pedestrian Monitoring DVD Navigation, ACC with Front Assist MirrorLink Touchscreen The new Passat offers high value retention and superior efficiency Best in class residual value … … and total cost of ownership -5pp +26% -10pp -15pp +9% +2% New Best Average Worst New Best Average Worst Passat competitor competitor competitor Passat competitor competitor competitor Volume competitors Core competitors Premium competitors Opel Insignia Ford Mondeo Peugeot 508 Renault Laguna BMW 3 series Mercedes C-Class Toyota Avensis Mazda 6 Source: DAT – Schwacke CCE / own calculation on basis of 36 months age and 30,000 km p.a., Passat Variant 2.0 TDI BlueMotion Technology compared to selected competitors Opel / Vauxhall Insignia 2.0 CDTI Sports Tourer ecoFLEX Start/Stop, Ford Mondeo Turnier 2.0 TDCi ECOnetic, Toyota Avensis Combi 2.2 D-4D, Mazda 6 2.2 Kombi SKYACTIV-D, Hyundai i40 cw 1.7 CRDi blue, BMW 318d Touring, Mercedes-Benz C200 T CDI DPF (BlueEFFICIENCY) Global Passat family sharing the same genes Passat Sedan Passat NMS Passat Variant Passat NMS Units 2013 (in 1,000) Magotan <1 1-5 5-10 10-50 50-150 >150 The new Passat: Solid operating profit performance while complying with all environmental regulations1 Operating Profit Additional serial content € / unit MQB w/o pricing EU6 / CO2 Currencies Volume / mix Passat 8 Passat 7 family family 1 Schematic illustration Volkswagen Group – Key sustainable achievements Superior products Continued market leadership in Europe and China Positioning and cooperation clearly strengthened in the premium segment Creation of a leading truck business Successful toolkit implementation Volkswagen Group – Well on track to achieve targets under Strategy 2018 Volkswagen Group customer satisfaction Group profit before tax margin (on a scale of 1 to 101) (in percent) 8.7 13.2 8.4 11.9 8.2 3 7.1 7.8 3 6.3 6.0 5.8 6.9 Leading in customer satisfaction 1.2 and quality 2007 2010 2013 2007 2008 2009 2010 2011 2012 2013 Volkswagen Group Top profit before tax employer margin > 8% „I am happy to work at the Volkswagen Group“ Volumes Group deliveries to customers (Employee opinion survey) > 10 million (in million units) 9.7 90% units p.a.2 84% 7.2 6.2 2007 2010 2013 2007/08 2013 1 Own calculation based on key industry studies on customer satisfaction with dealers, after sales and new vehicles. 2 Including China. 3 Group profit before tax margin excluding the nonrecurring effect from the remeasurement of the Porsche put/call options and from remeasurement at the contribution date of the shares already held. Growth in many major markets, excluding China, below expectations GDP growth remains behind forecasts - Volume projections for global car markets but recovery expected until 2018 (ex China) reduced significantly GDP growth p.a. 2010 – 2018 (%) in million units 80 35 5 3 -4 m + 4 m 75 30 2 4 -6 m + 1 m 70 25 1 3 65 20 0 2 60 15 -1 1 55 10 2010 2014 2018 2010 2014 2018 2014 2018 2014 2018 estimate estimate estimate estimate Western Europe World World exChina China (incl. HK) Dec 2010 forecast Projection as per end of 2010 Actuals Sept 2014 forecast Projection as per August 2014 Source: IHS Economics Additional challenges from substantial global volatility … … in the political and economical situation … in exchange rates Brazil Russia Argentina Ukraine ■ Brazilian economy weak ■ Argentina default South Africa India Turkey ■ Ukraine crisis ■ Iraq/Syria conflicts Tightening environmental regulation and major trends driving substantially higher investment and engineering needs today … CO₂ and EU6 regulations … Market / consumer trends Status and forecast of CO₂ regulations 270 EU US-LDV China Connectivity (PC+LDT) 250 E-mobility 230 US baseline: 219 210 Automated driving China baseline: 185 190 170 Shorter lifecycles per kilometer, normalized to NEDC per kilometer, normalized China 2015: 167 2 150 130 EU baseline: 142 US 2025:107 SUV trend Grams CO 110 EU 2020: 95 Shift in priorities 90 2000 2005 2010 2015 2020 2025 Source: based on ICCT Future Tracks – Paving the way to the future Strategy for the time beyond 2018 Revenues Profitability Costs Future E-mobilityConnectivity Business models Product cycles Automated driving trends Economic uncertainty Trade barriers Currencies Economic Regulations development Volkswagen Group 2018 Strategy Volkswagen Brand: Substantial efficiency measures across all business areas to ensure > 6% target return before 2018 • Adapt lifecycle strategy to meet core regional competition Revenues • Focus on models providing Sales & Distribution sustainable profitability Production • Expand after-sales business Regional Procurement business models • Reduce complexity and improve decision making process R&D • Increase use of common parts and Fixed costs reduction of number of variants Costs • Sharpen target-oriented investment • Increase localization in core markets • Enhance R&D efficiency • Leverage scale effects and groupwide synergy potential further Volkswagen Brand: Three focus areas to improve competitiveness Efficiency Program Model Portfolio & Cycle Plan Strengthen Regions Cost Discipline & Productivity Continually adapt product lifecycles to Improve operational and financial Strong focus on cost and investment the specific regional and competitive robustness of regional business models discipline requirement Increase localization of products, Roll-out of efficiency program in order to Challenge every model regarding growth production and components as well secure/improve cost efficiency and prospects and sustainable profit as research and development quality of results contribution Volkswagen Brand: Strong product momentum1 2014 2015/2016 Polo Fox Touareg Sagitar Passat US Tiguan Gol C-Sedan (China) New Lavida/ Golf Sportsvan Jetta Passat Touran Magotan up! A-SUV Gran Lavida Scirocco Golf GTE Lamando Sharan New Bora Saveiro Santana B-SUV Alternative / Conventional Electric Fuel cell Regenerative
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