VOLKSWAGEN AG. Deutsche Bank 8th German Corporate Conference. Dr Bernd Pischetsrieder Chairman of the Board of Management of VOLKSWAGEN AG

Transcription

1 VOLKSWAGEN AG Deutsche Bank 8th German Corporate Conference Dr Bernd Pischetsrieder Chairman of the Board of Management of VOLKSWAGEN AG Frankfurt, May 31, 2005

2 Agenda Challenging Economic Environment and Impact on Volkswagen Group Volkswagen s Response Regional Update

3 Challenging Economic Environment (Financial Times, ) Manche Finanzinvestoren verschwenden keinen Gedanken an an die die Menschen, deren Arbeitsplätze sie sie vernichten Sie Sie bleiben anonym, haben kein kein Gesicht, fallen wie wie Heuschreckenschwärme über über Unternehmen her, her, grasen sie sie ab ab und und ziehen weiter. Gegen diese diese Form von von Kapitalismus kämpfen wir. wir. (Franz (Franz Müntefering, Müntefering, Spiegel Spiegel Online, Online, ) ) (The Detroit News, ) "The price wars (in (in China) are set to to rage for forat at least the next two to to three years. Nobody is is going to to be beimmune. (Frank (Frank Li, Li, JP JP Morgan, Morgan, ) ) The U.S. carmakers' debt downgrade reflects the state of of the industry, it itspeaks for for struggling sales and profit. (Luis (Luis Benguerel,, Interbrokers Interbrokers S.A., S.A., ) )

4 Impact on Volkswagen Group: Deliveries to Customers million units

5 Impact on Volkswagen Group: Deliveries to Customers January March 2004/ units 1, % -1.9% 1,206 1,183 January March 2004 January March , % ,068 1, % % Volkswagen Brand Group Audi Brand Group % Commercial Vehicles Volkswagen Group excl. China Volkswagen Group incl. China Europe / Remaining markets -7.8% North America % South America/ South Africa -25.9% Asia-Pacific

6 Impact on Volkswagen Group: Operating Profit billion Special Items ) 2.0 2) 0.0 1) ) Adjusted due to adoption of IAS/IFRS changes in ) Operating Profit before Special Items

7 Impact on Volkswagen Group: Analysis by Business Line January - March Sales Revenue Operating Result millions Volkswagen brand group 10,710 11, Audi brand group 6,521 6, Commercial Vehicles 1,643 1, Remaining companies 1) Financial Services / Europcar 2,178 2, ) Volkswagen Group 21,120 21, ) Primarily AutoVision GmbH, Coordination Center Volkswagen SCS, Volkswagen International Finance N.V., Volkswagen Investments Ltd., VW Kraftwerk GmbH, Volkswagen Immobilien, gedas group, Volkswagen Beteiligungs-Gesellschaft mbh (including VW Versicherungsvermittlungs-GmbH in the previous year). 2) Restated.

8 Impact on Volkswagen Group: Analysis by Market January - March Sales Revenue Operating Result millions Europe / Remaining markets 15,932 15, North America 2,689 3, South America / South Africa 1,394 1, Asia-Pacific 1) 1,105 1, ) Volkswagen Group 1) 21,120 21, ) The sales revenue and operating results of the joint venture companies in China are not included in the figures for the Group and the Asia-Pacific market. The Chinese companies are consolidated using the equity method, and recorded an operating result (proportional) of -17 million ( 106 million).

9 Impact on Volkswagen Group: Outlook As expected, the most important automotive markets experienced a relatively difficult start to Neither are we forecasting any significant change in the macroeconomic environment over the coming months, so we do not expect any improvement in the situation in the high-volume automotive markets in the short term. We believe that price pressure will continue unabated. In addition, the persistently unfavorable exchange rates and uncertainty about developments in the costs of raw materials, especially steel, will put further pressure on the automotive manufacturers. For the current year, we are expecting an improvement in our sales figures in the USA on the back of the full availability of the Audi A4 and Audi A6, as well as the current model changes for the Jetta and the Passat. We are convinced that following the start-up phase, we will gain additional market share in Western Europe from the launch of the new Passat, the Golf Plus, the new Polo and the Fox. In addition, the start of sales of the successor to the SEAT Leon and of the new Audi RS 4 will follow in the second half of the year. Based on the large number of new models we are launching in 2005, we believe that the Volkswagen Group will deliver a higher volume over the year as a whole than in The ForMotion program will continue to be systematically implemented to improve our competitive strength and cost structures; we are confident that we will achieve the target earnings contribution of EUR 3.1 billion for operating profit after special items will improve year-on-year although the extent of this improvement depends on external factors that cannot be predicted today. The same applies to profit before tax. Source: Interim Report January-March 2005

10 Agenda Challenging Economic Environment and Impact on Volkswagen Group Volkswagen s Response Regional Update

11 Automotive Division ROI 1) Target % Mid-term target: ROI > 9% ) ) Proportionate inclusion of Chinese joint ventures. 2) Restated

12 Creating Top Line Growth Automobility AUTOMOBILITY PRIMARY AUTOMOBILE BUSINESS VEHICLE-RELATED SERVICES Customer acquisition/loyalty Customer service, genuine parts, etc. Used vehicles LIFECYCLE SERVICES CUSTOMER-RELATED SERVICES Customer finance, rental, private leasing (long-term) insurance (automobile insurance, residual value,etc.) Company vehicle leasing (long-term), full service leasing (maintenance, tires, insurance), fleet management (fleet analysis, etc.) Dealer financing, business insurance, etc. Rental business (short-term) Deposit business, credit cards, investment products, current accounts, etc.

13 Top Line Growth: Volkswagen Group Product Matrix Hatch Notch Station MPV Pickup/ Del. Van SUV Sport Coupé Lim. Coupé Conv. Roadster Luxury Upper *) Upper Middle Middle Compact Small Mini new in 2005

14 Top Line Growth: Volkswagen Fox

15 Top Line Growth: Audi Q7

16 Focussed Cost Control: ForMotion Program Status as of March 31, % 7% 5% 4% 41% Overheads / Process Optimization Product Costs One-time Expenditure Foreign Sales Subsidiaries 11% Commercial Vehicles Performance Enhancement Sales Financial Services 24% Total ForMotion effects January-March 2005: 684 million

17 Focussed Cost Control: ForMotion Product Cost Savings ForMotion 2005 Target: 3.1 billion of which Product Costs Savings contribute: approx. 1.0 billion examples Reviewing Materials Design Solutions with Suppliers Streamlining Contracts Benchmarking

18 Focussed Cost Control: Tariff Agreement, November Wage freeze 2. Partial retirement / termination contracts 3. Working time flexibility account incl. savings of allowances 4. New pay structures for new employees 5. Bonus system 6. New rules for apprentices 7. Effects on pensions 8. Effects on subsidiaries

19 Investment Discipline: Efficient Use of Resources through increasing modularization 100% 80% 60% 40% 20% 0% model specific 10% modules Golf V model specific 50% modules Passat Modular strategy complements platform strategy Golf V is the last major model where all components are developed at the time of the platform development But Golf V comprises a significant number of modules including for example electronic systems, heating and airconditioning, brake systems and of course engines Use of module production will be extended further with the Passat and beyond Modules will no longer have the same life cycle as the platforms and therefore can be used for a longer period of time Golf V is thus the first step towards a significant efficiency enhancement regarding development costs

20 Investment Discipline: Capex in Fixed Assets Automotive Division billion Capex Capex/Sales Ratio Target Corridor 6-7% 10% 8% 6% 4% 2 2% Q %

21 Structural Process Improvements: Structure of Sales and Marketing Volkswagen Brand Marketing and Sales Volume Planning Controlling Sales Project management luxury class sales and marketing Marketing Sales Germany Sales Europe Sales International Sales North America Fleet & Direct Sales Service/After-Sales Group Level Strategic Activities Group Marketing and Sales Genuine Parts and Accessories Group Service Multi-brand Sales Group Marketing Site and Retail Development Brand Responsibility for Global Sales Group Sales Control Group Sales Germany

22 Agenda Challenging Economic Environment and Impact on Volkswagen Group Volkswagen s Response Regional Update

23 Regional Update: Volkswagen in North America Region In 2004 VW posted an Operating Loss of close to 1 bn. The following operational steps will benefit 2005: New volume models will be launched; for VW the new Jetta is already available in Q2 and the Passat will be available in Q3. The new Audi A6 and A4 will be fully available in 2005 and the Audi Sport-Back will be launched. Although we do not expect a better market environment, new models will enable us to reduce incentives in 2005, but the full impact will only be seen in The whole organisation in the USA is currently under review and in 2005 cost reductions will be implemented. Overall cost savings from ForMotion, in particular product costs, will also improve the profitability in North America. However, we expect a further negative exchange rate development from the continuing weak Dollar. A break-even situation is therefore unlikely.

24 Regional Update: New Volkswagen Jetta

25 Regional Update: Volkswagen in China Challenges The market remains attractive long term but pricing has come down dramatically Chinese consumer preferences are different from European challenging exchange rate too much capacity in the market Volkswagen response dramatic reduction in cost structure through permanent dialogue with our suppliers investment directed to deepen our value chain capacity investment will take Volkswagen up to 900,000 units Volkswagen starts purchasing raw materials and components in China, with dramatic cost advantage Volkswagen strong at selling to government; this strength is now being developed in retail sales

26 New Volkswagen Passat

27 Appendix

28 Volkswagen Golf GTI

29 Volkswagen Golf Plus

30 Volkswagen Caddy Combi

31 Škoda Octavia Combi

32 The New Bentley Continental Flying Spur

33 Audi A4 Avant

34 SEAT Leon

35 Lamborghini Murciélago Roadster