Summary of expected developments

The Volkswagen Group’s Board of Management expects the global economy to record slightly stronger growth in 2015 than in the previous year, despite some uncertainties. The financial markets still entail risks resulting above all from the strained debt situation of many countries. In addition, growth prospects are being hurt by geopolitical tensions and conflicts. The emerging economies of Asia will probably record the highest rates of growth. While we expect to see an economic upturn in the major industrialized nations, the rates of expansion will remain moderate.

The automotive industry is highly dependent on global economic developments. We anticipate that competition in the international automotive markets will continue to increase.

We expect trends in the passenger car markets in the individual regions to be mixed in 2015. Overall, growth in global demand for new vehicles will probably be slower than in the reporting period. We anticipate a slight increase in demand for automobiles in Western Europe and expect to see slight growth in the German market as well. The Central and Eastern European markets are likely to be down sharply year-on-year due primarily to the substantial fall in demand in Russia. In North America, we expect last year’s positive trend to continue at a noticeably weaker pace. We assume that the South American passenger car markets will fall appreciably short of the prior-year level. The markets in the Asia-Pacific region that are strategically important for the Volkswagen Group will probably continue to grow at a slower pace.

Global demand for light commercial vehicles will probably see a moderate increase in 2015. We expect trends to vary from region to region.

In the markets for trucks and buses that are relevant for the Volkswagen Group, new registrations in 2015 will probably be noticeably lower than in the previous year.

We expect automotive financial services to continue to grow in importance worldwide in 2015.

The Volkswagen Group is optimally positioned to deal with the mixed developments in the global automotive markets. The Company’s strengths include in particular its unique brand portfolio, its diverse range of models, its steadily growing presence in all major world markets and its wide selection of financial services. We offer an extensive array of attractive, environmentally friendly, cutting-edge, high-quality vehicles for all markets and customer groups. This ranges from motorcycles through compact, sports and luxury cars to heavy trucks and buses, and covers almost all segments. The Volkswagen Group’s brands will press ahead with their product initiative in 2015, modernizing and expanding their offering by introducing new models. Our goal is to offer all customers the products and innovations they need, sustainably strengthening our competitive position in the process. To achieve that goal, we will extend our customer focus across all sales levels and in customer service.

We expect that the Volkswagen Group will moderately increase deliveries to customers year-on-year in 2015 in a persistently challenging market environment.

The difficult market environment, fierce competition, interest rate and exchange rate volatility, and fluctuations in raw material prices all pose challenges. We anticipate a positive effect from the efficiency programs implemented by all brands and, increasingly, from the modular toolkits.

Depending on the economic conditions, we expect 2015 sales revenue for the Volkswagen Group and its business areas to increase by up to 4% above the prior-year figure. However, economic trends in Latin America and Eastern Europe will need to be continuously monitored in the Commercial Vehicles/Power Engineering Business Area.

In terms of the Group’s operating profit, we anticipate an operating return on sales of between 5.5% and 6.5% in 2015 in light of the challenging economic environment. The operating return on sales is expected to be in the 6.0% to 7.0% range in the Passenger Cars Business Area and between 2.0% and 4.0% in the Commercial Vehicles/Power Engineering Business Area. For the Financial Services Division, we are forecasting an operating profit at the prior-year level.

At Group level, we are aiming to achieve a sustainable return on sales before tax of at least 8% by 2018 at the latest.

In the Automotive Division, the ratio of capex to sales revenue will fluctuate around a competitive level of 6 – 7% in 2015. The return on investment (ROI) will be below the prior-year level due to the extensive investment program, but still significantly above our minimum required rate of return of 9%. Net cash flow will probably be moderately lower than in the previous year, but will nevertheless make a significant contribution to strengthening the Group’s finances. Our goal is also to maintain our positive rating compared with the industry as a whole and to continue our solid liquidity policy.

We are working to make even more focused use of the strengths of our multibrand group by constructing new plants and continuously developing new technologies and toolkits. We will successfully meet the challenges of today and tomorrow thanks to a first-rate team, which delivers excellence and ensures the quality of our innovations and products at the highest level. Disciplined cost and investment management and the continuous optimization of our processes remain integral elements of the Volkswagen Group’s Strategy 2018.

This annual report contains forward-looking statements on the business development of the Volkswagen Group. These statements are based on assumptions relating to the development of the economic and legal environment in individual countries and economic regions, and in particular for 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 entail a degree of risk, and actual developments may differ from those forecast. Any changes in significant parameters relating to our key sales markets, or any significant shifts in exchange rates relevant to the Volkswagen Group, will have a corresponding effect on the development of our business. In addition, there may be departures from our expected business development if the assessments of the factors influencing sustainable value enhancement, as well as risks and opportunities, presented in this annual report develop in a way other than we are currently expecting, or if additional risks and opportunities or other factors emerge that affect the development of our business.