The international strategy of the Russian automotive industry– consequences for manufacturers and suppliers Dr. Michael Macht, Member of the Board of Volkswagen Group Volkswagen continues its successful development in the first six months of 2012 January - June Change 2011 2012 absolute in % Deliveries to customers (1,000 veh.) 4,128 4,552 424 + 10.3 Production (1,000 veh.) 4,184 4,681 497 + 11.9 Revenue (millions €) 77,767 95,378 17,611 + 22.6 Operating profit (millions €) 6,086 6,492 406 + 6.7 1 Nearly all group brands have increased their deliveries to customers January - June 2012 compared to 2011 In 1,000 vehicles +10.3% 4.552 4.128 +10.2% 2.787 2.530 +12.3% +8.4% -12.4% +31.9% +3.7% 653 733 Jan. – Jun. 455 493 186 163 260 270 2011 3 4 2012 Group* Volkswagen Audi SKODA SEAT Bentley Volkswagen Pass. Cars Comm. Veh. *incl. Scania and MAN 2 The Volkswagen Group strategy is based on profitable growth Leading in customer satisfaction and quality Volkswagen Group Volkswagen- Vison: The most profitable, Top Group fascinating and sustainable employer profit before tax Automobile company of the world margin > 8 % Volumes > 10 million units p.a. • Leading in customer satisfaction and quality • Profit before tax margin > 8% • Volumes > 10 milion units p.a. • Top employer 3 Strategic perspective: market growth is highest in the BRIC countries – and Russia is a very important market for Volkswagen +48% +8% Total +9% 6.0 +27% 15.8 4.0 4.7 4.1 4.6 4.4 14.8 19.3 14.4 18.4 +37% 2011 2014 2018 103.2 15.3 2011 2014 2018 Eastern Europe Japan (incl. Russia) +66% 88.9 2011 2014 2018 29.2 Western Europe2 23.2 75.6 2011 2014 2018 North America +94% 17.6 5.8 3.0 4.1 2011 2014 2018 2011 2014 2018 India China incl. Hong Kong +51% 8.4 6.5 5.5 2011 2014 2018 2011 2014 2018 South America1 1 incl. Central American and the Caribbean 2 incl. Cyprus and Malta Source: IHS Global Insight (status: June 2012), figures rounded Note: market = cars and LCVs. Figures are preliminary 4 BRIC: Brazil, Russia, India and China Volkswagen Group: Strategy for Russia Competitive products Products Volume business with vehicles adapted to the market and Group SUV’s Sales Clear brand positioning and Marketing Differentiation from the competition through quality and innovation High rate of parts from local suppliers Purchasing High local content and establishment of a VW supplier structure Establishment of regional structure Organisation Establishment of local expertise and competitive process routines Local production Production Establishment of local added value (vehicles and components) 5 1. Products Volkswagen and Škoda cars from local production are highly successful T5 Multivan Polo Sedan Octavia Tiguan Fabia Touareg Yeti 6 2. Sales and Marketing With nearly 380 dealers our coverage of the Russian market is close and keeps growing 7 3. Purchasing Over 40 suppliers have been nominated within the Russian Forderation 4. Organization Volkswagen Group Rus employees are part of the world wide group network dual training (German standard) Cooperation with Baumann University started in 2010 started in May 2011 2010: 2 courses - mechatronic, car mechatronic • signing of cooperation agreement 2011: 3 more courses • courses in mechanical engineering and dual training for mechantronics - development mechanic • start of courses on 1st September, 2011 - production mechanic • 20 students, duration of course 8 semester - car painter 9 5. Local Production Production sites in Kaluga, N. Novgorod and St. Petersburg 10 Volkswagen Activities in Russia Sponsor of Olympic Winter Games 2014 in Sochi 11 Thank you for your attention! The international strategy of the Russian automotive industry– consequences for manufacturers and suppliers Dr. Michael Macht, Member of the Board of Volkswagen Group 12 .