Volkswagen Commercial Vehicles Dr. Bernd Wiedemann Chief Executive Officer Volkswagen Commercial Vehicles Mr. Frank Fiedler Chief Financial Officer Volkswagen Commercial Vehicles Dresdner Kleinwort Analyst and Investor Conference Hanover, 20th September 2006 1 Volkswagen Group Group Structure VORSTAND DER VOLKSWAGEN AG BOARD OF VOLKSWAGEN GROUP Automobil-Unit Automotive Unit Financial Finanz-Unit Services Unit Volkswagen Brand Group Brand Group Board AUDI Brand AUDI Group Brand Group Board Commercial Nutzfahrzeuge Vehicles Brand Board Remaining companies Financial Services Services Dealer and Customer financing Leasing Insurance Fleet Business 2 1
Agenda Commercial Vehicles in the Volkswagen Group Our Market Our Products Our Plants Our Performance Product Innovations Strategic Overview Summary 3 Analysis by Business Line Commercial Vehicles January June Sales Revenue Operating Result million 2006 2005 % 2006 2005 % Volkswagen brand group 27,379 23,726 +15.4 730 169 +332.0 Audi brand group 16,005 14,112 +13.4 722 657 +9.9 Commercial Vehicles 4,129 3,460 +19.3 85 10 x Other companies 2) 94 141-33.3 6 35-82.9 Financial Services 4,285 4,007 +6.9 486 470 +3.4 Business lines before special items 51,892 45,446 +14.2 2,029 1,341 +51.3 Special Items -995 Volkswagen Group 51,892 45,446 +14.2 1,034 1,341-22.9 1) 1) 1) Restated. In accordance with IFRS 5, profit attributable to Europcar is reported separately as "discontinued operations". 2005 figures were restated accordingly in the income statement. 2) Primarily Volkswagen Group Service SCS, Volkswagen International Finance N.V., 4 Volkswagen Investments Ltd., VW Kraftwerk GmbH, Volkswagen Immobilien, gedas group (until March 2006 inclusive) 2
Volume of Utility and Leisure Vehicles 2005 Utility Vehicles Pickups Leisure Vehicles Passenger Cars 7.9 mio. units 5.1 mio. units 10.3 mio. units 39.0 mio. units Previous year ( 7.7 mio. ) ( 5.0 mio. ) ( 10.1 mio. ) ( 37.9 mio. ) BUS 2.1% Trucks>6t 26.2% 12.3% Caddy 8.8% Passenger Cars with Truck License TRP 50.7% SUV 75.8% 24.2 % MPV 23.3 mio. units thereof Volkswagen Group: 0.54 mio. units = 2.3 % (as at Feb 9th 2006) 5 Modal Split Germany 1970 2005 Ship 23% Other 8% Truck 36% Rail 16% Other Ship 3% 12% Rail 33% Truck 69% 6 Source: Federal Statistical Office Germany 3
Development Road Traffic 2002-2020 Passenger traffic [pkm]: + 20 % +133 bn passenger-km disproportionately high on motorways Goods traffic [ton-km]: + 43 % +152 Bn ton-km disproportionately high on motorways Increase Decrease 7 * Source: Volkswagen Groupresearch Mobility CEP Markets Europe 2005 (Courier Express Parcel Services) Other 29% Germany 30% UK 17% France 24% Germany is the biggest CEP market in Europe 8 *Source: Manner-Romberg 4
Volkswagen Commercial Vehicles Worldwide Production Hanover Poznań Resende Changchun China T5 Multivan T5 Kombi T5 Kasten/ Kombi T5 Pick Up Lkw 7-45 t LT 3/Crafter Düsseldorf/ Ludwigsfelde T5 Camper City Van Caddy Bus 8-16 t incl. CKD for Mexico City Van Caddy Saveiro Volkswagen do Brasil T2 Caddy VW of South Africa Truck Bus Mexico Truck Bus 9 Product Variations Volkswagen Commercial Vehicles Commercial Use Caddy Transporter Crafter Truck & Bus Caddy Life Multivan Business California Private Use 10 5
Commercial Vehicles Plants 2006: Hanover, Poznan, Resende 11 Marketleader in Brazil from 2003-2006 12 6
Consorcio Modular Partners ZP #7 ZP #8 SEATS FINAL APPROVAL AIR RESERVOIR FUEL TANK FRAME AXLE Chassis Cab Trim INSTRUMENT PANEL HUB & DRUM SPRING Axle & Suspension Paint Shop Body Shop PAINT SHOP BODY SHOP TIRES STEEL WHEEL ALUMINIUM WHEEL TRANSMISSION ENGINE Engine Tires & Wheels 13 Goods Transportation in Brazil 26% USA Water Fluvial 13.8% 13,8% Ferroviário Railway 20.9% 20,9% Rodoviário Road 60.5% 60,5% 24% Australia Pipeline 4.5% Air 0.3% Source: GEIPOT 14 7
Growth VW CV and Target Deliveries to Customers 2002 2003 2004 2005 2006 2010 600,000 333,820 401,400 280,539 258,839 Target 15 Sales and Revenue of the Commercial Vehicle Brand Vehicle sales 196,000 353,880 299,163 Sales Revenue 4,129 Mio 7,074 Mio 5,855 Mio 2004 2005 2006 (First half year) +18% +21% 16 8
Market share development in Germany 2002 2003 2004 2005 33.7 2006 (Jan - July) 35.7 24.8 22.5 27.8 17 Market share development in Western Europe 2002 2003 2004 2005 2006 (Jan - July) 10.4 9.3 11.6 13.7 14.4 18 9
Operating Profit Business Line 2001 2002 2003 2004 2005 308 2006 (Jan - June) 164 102 85 million - 142-233 19 Development of Market Share: Trucks and Busses in Brazil 2001 2002 2003 2004 2005 2006 (Jan - Aug) 2001 2002 2003 2004 2005 2006 (Jan - June) 27.5% 30.6% 34.3% 32.3% 32.1% 31.2% 24.8% 26.7% 29.6% 24.1% 22.2% 26.0% Trucks Busses 20 10
Sales Highlights Deliveries to customers worldwide by the end of July, 10.6 % over last year. South America: 43,800 deliveries by end of July +12% over last year. European production: 10.1 % over last year Germany: +17% positive development of market share in Germany and Western Europe 21 Production Highlights Poznan: 100% capacity Brazil: Hanover +31% (January June) overall productivity up 10% prognosis for the end of 2006 is a sustainable improvement of 8% in productivity in core production 22 11
Production Strategy Production up 10% Component activity under review Panamera project approved 500 jobs secured RPU strategy utilizes existing Volkswagen Group facilities in South America and South Africa as well as Hanover 23 Quality Development of claims, 12 months in operation (Volkswagen Group) 2000 2001 2002 2003 2004 2005 2006 2007 ADAC Pannenstatistik 2005 Vans (year 2005): Reduction in claims Reduction in warranty costs Important element of 2008 targets 1st place for T4/T5 in the ADAC 2005 Pannenstatistik for the year 2005 in the van class 2nd place over all classes 1.4 claims pro 1000 vehicles 1.Volkswagen T4/T5 2.Competitor 1 3.Competitor 2 24 12
Outlook 2006 Production volume: +4% Sales volume: +11% Earnings: H1 2006 85 million Earnings in H1 2006 were up substantially vs. H1 2005. H2 2006 is expected to continue this trend. 25 Summary Sales: Production: Quality: Growth of 10.6% in H1 2006, H2 on track Productivity up 10%, Poznan at full capacity; Hanover up 31% Continuous improvement Purchasing: Ahead of plan Personnel: Finance: Voluntary actions Goal exceeded H1 2006 earnings up substantially, H2 on continuous earnings trend 26 13
The new face of the Brand 27 Business Unit Special purpose vehicles 28 14
Sales Special Vehicles Volkswagen CV 40.000, 35.000, 30.000, 25.000, 20.000, 15.000, 10.000, 5.000, Vehicles 0 2003 2004 2005 2006 29 VGSG* commercialization steps 1st Commercialization step 2nd Commercialization step Manufacturer Fleet customer VGSG VW Appointed dealer Ultimate buyer Buy Back TradePort New Car Commercial Vehicles Fleet-retraces Leasing-retraces TurnTable sale (*VGSG = Volkswagen Gebrauchtfahrzeug Service GmbH 30 15
Business Area VGSG* Sales Growth 25,000 20,000 19,400 Number of units 15,000 10,000 6,713 5,000 4,143 x 2,8 1,461 38 0 2002 2003 2004 2005 Forecast 2006 (*VGSG = Volkswagen Gebrauchtfahrzeug Service GmbH 31 x 1,6 x 3 Multivan Startline 32 16
Caddy Ecofuel 33 Strategy VW Commercial Vehicles Cost Management Increase of Productivity Product strategy Strategy of Internationalization 34 17
Product Range 35 Internationalization Dual-Strategy Prime Markets Robust Pick Up Emerging Markets Robust Pick Up 36 18
Summary Volkswagen Commercial Vehicles: has the most modern model range of commercial vehicles targets the most promising segments of the world car market is successful in emerging markets like South Africa and Latin America is the fastest growing commercial vehicles brand in Europe is increasing manufacturing productivity by more than 10 percent annually is further increasing operating profit is committed to playing its part towards the Group 2008 target 37 Disclaimer This presentation contains forward-looking statements and information on the business development of the Volkswagen Group. These statements may be spoken or written and can be recognized by terms such as expects, anticipates, intends, plans, believes, seeks, estimates, will or words with similar meaning. These statements are based on assumptions relating to the development of the economies of individual countries, and in particular of 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 involve a degree of risk, and the actual developments may differ from those forecast. Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact on the development of our business. The same applies in the event of a significant shift in current exchange rates relative to the US dollar, sterling and the yen. If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such statements. We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superceded. 38 19