Audi Quarterly Report January 1 to September 30, 2016
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Audi Quarterly Report January 1 to September 30, 2016 Audi Vorsprung durch Technik THIRD QUARTER REPORT 2016 ECONOMIC ENVIRONMENT The first nine months of 2016 brought moderate growth in the achieved a 6.1 percent rise in new cars registered. Higher global economy. However, economic activity in most industrial demand from both private and business customers had a posi- nations and also in a large number of emerging economies was tive impact. Western European export markets also performed slightly lower than in the previous year. In Western Europe the well. Sales of passenger cars were up 7.5 percent, in particular economy continued to recover. Economic development in Cen- due to the healthy economic environment overall. In contrast, tral Europe also made positive progress. This contrasted with registrations of new passenger cars in Russia dropped –15.2 the economic situation in Eastern Europe, with the region percent as a result of the continuing difficult economic and suffering in particular from a further decline in economic out- political situation. In the United States, sales of passenger put in Russia. The referendum held in the United Kingdom in cars and light commercial vehicles remained flat at the previ- 2 June 2016, in which a majority voted for a withdrawal from the ous year’s high level. The robust U.S. labor market, low fuel European Union (EU), led to political and economic uncertainty prices and attractive financing terms had a positive impact. in Europe. This also resulted temporarily in increased volatility However, demand weakened as the year progressed, with on financial markets worldwide. The U.S. economy continued growing signs of market saturation. In Brazil, the continuing to grow over the first nine months, thanks to a robust labor recession led to a –22.5 percent decline in registrations of market and a continuing positive mood among consumers. new passenger cars and light commercial vehicles. China However, the pace of growth weakened as a result of the de- was again the main driver of worldwide demand for cars, cline in investing activities. Brazil’s economy remained in re- delivering growth of 15.7 percent. In particular the tax cession, overshadowed by political uncertainty. In China, the breaks for vehicles with a displacement of up to 1.6 liters economy slowed down as expected in the first three quarters together with high demand for SUV models were behind the of 2016, above all as a result of economic structural change. positive development. All the same, the Chinese economy still achieved a high rate of expansion in worldwide terms. The established motorcycle markets in the displacement seg- ment above 500 cc enjoyed a 1.2 percent rise in demand from Global demand for cars rose further up to the end of Septem- January through September. The rate of growth has slowed ber. Registrations of new cars increased in Western Europe, over the year to date. In Western Europe, almost all motor- Central Europe, North America and the Asia-Pacific region. In cycle markets benefited from the improved economic situa- contrast, passenger car sales in Eastern Europe and South tion. On the other hand, registrations of new motorcycles in America declined. The German passenger car market the United States and Japan were down on the prior-year level. Fuel consumption and CO2 emission figures as well as the efficiency classes can be found on page 13. Audi A5 Sportback THIRD QUARTER REPORT 2016 EXCEPTIONAL EVENTS DIESEL ISSUE In June 2016, Volkswagen publicly announced that Volkswagen In that eventuality, costs for legal risks will be passed on to AG, Volkswagen Group of America, Inc. and certain affiliates AUDI AG according to a causation-based cost allocation. including AUDI AG had reached settlement agreements in the USA related to the four-cylinder TDI engine issue with the U.S. In connection with the V6 3.0 TDI engine issue we adjusted the Department of Justice on behalf of the U.S. Environmental risk provisioning in the third quarter of 2016 by EUR 620 mil- Protection Agency (EPA), the California Air Resources Board lion in the form of provisions for technical measures, legal risks (CARB) and the California Attorney General; private plaintiffs and sales measures. For the period from January through Sep- represented by a Plaintiffs’ Steering Committee (PSC) in the tember 2016 the correspondent special items aggregate to Multi-District Litigation pending in California and the U.S. Fed- EUR -752 million. Special items that can only be planned and 3 eral Trade Commission (FTC). The settlement agreements will managed to a limited extent are being incorporated separately resolve certain civil claims made in relation to affected diesel into our business planning process during the year. It cannot be vehicles with 2.0 l TDI engines from the Volkswagen Passenger ruled out that risks may be assessed differently in the future. Cars and Audi brands in the USA. On October 25, 2016, the court granted final approval of the settlement agreements. This The attorneys general of thirteen US states (Alabama, Mary- final approval order remains subject to appeal. More infor- land, Massachusetts, Missouri, New Hampshire, New Jersey, mation about the settlement and the customer program can be New Mexico, New York, Ohio, Pennsylvania, Tennessee, Texas found under www.vwcourtsettlement.com. and Vermont) and some municipalities have filed suits in state and federal courts – and the state of Washington has asserted Volkswagen also reached separate settlement agreements a penalty claim through administrative proceedings – against with the attorneys general of 44 US states, the District of Volkswagen AG, Volkswagen Group of America, Inc. and cer- Columbia and Puerto Rico, to resolve their existing or poten- tain affiliates partly including AUDI AG seeking civil penalties tial consumer protection and unfair trade practices claims – and injunctive relief for alleged violations of environmental in connection with both 2.0 l TDI and 3.0 l TDI vehicles in laws. AUDI AG is named in each of the above-referenced pro- the USA. ceedings except for Texas. Alabama, Maryland, Massachusetts, Missouri, New Hampshire, New York, Pennsylvania, Tennessee, The settlements do not resolve all claims. Texas and Washington participated in the state settlements described above with respect to consumer protection and In Canada, Environment and Climate Change Canada, a depart- unfair trade practices claims, but those settlements did not ment of the Government of Canada responsible for coordinat- include claims for environmental penalties. In particular, nine ing environmental policies, is monitoring the EPA and CARB states (Delaware, Maine, Minnesota, Missouri, Montana, Ohio, proceedings in the USA as part of its pending criminal investi- Oregon, Wisconsin and Wyoming) have entered into agree- gation. Investigations by other Canadian regulators are ongoing. ments to toll the statute of limitations for their potential 33 class actions seeking compensation for consumers were environmental claims through the end of 2016. Of those filed in Canada against Volkswagen Group companies. The states, Wyoming has expressed its intention to file suit asserting majority of these actions purport to represent a national class environmental claims by November 1, 2016. Another state of 2.0 l and 3.0 l diesel customers. (Connecticut) has expressed its intention to participate in environmental settlement discussions without filing suit. On the basis of existing contractual agreements with Volkswagen AG, Wolfsburg, there are presently no direct ef- Detailed information on the diesel issue and on the declaration fects on profit arising for the Audi Group related to the four- of the incumbent members of the Board of Management is- cylinder TDI engine issue. sued in this connection is provided in the Combined Manage- ment Report of the 2015 Annual Report in the section “Excep- AUDI AG has concluded an agreement with Volkswagen AG on tional Events” on pages 147 f. There are no indications that the the V6 3.0 TDI engine issue in the event that the U.S. authori- information presented there is no longer applicable, even on ties, U.S. courts and potential out-of-court settlements do not the basis of new findings from the still ongoing investigation differentiate between the four-cylinder TDI engine issue for by the law firm Jones Day that have come to light since the which Volkswagen AG is accountable and the V6 3.0 TDI engine publication date. issue of AUDI AG, and that joint and several liability thus arises. Fuel consumption and CO2 emission figures as well as the efficiency classes can be found on page 13. THIRD QUARTER REPORT 2016 OPENING OF THE MEXICO PLANT At the end of September we opened our first own automotive generation Audi Q5 for the world market. The annual produc- plant on the North American continent in San José Chiapa tion capacity is 150,000 premium SUVs. A total of 4,200 local (Mexico). In all, the Audi Group has invested over one billion jobs will also be created there. euros in the production site, which is building the new- PRODUCTION 1) 2) From January through September 2016, the Audi Group pro- At our newest production site in San José Chiapa (Mexico), we 4 duced 1,445,824 (1,362,706) cars worldwide. This figure have built 843 (22) of the second-generation Audi Q5 in the includes 411,814 (350,329) Audi vehicles manufactured by year to date at AUDI MÉXICO S.A. de C.V. the associated company FAW-Volkswagen Automotive Company, From January through September 2016, 103,851 (100,941) of Ltd., Changchun (China). In the first three quarters, the Audi the Audi Q3 and 75,547 (59,833) of the Audi Q7 left the pro- Group built a total of 1,443,097 (1,359,795) cars of the Audi duction line at the two Volkswagen Group sites in Martorell brand and 2,727 (2,911) supercars of the Lamborghini brand.