Volkswagen Group of America Chattanooga Operations LLC at Automotive News Manufacturing Conference Tuesday, June 9 th 2009.

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2 Volkswagen Group of America Chattanooga Operations LLC at Automotive News Manufacturing Conference Tuesday, June 9 th 2009 Don Jackson 2

3 Creating the People's Car = Volks-Wagen Idea of Volkswagen as an inexpensive vehicle for the people Ferdinand Porsche commissioned to develop the people's car VW-Logo created Vehicle production for Armed Forces Series production of the Beetle begins with 55 vehicles About 10,000 employees produce 4,000 vehicles a month Volkswagen of America, Inc. founded Acquisition of Auto-Union (later: Audi) Volkswagen prototype Ferdinand Porsche Don Jackson 3

4 From a single brand to the Volkswagen Group Cooperation with SEAT (Spain), 1986 integration into the Group Integration of Skoda (Czech Rep.) Volkswagen Nutzfahrzeuge (Commercial Vehicles) brand introduced Bugatti and Bentley acquired Audi acquires Lamborghini Autostadt opens Auto 5000 GmbH established 100 million Volkswagen built Truck and bus-brand Scania integrated Nine brands belong to the Volkswagen Group Don Jackson 4

5 Volkswagen Group today The Group is made up of nine brands. Each brand has its own character, operates as an independent entity on the market and is fully responsible for its results and their publication. Don Jackson 5

6 Our Group Guidelines Customer focus Top performance Add values Renewability Respect Responsibility Sustainability Don Jackson 6

7 Volkswagen Group's current production plants Within Europe: 41 Germany 13 Poland 4 Spain 4 Czech Republic 3 Sweden 3 France 2 China 8 Netherlands 2 Mexico 1 Russia 2 Brazil 6 India 1 Slovakia 2 Belgium 1 Argentinia 3 South Africa 1 Bosnia-Herzegovina 1 Great Britain 1 Italy 1 Portugal 1 Hungary 1 Don Jackson 7

8 Overview: The 180 models within the Group When: Don Jackson 8

9 Global auto manufacturers first quarter`09 sales Toyota GM VW Renault/Nissan Ford Hyundai/Kia Honda PSA Fiat Suzuki Daimler Chrysler BMW Mazda Mitsubishi 1) 1,767,000 1,616,000 1,404,000 1,276, , , , , , , , , , , ,000 Change vs ,8% -28,3% -10,7% -24,7% -39,4% -14,6% -35,3% -18,7% -21,9% -8,2% -34,1% -42,6% -21,2% -24,7% -36,6% Don Jackson Source: OEMs 9

10 Volkswagen Group: 1 st Quarter Review April 2009 Global financial and economic crisis also significantly impacts Volkswagen: The Group generates operating profit of $ 443 million (vs. 2008: 1.86 million) in the first quarter New model initiative successfully driven forward under difficult conditions: - Global passenger car market 20.7% below the previous year - Volkswagen group deliveries down 10.7% year-on-year - Volkswagen Group increases market share in key regions of the world - Deliveries in Germany, China, Brazil, Russia and Poland higher than in prior-year quarter Don Jackson 10

11 World Passenger Car Market and Volkswagen Group Market Shares vehicles North America 1) 3.1% 15,904 Western Europe 20.3% 18,372 Asia 8.0% 14,655 China 18.6% 5,503 Central and Eastern Europe South America South Africa 10.6% 19.4% 20.8% 329 3,499 4,763 World passenger car market 55,677,000 vehicles Volkswagen Group world market share 10.3% Market share Volkswagen Group 1) Overall markets in the USA, Mexico and Canada include passenger cars and light trucks. Don Jackson 11

12 Total Industry Development USA 2009 Year-to-May 2009 May Volkswagen Subaru BMW Honda Kia Nissan Mazda Hyundai Toyota Suzuki Ford GM Mitsubishi Chrysler Daimler Total industry -15.5% -1.8% -30.5% -34.4% -6.8% -34.7% -33.0% -7.9% -39.2% -56.4% -36.5% -41.7% -52.3% -46.3% -28.7% -36,5% -12.4% -5.0% -27.8% -42.0% -16.1% -32.5% -40.1% -20.4% -41.2% -75.1% -24.2% -28.7% -58.3% -46.9% -33.4% -33.7% Don Jackson 12

13 The "Mach 18" Strategy The goal for the Volkswagen brand is to become the most innovative, high-volume manufacturer, offering the best quality in each class. - Martin Winterkorn, Chairman and CEO "With the Group production system we are heading toward a value-driven, synchronized company. We can raise our quality and productivity and achieve a continuous and sustained improvement in our processes and products." - Jochem Heizmann, Board Member with responsibility for Group production Don Jackson 13

14 Our Goals within the "Mach 18" Strategy By 2018, Volkswagen will: -> Be first choice among employees -> Be best at customer satisfaction and quality -> Deliver 6.6 million vehicles/year from VW brand and 11 million from the Group -> Including sales of 800,000 Volkswagen and 200,000 Audi units within U.S. market -> Bring a return on investment of 21 percent -> Develop products for specific markets -> Produce in local sites close to customers -> Source locally Annual Management Conference Don Jackson 14

15 Volkswagen Group's new production locations Chattanooga will be the 62nd plant worldwide Don Jackson 15

16 The Volkswagen Brand Guidelines VALUABLE INNOVATIVE Das Auto. RESPONSIBLE Don Jackson 16

17 The valuable brand Volkswagen is always one step ahead of time and consistently places the needs of its customers at the centre of its actions. Das Auto. Das Auto. RESPONSIBLE RESPONSIBLE Speed and flexibility are the most notable characteristics of its activities. Volkswagen develops high-quality innovations that remain up-to-date and offer the customer the greatest individual benefit. Don Jackson 17

18 The innovative brand Volkswagen offers more performance for the price: more car, more service, more value Das Auto. Das Auto. RESPONSIBLE RESPONSIBLE With its outstanding vehicles and services, Volkswagen sets standards in every class Volkswagen embodies the virtues of German car manufacturing: precision, dependability, competence Quality and dependability are primary brand characteristics that assure customers that they have made the right choice Don Jackson 18

19 The responsible brand Volkswagen acts with the future in mind and takes responsibility for people, the environment and society. Volkswagen thus makes a crucial contribution to a world worthy of being lived in now and for future generations. Das Auto. Das Auto. RESPONSIBLE RESPONSIBLE Volkswagen s products are accessible to many people. They symbolise constancy and vision. Volkswagen is a trusted partner that guarantees its customers carefree mobility on roads all around the world. Don Jackson 19

20 Award-winning Jetta Clean Diesel and Golf 2009 Volkswagen Jetta Clean Diesel voted Green Car of the Year at the Los Angeles Auto Show in November 2010 Volkswagen Golf gained the title World Car of the Year at New York Auto Show in April Don Jackson 20

21 2018 Strategy: Five Pillars to reach our goals Achieve 800,000 VW car sales by 2018 Brand strategy Product Strategy Local Production Dealer Network VWGoA Organization Position the brand Volkswagen as an innovative volume manufacturer Offer competitive product range with high quality Manufacture US specified products locally Increase efficiency of dealer network Establish efficient and competitive organization Don Jackson 21

22 Why Volkswagen chose Chattanooga Don Jackson 22

23 Site Selection: From 398 locations to the one - Chattanooga, Tennessee Teamwork State and local support Business community Etc. Quality of Life Close to city center Low cost of living Etc. Appointed Time Best in-place infrastructure Etc. Chattanooga Tennessee Personnel Available workforce Good educational level Etc. Logistics Direct connection to railway and to interstate Etc. Incentives Training Incentives Infrastructure Etc. Don Jackson 23

24 Chattanooga Riverfront 1970s Today Don Jackson 24

25 Chattanooga site Nature Reserve Interstate I-75 Property Line New Connection Road (under Construction) Railway Connection Road Don Jackson 25

26 Announcement and Start of Construction On July 15, 2008, Volkswagen officially announced the selection of Chattanooga On May 14, 2009, Volkswagen celebrates the first wall of the plant being raised at the site Don Jackson 26

27 Key Figures Product New Midsize Sedan Plant Chattanooga Volume: Veh./ Year Plant: Body shop, paint shop, assembly within 1.9 million sq. ft. Site: 1,400 acres (6,4 km²) Investment Volume > $1 billion USD Investment creates jobs for more than employees at Volkswagen Don Jackson 27

28 Greener Cars and a Greener Production VW site: Protected meander creeks created Plant walls: Best-in-class insulation Offices: Recycleable materials Body shop: Highly efficient laser technology saves energy Paint shop: New process eliminates one oven = 20% less CO2-emissions Assembly: Highly efficient electric motors 6 bar pressure air system Infrastructure: Energy and environmental management Low NOx burners for heat generating Don Jackson 28

29 Current Model of Chattanooga Plant Don Jackson 29

30 The Plant of Short Distances Overview for orientation Assembly Supplier Park Body shop diameter = 1,000 ft Body shop Assembly ZP5 ZP7 ZP5a Paint diameter = 300 ft ZP8 Paint Don Jackson 30

31 Supplier Park on-site: a Win-Win-Solution - Park ideal for Just-in-sequence-parts - Shared infrastructure, services and facilities - Common IT-network with standardized interfaces Supplier Park N - Target: Minimize logistic costs and establish maximum process quality - 75 potential investors participate Body Shop Assembly - Invitations to bid for participation issued shortly to qualified investors Paint Don Jackson 31

32 Timeschedule Plant Chattanooga Today Ground preparations Construction of buildings Installations of all Equipment SOP Full System Trial Don Jackson 32

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34 VW Academy Conference Center Apprentice Training Manufacturing and Automation Training Automotive Training Lean Center Don Jackson 34

35 Continuous Improvement Process Cascade Framework Takt Added value orientation synchronized production Flow Pull Perfection Working together Leadership and communication Process control Principles Bases Customer work Takt as the pacemaker Reduction in Takt time Arbeitsorganisation Work organization Leveled + smoothed production Rigorous elimination of all waste Standardization Pull processes Zero fault Quality Efficiency Environmental Umweltschutz protection Standards in processes in product in facilities and resources in infrastructure in organization Learning organization Employee development Problem solving process CIP-Cascade Knowledge sharing Supplier management Organization dev. Don Jackson 35

36 VWGoA Chattanooga Operations, LLC Board of Directors Frank Fischer Chairman & CEO Manufacturing. Don Jackson President Human Resources H.-H. Jagla EVP Finance & IT P. Mayer EVP Don Jackson 36

37 Volkswagen GoA Chattanooga Operations Customer Focus on customer needs Product Passionate about cars People Employer of choice Responsibility Building a better future Don Jackson 37

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