Return on investment (ROI) and value contribution in the reporting period

The operating profit after tax of the Automotive Division, including the proportionate operating profit of the Chinese joint ventures, was €11,734 million (€10,536 million) in fiscal year 2014. The year-on-year increase was due to positive volume and mix effects, optimized product costs and the significant improvement in the proportionate operating profit of the Chinese joint ventures. These factors more than offset the deteriorations in exchange rates, higher depreciation charges as a result of increased capital expenditures, higher research and development costs, and greater fixed costs due to growth factors. In addition, the prior year had been impacted by contingency reserves in the areas of Passenger Cars and Power Engineering. Effects on earnings and assets from purchase price allocation are not taken into account as this is beyond what is feasible from an operational management perspective.

Invested capital rose to €78,889 million (€72,749 million), primarily due to increased investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex).

The return on investment (ROI) is the return on invested capital for a particular period based on the operating profit after tax. It rose year-on-year in 2014 due to earnings-related factors, and at 14.9% (14.5%) was well above our minimum required rate of return of 9%.

At €6,074 million (€6,038 million), the opportunity cost of capital (invested capital multiplied by cost of capital) was level year-on-year. The increased operating profit after the opportunity cost of invested capital led to a clear improvement in the value contribution, which grew to €5,660 million (€4,497 million).

More information on value-based management is contained in our publication entitled “Financial Control System of the Volkswagen Group”, which can be downloaded from our Investor Relations website: www.volkswagenag.com/ir