Automotive   |   Volkswagen
Mobility for  
generations  
to come.  
ANNUAL REPORT 2019  
Key Figures  
VOLKSWAGE N GROU P  
2019  
2018  
%
Volume Data1 in thousands  
Deliveries to customers (units)  
Vehicle sales (units)  
10,975  
10,956  
10,823  
671.2  
10,834  
10,900  
11,018  
664.5  
+1.3  
+0.5  
–1.8  
+1.0  
Production (units)  
Employees at Dec. 31  
Financial Data (IFRSs), € million  
Sales revenue  
252,632  
19,296  
7.6  
235,849  
17,104  
7.3  
+7.1  
Operating result before special items  
Operating return on sales before special items (%)  
Special items  
+12.8  
–2,336  
16,960  
6.7  
–3,184  
13,920  
5.9  
–26.6  
+21.8  
Operating result  
Operating return on sales (%)  
Earnings before tax  
18,356  
7.3  
15,643  
6.6  
+17.3  
+15.4  
Return on sales before tax (%)  
Earnings after tax  
14,029  
12,153  
Automotive Division2  
Total research and development costs  
R&D ratio (%)  
14,306  
6.7  
13,640  
6.8  
+4.9  
Cash flows from operating activities  
30,733  
19,898  
14,007  
6.6  
18,531  
18,837  
13,218  
6.6  
+65.8  
+5.6  
+6.0  
Cash flows from investing activities attributable to operating activities3  
of which: capex  
capex/sales revenue (%)  
Net cash flow  
10,835  
21,276  
11.2  
–306  
19,368  
11.0  
x
Net liquidity at Dec. 31  
+9.9  
Return on investment (ROI) in %  
Financial Services Division  
4
Return on equity before tax (%)  
10.8  
9.9  
VOLKSWAGE N AG  
2019  
2018  
%
Volume Data in thousands  
Employees at Dec. 31  
119.2  
119.4  
–0.2  
Financial Data (HGB), € million  
Sales  
80,621  
4,958  
78,001  
4,620  
+3.4  
+7.3  
Net income for the fiscal year  
Dividends (€)  
per ordinary share  
per preferred share  
6.50  
6.56  
4.80  
4.86  
1
Volume data including the unconsolidated Chinese joint ventures. These companies are accounted for using the equity method. Prior-year deliveries updated to reflect  
subsequent statistical trends.  
2
3
4
Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.  
Excluding acquisition and disposal of equity investments: €19,182 (18,242) million.  
Earnings before tax as a percentage of average equity.  
This version of the annual report is a translation of the German original. The German takes precedence. All figures shown in the report are rounded, so minor discrepancies may arise from  
addition of these amounts. The figures from the previous fiscal year are shown in parentheses directly after the figures for the current reporting period.  
Specified vehicle ranges correspond to results obtained through the Worldwide Harmonized Light vehicles Test Procedure (WLTP) on the chassis dynamometer. WLTP value ranges for  
series-produced vehicles may vary depending on the equipment. The actual range will deviate in practice depending on various other factors.  
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TO OUR SHAREHOLDERS  
DIVISIONS  
0
1
7
0
Letter to our Shareholders  
21  
24  
26  
28  
Brands and Business Fields  
Volkswagen Passenger Cars  
Audi  
ŠKODA  
The Board of Management of  
Volkswagen Aktiengesellschaft  
Report of the Supervisory Board  
1
2
3
3
3
3
3
4
4
4
4
0
2
4
6
8
0
2
4
6
SEAT  
Bentley  
Porsche  
Volkswagen Commercial Vehicles  
TRATON GROUP  
Scania  
MAN  
Volkswagen Group China  
Volkswagen Financial Services  
3
4 5  
ADDITIONAL INFORMATION  
346 Five-Year Review  
347 Financial Key  
Performance Indicators  
348 Glossary  
350 Index  
GROUP MANAGEMENT REPORT  
CONSOLIDATED FINANCIAL STATEMENTS  
195 Income Statement  
196 Statement of Comprehensive Income  
198 Balance Sheet  
200 Statement of Changes in Equity  
202 Cash Flow Statement  
203 Notes  
5
5
1
5
Goals and Strategies  
Internal Management System and  
Key Performance Indicators  
Structure and Business Activities  
Corporate Governance Report  
Remuneration Report  
5
6
7
8
9
7
0
0
8
2
352 Scheduled Dates  
Executive Bodies  
Disclosures Required  
336 Responsibility Statement  
337 Auditor’s Report  
Under Takeover Law  
9
1
1
4
Business Development  
07 Shares and Bonds  
13 Results of Operations,  
Financial Position and Net Assets  
29 Volkswagen AG (condensed,  
in accordance with the  
1
German Commercial Code)  
1
1
1
1
33 Sustainable Value Enhancement  
57 Report on Expected Developments  
64 Report on Risks and Opportunities  
90 Prospects for 2020  
This annual report was published  
on the occasion of the Annual Media  
Conference on March 17, 2020.  
1
To our  
Shareholders  
TO OUR SHAREHOLDERS  
0
1
7
0
Letter to our Shareholders  
The Board of Management of  
Volkswagen Aktiengesellschaft  
Report of the Supervisory Board  
1
2
To our Shareholders  
Letter to our Shareholders  
7
Letter to our Shareholders  
The financial markets are a leading indicator of the far- organization, which started operating in 2019. The new orga-  
reaching social and technological upheaval of our times. Sustain- nization brings together some 3,000 IT experts from the  
ability and climate protection are rapidly gaining significance Group’s interests and subsidiaries, and this number is  
for investors around the world. At the same time, large expected to rise to more than 10,000 digital experts by 2025.  
technology companies are outstripping traditional industrial They are developing “vw.os”, a uniform proprietary operating  
groups in terms of market capitalization, with valuations system that will be installed in all Group vehicles in the future.  
focusing on a company’s potential rather than its asset base.  
Volkswagen is also the first car manufacturer to commit to the  
Volkswagen is the wisest choice for all those investors who targets of the Paris Agreement on climate change. By 2025 we  
2
consciously embrace a combination of the two: potential and aim to reduce CO emissions in our fleet by 30 percent. We  
assets. We have the resources of a strong industrial group and intend to become climate neutral by 2050, which is why we are  
are making good use of these in our efforts to become a working flat out to drive the evolution of the automobile  
technology leader.  
toward electric mobility. Electric driving is the only viable  
alternative to combustion engines, large numbers of which  
Making our core product – the car – the most important can be produced at reasonable cost. Electric cars offer more  
internet device of the future is our big opportunity. In a data- utility for customers along with lower running costs and  
based economy, the car has considerable potential to create greater driving pleasure. Volkswagen has developed a pro-  
value. A modern Volkswagen model already boasts ten times prietary platform exclusively for electric driving – the Modular  
more software than a smartphone. In just a few years, this will Electric Drive Toolkit (MEB). The Volkswagen brand will bring  
increase to a factor of 20 to 30. The fully connected car of the out its first MEB models (the ID.3 and ID.4) in 2020 as part of  
future will receive data for a growing number of new digital its electric campaign. Last year, the Group brands Porsche and  
user applications. At the same time, it will transmit very Audi successfully demonstrated with the Taycan and the  
valuable data about traffic density, air quality, hazardous e-tron that electric mobility is able to excite customers in the  
situations and much more. This will open up new lines of premium segment too. Experience gained in markets such as  
business, which we intend to develop for ourselves.  
the Netherlands and Norway shows that when the infra-  
structure and the control system are right, customers will  
We are the first automaker to establish a separate Board of switch to electric cars. There can be no doubt that e-mobility  
Management position for software and to combine all of the will catch on. The question is when and where it will take off  
Group’s digital expertise in a single unit, the Car.Software first.  
8
Letter to our Shareholders  
To our shareholders  
Making our core product  
the car – the most important  
internet device of the future  
is our big opportunity.  
–
–
Herbert Diess –  
To our shareholders  
Letter to our Shareholders  
9
That the car has a bright future ahead of it is just as certain. rose to €252.6 billion. Operating profit climbed to €17.0 bil-  
Cars still fulfill the desire for individual mobility better than lion, and before special items to €19.3 billion. At 7.6%, the  
any other means of transport. For millions of people, espe- operating return on sales before special items was slightly  
cially in emerging societies, their first car represents a longed above the forecast range. Net cash flow was significantly  
for promise of freedom and a symbol of prosperity. Last but higher than in 2018 at €10.8 billion. We intend to maintain  
not least, cars are losing their negative qualities: they are this course of qualitative growth, which is why we are aligning  
becoming cleaner, safer, quieter and fully connected.  
our business even more closely with our financial core per-  
formance indicators.  
This is precisely what the Volkswagen Group and its brands  
work on every day. For this we are mobilizing massive financial 2019 would not have been so successful without the huge  
resources. In the next five years alone, €60 billion will be commitment of our 670,000 employees, whom I would like to  
invested in topics of future relevance, €33 billion of which has thank very warmly. This success would also not have been  
been earmarked for e-mobility and over €14 billion for digi- possible without you, our shareholders. Of course you will also  
talization.  
benefit from this success. The Board of Management and  
Supervisory Board are therefore proposing a significant  
What is special about Volkswagen is that we have the strength increase in the dividend to €6.50 per ordinary share and €6.56  
to finance the green and digital transformation from our own per preferred share.  
resources. We will safeguard the investments in our new tech-  
nologies through our successful business with our existing In 2020, the main priority will be complying with the new CO  
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technologies. We will maintain this high level especially in the fleet limits in the European Union while maintaining the same  
transformation phase. Customers can choose from highly level of profitability. We will leverage the synergies within the  
efficient combustion engines, hybrids and completely battery- Group much more consistently. By further optimizing our  
electric drives. From the ŠKODA Kamiq to the Bentley Bentayga overall brand strategy, we will ensure that the Group as a whole  
Hybrid, we have attractive and fascinating new models across can exploit the profit potential of the market even more  
all segments that impress customers worldwide. Another efficiently. Further productivity gains are also needed. Cost-  
special highlight for us last year was the launch of the eighth cutting programs are underway in all brands. There is con-  
generation of the Volkswagen Golf.  
siderable potential at the German sites in particular.  
2019 was an extremely successful year for our Group. Despite There is much to be done. Our industry is changing radically,  
considerable economic uncertainty, our brands performed with us in the driving seat. Volkswagen is on course to become  
exceedingly well around the world. In China, we lifted our a climate-neutral technology group. I look forward to your  
market share in a declining market. In South America, we continued support on this journey.  
returned to profitability for the first time in many years.  
Business in Russia is also profitable and continues to pick up  
speed. And in North America we significantly improved our  
earnings.  
A strategic milestone in 2019 was the IPO of TRATON. With this  
move, Volkswagen demonstrated that we are in a position to  
systematically review our portfolio and take decisive action. Sincerely,  
This includes divesting ourselves of sections of our company  
to focus more squarely on our core automotive business.  
We are also improving the quality of our business. Sales Reve-  
nue and profit grew faster than unit sales. Sales Revenue Herbert Diess  
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The Board of Management  
To our Shareholders  
The Board of  
Management  
of Volkswagen Aktiengesellschaft  
Hiltrud Dorothea Werner  
Integrity & Legal Affairs  
Dr.-Ing. Herbert Diess  
Chairman of the Board of Management of Volkswagen  
Aktiengesellschaft and Chairman of the Brand Board of  
Management of Volkswagen Passenger Cars,  
Volume brand group,  
China  
Andreas Renschler  
Chairman of the Board of Management of TRATON SE,  
Truck & Bus brand group  
To our Shareholders  
The Board of Management  
11  
Oliver Blume  
Chairman of the Board of Management  
of Dr. Ing. h.c. F. Porsche AG,  
Sport & Luxury brand group  
Gunnar Kilian  
Human Resources  
Frank Witter  
Finance & IT  
Bram Schot  
Chairman of the Board of Management  
of AUDI AG, Premium brand group  
Dr.-Ing. Stefan Sommer  
Components & Procurement  
1
2
Report of the Supervisory Board  
To our shareholders  
Report of the Supervisory Board  
(
in accordance with section 171(2) of the AktG)  
Ladies and gentlemen,  
In fiscal year 2019, the work of the Supervisory Board of meetings. At regular intervals, we also received a detailed  
Volkswagen AG and its committees focused on the Volks- report from the Board of Management on the current busi-  
wagen Group’s strategic direction. The Supervisory Board ness position and the forecast for the current year. Any  
regularly deliberated on the Company’s position and develop- deviations in performance from the plans and targets pre-  
ment in the reporting period. We supervised and supported viously drawn up were explained in detail by the Board of  
the Board of Management in its running of the business and Management, either in person or in writing. Together with  
advised it on issues relating to the management of the the Board of Management we analyzed the reasons for the  
Company in accordance with our duties under the law, the deviations so as to enable countermeasures to be derived. At  
Articles of Association and the rules of procedure. We also the meetings of the Special Committee on Diesel Engines, the  
observed the relevant recommendations and suggestions of Board of Management presented regular reports on current  
the German Corporate Governance Code (the Code) at all developments in connection with the diesel issue.  
times. The Supervisory Board was directly involved in all  
decisions of fundamental importance to the Group. Addi- In addition, the Chairman of the Supervisory Board consulted  
tionally, we discussed strategic considerations with the Board with the Chairman of the Board of Management at regular  
of Management at regular intervals.  
intervals between meetings to discuss important current  
issues. Apart from the efforts to address the diesel issue, these  
The Board of Management complied with its disclosure obli- included the Volkswagen Group’s strategy and planning, its  
gations and provided us with information as promptly and business development, and the risk situation and risk man-  
comprehensively as possible both in writing and in person, agement, including integrity and compliance issues in the  
particularly on all matters of relevance to the Company Volkswagen Group.  
relating to its strategy, business development and the Com-  
pany’s planning and position. This also included the risk The Supervisory Board held a total of 8 meetings in fiscal year  
situation and risk management. In this respect, the Board of 2019. The average attendance rate was 94.3%. In addition,  
Management also informed the Supervisory Board of further resolutions on particularly urgent matters were adopted in  
improvements to the risk and compliance management writing or using electronic communications media. All of the  
system. In addition, the Supervisory Board received infor- members of the Supervisory Board attended over half of the  
mation about compliance and other topical issues by the meetings of the Supervisory Board and the committees of  
Board of Management on an ongoing basis. We received the which they are members.  
documents relevant to our decisions in good time for our  
To our shareholders  
Report of the Supervisory Board  
13  
CO M M IT T E E ACT I V IT I E S  
Special Committee is also entrusted with examining any  
In order to discharge the duties entrusted to it, the Super- consequences of the findings. The Chairman of the Special  
visory Board has established five committees: the Executive Committee on Diesel Engines reports regularly on its work to  
Committee, the Nomination Committee, the Mediation the Supervisory Board. In 2019, the Special Committee on  
Committee established in accordance with section 27(3) of Diesel Engines met on two occasions to discuss, among other  
the Mitbestimmungsgesetz (MitbestG – German Codeter- things, reports from the Board of Management on the state of  
mination Act), the Audit Committee and, since October 2015, affairs with respect to the diesel issue and the administrative  
the Special Committee on Diesel Engines. The Executive fine proceedings conducted against Dr. Ing. h.c. F. Porsche AG  
Committee and the Special Committee on Diesel Engines that was ended by the administrative fine imposed by the  
each consist of three shareholder representatives and three Stuttgart Public Prosecutor.  
employee representatives. The shareholder representatives  
on the Executive Committee make up the Nomination Com- Furthermore, as a rule, the shareholder and employee repre-  
mittee. The remaining two committees are each composed of sentatives met for separate preliminary discussions before  
two shareholder representatives and two employee repre- each of the Supervisory Board meetings.  
sentatives. The members of these committees as of December  
3
1, 2019 are given on page 91 of this annual report.  
In connection with their seat on the Supervisory Board,  
members of the Supervisory Board receive support from the  
The Executive Committee met 14 times in the reporting Company upon induction as well as with respect to education  
period. At its meetings, the Executive Committee prepared and training; the Company particularly supports the orga-  
the resolutions of the Supervisory Board in detail, dealt with nization of seminars and bears the costs thereof. Supervisory  
the composition of the Board of Management and took Board members appointed for the first time are also provided  
decisions on, among other things, contractual issues con- with a detailed introduction to topics that apply specifically  
cerning the Board of Management other than remuneration to the Supervisory Board of Volkswagen AG.  
and on consenting to ancillary activities by members of the  
Board of Management.  
TO P IC S D IS C U S S E D BY T H E SU PE RV ISO RY B OAR D  
The first Supervisory Board meeting of the reporting year  
The Nomination Committee is responsible for proposing took place on January 11, 2019. At this meeting, we focused  
suitable candidates for the Supervisory Board to recommend on the IPO of TRATON SE (then TRATON AG).  
for election to the Annual General Meeting. This committee  
met on one occasion in 2019.  
The Supervisory Board next met on February 22, 2019.  
Following a detailed examination, we approved the consoli-  
The Mediation Committee did not have to be convened in the dated financial statements and the annual financial state-  
reporting period.  
ments of Volkswagen AG for 2018 prepared by the Board of  
Management. We examined the combined management  
The Audit Committee held six meetings in the past fiscal report, the combined separate nonfinancial report for 2018  
year. It focused on the annual and consolidated financial and the Report by the Board of Management on Relation-  
statements, the risk management system including the ships of Volkswagen AG with Affiliated Companies in accor-  
effectiveness of the internal control system and the internal dance with section 312 of the AktG (dependent company  
audit system, and the work performed by the Company’s report). Upon completion of our examination of the  
Compliance organization. In addition, the Audit Committee dependent company report, we came to the conclusion that  
concerned itself with the Volkswagen Group’s quarterly there were no objections to be raised to the concluding  
reports and the half-yearly financial report, as well as with declaration by the Board of Management in the dependent  
current issues and the supervision of financial reporting and company report. Other agenda items included the current  
the financial reporting process, and the examination thereof state of affairs with respect to the diesel issue, financing  
by the auditors.  
measures at the Volkswagen Group and the agenda for the  
9th Annual General Meeting of Volkswagen AG, particularly  
5
The Special Committee on Diesel Engines is responsible for the Supervisory Board’s proposed resolutions.  
coordinating all activities relating to the diesel issue and  
preparing resolutions by the Supervisory Board. To this end, At the Supervisory Board meeting on April 23, 2019, we  
the Special Committee on Diesel Engines is also provided largely discussed strategic issues relating to the Group.  
with regular information by the Board of Management. This  
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4
Report of the Supervisory Board  
To our shareholders  
Hans Dieter Pötsch  
The Supervisory Board held another meeting on May 13, 2019. visory Board Mr. Hans Dieter Pötsch and the Chairman of the  
Alongside preparations for the 59th Annual General Meeting Board of Management Dr. Herbert Diess, which concerned  
of Volkswagen AG on May 14, 2019, the agenda included, alleged market manipulation. It was decided unanimously  
among others, the IPO of TRATON SE, the current state of affairs that Dr. Diess and Mr. Pötsch should continue in post. The  
with respect to the diesel issue and monitor’s report. We also main topics of the day’s second meeting were the creation of a  
discussed with the Board of Management factors affecting the software organization, the agreement of a syndicated line of  
decision to build a new production site.  
credit and the current state of affairs with respect to the diesel  
issue.  
The Supervisory Board meeting on July 11, 2019 centered on  
fundamental decisions concerning the construction of a new At the Supervisory Board meeting on November 15, 2019, we  
production site and the planned cooperation with Ford.  
discussed in detail the Volkswagen Group’s investment and  
financial planning for the period from 2020 to 2024. The  
On September 25, 2019, two meetings took place: In the first meeting also focused on changes in the composition of the  
meeting, the Supervisory Board discussed the indictments by Board of Management and the creation of a software orga-  
the public prosecutor’s office in Braunschweig against the nization. We also submitted the annual declaration of con-  
former chairman of the Volkswagen AG Board of Management formity with the Code together with the Board of Manage-  
Prof. Dr. Martin Winterkorn, the Chairman of the Super- ment.  
To our shareholders  
Report of the Supervisory Board  
15  
In the reporting period, we voted in writing on matters such lation. Moreover, Mr. Pötsch did not participate in the  
as a cooperation with Northvolt AB concerning the building Supervisory Board’s deliberations and decisions insofar as his  
of a battery cell factory.  
personal interests were concerned, for example in connection  
with the reimbursement of his expenses as Chairman of the  
Supervisory Board.  
CO N F LICT S O F I N T ERE ST  
Mr. Hans Dieter Pötsch was a member of the Board of Man-  
agement of Volkswagen AG until October 2015. His move to Starting in autumn 2016, the public prosecutor’s office in  
the Supervisory Board had already been planned irrespective Braunschweig launched criminal investigations against a  
of the diesel issue. In order to avoid conceivable conflicts of number of individuals based on the provisions of the  
interest, Mr. Pötsch always left the meeting room prior to Betriebsverfassungsgesetz (BetrVG – German Works Consti-  
discussions and resolutions adopted by the Supervisory tution Act) relating to possibly excessive remuneration  
Board that might relate to his conduct in connection with the granted to the Chairman of the General and Group Works  
diesel issue. In particular, Mr. Pötsch did not attend the Councils of Volkswagen AG, Mr. Bernd Osterloh, and other  
meeting of the Executive Committee on September 24, 2019, works council members. In order to avoid conceivable con-  
and the meeting of the Supervisory Board on September 25, flicts of interest, Mr. Osterloh always left the meeting room  
2
019, in which the Executive Committee and the Supervisory prior to discussions and resolutions adopted by the Super-  
Board addressed the indictments by the public prosecutor’s visory Board that relate to possibly excessive remuneration  
office in Braunschweig against the former chairman of granted to him, based on the provisions of the German Works  
the Volkswagen AG Board of Management Prof. Dr. Martin Constitution Act.  
Winterkorn, the Chairman of the Supervisory Board  
Mr. Pötsch and the Chairman of the Board of Management No other conflicts of interest were reported or were discern-  
Dr. Herbert Diess, which concerned alleged market manipu- ible in the reporting period.  
The following table shows the number of meetings of the Board and the committees as well as the individual participation of  
the members of the Supervisory Board in 2019:  
Meetings of the full  
Supervisory Board Meetings of the Committees  
Hans Dieter Pötsch  
7 out of 8  
6 out of 8  
5 out of 8  
8 out of 8  
8 out of 8  
3 out of 4  
8 out of 8  
8 out of 8  
1 out of 1  
8 out of 8  
7 out of 8  
8 out of 8  
8 out of 8  
8 out of 8  
8 out of 8  
8 out of 8  
8 out of 8  
8 out of 8  
4 out of 4  
8 out of 8  
7 out of 8  
7 out of 7  
13 out of 15  
Jörg Hofmann  
12 out of 14  
Dr. Hussain Ali AlꢀAbdulla  
Dr. Hessa Sultan AlꢀJaber  
Dr. Bernd Althusmann  
Birgit Dietze (until May 31, 2019)  
Dr. Hans-Peter Fischer  
Marianne Heiß  
–
–
2 out of 2  
2 out of 2  
–
5 out of 6  
Uwe Hück (until February 8, 2019)  
Johan Järvklo  
–
–
Ulrike Jakob  
–
–
Dr. Louise Kiesling  
Peter Mosch  
15 out of 16  
2 out of 2  
22 out of 22  
–
Bertina Murkovic  
Bernd Osterloh  
Dr. Hans Michel Piëch  
Dr. Ferdinand Oliver Porsche  
Dr. Wolfgang Porsche  
Conny Schönhardt (since June 21, 2019)  
Athanasios Stimoniaris  
Stephan Weil  
8 out of 8  
15 out of 17  
3 out of 4  
–
13 out of 15  
–
Werner Weresch (since February 21, 2019)  
1
6
Report of the Supervisory Board  
To our shareholders  
CO R PORAT E GOVERN ANCE AN D D ECL ARAT ION OF CO N FO RMIT Y  
China division was transferred to Dr. Herbert Diess with  
The Supervisory Board meeting on Friday, November 15, 2019 effect from January 11, 2019.  
focused on the implementation of the recommendations and  
suggestions of the Code in the Volkswagen Group. We dis- Mr. Abraham Schot will step down from the Board of Man-  
cussed in detail the currently applicable version of the Code agement of Volkswagen AG by mutual agreement with effect  
dated February 7, 2017, and issued the annual declaration of from March 31, 2020. On November 15, 2019, the Supervisory  
conformity with the recommendations of the Code in accor- Board appointed Mr. Markus Duesmann to succeed Mr. Schot  
dance with section 161 of the Aktiengesetz (AktG – German as a member of the Board of Management with effect from  
Stock Corporation Act) together with the Board of Manage- April 1, 2020. Mr. Duesmann will especially be responsible for  
ment. In addition, we addressed the recommenddations in the Premium brand group and for the Group Research and  
the draft amendment of the Code, which was published by Development division on the Board of Management of  
the government commission on May 9, 2019, as well as Volkswagen AG. Dr. Herbert Diess will take over the Group  
measures pertaining to the implementation thereof.  
Sales division with effect from April 1, 2020.  
The joint declarations of conformity by the Board of Our sincere thanks go to all of the departing members of the  
Management and the Supervisory Board are permanently Supervisory Board and the Board of Management for their  
available at www.volkswagenag.com/en/InvestorRelations/ work.  
corporate-governance/declaration-of-conformity.html. Addi-  
tional information on the implementation of the recom- On August 25, 2019, the long-time Chairman of the Board of  
mendations and suggestions of the Code can be found in the Management and Supervisory Board of Volkswagen AG, Prof.  
corporate governance report starting on page 60 and in the Dr. Ferdinand K. Piëch, died at the age of 82. During his  
notes to the consolidated financial statements on page 334 of career, Prof. Dr. Piëch was instrumental in the development  
this annual report.  
of the automobile and of the automotive industry, and  
especially in the growth of Volkswagen to become a global  
mobility group. The Company and everyone who works for it  
have enormous gratitude and respect for his services. We will  
M EM B ER S O F T H E SU P E RV I SO RY BOAR D A N D BOA RD O F  
MA NAGEM ENT  
Effective February 8, 2019, Mr. Uwe Hück stepped down as a always remember him and his life’s work.  
member of the Volkswagen AG Supervisory Board. At the  
request of the Chairman of the Supervisory Board and in On January 3, 2020, Dr. Werner P. Schmidt, former member of  
accordance with section 104 of the AktG, the Braunschweig the Volkswagen AG Board of Management, died at the age of  
Registry Court appointed Mr. Werner Weresch to succeed him 87. Dr. Schmidt belonged to the Board of Management from  
as a member of the Volkswagen AG Supervisory Board with 1975 to 1994 and demonstrated tireless commitment  
effect from February 21, 2019.  
throughout this period, during which he made an important  
contribution to shaping our company. We will fondly  
The terms of office of Dr. Hessa Sultan Al Jaber, Dr. Hans remember his accomplishments.  
Michel Piëch and Dr. Ferdinand Oliver Porsche on the Super-  
visory Board of Volkswagen AG duly ended at the close of the  
9th Annual General Meeting. On May 14, 2019, the Annual  
General Meeting re-elected all three for a further full term of In line with our proposal, the Annual General Meeting of  
AU D IT O F T H E A N N UA L A N D CO N SO L I DAT E D F I NA NCI AL  
5
STAT E M E N T S  
office on the Supervisory Board.  
Volkswagen AG on May 14, 2019 elected Pricewaterhouse-  
Coopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) as  
Effective May 31, 2019, Ms. Birgit Dietze stepped down as a auditors for fiscal year 2019. The auditors audited the annual  
member of the Supervisory Board of Volkswagen AG. At the financial statements of Volkswagen AG, the consolidated  
request of the Chairman of the Supervisory Board and in financial statements of the Volkswagen Group and the  
accordance with section 104 of the AktG, the Braunschweig combined management report and issued unqualified audit  
Registry Court appointed Ms. Conny Schönhardt, Union reports in each case.  
Secretary to the board of IG Metall, to succeed her as a  
member of the Volkswagen AG Supervisory Board with effect The Supervisory Board commissioned PwC to conduct an  
from June 21, 2019. On July 11, 2019, the Supervisory Board external content-related audit of the combined separate non-  
elected Ms. Schönhardt as a member of the Audit Committee.  
financial report for 2019.  
Prof. Jochem Heizmann retired from the Board of Manage- In addition, the auditors analyzed the risk management and  
ment of Volkswagen AG with effect from January 10, 2019 internal control systems, concluding that the Board of  
under a retirement program. His Board responsibility for the Management had taken the measures required by section  
To our shareholders  
Report of the Supervisory Board  
17  
9
1(2) of the AktG to ensure early detection of any risks We therefore concurred with the auditors’ findings and  
endangering the continued existence of the Company. The approved the annual financial statements and the consoli-  
Report on Relationships of Volkswagen AG with Affiliated dated financial statements prepared by the Board of  
Companies in accordance with section 312 of the AktG for  
Management at our meeting on February 28, 2020, which the  
the period from January 1 to December 31, 2019 (dependent auditors also attended for the agenda items relating to the  
company report) submitted by the Board of Management was annual and consolidated financial statements, the dependent  
also audited by the auditors, who issued the following opin- company report and the combined management report. The  
ion: “In our opinion and in accordance with our statutory annual financial statements are thus adopted. Upon  
audit, we certify that the factual disclosures provided in the completion of our examination of the dependent company  
report are correct and that the company’s consideration report, there are no objections to be raised to the concluding  
concerning legal transactions referred to in the report was declaration by the Board of Management in the dependent  
not unduly high.”  
company report. We reviewed the proposal on the appro-  
priation of net profit submitted by the Board of Management,  
The members of the Audit Committee and the members of taking into account in particular the interests of the Com-  
the Supervisory Board were provided with the document- pany and its shareholders, and endorsed the proposal. PwC  
tation relating to the annual and consolidated financial conducted an external content-related audit of the combined  
statements, including the dependent company report, the separate nonfinancial report for 2019 to attain limited  
documentation relating to the combined management assurance and issued an unqualified report. At our meeting  
report, and also the audit reports prepared by the auditors on February 28, 2020, PwC also took part in the discussions  
and the report from PwC on the external content-related on the agenda items relating to the combined separate  
audit of the combined separate nonfinancial report for 2019 nonfinancial report for 2019. Upon completion of its own  
in good time for their meetings on February 27 and February independent examination of the combined separate  
2
8, 2020 respectively. The auditors reported extensively at nonfinancial report for 2019, the Supervisory Board did not  
both meetings on the material findings of their audit and have any objections.  
were available to provide additional information.  
We would like to express our thanks and particular appre-  
Taking into consideration the audit reports and the discus- ciation to the Board of Management, the Works Council, the  
sion with the auditors, and based on its own conclusions, the management teams and all the employees of Volkswagen AG  
Audit Committee prepared the documents for the Supervisory and its affiliated companies for their work in 2019. With their  
Board’s examination of the consolidated financial statements, immense personal commitment, great loyalty and readiness  
the annual financial statements of Volkswagen AG, the to support the changes that have been introduced, they have  
combined management report, the dependent company all made a decisive contribution in helping to make 2019 a  
report and the combined separate nonfinancial report for successful year for the Volkswagen Group in spite of the  
2
019, and reported on these at the Supervisory Board many challenges presented.  
meeting on February 28, 2020. Following this, the Audit Com-  
mittee recommended that the Supervisory Board approve the  
annual and consolidated financial statements. We examined  
the documents in depth in the knowledge and on the basis of Wolfsburg, February 28, 2020  
the report by the Audit Committee and the audit report, as  
well as in talks and discussions with the auditors. We came to  
the conclusion that the documents are due and proper and  
that the assessment of the position of the Company and the  
Group presented by the Board of Management in the  
combined management report corresponds to the assess- Hans Dieter Pötsch  
ment by the Supervisory Board.  
Chairman of the Supervisory Board  
2
Divisions  
DIVISIONS  
2
2
2
2
3
3
3
3
3
4
4
4
4
1
4
6
8
0
2
4
6
8
0
2
4
6
Brands and Business Fields  
Volkswagen Passenger Cars  
Audi  
ŠKODA  
SEAT  
Bentley  
Porsche  
Volkswagen Commercial Vehicles  
TRATON GROUP  
Scania  
MAN  
Volkswagen Group China  
Volkswagen Financial Services  
Divisions  
Brands and Business Fields  
21  
Brands and Business Fields  
The Volkswagen Group increased unit sales, sales revenue and profit in fiscal year 2019  
amid a persistently challenging market environment. The diesel issue resulted in special  
items that had an adverse effect on profit.  
GROU P STRU CTU RE  
The Volkswagen Group consists of two divisions: the Automotive Division and the Financial Services Division.  
The Automotive Division comprises the Passenger Cars, Commercial Vehicles and Power Engineering business  
areas. Activities of the Automotive Division comprise in particular the development of vehicles and engines,  
the production and sale of passenger cars, light commercial vehicles, trucks, buses and motorcycles, as well as  
genuine parts, large-bore diesel engines, turbomachinery, special gear units, propulsion components and  
testing systems businesses. Mobility solutions are gradually being added to the range. The Ducati brand is  
allocated to the Audi brand and thus to the Passenger Cars Business Area. The activities of the Financial Services  
Division comprise dealer and customer financing, vehicle leasing, direct banking and insurance activities, fleet  
management and mobility offerings.  
VOLKSWAGEN GROUP REPORTING STRUCTURE  
AUTOMOTIVE  
DIVISION  
FINANCIAL SERVICES  
DIVISION  
Passenger Cars Business Areaꢀ  
Volkswagen Passenger Carsꢀ  
Commercial Vehicles Business Areaꢀꢀ  
Scania Vehicles and Servicesꢀ  
MAN Commercial Vehicles  
Power Engineering Business Areaꢀ  
ꢂıėťıƃꢀėŬĬꢀĦƕƇƏųŪıƃꢀŁŬėŬĦŔŬŋ  
Leasing  
Power Engineering  
Audi  
Direct bank  
ŠKODA  
Insurance  
SEAT  
Bentley  
Fleet management  
IųĤŔťŔƏƧꢀųĿıƃŔŬŋƇ  
Porsche Automotiveꢀ  
ųťŢƇơėŋıŬꢀꢁųŪŪıƃĦŔėťꢀ~ıőŔĦťıƇꢀꢀ  
Other  
~
2
2
Brands and Business Fields  
Divisions  
In this chapter, we present the key volume and financial data relating to the Group brands and to Volkswagen  
Financial Services. In light of the considerable importance of the development of business in the world’s largest  
single market for the Volkswagen Group, we also report on business developments and the results of our  
activities in China in this chapter.  
The production figures and deliveries to customers are differentiated by vehicle brand and their models  
that carry the corresponding brand logo. Unit sales figures contain vehicles sold by respective brand com-  
panies, including models of other Group brands. In some cases, there are marked differences between delivery  
figures and unit sales as a result of our business development in China.  
KEY FIGU RE S BY M A RKET  
The Volkswagen Group generated an operating profit before special items of €19.3 (17.1) billion in fiscal year  
2019. Special items which resulted from the diesel issue weighed on the operating profit in the amount of  
€
–2.3 (–3.2) billion.  
Unit sales by the Volkswagen Group rose to 11.0 (10.9) million vehicles in 2019 – a new record despite a  
challenging and highly competitive market environment. Sales revenue rose by 7.1% to €252.6 billion.  
At 4.9 million vehicles, unit sales in the Europe/Other markets region were up 2.5% compared with the  
previous year. Sales revenue increased to €154.0 (143.1) billion due to volume and mix effects.  
In North America, we increased unit sales by 3.4% to 1.0 million vehicles. Sales revenue amounted to  
€43.4 (37.7) billion, primarily due to the increase in volumes as well as positive exchange rate effects.  
In the markets of the South America region, we sold 0.6 million vehicles in the reporting year. This was 1.9%  
more than in the previous year. Despite unfavorable exchange rate trends, sales revenue improved by 8.6% to  
€11.3 billion due to positive mix effects.  
In the Asia-Pacific region, the Volkswagen Group’s unit sales – including those of the Chinese joint ventures –  
amounted to a total of 4.5 (4.6) million vehicles. At €44.0 (43.2) billion, sales revenue exceeded the prior-year  
level thanks to the improved mix and positive exchange rate effects. This figure does not include the sales  
revenue of our equity-accounted Chinese joint ventures.  
Hedging transactions relating to sales revenue in foreign currency increased the sales revenue of the  
Volkswagen Group by €11 million in the reporting year. In the previous year, they increased sales revenue by  
€
1.5 billion.  
Divisions  
Brands and Business Fields  
23  
K EY F I G U R E S BY B RA N D A N D B U S I N E S S F I E L D  
VEHICLE SALES  
2019  
SALES REVENUE  
2019  
OPERATING RESULT  
Thousand vehicles/€ million  
2018  
2018  
2019  
2018  
Volkswagen Passenger Cars  
Audi1  
ŠKODA1  
3,677  
1,200  
1,062  
667  
12  
3,715  
1,467  
957  
608  
10  
88,407  
55,680  
19,806  
11,496  
2,092  
84,585  
59,248  
17,293  
10,202  
1,548  
3,785  
4,509  
1,660  
445  
3,239  
4,705  
1,377  
254  
SEAT  
Bentley  
65  
–288  
4,110  
780  
Porsche Automotive2  
Volkswagen Commercial Vehicles  
Scania Vehicles and Services3  
MAN Commercial Vehicles  
Power Engineering  
277  
456  
101  
143  
–
253  
469  
97  
26,060  
11,473  
13,934  
12,663  
3,997  
23,668  
11,875  
12,981  
12,104  
3,608  
4,210  
510  
1,506  
402  
1,207  
332  
137  
–
159  
193  
VW China4  
Other5  
4,048  
–685  
–
4,101  
–912  
–
–
–
–
–
–30,931  
37,957  
–
–34,029  
32,764  
–
–917  
2,960  
19,296  
–2,336  
16,960  
13,748  
12,188  
1,653  
–93  
–1,418  
2,612  
17,104  
–3,184  
13,920  
11,127  
10,000  
1,191  
–64  
Volkswagen Financial Services  
Volkswagen Group before special items  
Special items  
–
–
–
–
–
–
Volkswagen Group  
10,956  
10,956  
10,713  
243  
10,900  
10,900  
10,666  
234  
252,632  
212,473  
182,031  
26,444  
3,997  
235,849  
201,067  
172,678  
24,781  
3,608  
Automotive Division6  
of which: Passenger Cars Business Area7  
Commercial Vehicles Business Area7  
Power Engineering Business Area  
Financial Services Division  
–
–
–
–
40,160  
34,782  
3,212  
2,793  
1
2
3
4
2019 in line with the reallocation of companies; the prior-year figures have not been adjusted.  
Porsche (including Financial Services): sales revenue €28,518 (25,784) million, operating profit before special items €4,396 (4,291) million.  
Scania (including Financial Services): sales revenue €14,391 (13,360) million, operating profit €1,648 (1,346) million.  
The sales revenues and operating profits of the joint venture companies in China are not included in the figures for the Group.  
These Chinese companies are accounted for using the equity method and recorded a proportionate operating profit of €4,425 (4,627) million.  
In operating profit, mainly intragroup items recognized in profit or loss, in particular from the elimination of intercompany profits; the figure includes  
depreciation and amortization of identifiable assets as part of purchase price allocation, as well as companies not allocated to the brands.  
Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.  
5
6
7
The Volkswagen Commercial Vehicles brand has been reported as part of the Passenger Cars Business Area since January 1, 2019. The prior-year figures have been  
adjusted.  
KEY FIGU RE S BY M A RKET  
VEHICLE SALES  
2019  
SALES REVENUE  
2019  
Thousand vehicles/€ million  
2018  
2018  
Europe/Other markets  
North America  
4,856  
956  
4,739  
925  
153,999  
43,351  
11,297  
43,974  
11  
143,089  
37,656  
10,405  
43,166  
1,535  
South America  
Asia-Pacific1  
607  
596  
4,538  
–
4,640  
–
Hedges on sales revenue  
Volkswagen Group1  
10,956  
10,900  
252,632  
235,849  
1
The sales revenue of the joint venture companies in China is not included in the figures for the Group and the Asia-Pacific market.  
2
4
Volkswagen Passenger Cars  
Divisions  
Volkswagen Passenger Cars enters a new era and presents a more modern, more  
human and more authentic image. The eighth generation of the Golf launches  
and the all-electric ID.3 celebrates its world premiere.  
B U SI N E S S D EV E LOPM E NT  
+
The Volkswagen Passenger Cars brand aims to move you. The TRANSFORM 2025 strategy therefore centers on a  
global model initiative through which the brand aims to lead innovation, technology and quality in the volume  
segment.  
At the International Motor Show (IAA) in Frankfurt, the Volkswagen Passenger Cars brand unveiled its new  
brand design which creates a new global brand experience. This focuses on the new logo, which has a flat two-  
dimensional design and is reduced to its essential elements for more flexible use in digital applications. With  
its new brand design, Volkswagen is presenting itself as more modern, more human and more authentic. This  
marks the start of a new era for Volkswagen, the product aspect of which is represented by the all-electric ID.3.  
As the first model in the ID. product line, this highly efficient and fully connected zero emissions car is based on  
the Modular Electric Drive Toolkit (MEB) and will be on the road from 2020. Volkswagen announced in 2019  
that it wants also make its MEB available for other manufacturers. The lifestyle-oriented T-Roc Cabriolet  
expanded this popular crossover model range in the reporting year. For more than four decades, the Golf has  
been the most successful European car. The eighth generation of the bestseller launched at the end of the  
reporting year: digitalized, connected and intuitive to operate. No fewer than five hybrid versions are electri-  
fying the compact class. Assisted driving is available up to a speed of 210 km/h.  
The Volkswagen Passenger Cars brand delivered 6.3 million (+0.5%) vehicles worldwide in fiscal year 2019.  
Delivery figures were up in Italy (+8.7%), France (+6.8%), Germany (+5.3%), the USA (+2.6%) and Brazil (+16.7%).  
The T-Cross, T-Roc, Tiguan, Touareg and Atlas models were particularly popular.  
The Volkswagen Passenger Cars brand sold 3.7 (3.7) million vehicles in the reporting year. The difference  
between deliveries and unit sales is mainly due to the fact that the vehicle-producing joint ventures in China are  
not attributed to the companies in the Volkswagen Passenger Cars brand.  
The Volkswagen Passenger Cars brand produced 6.2 (6.3) million vehicles worldwide in 2019. At the Wolfs-  
burg plant, the five millionth Tiguan rolled off the assembly line. In Emden, the thirty millionth Passat was  
manufactured; this makes it the Group’s most-produced mid-range model.  
SA LE S R EVEN U E AN D EA RN I NG S  
At €88.4 billion, the Volkswagen Passenger Cars brand’s sales revenue in 2019 was 4.5% higher than in the  
previous year. Operating profit before special items increased to €3.8 (3.2) billion. Particularly improvements in  
the mix and price positioning compensated for lower sales of the models from Volkswagen Passenger Cars and  
for launch costs and negative exchange rate effects. The operating return on sales before special items increased  
to 4.3 (3.8)%. The diesel issue gave rise to special items of €–1.9 (–1.9) billion.  
3
0 million  
Passats manufactured  
Divisions  
Volkswagen Passenger Cars  
25  
PRODU CT IO N  
VOLKSWAGE N PA SSEN GER CA RS B RAN D  
Units  
2019  
2018  
2019  
2018  
%
Tiguan  
910,926  
706,052  
679,351  
610,327  
543,706  
514,698  
345,077  
328,069  
274,071  
244,132  
183,648  
151,241  
136,899  
108,676  
92,903  
90,366  
54,941  
52,859  
51,868  
43,675  
25,681  
20,580  
13,750  
600  
861,331  
855,179  
805,752  
770,447  
656,249  
513,556  
269,390  
236,977  
–
Deliveries (thousand units)  
Vehicle sales  
6,278  
3,677  
6,245  
3,715  
+0.5  
–1.0  
–1.8  
+4.5  
Polo/Virtus  
Golf  
Production  
6,184  
6,297  
Jetta/Sagitar  
Passat/Magotan  
Lavida  
Sales revenue (€ million)  
88,407  
84,585  
Operating result before  
special items  
3,785  
4.3  
3,239  
3.8  
+16.9  
Operating return on sales (%)  
Bora  
T-Roc  
T-Cross  
Santana  
Atlas/Teramont  
Gol  
272,080  
166,034  
156,410  
26,986  
136,512  
141,076  
130,417  
59,233  
40,387  
49,735  
40,596  
30,459  
37,846  
24,102  
16,356  
–
Tharu  
up!  
Lamando  
Touran  
Saveiro  
Touareg  
Arteon/CC  
Fox  
Sharan  
Beetle  
Phideon  
Suran  
ID.3  
50  
6,184,146  
6,297,110  
DEL I VERI ES BY MA RKET  
in percent  
T-Cross  
Europe/Other markets 30.4 %  
North America  
South America  
9.0 %  
7.8 %  
Asia-Pacific 52.7 %  
i
F U R T H E R IN F O R M A T IO N www.volkswagen.com  
2
6
Audi  
Divisions  
Audi is following its strategic focus and consistently pursuing sustainable premium  
mobility. The electric-powered e-tron is the highlight of the 2019 product offensive.  
B U SI N E S S D EV E LOPM E NT  
“Vorsprung” is Audi’s active brand promise that is delivered throughout the world and that is currently being  
redefined by the brand with the four rings, as it moves away from the narrow focus on technical feasibility and  
towards a new approach, where the customer is at the center. In 2019, Audi expanded its vehicle range and  
celebrated over 20 market launches. The highlight of the year was the market introduction of the Audi e-tron.  
The all-electric SUV was rolled out in Europe, China and the USA. The vehicle stands out with a high-quality  
interior and is packed with technological highlights. The all-electric Q2L e-tron debuted on the Chinese market.  
With concept vehicles such as the e-tron GT concept, Q4 e-tron concept, AI:TRAIL, AI:ME and others, Audi  
showcased further potential in e-mobility and artificial intelligence. By 2025, Audi plans to bring more than 30  
electrified models to market, including 20 with pure electric drive. Audi is thereby following its strategic focus  
and consistently pursuing sustainable premium mobility. Alongside the electrified models, the vehicles Audi  
presented in 2019 included the fourth generation of the bestselling A6 and the dynamic RS 7 Sportback.  
The difficult market environment and the WLTP test procedure posed challenges for Audi particularly in the  
first half of 2019. Nevertheless, the Audi brand delivered a total of 1.9 million vehicles to customers (+1.8%).  
Deliveries rose especially in Western Europe (+4.0%) and China (+4.1%).  
Audi sold 1.2 (1.5) million vehicles in the reporting year. Unit sales by the Chinese joint venture FAW-Volks-  
wagen amounted to a further 620 (620) thousand Audi vehicles. The Q2, e-tron and Q8 models were in especially  
high demand. Unit sales at Automobili Lamborghini S.p.A. amounted to 8,290 (6,333) vehicles. The increase was  
mainly due to high demand for the Urus.  
In the reporting year, Audi produced 1.8 (1.9) million units worldwide. Lamborghini manufactured a total of  
8,664 (6,571) vehicles in 2019.  
SA LE S R EVEN U E AN D EA RN I NG S  
As of 2019, the multibrand sales companies have been separated from the Audi brand and are reported in the  
Other category to increase overall transparency and comparability. As a result, the Audi brand’s sales revenue  
declined to €55.7 (59.2) billion in fiscal year 2019. The operating result (previous year’s figure excludes special  
items) stood at €4.5 (4.7) billion. Mix and product cost improvements offset negative effects from model start-  
ups and phase-outs, higher upfront expenditure for new products and technologies, an unfavorable exchange  
rate trend and personnel cost increases. The operating return on sales (previous year’s figure excludes special  
items) was 8.1 (7.9)%. The financial key performance indicators for the Lamborghini and Ducati brands are  
included in the financial figures for the Audi brand.  
1
.9 million  
Vehicles delivered in 2019  
Divisions  
Audi  
27  
PRODU CT IO N  
AU DI B RA N D  
Units  
2019  
2018  
2019  
2018  
%
Audi  
A4  
Deliveries (thousand units)  
Audi  
1,854  
1,846  
8
1,818  
1,812  
6
+2.0  
+1.8  
323,387  
286,365  
240,795  
232,569  
195,566  
130,225  
93,077  
81,287  
63,633  
44,727  
43,376  
23,826  
17,068  
14,999  
2,121  
344,623  
298,645  
304,903  
254,705  
167,707  
108,386  
111,544  
80,387  
Q5  
A3  
Lamborghini  
+42.7  
–18.2  
–3.7  
Vehicle sales  
1,200  
1,802  
55,680  
1,467  
1,871  
59,248  
A6  
Production  
Q3  
Q2  
A5  
Sales revenue (€ million)  
–6.0  
Operating result before  
special items  
4,509  
8.1  
4,705  
7.9  
–4.2  
Operating return on sales (%)  
A1  
Q7  
Q8  
e-tron  
A8  
110,593  
22,414  
2,425  
24,541  
A7  
20,058  
TT  
12,118  
R8  
1,764  
1,793,021  
1,864,813  
Lamborghini  
Urus  
5,233  
1,495  
931  
2,565  
1,669  
1,121  
578  
Huracán Coupé  
Huracán Spyder  
Aventador Coupé  
Aventador Roadster  
786  
219  
638  
8,664  
6,571  
Audi brand  
1,801,685  
1,871,384  
Ducati, motorcycles  
51,723  
53,320  
DEL I VERI ES BY MA RKET  
in percent  
e-tron  
Europe/Other markets 43.5 %  
North America 14.7 %  
South America  
0.9 %  
Asia-Pacific 40.9 %  
i
F U R T H E R IN F O R M A T IO N ww w . a u d i . com
2
8
ŠKODA  
Divisions  
ŠKODA presented new vehicles with alternative drives in 2019, including the  
e
G-Tec CNG models. With the Citigo iV, the first all-electric production model,  
ŠKODA is entering the era of e-mobility.  
B U SI N E S S D EV E LOPM E NT  
The ŠKODA models are synonymous with smart understatement, featuring a superior spacious interior, the  
highest standards of functionality, excellent value for money and a distinct design. Added to that are a number  
of “Simply Clever” ideas and new digital services, all aimed at making customers’ lives easier. ŠKODA presented  
the CNG-powered Scala G-Tec and Kamiq G-Tec in 2019, expanding the range of particularly environmentally  
conscious and efficient natural gas models. ŠKODA also presented the successor to the successful Octavia, and  
the Kamiq city SUV for the European market. In addition, ŠKODA entered the era of e-mobility in 2019. For the  
future, ŠKODA is combining the establishment of its electric product family and an integrated networked  
e
ecosystem for mobility solutions under the iV sub-brand. The ŠKODA Citigo iV is the Czech brand’s first all-  
e
electric vehicle. Another electric car also celebrated its debut in 2019: the Superb iV is ŠKODA’S first production  
model with plug-in hybrid drive. ŠKODA gave a foretaste of this in the reporting year with the presentation of  
the all-electric Vision iV concept study. With a sporty, emotive design, this is the first vehicle from ŠKODA to be  
based on the Modular Electric Drive Toolkit (MEB).  
The ŠKODA brand delivered 1.2 (1.3) million vehicles worldwide in 2019. China remained the largest  
individual market. However, deliveries there fell by 17.3%. Meanwhile, in Western Europe (+7.0%) and in Central  
and Eastern Europe (+4.1%), an increase in deliveries was achieved.  
ŠKODA sold 1.1 (1.0) million vehicles in the reporting period. The gain was due particularly to the initial  
consolidation following the assumption of regional responsibility for India. The Karoq and Kodiaq models were  
in particularly high demand. The difference between figures for deliveries and unit sales is mainly due to the  
fact that the vehicle-producing joint ventures in China are not attributed to ŠKODA brand companies.  
The ŠKODA brand produced 1.2 (1.3) million vehicles worldwide in 2019. The 22 millionth vehicle rolled off  
the assembly line in mid-April 2019. It was produced by the SAIC VOLKSWAGEN joint venture’s plant in Changsha.  
SA LE S R EVEN U E AN D EA RN I NG S  
Sales revenue at the ŠKODA brand increased by 14.5% in 2019 to €19.8 billion, particularly due to initial con-  
solidation following the assumption of regional responsibility for India. The operating profit improved by  
€0.3 billion to €1.7 billion in the reporting period. Volume increases, mix optimizations and pricing measures  
more than compensated for negative effects resulting from cost increases and higher upfront expenditure for  
new products. The operating return on sales stood at 8.4%, compared to 8.0% in the previous year.  
2
2 million  
Vehicles produced by the ŠKODA brand  
Divisions  
ŠKODA  
29  
PRODU CT IO N  
ŠKODA B RA N D  
Units  
2019  
2018  
2019  
2018  
%
Octavia  
358,356  
207,724  
203,688  
177,163  
166,237  
102,592  
27,306  
400,210  
195,270  
173,816  
155,499  
186,213  
136,985  
37,095  
Deliveries (thousand units)  
Vehicle sales  
1,243  
1,062  
1,243  
19,806  
1,660  
8.4  
1,254  
957  
–0.9  
+11.0  
–3.3  
Rapid/Scala  
Karoq/Kamiq/Yeti  
Kodiaq  
Production  
1,285  
17,293  
1,377  
8.0  
Sales revenue (€ million)  
Operating result  
+14.5  
+20.6  
Fabia  
Superb  
Operating return on sales (%)  
Citigo  
1,243,066  
1,285,088  
DEL I VERI ES BY MA RKET  
in percent  
Scala G-Tec  
Europe/Other markets 74.8 %  
North America  
South America  
0.0 %  
0.1 %  
Asia-Pacific 25.1 %  
i
F U R T H E R IN F O R M A T IO N www.skoda-auto.com  
3
0
SEAT  
Divisions  
SEAT can look back on a successful year in which it presented its first all-electric  
production model, the Mii electric. A vehicle based on the MEB is already in the  
starting blocks.  
B U SI N E S S D EV E LOPM E NT  
SEAT delivers solutions “Created in Barcelona” to make mobility easy. At SEAT, the year 2019 was all about the  
electrification of the model range: the Spanish brand brought its first all-electric production model, the Mii  
electric, onto the market in the reporting period. Powered by a 61 kW (83 PS) electric motor, the model is ideally  
suited to city traffic with its dynamic performance and fresh design. The battery has a range of up to 260 km.  
SEAT gave a foretaste of another all-electric vehicle with its el-Born concept car. Based on the Modular Electric  
Drive Toolkit, this model impresses with a generous interior, offering both practicality and functionality, as well  
as a range of up to 420 km. The Tarraco FR, also presented in 2019, is the most powerful vehicle in the model  
range with a modern powertrain comprising a 1.4 TSI petrol engine producing 110 kW (150 PS) and an 85 kW  
(115 PS) electric motor. The system’s total output is 180 kW (245 PS). The body exudes confidence and is truly  
dynamic thanks to wider wheel housings, a sporty rear spoiler, a front FR radiator grille and 19-inch alloy  
wheels. The company’s CUPRA brand presented the Formentor, the first model specially developed for the  
brand, which is due to launch on the market in 2020. CUPRA also presented the Tavascan, its vision of an all-  
electric SUV coupé. This concept car combines state-of-the-art drive technology with the elegant, sporty and  
expressive design of a four-door crossover SUV.  
The SEAT brand’s deliveries to customers rose by 10.9% in fiscal year 2019 to 574 thousand vehicles. Almost  
all markets contributed to this rise, with the brand achieving the most significant increases in Italy (+30.8%),  
France (+19.0%), Germany (+16.1%) and the United Kingdom (+9.5%). The company’s CUPRA brand recorded an  
increase of 71.8% to 25 thousand vehicles.  
At 667 thousand units, the SEAT brand’s sales in the reporting period were up by 9.8% on the prior-year  
figure. This figure includes the A1 manufactured for Audi. The A-SUV models Arona and Ateca were in high  
demand.  
SEAT manufactured 592 thousand vehicles during the past fiscal year, an increase of 12.1% on 2018.  
SA LE S R EVEN U E AN D EA RN I NG S  
SEAT continued its upward trend in the reporting year: sales revenue amounted to €11.5 billion, exceeding the  
previous year’s record figure by 12.7%. Operating profit rose to €445 (254) million, which was also a new record.  
Particularly volume and mix effects had a positive impact. The SEAT brand’s operating return on sales increased  
to 3.9 (2.5)%.  
€
445 million  
Operating profit for 2019  
Divisions  
SEAT  
31  
PRODU CT IO N  
SEAT B RA N D  
Units  
2019  
2018  
2019  
2018  
%
Leon  
153,837  
134,611  
130,243  
98,397  
38,721  
23,015  
11,479  
1,506  
159,486  
110,926  
120,287  
90,824  
2,398  
Deliveries (thousand units)  
Vehicle sales  
574  
667  
518  
608  
+10.9  
+9.8  
Arona  
Ibiza  
Production  
592  
528  
+12.1  
+12.7  
+74.7  
Ateca  
Tarraco  
Alhambra  
Mii  
Sales revenue (€ million)  
Operating result  
11,496  
445  
10,202  
254  
19,588  
14,369  
10,151  
528,029  
Operating return on sales (%)  
3.9  
2.5  
Toledo  
591,809  
DEL I VERI ES BY MA RKET  
in percent  
Mii electric  
Europe/Other markets 95.4 %  
North America  
South America  
Asia-Pacific  
4.2 %  
0.3 %  
0.1 %  
i
F U R T H E R IN F O R M A T IO N www . seat . com  
3
2
Bentley  
Divisions  
Bentley celebrated a special occasion in 2019: the brand’s 100th anniversary. The record  
deliveries achieved in the anniversary year were partly attributable to the popularity of  
the Bentayga.  
B U SI N E S S D EV E LOPM E NT  
The Bentley brand is defined by exclusivity, elegance and power. For Bentley, 2019 was all about the brand’s  
100th anniversary. Bentley celebrated this special occasion with a range of special models, including the  
Continental GT Number 9 Edition by Mulliner, of which only 100 vehicles were produced. Bentley also debuted  
the 467 kW (635 PS) powerful Continental GT Convertible in 2019, which sprints from 0 to 100 km/h in just 3.8  
seconds. Furthermore the Bentley brand also presented the new generation of the Flying Spur. This luxurious  
grand tourer has been completely revamped and sets new standards in innovation, connectivity, comfort and  
driving pleasure. It impresses with both the maneuverability of a sports saloon and the finesse of a luxury  
vehicle. The Flying Spur is the first Bentley model to come with electronic all-wheel steering, which combined  
with the active all-wheel drive and the Bentley Dynamic Ride system provides for an agile handling and driving  
experience. The Bentayga range was very popular with customers in the reporting year. The 467 kW (635 PS)  
Bentayga Speed and a Bentayga hybrid were added in 2019. With combined CO  
2
emissions of just 75 g/km, the  
hybrid is making a powerful statement about efficiency in the luxury segment.  
Sales by the Bentley brand in 2019 increased to 11,006 (10,494) vehicles, thereby hitting a new record.  
Bentley recorded increased deliveries in almost all markets. However, there was a decline of 9.4% in Asia-Pacific.  
Bentley sold 11,631 (9,559) vehicles globally in the reporting year. The increase was primarily due to the  
availability of the new Continental GT and GTC models and the popularity of the Bentayga.  
In fiscal year 2019, the Bentley brand manufactured 12,430 vehicles. This was an increase of 36.4% year-on-  
year.  
SA LE S R EVEN U E AN D EA RN I NG S  
The Bentley brand generated sales revenue of €2.1 billion in 2019, exceeding the equivalent prior-year figure by  
35.1%. Operating profit increased to €65 (–288) million driven by higher volumes, as well as by cost savings in  
connection with the ongoing efficiency program together with mix effects and exchange rate trends. The  
operating return on sales rose to 3.1 (–18.6)%.  
1
00 years  
Bentley brand  
Divisions  
Bentley  
33  
PRODU CT IO N  
B E NTL EY B RA N D  
Units  
2019  
2018  
2019  
2018  
%
Bentayga  
5,232  
3,903  
443  
4,072  
2,841  
547  
Deliveries (units)  
Vehicle sales  
11,006  
11,631  
12,430  
2,092  
65  
10,494  
9,559  
9,115  
1,548  
–288  
+4.9  
+21.7  
+36.4  
+35.1  
x
Continental GT Coupé  
Mulsanne  
Production  
Flying Spur  
102  
1,627  
28  
Sales revenue (€ million)  
Operating result  
Continental GT Convertible  
2,750  
2,430  
1
9,115  
Operating return on sales (%)  
3.1  
–18.6  
DEL I VERI ES BY MA RKET  
in percent  
Flying Spur  
Europe/Other markets 45.3 %  
North America 26.3 %  
South America  
0.2 %  
Asia-Pacific 28.2 %  
i
F U R T H E R IN F O R M A T IO N w w w . b e n t le y m o t o r s . c o m
3
4
Porsche  
Divisions  
Porsche is electrifying – the all-electric Taycan marks the beginning of a new era for  
the sports car manufacturer. With the new 911 Cabriolet, Porsche is celebrating  
open-top driving.  
B U SI N E S S D EV E LOPM E NT  
Exclusivity and social acceptance, innovation and tradition, performance and everyday usability, design and  
functionality – these are the brand values of sports car manufacturer Porsche. The highlight in fiscal year 2019  
was the presentation of the Taycan. With a spectacular world premiere taking place simultaneously on three  
continents, Porsche presented its first all-electric sports car to the audience. The four-door sports saloon  
impressively combines typical Porsche performance and connectivity with everyday usability and is setting  
new benchmarks for sustainability and digitalization. The vehicle is produced carbon-neutrally in Zuffenhausen.  
The Taycan Turbo S, Taycan Turbo and Taycan 4S models in the new series are at the cutting edge of Porsche  
E-Performance and are among the sports car manufacturer’s most powerful production models. The Taycan’s  
top version Turbo S can generate up to 560 kW (761 PS). It accelerates from 0 to 100 km/h in just 2.8 seconds  
and has a range of up to 412 km. Porsche also presented the new 911 Cabriolet in 2019, continuing the tradition  
of open-top driving. The 331 kW (450 PS) twin-turbo engine delivers top speeds of over 300 km/h, and  
acceleration of 0 to 100 km/h in less than 4 seconds. There was a new member of the Cayenne range in 2019:  
the Cayenne Coupé. The new derivative includes all the technical highlights of the third Cayenne generation,  
but is more progressive, more athletic and more emotional thanks to its custom design elements with a roof  
line that falls away more dramatically to the rear. Other new products comprised the 718 Touring versions of  
the Boxster and Cayman as well as the Macan S and the Macan Turbo.  
Porsche increased its deliveries to customers by 9.6% in fiscal year 2019 to 281 thousand sports cars. China,  
where Porsche sold 87 thousand vehicles (+8.3%), remained the largest individual market. Deliveries rose by  
1
5.2% in Europe and 6.5% in North America.  
Porsche’s unit sales amounted to 277 thousand vehicles in 2019. This was 9.6% more than in the previous  
year. The Macan and Cayenne models in particular achieved considerable growth.  
Porsche produced 274 thousand vehicles in the reporting year, an increase by 2.2% year-on-year.  
SA LE S R EVEN U E AN D EA RN I NG S  
Porsche Automotive’s sales revenue rose by 10.1% to €26.1 (23.7) billion in fiscal year 2019. Operating profit  
before special items improved by 2.4% year-on-year to €4.2 billion. Volume and mix improvements and  
product cost optimization compensated for negative exchange rate effects and cost increases. The operating  
return on sales before special items was 16.2 (17.4)%. The diesel issue gave rise to special items of €–0.5 billion  
in the reporting period.  
9
.6%  
Increase in unit sales in 2019  
Divisions  
Porsche  
35  
PRODU CT IO N  
POR SC H E AUTO M OTIV E1  
Units  
2019  
2018  
2019  
2018  
%
Cayenne  
Macan  
95,293  
89,744  
37,585  
31,192  
19,263  
1,386  
79,111  
93,953  
36,236  
35,493  
23,658  
–
Deliveries (thousand units)  
Vehicle sales  
281  
277  
256  
253  
+9.6  
+9.6  
9
11 Coupé/Cabriolet  
Panamera  
18 Boxster/Cayman  
Production  
274  
268  
+2.2  
Sales revenue (€ million)  
26,060  
23,668  
+10.1  
7
Operating result before  
special items  
4,210  
16.2  
4,110  
17.4  
+2.4  
Taycan  
Operating return on sales (%)  
2
74,463  
268,451  
1
Porsche (Automotive and Financial Services): sales revenue €28,518 (25,784) million,  
operating profit before special items €4,396 (4,291) million.  
DEL I VERI ES BY MA RKET  
in percent  
Taycan  
Europe/Other markets 34.2 %  
North America 25.6 %  
South America  
1.2 %  
Asia-Pacific 39.0 %  
i
F U R T H E R IN F O R M A T IO N www.porsche.com  
3
6
Volkswagen Commercial Vehicles  
Divisions  
The Transporter 6.1 – a technically redesigned version of the bestselling van – was  
launched on the market in 2019. Volkswagen Commercial Vehicles will be the Group’s  
leading brand for autonomous driving.  
B U SI N E S S D EV E LOPM E NT  
As a leading manufacturer of light commercial vehicles, Volkswagen Commercial Vehicles is making fundamen-  
tal and sustainable changes to the way goods and services are distributed in cities in order to improve quality  
of life, especially in inner city areas. The brand is also the Volkswagen Group’s leader in autonomous driving as  
well as in services such as Mobility-as-a-Service and Transport-as-a-Service. For these solutions, Volkswagen  
Commercial Vehicles plans to develop special-purpose vehicles such as robo-taxis and robo-vans to keep the  
world of tomorrow moving with all its requirements for a clean, intelligent and sustainable mobility.  
In the reporting year, Volkswagen Commercial Vehicles introduced its extensive technically redesigned  
bestselling van, the Multivan/Transporter 6.1. Thanks to the switch from hydraulic to electro-mechanical power  
steering, the Transporter now has an extended range of driver assist systems, which significantly increase  
safety and comfort. The new assist systems include technologies such as Lane Assist, Park Assist and Trailer  
Assist. In addition, the vehicle has been tailored to the requirements of the digital world: now available as an  
option is the third generation of the Modular Infotainment Toolkit, which enables the use of new applications  
and online services with an integrated SIM card. The popular Campervan California has also been upgraded. Like  
its predecessor, the California 6.1 is available in three equipment versions: Beach, Coast and Ocean.  
Deliveries by Volkswagen Commercial Vehicles in fiscal year 2019 stood at 492 thousand units and were  
slightly down on the previous year (–1.6%). While sales in Europe increased by 1.4%, they declined in South  
America by 14.5%.  
Unit sales fell by 2.8% to 456 thousand vehicles in the reporting year. Increases were recorded for the Crafter.  
The Volkswagen Commercial Vehicles brand produced 477 thousand vehicles in the reporting period. This  
was 8.0% less than in the previous year. The decline was due to the model change in the T series and the WLTP  
test procedure applicable to light commercial vehicles since September 1, 2019. The two millionth Caddy rolled  
off the assembly line at Volkswagen Poznan in March. The main plant in Hanover celebrated a special anniver-  
sary in 2019: the ten millionth vehicle rolled off its assembly line in early March. The Hanover plant began  
producing the T series in 1956.  
SA LE S R EVEN U E AN D EA RN I NG S  
Sales revenue by Volkswagen Commercial Vehicles in 2019 was almost on a level with the previous year, at  
€11.5 (11.9) billion. In particular, increased fixed and development costs for new products reduced operating  
profit to €510 (780) million. Improved product costs had a positive effect. The operating return on sales amounted  
to 4.4(6.6)%.  
1
0 million  
Vehicles produced in Hanover  
Divisions  
Volkswagen Commercial Vehicles  
37  
PRODU CT IO N  
VOLKSWAGE N CO MMERCIA L VE H I CLE S B RAN D  
Units  
2019  
2018  
2019  
2018  
%
Caravelle/Multivan, Kombi  
Transporter  
Caddy Kombi  
Crafter  
96,533  
91,585  
81,466  
72,906  
68,010  
66,780  
77,280  
115,525  
86,286  
89,154  
67,151  
88,950  
71,881  
518,947  
Deliveries (thousand units)  
Vehicle sales  
492  
456  
500  
469  
–1.6  
–2.8  
Production  
477  
519  
–8.0  
Sales revenue (€ million)  
Operating result  
11,473  
510  
11,875  
780  
–3.4  
Amarok  
–34.6  
Caddy  
Operating return on sales (%)  
4.4  
6.6  
4
DEL I VERI ES BY MA RKET  
in percent  
Multivan 6.1  
Europe/Other markets 85.3 %  
North America  
South America  
Asia-Pacific  
2.3 %  
7.7 %  
4.7 %  
i
F U R T H E R IN F O R M A T IO N www.vol kswa gen- com m e r ci al - vehi cl es. com
3
8
TRATON GROUP  
Divisions  
In 2019, the TRATON GROUP consistently pursued its goal of becoming a global  
champion of the commercial vehicle industry. In addition to the IPO, sales successes  
and strategic partnerships contributed to this.  
B U SI N E S S D EV E LOPM E NT  
With its MAN, Scania, Volkswagen Caminhões e Ônibus and RIO brands, TRATON SE aims to become a global  
champion of the commercial vehicle industry and drive the transformation of the logistics sector. Its mission is  
to reinvent transport for future generations: “Transforming Transportation”.  
2
019 was a year that set the direction of travel at the TRATON GROUP. The change in legal form in January  
from a German stock corporation (AG) to a European Company (Societas Europaea, SE) reinforced the Group’s  
international identity. The company now operates under the name TRATON SE  
.
The reporting year 2019, especially the first half of the year, was dominated by the company’s IPO. It is  
increasing the company’s financial flexibility and opening up direct access to the capital markets. June 28, 2019  
marked the first day of trading for TRATON shares and was an important milestone in its corporate history. The  
successful dual listing on the Frankfurt Stock Exchange in Germany and Nasdaq Stockholm in Sweden  
underscores the TRATON GROUP’s international orientation.  
At the Innovation Day in Södertälje, Sweden, in October, the TRATON GROUP presented itself as a forward-  
looking company and announced investments in e-mobility and digitalization.  
As part of the strategic partnership with the Japanese company Hino Motors, Ltd., a procurement joint  
venture was created in October under the name HINO  
& TRATON Global Procurement GmbH. Cooperation on  
mining vehicles for the Canadian market was agreed between Navistar and Scania under the umbrella of the  
TRATON alliance with Navistar. In 2020, Scania will deliver heavy-duty trucks for initial tests by selected  
operators.  
The TRATON GROUP takes sustainability and environmental awareness very seriously. In the first half of  
2
019, to fulfill the Paris Climate Agreement, the institutions of the European Union set the first CO  
2
emission  
emis-  
standards for heavy trucks weighing over 16 tonnes. Heavy vehicle manufacturers must reduce the CO  
2
sions of their new vehicle fleet in the EU by 15% by 2025. By 2030, the new rules call for a reduction of 30%. The  
reference period for all reduction targets runs from July 1, 2019 to June 30, 2020. The TRATON GROUP is fully  
committed to further reducing the greenhouse gas emissions caused by commercial vehicles.  
June 28, 2019  
First day of trading for TRATON shares  
Divisions  
TRATON GROUP  
39  
PRODU CT IO N  
DELI VER I E S  
Units  
2019  
2018  
Units  
2019  
2018  
Trucks  
201,115  
21,387  
15,903  
207,235  
23,141  
9,043  
Trucks  
205,936  
21,496  
14,789  
242,221  
202,494  
22,629  
7,871  
Buses  
Buses  
Light Commercial Vehicles  
Light Commercial Vehicles  
238,405  
239,419  
232,994  
DEL I VERI ES BY MA RKET  
in percent  
Strong brands  
Europe/Other markets 69.9 %  
North America 1.3 %  
South America 23.5 %  
Asia-Pacific 5.3 %  
i
F U R T H E R IN F O R M A T IO N w w w . t r a t o n . c o m
4
0
Scania  
Divisions  
Scania presented innovative and sustainable solutions for public transport in 2019.  
The R 450 won the “Green Truck 2019” award. Sales revenue and earnings increased  
year-on-year.  
B U SI N E S S D EV E LOPM E NT  
The Swedish brand Scania follows its values “Customer first”, “Respect for the individual”, “Elimination of  
waste”, “Determination”, “Team Spirit” and “Integrity”. In 2019, Scania’s R 450 truck won the “Green Truck 2019”  
award as the most fuel-efficient and environmentally friendly commercial vehicle in its class. At the UITP 2019  
Global Public Transport Summit, Scania presented sustainable solutions for public transport, particularly to  
address the future challenges in major cities. It revealed initial realizations of innovative transport solutions  
that included the use of autonomous shuttle buses in public spaces. In keeping with this, it also presented the  
new battery-electric, self-driving urban concept vehicle NXT. The NXT offers a high degree of flexibility and is  
able to shift from delivering goods during the day to collecting refuse at night, for example. The autonomous  
concept vehicle AXL is another forward-looking solution for use in mines. In October, at the international trade  
fair FENATRAN in Brazil, Scania won the “Truck of the Year” prize for the Latin American market. The new Scania  
Citywide, the first all-electric urban bus in series production, won an award at Busworld.  
The key figures presented in this chapter encompass Scania’s truck and bus, industrial and marine engines  
businesses.  
Incoming orders at the Scania brand fell by 8.2% year-on-year to 89 thousand vehicles due to a cooling  
down the market for trucks in Europe during the course of the year in 2019. In 2019, the Scania brand increased  
its deliveries to 99 (96) thousand vehicles worldwide. Scania recorded increases especially in Europe and Brazil.  
The number of buses delivered in 2019 stood at 8 (8) thousand units. Demand for services and replacement  
parts as well as for Scania Financial Services was again higher in the reporting period than in the previous year.  
Scania manufactured 97 (101) thousand commercial vehicles in fiscal year 2019, of which 8 (9) thousand  
were buses. The successful introduction of the new generation of Scania trucks in Latin America and Asia  
completed the changeover of production to the new series.  
SA LE S R EVEN U E AN D EA RN I NG S  
Scania Vehicles and Services generated sales revenue of €13.9 (13.0) billion in fiscal year 2019. Operating profit  
increased by 24.8% to €1.5 billion. In addition to higher vehicles sales and a stronger genuine parts and service  
business, improvements in the mix as well as exchange rate effects had a positive impact on profit. The  
operating return on sales amounted to 10.8 (9.3)% in the reporting period.  
1
0.8%  
Operating return on sales in 2019  
Divisions  
Scania  
41  
PRODU CT IO N  
SCA N I A V EH I C L E S A N D SE RV I C E S1  
Units  
2019  
2018  
2019  
2018  
%
Trucks  
Buses  
89,276  
7,719  
92,679  
8,696  
Orders received  
(thousand units)  
89  
99  
97  
96  
–8.2  
+3.1  
+3.2  
–4.3  
+7.3  
+24.8  
Deliveries  
96,995  
101,375  
Vehicle sales  
101  
97  
Production  
97  
101  
Sales revenue (€ million)  
Operating result  
Operating return on sales (%)  
13,934  
1,506  
10.8  
12,981  
1,207  
9.3  
1
Scania (including Financial Services): sales revenue €14,391 (13,360) million, operating  
profit €1,648 (1,346) million.  
DEL I VERI ES BY MA RKET  
in percent  
R 450  
Europe/Other markets 72.7 %  
North America  
South America 17.4 %  
Asia-Pacific 8.8 %  
1.0 %  
i
F U R T H E R IN F O R M A T IO N www.scania.com  
4
2
MAN  
Divisions  
MAN continued to work intensively on digital solutions for the transport industry  
in 2019. In South America, further improving conditions led to a considerable increase  
in deliveries.  
B U SI N E S S D EV E LOPM E NT  
Customer focus, enthusiasm for the product, and efficiency are the core values at MAN. MAN, DB Schenker and  
the Fresenius University of Applied Sciences presented the successful results of the platooning project in real  
logistics operations in the reporting year. The findings: operating digitally networked trucks on German  
motorways is safe, technically reliable and easily applicable in the day-to-day operations of a logistics company.  
In addition, the technology also saves fuel. As part of a research project sponsored by the Federal Ministry of  
Transport and Digital Infrastructure (BMVI), truck drivers praised the driving comfort and general feeling of  
safety. MAN worked intensively in 2019 on the successful launch of its new generation of trucks, which took  
place in February 2020. The MAN Lion’s City was the winner in the “Safety Label Bus” category at the Busworld  
Awards 2019.  
In South America, MAN Commercial Vehicles was recognized in 2019 as one of Brazil’s best employers with  
its Volkswagen Caminhões e Ônibus brand. Since the new Delivery range launched in 2017, over 25,000 vehicles  
have already been produced. Production of the Constellation truck passed the 240,000-vehicle mark in 2019. In  
bus production too, Volkswagen Caminhões e Ônibus is underscoring its strong position, with more than 3,400  
Volksbuses being delivered as part of the “Caminho da Escola” (route to school) program. A further 430 buses  
are being provided to support social projects. Following the successful introduction of our digital brand RIO in  
2019, Volkswagen Caminhões e Ônibus has already connected 1,000 vehicles. With the “e-Consortium”, the  
company is also driving the introduction of electric trucks in Brazil.  
Due to the slowing European market for trucks in 2019, incoming orders at MAN fell by 5.3% in the reporting  
year to 139 thousand vehicles. A total of 143 (137) thousand commercial vehicles were delivered to customers,  
of which 14 (14) thousand were buses. In South America, MAN Commercial Vehicles recorded rising demand  
with its Volkswagen Caminhões e Ônibus brand as a result of the further improving economic environment in  
Brazil.  
In 2019, MAN produced a total of 141 (138) thousand commercial vehicles, including 14 (14) thousand buses.  
SA LE S R EVEN U E AN D EA RN I NG S  
Driven by higher volumes, sales revenue at MAN Commercial Vehicles climbed to €12.7 billion in 2019,  
exceeding the prior-year figure by 4.6%. Operating profit was up on the prior-year period at €402 (332) million,  
which was negatively impacted by expenses incurred in connection with the restructuring of activities in India.  
The operating return on sales was 3.2 (2.7)%.  
2
1.2%  
Increase in profit in 2019  
Divisions  
MAN  
43  
PRODU CT IO N  
M A N COMME RCI AL VE H IC LE S  
Units  
2019  
2018  
2019  
2018  
%
Trucks  
111,839  
13,668  
15,903  
114,556  
14,445  
9,043  
Orders received  
(thousand units)  
139  
143  
146  
137  
–5.3  
+4.6  
+4.6  
+2.4  
+4.6  
+21.2  
Buses  
Deliveries  
Light Commercial Vehicles  
Vehicle sales  
143  
137  
141,410  
138,044  
Production  
141  
138  
Sales revenue (€ million)  
Operating result  
Operating return on sales (%)  
12,663  
402  
12,104  
332  
3.2  
2.7  
DEL I VERI ES BY MA RKET  
in percent  
Lion’s Coach  
Europe/Other markets 68.0 %  
North America 1.6 %  
South America 27.7 %  
Asia-Pacific 2.8 %  
i
F U R T H E R IN F O R M A T IO N www.man.eu  
4
4
Volkswagen Group China  
Divisions  
Volkswagen Group China  
The Chinese automotive market is centrally important to Volkswagen’s electric  
campaign. With intensified local development work and expansion of the product  
portfolio, for example with the new JETTA brand from Volkswagen Passenger Cars,  
we want to confirm our strong position in the world’s largest individual market.  
B U SI N E S S D EV E LOPM E NT  
In China, its largest individual market, Volkswagen stood its ground in 2019 amid a sluggish overall market.  
Together with our joint ventures, we held deliveries stable and gained market share. This was particularly  
thanks to a successful SUV campaign: with the Teramont, Tacqua, Tayron and Tharu models, the Volkswagen  
Passenger Cars brand offers a large selection of locally produced SUVs, which are supplemented by imported  
SUV products such as the Touareg. Other vehicles such as the Audi Q2 L e-tron, Q5 and Q7 models as well as the  
ŠKODA Kamiq and Porsche Macan augmented the attractive SUV range.  
In 2019, Volkswagen established its sub-brand JETTA in the Chinese market, thereby increasing its market  
coverage. JETTA has its own model family and dealer network. The JETTA brand is focusing particularly on young  
Chinese customers striving for individual mobility - their first own car. JETTA launched very successfully in the  
reporting year with the VS5 SUV and VA3 saloon.  
As a global driver of mobility, the Chinese automotive market is centrally important to Volkswagen’s  
electric campaign. Pre-production of an ID. model started at a new SAIC VOLKSWAGEN plant in Anting in the  
reporting year. This plant was built exclusively to produce all-electric vehicles based on the Modular Electric  
Drive Toolkit (MEB). Series production with an annual capacity of 300,000 vehicles is due to begin in October  
2020. Together with the FAW-Volkswagen plant in Foshan, this will take future production capacity to  
approximately 600,000 MEB-based all-electric vehicles a year. By 2025, it is planned to increase local production  
in China to 15 MEB models from various brands. In the reporting year, Volkswagen Group China was already  
able to offer its Chinese customers 14 electrified models.  
In 2019, we combined the Chinese research and development capacity of the Volkswagen and Audi brands  
and of the Group in a new structure. This will generate synergy effects, intensify cooperation between the  
brands and strengthen the local development of technologies. More than 4,500 employees in China are working  
in research and development on mobility solutions for the future.  
On the Chinese market, the Volkswagen Group offers more than 180 imported and locally produced models  
from the Volkswagen Passenger Cars, Audi, ŠKODA, Porsche, Bentley, Lamborghini, Volkswagen Commercial  
Vehicles, MAN, Scania and Ducati brands. We delivered 4.2 (4.2) million vehicles (including imports) to custom-  
ers in China in the reporting period. The T-Cross, Tayron, T-Roc, Tharu, Bora, Passat, Audi Q2, Audi Q5, ŠKODA  
Kamiq, ŠKODA Karoq and Porsche Macan models were especially popular.  
4
,500  
Engineers for future technologies  
Divisions  
Volkswagen Group China  
45  
EA RN I N GS  
Thousand units  
2019  
2018  
%
€ million  
2019  
2018  
Deliveries  
Vehicle sales1  
4,234  
4,048  
3,948  
4,207  
4,101  
4,116  
+0.6  
–1.3  
–4.1  
Operating result (100%)  
11,110  
4,425  
11,427  
4,627  
Operating result (proportionate)  
Production  
1
Produced locally.  
Our joint ventures produced a total of 3.9 (4.1) million vehi- The proportionate operating result of the joint ventures in  
cles in fiscal year 2019. The joint ventures produce both the reporting year stood at €4.4 billion. The negative impacts  
established Group models and those specially modified for of more intense market competition and higher research and  
Chinese customers (e.g. with extended wheelbases), as well as development costs were offset by improvements in the mix  
vehicles developed exclusively for the Chinese market (such and product cost optimization.  
as the Volkswagen Lamando, Lavida, New Bora, New Jetta, New  
Santana and Teramont).  
The figures of the Chinese joint venture companies are  
not included in the operating profit of the Group as they are  
accounted for using the equity method. Their profits are  
included solely in the Group’s financial result on a propor-  
tionate basis.  
JETTA VS5  
LO CA L P RO DU CTI ON  
Units  
2019  
2018  
Volkswagen Passenger Cars  
3,066,807  
614,753  
3,145,141  
617,472  
Audi  
ŠKODA  
Total  
266,377  
353,829  
3,947,937  
4,116,442  
4
6
Volkswagen Financial Services  
Divisions  
Volkswagen Financial Services continued its successful course in 2019, achieving  
growth in contract volume and earnings. This was thanks to its international  
presence combined with a diverse product portfolio.  
STRU CTU R E OF VOLKSWAGE N FI N A NCIA L SE RV I CE S  
Volkswagen Financial Services comprises dealer and customer financing, leasing, direct banking and insurance  
activities, fleet management and mobility services in 48 countries. Volkswagen Financial Services AG is respon-  
sible for global coordination of the Group’s financial services activities, the only exceptions being the financial  
services business of the Scania brand and of Porsche Holding Salzburg. In Europe, the principal companies are  
Volkswagen Bank GmbH, Volkswagen Leasing GmbH and Volkswagen Versicherungsdienst GmbH. VW CREDIT, INC.  
operates financial services activities in North America.  
B U SI N E S S D EV E LOPM E NT  
In 2019, Volkswagen Financial Services and the Nature And Biodiversity Conservation Union (NABU) launched  
the “Blaue Flotte” (Blue Fleet), an e-mobility program for fleet customers. The initiative centers on investment  
in climate-relevant bog protection projects. One of the major focuses is on renaturation of the Sulinger Moor in  
Lower Saxony. In future, the “Blaue Flotte” label will bring together all e-mobility offerings from Volkswagen  
Financial Services in Germany.  
The international fleet business has been further strengthened with a majority shareholding in FleetLogistics.  
The other shareholder is TÜV SÜD Auto Service GmbH. This strategic partnership will combine and further  
develop mobility services for fleet customers.  
The online used vehicle platform heycar from Volkswagen Financial Services is expanding: after the positive  
performance in Germany, where heycar launched in October 2017, the platform is now also serving dealers and  
customers in the United Kingdom in the first step of its international expansion. Since the reporting year, they  
have been able to use the internet platform to find high-quality used vehicles with warranties.  
Volkswagen Financial Services is further expanding its involvement in the mobility business and acquired  
100% of the shares in LogPay Financial Services GmbH (LPFS) in the reporting year. LPFS owns LogPay Mobility  
Services, a leading payment services provider for local public transport in Germany. With the takeover of LPFS  
,
Volkswagen Financial Services is able to centralize its fuel card business and become one of the leading fuel and  
road toll service providers in Europe.  
To further expand the strategic business area related to parking, Volkswagen Financial Services acquired  
75.1% of the shares in PTV Truckparking B .V . from PTV Planung Transport Verkehr AG from Karlsruhe. Based in  
Utrecht (Netherlands), the company operates the web platform and smartphone app Truck Parking Europe. A  
popular service aimed at truck drivers, this helps users find and reserve truck parking spaces along motorways.  
The new “Ubility” hub from Volkswagen Financial Services encourages cooperation between business,  
researchers, universities and start-ups. The hub aims to develop brand-independent services and products from  
Volkswagen Financial Services and make them market-ready.  
2
1.5 million  
Total number of contracts at the end of 2019  
Divisions  
Volkswagen Financial Services  
47  
The main refinancing sources for Volkswagen Financial Services are money market and capital market instru-  
ments, asset-backed securities (ABS) transactions, customer deposits from the direct banking business and  
bank credit lines.  
In April 2019, Volkswagen Financial Services AG issued three bonds with different terms and a total volume  
of €2.75 billion. In June 2019, Volkswagen Leasing GmbH placed two bonds with terms of three and seven years  
and a total volume of €1.75 billion. In January 2019, Volkswagen Bank GmbH placed four bonds with a broad range  
of maturities, incorporating a variable-interest tranche. The transaction had a total volume of €2.5 billion.  
Numerous notes transactions were conducted internationally too. In the US capital market, a bond with a  
total volume of USD 3.0 billion was placed with investors in five tranches. Notes with a volume of around  
CAD 1.5 billion were issued in the Canadian refinancing market. Other notes transactions were conducted in the  
UK, Australia, Brazil and Norway. In addition to this, private placements were issued in various currencies.  
Volkswagen Leasing GmbH was active on the market again in 2019 with its ABS transactions. The “Volks-  
wagen Car Lease 28” transaction, consisting of securitized German leasing receivables, had a volume of approxi-  
mately €1.0 billion and was the first European securitization transaction under the STS standard for high-  
quality securitizations. Approximately €1.0 billion of receivables were also securitized in the 29th ABS trans-  
action, “Volkswagen Car Lease 29”.  
Outside Germany, Volkswagen Financial Services issued a total of seven ABS transactions in the United  
States, China, Australia, Japan and Brazil. In Japan, the eighth ABS transaction was successfully placed in “Driver  
Japan”. The “Driver China nine” ABS transaction was the highest-volume issue to date by Volkswagen Financial  
Services in China.  
LogPay  
4
8
Volkswagen Financial Services  
Divisions  
The number of new financing, leasing, service and insurance contracts signed in fiscal year 2019 was 8.5 mil-  
lion, making it 5.7% higher than in the previous year. As of December 31, 2019, the total number of contracts  
was 21.5 million, up 5.9% from the year before. The number of contracts in the Customer Financing/Leasing  
area rose by 4.4% to 11.2 million. There were 10.3 million contracts in the Service/Insurance area, 7.7% more  
than in the previous year. With credit eligibility criteria remaining unchanged, the penetration rate, expressed  
as the ratio of financed or leased vehicles to relevant Group delivery volumes – including the Chinese joint  
ventures – was steady at 34.2 (33.9)%.  
As of the end of the reporting period, Volkswagen Bank GmbH managed 1.3 (1.4) million deposit accounts.  
As of year-end 2019, Volkswagen Financial Services employed 14,394 people worldwide, including 7,414 in  
Germany.  
SA LE S R EVEN U E AN D EA RN I NG S  
The sales revenue of Volkswagen Financial Services in the reporting year amounted to €38.0 billion, an increase  
of 15.8% on the previous year. The operating result rose by 13.3% and hit a new record of €3.0 billion. The  
increase was mainly attributable to business growth.  
VOLKSWAGE N FI NANC IAL SERV IC ES  
2019  
2018  
%
Number of contracts1  
Customer financing  
Leasing  
thousands  
21,498  
6,585  
20,291  
6,387  
4,341  
9,563  
40,317  
+5.9  
+3.1  
4,616  
+6.3  
Service/Insurance  
Lease assets  
10,297  
47,222  
+7.7  
€ million  
€ million  
+17.1  
Receivables from  
Customer financing  
Dealer financing  
Leasing agreements1  
Direct banking deposits  
Total assets  
68,517  
23,093  
46,276  
31,330  
223,536  
28,428  
187,092  
12.7  
63,690  
20,529  
41,838  
28,926  
207,629  
26,298  
174,255  
12.7  
+7.6  
+12.5  
+10.6  
+8.3  
€ million  
€ million  
€ million  
€ million  
%
+7.7  
Equity  
Liabilities2  
+8.1  
+7.4  
Equity ratio  
Return on equity before tax3  
Leverage4  
%
10.8  
10.0  
6.6  
6.6  
Operating result  
Earnings before tax  
Employees at Dec. 31  
€ million  
€ million  
2,960  
2,612  
+13.3  
+14.2  
+2.5  
2,968  
2,600  
14,394  
14,048  
1
2
3
4
Includes our international joint ventures since January 1, 2019. Prior-year figures adjusted.  
Excluding provisions and deferred tax liabilities.  
Earnings before tax as a percentage of average equity (continuing operations).  
Liabilities as a percentage of equity.  
ADDITIONAL IN FORMATION  
www.vwfsag.com  
3
Group Management  
Report  
(
Combined Management Report of the Volkswagen Group and Volkswagen AG)  
GROUP MANAGEMENT REPORT  
5
5
1
5
Goals and Strategies  
Internal Management System and  
Key Performance Indicators  
Structure and Business Activities  
Corporate Governance Report  
Remuneration Report  
5
6
7
8
9
7
0
0
8
2
Executive Bodies  
Disclosures Required  
Under Takeover Law  
9
1
1
4
Business Development  
07 Shares and Bonds  
13 Results of Operations,  
Financial Position and Net Assets  
29 Volkswagen AG (condensed,  
in accordance with the  
1
German Commercial Code)  
1
1
1
1
33 Sustainable Value Enhancement  
57 Report on Expected Developments  
64 Report on Risks and Opportunities  
90 Prospects for 2020  
Group Management Report  
Goals and Strategies  
51  
Goals and Strategies  
+
With the enhanced TOGETHER 2025 strategy, we aim to step up the pace, sharpen the focus of our  
strategic projects and follow through on implementation even more systematically. In so doing, we  
aim to make the future of mobility even more sustainable – for present and future generations.  
With the future-oriented program TOGETHER – Strategy 2025 the strategies of our brands and regions as well as those of  
announced in 2016, we are seeking to make the Volkswagen our functional areas are consistently aligned with the  
Group more focused, efficient, innovative, customer-oriented TOGETHER 2025+ Group strategy.  
and sustainable, and systematically geared toward generating  
profitable growth.  
Under the umbrella of the TOGETHER 2025+ Group strat-  
egy, we have defined five central modules that incorporate  
We at the Volkswagen Group have set ourselves the goal many of our existing Group initiatives. With this change, we  
of continuing to excite our customers in future and meeting are putting the focus on corporate governance, improved  
their diverse needs with an appealing product portfolio of performance, increased brand values, software and excellence  
impressive vehicles and forward-looking, tailor-made mobil- in employee management.  
ity solutions. Every day, we actively assume and exercise  
Our Code of Collaboration, along with our integrity and  
responsibility in relation to the environment, safety and compliance program Together4Integrity (T4I), is a central  
society, and we aim to be a role model in these areas. Integ- pillar of the Group strategy. This Code describes how collabo-  
rity, reliability, quality and passion thus form the basis for ration is to take place within the Group and between individ-  
our work. Using this approach, we aim for technological uals in their day-to-day work. Its core values are encapsulated  
leadership in the industry and competitive profitability while in the terms “genuine”, “straightforward”, “open-minded”, “as  
also striving to be an excellent employer.  
equals” and “united”. T4I brings together all activities relating  
In summer 2019, we further enhanced our program for to integrity, culture, compliance, risk management and human  
the future with TOGETHER 2025+. We are increasing the resources, creating a common path toward a new corporate  
momentum for achieving our strategic targets and sharp- culture.  
ening our focus. To this end, the strategic vision of the  
Volkswagen Group was also revised. By “Shaping mobility  
for generations to come”, we aim to more actively shape the Our enhanced TOGETHER 2025+ Group strategy comprises  
future of mobility while safeguarding it sustainably – for consistent strategic decisions and specific modules aimed at  
present and future generations. safeguarding the long-term future of the Group and gener-  
With electric drives, digital connectivity and autonomous ating profitable growth.  
FIVE M ODU LE S O F TH E TOG ET H ER 20 2 5+ STRAT EGY  
–
driving, we want to make the automobile cleaner, quieter,  
These modules are namely Best Governance, Best Perfor-  
more intelligent and safer. At the same time, our core product mance, Best Brand Equity, Software-enabled Car Company  
will become more emotive and offer a completely new and Excellent Leadership. We continuously review the status  
driving experience. In this way, the car can continue to be a and progress of these initiatives in order to analyze the target  
cornerstone of sustainable, individual and affordable mobility achievement, importance and suitability of the measures  
in the future. In addition, we are committed to the Paris defined. This enables us to tailor these modules to the trans-  
Agreement on climate protection and are one of the first formation underway within our company. In the Best Gover-  
companies in our industry to commit ourselves to the zero- nance module, we are working to create a focused, stream-  
emissions target by 2050 at the latest.  
lined corporate structure to manage the brands, continually  
The automotive industry is being shaped particularly by leverage synergies and accelerate decision-making processes.  
the transformation to e-mobility and digitalization. We have We want the Group to be perceived as efficiently managed,  
positioned ourselves to successfully tackle this radical change: trustworthy, sustainable and transparent. To this end, we are  
5
2
Goals and Strategies  
Group Management Report  
intensifying the dialog with our key stakeholders and product portfolio and services of each Group brand – using  
systematically reviewing whether we are still the best owner the needs of our customers as a starting point.  
for our various brands and companies. We also want our CO  
targets to be measurable and our progress toward CO  
neutrality in 2050 to be transparent.  
2
In the Software-enabled Car Company module, we are  
working to make software development one of the Volks-  
wagen Group’s core competencies. To achieve this, we are  
2
The aim of the Best Performance module is to achieve a pooling existing expertise, substantially strengthening our  
sustainable increase in our enterprise value by increasing resources and establishing a dedicated organizational unit.  
efficiency, productivity and profitability. As a global company, By 2025, all new vehicle models across the Group will be based  
our size enables us to make even more efficient use of on our own cross-brand software platform. This approach will  
economies of scale. We remain firmly committed to our enable us to leverage synergies between the individual brands  
ambitious targets, work consistently on achieving them and and vehicle projects. The aim is that the Volkswagen Group  
strive to exceed them. This will lay the foundations for and its brands will stand not only for the best vehicles but in  
extensive investment in our Company, in our employees and equal measure for exciting digital products and services.  
in mobility for present and future generations.  
The Excellent Leadership module will accelerate the trans-  
In the Best Brand Equity module, the focus is on formation to a more open, more partnership-based and more  
realigning and refining the brand portfolio, making a sig- value-based leadership. We will completely restructure man-  
nificant increase in the value of our Group brands possible by agement development and training and take an even more  
2
025. The profile and mission of each brand are being systematic approach to succession planning so that, at our  
optimized and overlaps in market positioning reduced. Based Group, the right talent is always in the right position at the  
on these optimizations, we will decide on the future design, right time. We are also defining clear expectations for the  
Group Management Report  
Goals and Strategies  
53  
Group’s managers. These involve greater customer focus, Target dimension: excited customers  
more corporate responsibility, greater effectiveness and focus This target dimension focuses on the diverse needs of our  
on results as well as a culture of constructive dissent and a customers and on tailor-made mobility solutions. We aspire  
positive approach in dealing with mistakes. Volkswagen also to exceed our customers’ expectations, thus generating maxi-  
wants to increase diversity at all levels of the company and is mum customer benefit. This requires not only the best prod-  
pursuing clear, measurable targets for raising the proportion ucts, the most efficient solutions and the best service, but  
of female and international managers.  
also flawless quality and an outstanding image. We want to  
excite our existing customers, win over new ones and retain  
their loyalty in the long term – because only loyal and faithful  
customers will recommend us to others.  
GOAL S AN D KEY PERFO RM AN CE I N DI CATO RS OF T H E GROU P’ S  
STRATE GY  
The five strategic modules describe how we want to achieve  
The strategic KPIs consist of the conquest rate and KPIs  
our vision of sustainable mobility for present and future pertaining to loyalty, customer satisfaction and quality.  
generations. We are managing our project using four target  
dimensions, which are also reflected in the Volkswagen strat- Target dimension: excellent employer  
egy rhombus. The four target dimensions are as follows: To achieve sustainable success, we need skilled and dedicated  
excited customers, excellent employer, role model for environ- employees. We aim to foster their satisfaction and motivation  
ment, safety and integrity, and competitive profitability. We by means of equal opportunities, an attractive and modern  
want to grow sustainably by consistently pursuing these working environment, and a forward-looking organization of  
objectives.  
work. An exemplary leadership and corporate culture forms  
The target dimensions apply throughout the whole the basis for this, allowing us to retain our core workforce and  
Group. The strategic KPIs that we use to measure how well we attract new talents.  
have implemented our Group strategy are dependent on the  
The strategic KPIs of this target dimension cover internal  
respective business model. After all, the business model for employer attractiveness determined by means of the opinion  
our passenger car-producing brands is different from the survey, external employer attractiveness, an external employer  
business model for trucks and buses and also differs from the ranking as well as the diversity index.  
business model for our Power Engineering Business Area and  
our services business.  
Target dimension: role model for environment, safety and integrity  
The strategic KPIs of the competitive profitability target Every day, we at the Volkswagen Group assume and exercise  
dimension have been defined and standardized. As the Group responsibility in issues relating to the environment, safety  
strategy is currently being revised and specified in detail, the and society. This is reflected both in our thoughts and actions  
content of some strategic KPIs in the other target dimensions and in all our decisions. We pay particular attention to the  
is still being determined. The relevance of the KPIs is use of resources and the emissions of our product portfolio  
reviewed at Group level and their focus is continuously as well as those of our sites and plants, with the goal of  
monitored and adjusted as necessary. We report on the continuously improving our carbon footprint and lowering  
defined non-financial strategic KPIs in the “Corporate Gover- pollutant emissions. Through innovations and outstanding  
nance Report” and “Sustainable Value Enhancement” sections. quality, we aim for maximum product safety.  
5
4
Goals and Strategies  
Group Management Report  
Our primary objectives in this process include complying The strategic KPIs are operationalized for internal manage-  
with laws and regulations, establishing secure processes and ment purposes: target and actual data are derived from Volks-  
dealing openly with mistakes so that they can be avoided or wagen Group figures.  
rectified in the future. In terms of integrity, Volkswagen aims  
to become a role model for a modern, transparent and suc-  
cessful enterprise.  
STRATE G IC K P I S: COM P E TI TIV E P ROFITA B I L ITY  
The strategic KPIs of this target dimension consist of the  
decarbonization index and fleet CO emissions figures, compli-  
2
ance, a culture of dealing openly with mistakes, and integrity.  
2015  
2025  
Target dimension: competitive profitability  
Operating return on sales1  
6.0%  
7 to 8%  
Investors judge us by whether we are able to meet our obli- Research and development ratio  
(
R&D ratio) in the Automotive  
gations as regards interest payments and debt repayments.  
As equity holders, they expect appropriate dividends and a  
long-term increase in the value of their shares.  
Division  
7.4%  
6.9%  
a6%  
a6%  
Capex/sales revenue in the  
Automotive Division  
We make investments with a view to achieving profitable  
Net cash flow in the  
growth and strengthening our competitiveness, thus keeping Automotive Division  
the Volkswagen Group on a firm footing in the future and Payout ratio  
ensuring it remains an attractive investment option.  
€8,887 million  
negative  
>€10 billion  
М30%  
a10% of  
consolidated  
sales revenue  
Net liquidity in the Automotive  
€24,522 million,  
11.5%  
The goals we have set ourselves are operational excellence  
in all business processes and becoming the benchmark for  
the entire industry.  
Division  
Return on investment (ROI) in the  
Automotive Division  
–0.2%  
>14%2  
1
2
2015 before special items.  
Taking into account the new IFRS 16.  
Group Management Report  
Internal Management System and Key Performance Indicators  
55  
Internal Management System and  
Key Performance Indicators  
This chapter describes how the Volkswagen Group is managed on the basis of the Group strategy  
and the key performance indicators used for this purpose. In addition to financial measures, our  
management system also contains nonfinancial key performance indicators.  
The Volkswagen Group’s performance and success can be When planning the Company’s future, the individual planning  
measured by both financial and nonfinancial key perfor- components are determined on the basis of the timescale  
mance indicators. With the Best Performance module of our involved:  
enhanced TOGETHER 2025+ Group strategy, we want to !ꢀ the long-term unit sales plan, which sets out market and  
improve these indicators across all areas and along the entire  
value chain. In so doing, we aim to sustainably increase the  
segment growth and then derives the Volkswagen Group’s  
delivery volumes from them,  
Company’s value and raise our efficiency, productivity and !ꢀ the product program as the strategic, long-term factor  
profitability. determining corporate policy,  
In the following, we first describe the internal manage- !ꢀ capacity and utilization planning for the individual sites.  
ment process and then explain the Volkswagen Group’s core The coordinated results of the upstream planning processes  
performance indicators.  
are used as the basis for the medium-term financial planning:  
the Group’s financial planning, including the brands and  
business fields, comprises the income statement, cash flow  
I NT E R NA L M A NAG E M E N T P ROCE S S I N TH E VOL KSWAG E N G ROU P  
Consistent, close integration of the Group and brand strate- and balance sheet planning, profitability and liquidity, as well  
gies with the operational planning process ensures trans- as the upfront investments needed for alternative products  
parency at the Volkswagen Group when it comes to the finan- and the implementation of strategic options. The first year of  
cial assessment and evaluation of strategic decisions. The the medium-term planning period is fixed and a budget  
operational medium-term planning that is conducted once a drawn up for the individual months. This is planned in detail  
year and generally covers a period of five years is incorpo- down to the level of the operating cost centers.  
rated into the strategic planning as a key management element  
of the Group.  
The budget is reviewed each month throughout the year  
to establish the target achievement level. Key internal man-  
Medium-term planning forms the core of our operational agement instruments comprise target/actual comparisons,  
planning and is used to formulate and safeguard the require- prior-year comparisons, variance analyses and, where neces-  
ments for realizing strategic projects designed to meet Group sary, action plans to ensure targets are met. For the current  
targets in both technical and economic terms – and partic- fiscal year, detailed revolving monthly forecasts are prepared  
ularly in relation to earnings, cash flow and liquidity effects. for the coming three months and the full year, taking into  
In addition, it is used to coordinate all business areas with account the current risks and opportunities. The focus of  
respect to the strategic action areas concerned: functions/ intrayear internal management is therefore on adapting  
processes, products and markets.  
ongoing operations. At the same time, the current forecast  
serves as a potential, ongoing corrective to the medium-term  
and budget planning that follows on from it.  
5
6
Internal Management System and Key Performance Indicators  
Group Management Report  
CORE P ERF ORM A NCE I N D ICATOR S I N TH E VO LKSWAGEN GROU P  
The R&D ratio reflects our activities undertaken to safeguard  
The Volkswagen Group’s internal management system is based the Company’s future viability.  
on nine core performance indicators, which are derived from  
our strategic goals:  
The ratio of capex (investments in property, plant and  
equipment, investment property and intangible assets,  
excluding capitalized development costs) to sales revenue in  
the Automotive Division reflects both our innovative power  
and our future competitiveness. It shows our capital expen-  
diture – largely for modernizing, expanding, electrifying and  
!
!
!
!
!
ꢀ Deliveries to customers  
ꢀ Sales revenue  
ꢀ Operating result  
ꢀ Operating return on sales  
ꢀ Research and development ratio (R&D ratio) in the Auto- digitalizing our product range and for environmentally  
motive Division  
friendly drivetrains, as well as for adjusting production capac-  
ities and improving production processes – in relation to the  
Automotive Division’s sales revenue.  
Net cash flow in the Automotive Division represents the  
excess funds from operating activities available for dividend  
!
!
!
!
ꢀ Capex/sales revenue in the Automotive Division  
ꢀ Net cash flow in the Automotive Division  
ꢀ Net liquidity in the Automotive Division  
ꢀ Return on investment (ROI) in the Automotive Division  
Deliveries to customers are defined as handovers of new payments, for example. It is calculated as cash flows from  
vehicles to the end customer. This figure shows the popu- operating activities less cash flows from investing activities  
larity of our products and is the measure we use to determine attributable to operating activities.  
our competitive position in the various markets. Deliveries  
Net liquidity in the Automotive Division is the total of  
are closely related to our targets of exciting our customers, cash, cash equivalents, securities, loans and time deposits not  
being a role model for environment, safety and integrity, and financed by third-party borrowings. To safeguard our busi-  
being an excellent employer. One of the most important ness activities, we have formulated the strategic target that  
prerequisites for the Company’s long-term success is a strong net liquidity in the Automotive Division should amount to  
brand portfolio that – on the basis of outstanding quality – approximately 10% of the consolidated sales revenue.  
offers tailor-made mobility solutions with safe, resource-  
We use the return on investment (ROI) to calculate the  
efficient vehicles, thus meeting the diverse needs of custom- return on invested capital for a particular period in the Auto-  
ers. Demand for our products guarantees not only unit sales motive Division, including the Chinese joint ventures on a  
and production, but also full utilization of our sites and the proportionate basis, by calculating the ratio of the operating  
jobs of our employees. The goals we are striving for cannot be result after tax to average invested capital. If the return on  
achieved without a skilled, dedicated workforce and a con- investment (ROI) exceeds the market cost of capital, the value  
sensus on shared values.  
Sales revenue, which does not include the figures for our financial success of our brands, locations and vehicle projects.  
equity-accounted Chinese joint ventures, reflects our market You can find information on and explanations of the sales  
of the Company has increased. This is how we measure the  
success in financial terms. Following adjustment for our use figures and the Volkswagen Group’s financial key performance  
of resources, the operating result reflects the Company’s indicators on pages 100 to 106 and on pages 113 to 128,  
actual business activity and documents the economic success respectively.  
of our core business. The operating return on sales is the ratio  
of the operating result to sales revenue.  
Detailed descriptions of our activities and additional  
nonfinancial key performance indicators in the areas of sus-  
The research and development ratio (R&D ratio) in the tainability, research and development, procurement, pro-  
Automotive Division shows total research and development duction, sales and marketing, quality assurance, employees,  
costs in relation to sales revenue. Research and development information technology and the environment can be found  
costs comprise a range of expenses, from futurology through in the chapter entitled “Sustainable Value Enhancement”  
to the development of marketable products. Particular empha- beginning on page 133 of this annual report. Nonfinancial  
sis is placed on the environmentally friendly orientation of key performance indicators related to compliance are  
our product portfolio, digitalization and new technologies. described in the “Corporate Governance Report” on page 67.  
Group Management Report  
Structure and Business Activities  
57  
Structure and Business Activities  
This chapter describes the legal and organizational structure of the Volkswagen Group  
and explains the material changes in 2019 with respect to equity investments.  
OUTLI N E OF TH E LEGAL STRU CTU R E OF TH E GROU P  
sions. All brands within the Automotive Division – with the  
Volkswagen AG is the parent company of the Volkswagen exception of the Volkswagen Passenger Cars and Volkswagen  
Group. It develops vehicles and components for the Group’s Commercial Vehicles brands – are independent legal entities.  
brands, but also produces and sells vehicles, in particular  
The Automotive Division comprises the Passenger Cars,  
passenger cars and light commercial vehicles for the Volks- Commercial Vehicles and Power Engineering business areas.  
wagen Passenger Cars and Volkswagen Commercial Vehicles The Passenger Cars Business Area essentially consolidates the  
brands. In its capacity as parent company, Volkswagen AG Volkswagen Group’s passenger car brands and the Volks-  
holds direct or indirect interests in AUDI AG, SEAT S.A., wagen Commercial Vehicles brand. Activities focus on the  
ŠKODA AUTO a.s., Dr. Ing. h.c. F. Porsche AG, TRATON SE, Volks- development of vehicles and engines, the production and sale  
wagen Financial Services AG, Volkswagen Bank GmbH and a of passenger cars and light commercial vehicles, and the  
large number of other companies in Germany and abroad. genuine parts business. The product portfolio ranges from  
More detailed disclosures are contained in the list of share- compact cars to luxury vehicles and also includes motorcycles,  
holdings in accordance with sections 285 and 313 of the and will gradually be supplemented by mobility solutions.  
Handelsgesetzbuch (HGB – German Commercial Code), which  
can be accessed at www.volkswagenag.com/en/InvestorRela- prises the development, production and sale of trucks and  
tions.html and is part of the annual financial statements.  
buses from the Scania and MAN brands, the corresponding  
The Commercial Vehicles Business Area primarily com-  
Volkswagen AG is a vertically integrated energy supply genuine parts business and related services. The commercial  
company as defined by section 3 no. 38 of the Energiewirt- vehicles portfolio ranges from light vans to heavy trucks and  
schaftsgesetz (EnWG – German Energy Industry Act) and is buses. The collaboration between the two commercial vehicle  
therefore subject to the provisions of the EnWG. In the elec- brands is coordinated in TRATON SE, which has been listed on  
tricity sector, Volkswagen AG generates, sells and distributes the stock exchange since mid-2019.  
electricity together as a Group with subsidiaries.  
The Power Engineering Business Area combines the large-  
The Volkswagen AG Board of Management has sole respon- bore diesel engines, turbomachinery, special gear units, pro-  
sibility for managing the Company. The Supervisory Board pulsion components and testing systems businesses.  
appoints, monitors and advises the Board of Management; it The activities of the Financial Services Division comprise  
is consulted directly on decisions that are of fundamental dealer and customer financing, vehicle leasing, direct banking  
significance for the Company.  
and insurance activities, as well as fleet management and  
mobility offerings.  
ORGA N IZATIO NA L STRU CTU R E OF TH E GROU P  
With its brands, the Volkswagen Group is present in all  
The Volkswagen Group is one of the leading multibrand relevant markets around the world. The key sales markets  
groups in the automotive industry. The Company’s business currently include Western Europe, China, the USA, Brazil,  
activities comprise the Automotive and Financial Services divi- Russia, Mexico and Poland.  
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Structure and Business Activities  
Group Management Report  
Volkswagen AG and the Volkswagen Group are managed by The Volkswagen Group companies are managed solely by  
the Volkswagen AG Board of Management in accordance with their respective managements. The management of each  
the Volkswagen AG Articles of Association and the rules of individual company takes into account not only the interest  
procedure for Volkswagen AG’s Board of Management issued of its own company but also the interests of the Group, the  
by the Supervisory Board.  
relevant brand group and the individual brands in accor-  
In addition to the Finance & IT, Human Resources and dance with the framework laid down by law.  
Integrity & Legal Affairs divisions, the Volkswagen Group  
At Group level, committees also address key strategic  
collaborates across six operating units and the China region, issues, for example relating to product planning, investments,  
these being the “Volume”, “Premium”, “Sport & Luxury”, risks management and management issues. Some of the  
“
Truck & Bus” brand groups, as well as the Components & committees were optimized in the reporting year in order to  
Procurement and Financial Services operating units. The improve the efficiency of their decision making. This has  
Volume” brand group comprises the Volkswagen Passenger reduced complexity and reinforced governance within the  
Cars, SEAT, ŠKODA and Volkswagen Commercial Vehicles Group.  
“
brands. The Audi, Lamborghini and Ducati brands are  
The Best Governance module of our future program  
brought together in the “Premium” brand group. “Sport & TOGETHER 2025+, which was enhanced over the course of the  
Luxury” is comprised of the Porsche, Bentley and Bugatti fiscal year, is fostering our Company’s transformation. One of  
brands. The “Truck & Bus” brand group is the umbrella for its aims is to further improve manageability of the Group and  
the Scania and MAN brands. Components & Procurement will to make even better use of synergy effects.  
function as one unit spanning all of the brands and sup-  
porting them. The Financial Services business has been  
M ATERIA L CHA N G ES I N EQU I TY I NV E STM EN TS  
combined into a single unit. We are convinced that this The control and profit and loss transfer agreement between  
management model will allow better use of existing exper- MAN SE, as the controlled company, and TRATON SE (at that  
tise and economies of scale, boost synergy effects more time Truck & Bus GmbH), a subsidiary of Volkswagen AG, as  
systematically and accelerate decision making. In addition, it the controlling company, came into force upon its entry in  
will prepare the Volkswagen Group for a management struc- the commercial register on July 16, 2013. In summer 2018,  
ture that is simpler, leaner and more effective, and strengthen the Higher Regional Court in Munich made a final decision in  
the brands, giving them more autonomy. In line with the the award proceedings on an increase in the cash settlement  
principle of subsidiarity, decisions will be taken at the lowest and the compensation rights per share for the noncontrolling  
competent level, close to business operations.  
interest shareholders of MAN SE. This decision resulted in a  
At the same time, spreading the Group’s management significant increase in the annual compensation to be paid to  
duties more broadly means that responsibility is assigned noncontrolling interest shareholders of MAN SE. In the opin-  
more clearly and definitively. Every member of the Board of ion of the Board of Management at TRATON SE (at that time  
Management has assumed additional higher-level duties for TRATON AG), this was no longer proportionate to the profit  
the Group. At the same time, the members of the Board of transfer from MAN SE and other benefits stipulated in the  
Management of Volkswagen AG have responsibility for a brand control and profit and loss transfer agreement; TRATON SE  
group or operating unit, improving collaboration between therefore exercised its right to extraordinary termination in  
the brands and the Group as a whole and ensuring that accordance with section 304(4) of the Aktiengesetz (AktG  
management of the Group is a shared undertaking.  
– German Stock Corporation Act) in August 2018 and termi-  
Each brand within the Volkswagen Group is managed by a nated the control and profit and loss transfer agreement  
brand board of management, which ensures the brand's effective January 1, 2019. Following the announcement of the  
independent and self-contained development and business termination of the control and profit and loss transfer  
operations. To the extent permitted by law, the board adheres agreement and the recording thereof in the commercial  
to the Group targets and requirements laid down by the register on January 3, 2019, the noncontrolling shareholders  
Board of Management of Volkswagen AG, as well as with the of MAN SE once again had the right to tender their shares to  
agreements in the brand groups. This allows Group-wide TRATON SE, pursuant to the provisions of the control and  
interests to be pursued, while at the same time safeguarding profit and loss transfer agreement, within a two-month  
and reinforcing each brand’s specific characteristics. Matters period at a cash settlement price of €90.29. As of year-end  
that are of importance to the Group as a whole are submitted 2019, TRATON SE held 94.68 (87.04)% of the ordinary shares  
to the Group Board of Management to be agreed upon, to the and 86.85 (83.05)% of the preferred shares in MAN SE.  
extent permitted by law. The rights and obligations of the  
statutory bodies of the relevant brand company remain  
unaffected.  
Group Management Report  
Structure and Business Activities  
59  
Since the end of June 2019, shares of TRATON SE have been  
LEGAL F ACTO RS I N FLU EN CI NG BU SI N E S S  
traded on the regulated market of the Frankfurt Stock Like other international companies, the business of Volks-  
Exchange and the Nasdaq Stockholm exchange. These no-par wagen companies is affected by numerous laws in Germany  
value bearer shares were placed with investors from Volks- and abroad. In particular, there are legal requirements  
wagen AG's shareholding. Volkswagen remains an involved relating to development, products, production and distri-  
majority shareholder and held 89.72% of the share capital in bution, as well as supervisory, data protection, financial, com-  
TRATON SE at the end of the reporting year. The control and pany, commercial, capital market, anti-trust and tax regu-  
profit and loss transfer agreement between Volkswagen AG lations and regulations relating to labor, banking, state aid,  
and TRATON SE ended in accordance with section 307 of the energy, environmental and insurance law.  
German Stock Corporation Act on December 31, 2019.  
VOLKSWAGEN AG SHAREHOLDINGS  
www.volkswagenag.com/en/InvestorRelations.html  
6
0
Corporate Governance Report  
Group Management Report  
Corporate Governance Report  
Corporate governance is defined as responsible, transparent corporate management and  
supervision that aim to add long-term value. For us, good corporate governance not only  
forms the basis for lasting success; it is also an important prerequisite for strengthening  
the trust of our stakeholders in our work.  
TH E GE RM AN CO RPORAT E GOVE R NANC E CO DE – A B LU EPRI NT  
FOR SU CC ES S FU L CORP O RATE G OVERNA NC E  
16 November 2018 and will continue to be complied with,  
with the exception of the numbers listed below and their  
Corporate governance provides the regulatory framework for stated reasons and periods listed below.  
corporate management and supervision. This includes a !ꢀ a) 4.2.3(4) (severance payment cap)  
company’s organization and values, and the principles and  
guidelines for its business policy. The German Corporate  
Governance Code (the Code) contains recommendations and  
suggestions for sound, responsible corporate management  
and supervision. It was prepared by a dedicated government  
commission on the basis of the material provisions and  
nationally and internationally accepted standards of corpo-  
rate governance. The government commission regularly  
reviews the Code in light of current developments and  
A severance payment cap will be included in new contracts  
concluded with members of the Board of Management, but  
was not stipulated in contracts concluded with Board of  
Management members entering their third term of office  
or beyond provided a cap did not form part of the initial  
contract. Grandfather rights were applied in this respect.  
This recommendation has been complied with in full since  
June 2019, because there are no longer any contracts  
containing grandfather clauses.  
updates it as necessary. The Board of Management and the !ꢀ b) 5.3.2(3) sentence 2 (independence of the chair of the  
Supervisory Board of Volkswagen AG base their work on the  
recommendations and suggestions of the German Corporate  
Governance Code. We consider good corporate governance  
to be a key prerequisite for achieving a lasting increase in  
the Company’s value. It helps strengthen the trust of our  
shareholders, customers, employees, business partners and  
investors in our work and enables us to meet the steadily  
increasing demand for information from national and  
international stakeholders.  
Audit Committee)  
It is unclear from the wording of this recommendation  
whether the Chairman of the Audit Committee is “indepen-  
dent” within the meaning of number 5.3.2(3) sentence 2 of  
the Code. Such independence could be considered lacking  
in view of his seat on the Supervisory Board of Porsche  
Automobil Holding SE, kinship with other members of the  
Supervisory Board of the company and of Porsche Auto-  
mobil Holding SE, his indirect minority interest in Porsche  
Automobil Holding SE, and business relations with other  
members of the Porsche and Piëch families who also have  
an indirect interest in Porsche Automobil Holding SE.  
However, it is our opinion that these relationships do not  
constitute a conflict of interest nor do they interfere with  
his duties as the Chairman of the Audit Committee. This  
deviation is therefore being declared purely as a precau-  
tionary measure.  
DE CL A RATI ON S O F CON FO RM I TY  
(
VA L I D A S O F T H E DAT E O F T H E D E C L A RAT I O N )  
The Board of Management and the Supervisory Board of  
Volkswagen AG issued the annual declaration of conformity  
with the Code as required by section 161 of the Aktiengesetz  
(AktG – German Stock Corporation Act) on November 15,  
2
019 with the following wording:  
“
The Board of Management and the Supervisory Board !ꢀ c) 5.4.1(6 to 8) (disclosure regarding election recommen-  
declare the following:  
dations)  
The recommendations of the Government Commission of  
the German Corporate Governance Code in the version dated  
With regard to the recommendation in number 5.4.1(6-8)  
of the Code stating that certain circumstances disclosed by  
the Supervisory Board when making election recommen-  
dations to the Annual General Meeting, the stipulations of  
the Code are vague and the definitions unclear. Purely as a  
precautionary measure, we therefore declare a deviation  
7
February 2017 (the Code) that was published by the German  
Ministry of Justice in the official section of the Federal  
Gazette (Bundesanzeiger) on 24 April 2017 was complied with  
in the period from the last Declaration of Conformity dated  
Group Management Report  
Corporate Governance Report  
61  
from the Code in this respect. Notwithstanding this, the appointment to the Board of Management on an individual  
Supervisory Board will make every effort to satisfy the basis, taking the best interests of the Company into account.  
requirements of the recommendation.  
The suggestion made in number 2.3.2 sentence 2 (acces-  
!ꢀ d) 5.4.5 sentence 2 (a maximum of three supervisory board sibility of the voting proxy during the Annual General  
mandates in non-group listed corporations or comparable Meeting) was implemented at the 2019 Annual General  
companies)  
Meeting in such a manner that the shareholders were able to  
On 28 June 2019, TRATON SE shares commenced trading on reach the voting proxies named by the Company to exercise  
the regulated market of the Frankfurt Stock Exchange and their voting rights until 1:00 pm, also by electronic means.  
the Nasdaq in Stockholm. The Chairman of the Supervisory The suggestion made in number 2.3.3 (broadcast of the  
Board has been on the supervisory boards of three listed Annual General Meeting) was implemented at the 2019  
companies since that date, namely VOLKSWAGEN AG, Annual General Meeting so that the introductory remarks  
AUDI AG and TRATON SE, as well as on the Supervisory and the speech by the Chairman of the Supervisory Board  
Board of Bertelsmann SE & Co. KGaA. He is also Chairman and the speech of the Chairman of the Board of Management  
of the Executive Board of Porsche Automobil Holding SE. were broadcast.  
Porsche Automobil Holding SE is not part of the same  
Our listed subsidiaries AUDI AG, TRATON SE, MAN SE and  
group as AUDI AG, VOLKSWAGEN AG and TRATON SE. As it RENK AG have also each issued declarations of conformity  
cannot be ruled out that the supervisory board mandate at with the German Corporate Governance Code. The declara-  
Bertelsmann SE & Co. KGaA involves similar requirements tions of conformity by our listed subsidiaries can be accessed  
to those of a supervisory mandate in a listed company, and on the websites shown on this page.  
as the precise method of counting the mandates is unclear,  
we declare a deviation from section 5.4.5 sentence 2 of the CO OPERAT IO N B ETWE EN T H E B OARD OF M A N AGE MENT A N D T H E  
Code as a precautionary measure. We are, however, confi-  
SU PERV IS ORY B OA RD  
dent that the Chairman of the Supervisory Board of The Supervisory Board advises and monitors the Board of  
VOLKSWAGEN AG has sufficient time at his disposal to Management with regard to the management of the Com-  
fulfill the duties related to his mandate in the VOLKS- pany and is directly involved in decisions of fundamental  
WAGEN Group.”  
importance to the Company. The Board of Management and  
The current declaration of conformity is also published on our the Supervisory Board of Volkswagen AG consult closely on  
website http://www.volkswagenag.com/en/InvestorRelations/ the strategic orientation of the Volkswagen Group. The two  
corporate-governance/declaration-of-conformity.html.  
bodies jointly assess, at regular intervals, the progress made  
With the exception of number 4.2.3(2) sentence 9 (no in implementing the corporate strategy. The Board of Man-  
early disbursements of variable remuneration components) agement reports to the Supervisory Board regularly, promptly  
and number 5.1.2(2) sentence 1 (duration of first-time and comprehensively in both written and oral form on all  
appointments to the Board of Management), the suggestions issues of relevance for the Company with regard to strategy,  
in the version of the Code as amended on February 7, 2017 planning and the situation of the Company, the development  
have been complied with. The general compensation clauses of the business, the risk situation, risk management and  
in the contracts with members of the Board of Management compliance.  
may, if applied accordingly, result in early disbursement of  
More information on the cooperation between the Board  
multi-year variable remuneration components. The Super- of Management and the Supervisory Board of Volkswagen AG  
visory Board will decide the duration of each first-time and on the work and structure of the committees of the  
Supervisory Board can be found in the Report of the Super-  
visory Board on pages 12 to 17 of this annual report.  
Information on the members of the Board of Manage-  
ment and Supervisory Board, as well as on the Supervisory  
DECLARATION OF CON FORMITY OF VOLKSWAGEN AG  
www.volkswagenag.com/en/InvestorRelations/corporate-governance/declaration-  
of-conformity.html  
Board committees, can be found on pages 88 to 91.  
DECLARATION OF CON FORMITY OF AUDI AG  
www.audi.com/cgk-declaration  
DECLARATION OF CON FORMITY OF TRATON SE  
https://ir.traton.com/websites/traton/English/5000/corporate-governance.html  
DECLARATION OF CON FORMITY OF MAN SE  
https://www.corporate.man.eu/en/investor-relations/corporate-  
governance/corporate-governance-at-man/Corporate-Governance-at-MAN.html  
DECLARATION OF CON FORMITY OF REN K AG  
https://www.renk-ag.com/en/investor-relations/financial-reports/  
6
2
Corporate Governance Report  
Group Management Report  
OB J E CT IVE S FO R TH E COMPO SITI ON OF TH E SU PE RV I SO RY BOAR D  
AN D BOA RD O F M A NAGEME NT A S WELL A S T H E SEN I OR  
EXE CUT IVE PO SI TIO NS  
familiar with the sector in which the Company operates. The  
key skills and requirements of the Supervisory Board as a  
whole include, in particular:  
In view of the Company’s specific situation, its purpose, its !ꢀ Knowledge of or experience in the manufacture and sale of  
size and the extent of its international activities, the Super-  
all types of vehicles and engines or other technical products,  
visory Board of Volkswagen AG strives to achieve a compo- !ꢀ Knowledge of the automotive industry, the business model  
sition that takes the Company's ownership structure and the  
following aspects into account:  
and the market, as well as product expertise,  
!ꢀ Knowledge in the field of research and development, par-  
ticularly of technologies with relevance for the Company,  
!ꢀ At least three members of the Supervisory Board should be  
persons who embody the criterion of internationality to a !ꢀ Experience in corporate leadership positions or in the  
particularly high degree.  
supervisory bodies of large companies,  
!
ꢀ At least four members of the Supervisory Board should be !ꢀ Knowledge in the areas of governance, law or compliance,  
shareholder representatives with no potential conflicts of !ꢀ Detailed knowledge in the areas of finance, accounting, or  
interest, particularly conflicts of interest that could arise  
from an advisory or board position at customers, suppliers, !ꢀ Knowledge of the capital markets,  
auditing,  
lenders, or other third parties.  
ꢀ In addition, at least four of the shareholder representatives  
!ꢀ Knowledge in the areas of controlling/risk management  
and the internal control system,  
on the Supervisory Board must be persons who are !ꢀ Human resources expertise (particularly the search for and  
!
!
!
independent as defined in number 5.4.2 of the Code.  
ꢀ At least three of the seats on the Supervisory Board should  
be held by people who make a special contribution to the  
diversity of the Board.  
ꢀ Furthermore, proposals for elections should not normally  
include persons who will have reached the age of 75 on the  
selection of members of the Board of Management, and the  
succession process) and knowledge of incentive and remune-  
ration systems for the Board of Management,  
!ꢀ Detailed knowledge or experience in the areas of codeter-  
mination, employee matters and the working environment  
in the Company.  
date of the election or who will have been members of the The current composition of the Supervisory Board is  
Supervisory Board for more than 15 years on the date of also in line with this profile of skills and expertise. The curric-  
the election.  
ulum vitae of the members of the Supervisory Board are  
The above criteria have been met. After thorough deliber- available online at www.volkswagenag.com/en/group/execu-  
ation, the Supervisory Board decided to propose Mr. Hans tive-bodies. html.  
Michel Piëch to the 2019 Annual General Meeting for re-elec-  
The statutory quota of at least 30% women and at least  
tion to the Supervisory Board, despite him exceeding the 30% men has applied to new appointments to the Super-  
regular age limit of 75 (in accordance with the Supervisory visory Board of Volkswagen AG since January 1, 2016 as  
Board rules of procedure) at the time of election. Mr. Hans required by the Gesetz für die gleichberechtigte Teilhabe von  
Michel Piëch is indirectly the largest individual shareholder Frauen und Männern an Führungspositionen in der Privat-  
in Volkswagen AG and – thanks in part to his many years of wirtschaft und im öffentlichen Dienst (Führpos-GleichberG –  
work for numerous other companies in the Volkswagen German Act on the Equal Participation of Women and Men in  
Group – has a particular wealth of experience and expertise Leadership Positions in the Private and Public Sectors).  
in the Company’s business areas. The Supervisory Board is Shareholder and employee representatives have resolved that  
confident that he will continue to contribute this in the each side will meet this quota separately. The shareholder  
Company’s best interests in the future. The independent representatives have met the quota of at least 30% women  
members of the Supervisory Board within the meaning of and at least 30% men since the 56th Annual General Meeting  
number 5.4.2 of the Code are, at the present time in any case, on June 22, 2016. The employee representatives have met the  
Ms. Hessa Sultan Al-Jaber and Ms. Louise Kiesling, Mr. Hussain quota since the end of the 57th Annual General Meeting on  
Ali Al-Abdulla, Mr. Bernd Althusmann and Mr. Stephan Weil.  
In addition, the Supervisory Board has decided on the sentatives fulfilled the quota on December 31, 2019.  
following profile of skills and expertise for the full Board:  
The Supervisory Board set a target quota of 11.1% for the  
May 10, 2017. Both the shareholder and the employee repre-  
The Supervisory Board as a whole must collectively have period after December 31, 2016 for the proportion of female  
the knowledge, skills and professional expertise required to members on the Board of Management as required in  
properly perform its supervisory function and assess and accordance with the FührposGleichberG. The new deadline  
monitor the business conducted by the company. For this, set for achievement of this target is December 31, 2021. The  
the members of the Supervisory Board must collectively be proportion of female members on the Board of Management  
Group Management Report  
Corporate Governance Report  
63  
TOGETHER4INTEGRITY  
1
Integrity and compliance are central  
to our business strategy  
2
3
Integrity and compliance risks are identified,  
owned, managed and mitigated  
Our leaders at all levels across our organization  
build and sustain a culture of integrity  
4
5
We encourage, protect and value the reporting of  
concerns and suspected wrongdoing  
We take action and hold ourselves accountable  
when wrongdoing occurs  
Together4Integrity  
We keep our word  
of Volkswagen AG as of December 31, 2019 was 12.5%, thus  
meeting the target quota.  
I NT EGR ITY  
With the Group strategy that was enhanced in 2019  
For the proportion of women in management in accor- – TOGETHER 2025+ – Volkswagen has made becoming a role  
dance with the FührposGleichberG, Volkswagen AG has set model in the areas of integrity and compliance one of its key  
itself the target of 13.0% women in the first level of man- objectives.  
agement and 16.9% women in the second level of manage-  
ment for the period up to the end of 2021. As of December 31, Legal Affairs, the Group has put in place the organizational  
019, the proportion of women in the active workforce at the prerequisites for centralized integrity management. This  
first level of management was 11.4 (10.7)% and at the second Group function is responsible for planning, preparing and  
With the Board of Management position for Integrity and  
2
level of management it was 16.4 (15.4)%.  
implementing programs and projects aimed at raising  
awareness, providing information and reinforcing a shared  
awareness of integrity.  
REMU N ERAT ION REPO RT  
Extensive explanations of the remuneration system and the  
Integrity at Volkswagen is defined as acting out of con-  
individual remuneration of the members of the Board of viction, with responsibility and steadfastness. Integrity is an  
Management and Supervisory Board can be found in the inner disposition that acts as an internal moral compass for  
Remuneration Report starting on page 70 of the combined doing the right thing in gray areas, in the absence of explicit  
management report, in the notes to Volkswagen’s consoli- rules or in the event of conflicting objectives. This means  
dated financial statements on page 334, and on page 65 of the complying with our Group principles and the ethical  
notes to the annual financial statements of Volkswagen AG.  
principles established therein and behaving correctly in  
accordance with the rules. It also includes the steadfastness  
The Corporate Governance Report according to number 3.10 needed to adhere to these principles – regardless of economic  
of the Code in the version dated February 7, 2017 ends here.  
and social pressure.  
A comprehensive integrity program has been in place  
since 2016 with information campaigns, opportunities for  
GROU P COR P ORATE GOV ERNA NC E DECL ARATIO N  
The Group corporate governance declaration forms part of dialog and initiatives aimed at all employees. This encom-  
the combined management report and is permanently avail- passes measures such as international get-togethers for  
able at www.volkswagenag.com/en/InvestorRelations/corpo- managers and so-called integrity workshops for team spokes-  
rate-governance/declaration-of-conformity.html. It also con- people in production. In addition, we have launched an  
tains the description of the diversity concepts for the Board ambassador program that helps multipliers to make integrity  
of Management and Supervisory Board of Volkswagen AG. a visible and practical part of everyday working life. The  
reporting year also saw us launch the integrity index as a  
pilot project in the Volkswagen Passenger Cars and Audi  
brands’ German locations. The index was developed in  
GROU P CORPORATE GOVERNANCE DECLARATION  
www.volkswagenag.com/en/InvestorRelations/corporate-governance/declaration-  
of-conformity.html  
collaboration with the Technical University of Munich and is  
6
4
Corporate Governance Report  
Group Management Report  
designed to give a comprehensive picture of an organization’s 200 companies (as of year-end 2019) that were prioritized  
integrity. In future, we will use it as a performance indicator based on the level of risk. In total, these employ approxi-  
to measure our progress toward our strategic goal of being a mately 430,000 people or around two-thirds of the Group’s  
role model for integrity. With the integrity index, we are total workforce. From 2020, the program will be introduced to  
setting a benchmark for measuring integrity at an inter- more and more of the smaller companies in the Group.  
national level. The index can be used across industries and is  
There are over 100 packages of measures that make up  
geared toward global use. It has strong scientific validity and the core content of T4I, and each Group company is respon-  
incorporates established frameworks such as the Ethics & sible for implementing these itself. Every functional area  
Compliance Initiative (ECI) and Global Reporting Initiative must put comprehensive and robust systems and processes  
(
GRI). Its intention is to reveal possible weaknesses in into effect to mitigate compliance and integrity risks, thereby  
integrity and compliance matters and make visible the eliminating the factors that have contributed to serious  
changing mindset and behavior of managers and employees.  
wrongdoing in the past. The packages of measures have been  
grouped together into eleven key initiatives; for example,  
product compliance, HR compliance and HR processes, the  
Together4Integrity: Establishing processes and engaging with people  
As a central part of achieving the goal of becoming a role whistleblower system, and business partner due diligence.  
model for integrity and compliance, Volkswagen has launched Both compliance and integrity are embedded in the processes  
Together4Integrity (T4I) – one of the largest strategic pro- for every key initiative.  
grams of transformation in the Group’s history.  
Employees and managers are engaged in T4I through the  
We firmly believe that only with lasting and dependable use of emotive and interactive formats, making them players  
integrity will our Company be able to gain and boost the trust in the process of change. They become aware of the fact that  
of its customers, staff, shareholders, business partners and successful change relies first and foremost on their hard work  
the general public. With T4I, integrity and compliance are and that Volkswagen values their efforts. Events such as the  
given the same priority as other parameters such as economic T4I kick-off and T4I perception workshops bring together  
targets, sales figures and product quality. T4I strengthens employees and managers regardless of the different hierar-  
corporate governance in a lasting way. As a Group-wide pro- chies. They convey a sense of community and strengthen  
gram, it has been bringing together all integrity- and com- awareness of the role of each individual. They also provide an  
pliance-related initiatives from 15 different departments opportunity to openly ask critical questions and address  
under a common umbrella since 2018. The departments problems. Both events take place at every Group company in  
involved include Research and Development, Compliance, HR which T4I is rolled out.  
and Integrity.  
T4I not only has an internal impact; it is also felt outside  
T4I is based on the five principles of the internationally the Group. New processes, for example, such as the imple-  
recognized ECI, which relate to strategy, risk management, a mentation of the Business Partner Code of Conduct, ensure  
culture of integrity, a speak-up environment and resolute that our suppliers and sales partners are committed to the  
accountability. They are codified as the Group’s aspiration principles of integrity and compliance and are trained accord-  
level and are implemented through T4I. The Board of ingly. In addition, our increasing focus on integrity and com-  
Management positions for Integrity & Legal Affairs and for pliance shapes the manner in which employees interact with  
Human Resources are responsible for the program. The other customers, representatives from civil society, governments  
Board of Management positions act as sponsors, thus and other stakeholders, particularly as a result of the require-  
ensuring that T4I is successfully implemented in their area of ments and examples set out in the Code of Conduct. In this  
responsibility.  
way, we also convey our understanding of integrity and  
The program serves to implement processes and struc- compliance and the subsequent necessary changes beyond  
tures that create a regulatory framework for acting with the company.  
integrity and in accordance with the law. Furthermore, T4I  
Through T4I, corporate governance will be geared towards  
aims to engage with people, creating a corporate culture that comprehensive and sustainable integrity and compliance  
enables them to work together as equals, opens up space for across the entire Volkswagen Group. This will provide a stable  
creativity, allows diversity to flourish and encourages people framework within which the whole workforce can act  
to act in line with their values.  
responsibly and with purpose and entrepreneurial spirit, and  
The program will be rolled out to all Group companies by will help to establish Volkswagen as a reputable company that  
025. Since launching in 2018, it has been introduced to over embodies integrity.  
2
Group Management Report  
Corporate Governance Report  
65  
COM P L IA N CE  
panies to identify, evaluate, manage and monitor potential  
Acting with integrity, compliance and honesty is an essential compliance risks. Additional compliance resources were  
prerequisite for the success of the Volkswagen Group. For this provided on a risk-oriented basis in the reporting year. Higher  
reason, compliance with national and international laws and levels of the compliance organization are involved in the  
regulations, internal rules and voluntary commitments is appointment of new compliance officers and conduct a  
among our Company’s most important principles. We are standardized training process.  
striving to strengthen the trust of our customers, our busi-  
The heads of the centers of competence report to the  
ness partners and other stakeholders in our Group by Group Chief Compliance Officer on disciplinary and func-  
treating each other fairly. Compliant behavior is the basis for tional matters. The Divisional Compliance Officers and the  
this and must be a matter of course for all Group employees. Regional Compliance Officer China report generally to the  
One of our Company’s main tasks is to further enhance Group Chief Compliance Officer on functional matters.  
awareness of this.  
Meetings and conferences ensure that those responsible for  
compliance at Group and brand level are connected and  
communicate regularly.  
Commitment to compliance at the highest level  
In September 2019, Herbert Diess, Chairman of the Board of  
Management of Volkswagen AG, wrote in the social network Compliance management system  
LinkedIn: “Ethics, integrity, and compliance are crucial to me Our compliance management system is aligned with national  
and the entire Board of Management to our success. This is and international laws and standards. Its objective is to  
the foundation for our future business.”  
encourage, reinforce and ensure compliant behavior in the  
Company in a lasting manner. The focus of our compliance  
organization is on preventing corruption, breaches of trust  
Compliance organization  
The Group Compliance Committee met regularly in the and money laundering and thereby on reducing the risk of  
reporting year. It is a top-management level body that is unlawful actions. In the reporting year, we also conducted an  
chaired by the member of the Board of Management respon- analysis of fraud prevention for all relevant risks at the  
sible for Integrity & Legal Affairs. The committee ensures that second line of defense in the risk management and internal  
compliance and integrity standards are uniformly developed, control system.  
applied and communicated across the divisions and brands.  
Where laws and regulations have been violated, our  
The Group Chief Compliance Officer reports directly to whistleblower system is a suitable tool for taking appropriate  
the member of the Board of Management responsible for action. Members of management are obligated to report every  
Integrity & Legal Affairs. In the reporting period, there was indication of serious rule-breaking. Failure to do so is itself a  
direct communication on compliance issues at meetings of serious infringement. The accessibility of the whistleblower  
the Board of Management, the Audit Committee of the Super- system has been further improved with a 24-hour hotline.  
visory Board and the Works Council, particularly by the  
We place value on communication and training seminars  
member of the Board of Management responsible for Integ- to permanently anchor compliance-related content among  
rity & Legal Affairs and the Group Chief Compliance Officer.  
Central divisions within the Group are supported and  
the workforce.  
Compliance work in the Volkswagen Group is based on a  
advised by their own compliance contacts. Additional centers systematic process of risk identification and reporting in  
of competence are responsible for the overall direction of accordance with the IDW standard AsS 980. We used 2019 to  
compliance work and develop compliance instruments and conduct a Group-wide compliance risk analysis. The reporting  
program components with which the companies can imple- year also saw us begin the global roll-out of our new stan-  
ment the compliance requirements themselves across the dardized, IT-based process for selecting business partners.  
Group. During the reporting period, additional resources This will be used to regularly review the integrity of existing  
were set aside for these tasks.  
and new business partners through a risk-based approach  
The global compliance organization at the Volkswagen and will be conducted every one to six years, depending on  
Group comprises divisional and regional compliance offices. the degree of risk exposure. The objective is to obtain trans-  
These support and advise the compliance officers and parency at Group level of the risk exposure of all Group com-  
managers of the respective Group and brand companies with panies included in the compliance scope.  
an effective, risk-based, Group-wide compliance management  
However, we are also aware that even the best compliance  
system, helping them to conduct their business activities in management system can never entirely prevent the criminal  
accordance with the rules and to be consistent in adhering to actions of individuals.  
relevant laws and internal regulations. They also help com-  
6
6
Corporate Governance Report  
Group Management Report  
Code of Conduct and guidelines  
The Code of Conduct for Business Partners was extensively  
The Volkswagen Group’s Code of Conduct is established revised in the reporting year and the new version was  
throughout the Group. It is the main tool for reinforcing enacted throughout the Group. The Code of Conduct for Busi-  
awareness of good conduct among the workforce, providing ness Partners defines our minimum standards concerning  
assistance to employees and finding suitable contacts in the compliance matters described therein and is permanently  
cases of uncertainty. The framework is available to all available to third parties via the internet. Business partners  
employees on the intranet and also to third parties on the can also take part in online training that covers the Code’s  
internet and is continually communicated within the content.  
Company via digital and print media and at events.  
Employees at all levels of the hierarchy receive regular Whistleblower system  
training on the Code of Conduct, and the Code is also a fixed The Volkswagen whistleblower system is the central point of  
part of our operational HR processes. New employees receive contact for reporting potential cases of serious rule-breaking  
a copy of it as part of the recruitment process. A reference to in the Volkswagen Group. It focuses on investigating serious  
the Code of Conduct and the obligation to comply with it are infringements that could cause major damage to the Com-  
a fixed part of employment contracts. In the reporting year, pany’s reputation or financial interests or that involve major  
the Code of Conduct formed part of the employees’ annual breaches of the Volkswagen Group’s ethical principles. Exam-  
reviews and was thus taken into account when calculating ples of matters generally involving serious rule-breaking  
their variable, performance-related remuneration. As of 2019, include economic, corruption-related, tax and environmental  
employees at senior management levels are required to offenses, breaches of human rights, infringements of anti-  
undergo annual Code of Conduct certification process.  
trust and competition law, money laundering and terrorist  
In addition to the Volkswagen Group Code of Conduct, financing, infringements of rules on product safety and  
Group Compliance prepares Group policies and guidelines on approval, and serious data protection breaches.  
specific compliance issues, which are incorporated into the  
The aim of the whistleblower system is to protect Volks-  
relevant rules of the brand and Group companies throughout wagen and its employees through the use of binding prin-  
the entire Group. In the reporting year, for example, uniform ciples and a clearly governed process. The experience gained  
rules for dealing with gifts, avoiding corruption and conflicts from reported violations of regulations helps us to improve  
of interest were set out in a Group policy for the first time. In compliance management and prevent similar incidents in  
addition, a revised version of the guidelines on whistle- the future. The whistleblower system is designed to provide  
blowing reinforced the role of the Volkswagen whistleblower maximum protection for whistleblowers and affected parties.  
system as the central point of contact for cases of serious An investigation is only initiated after the information  
rule-breaking. Group policies on business partner due dili- received has undergone a thorough examination and the  
gence, on prevention of money laundering and on mergers & latter has identified concrete indications of rule-breaking.  
acquisitions were also implemented.  
The presumption of innocence applies to the parties affected  
There was a new guideline on “Governance and Integrity, until rule-breaking has been proven. Strict confidentiality  
Risk Management, Compliance and Legal Affairs” which and secrecy apply throughout the investigation process.  
describes the organization, structure and functions relating Reports are investigated fairly, swiftly and sensitively. Whistle-  
to the Compliance, Integrity, Risk Management and Legal blowers are also protected. Their statements are treated  
departments. Employees have access to the compliance rules confidentially. If they wish, and provided the law allows, their  
and regulations in particular via the compliance pages on the identity is not disclosed. Discriminating against whistle-  
Company intranet.  
blowers is a serious violation of the rules and is not tolerated.  
Appropriate sanctions are applied where misconduct is  
proven.  
Information on misconduct by Volkswagen Group  
employees can be reported through a wide range of channels,  
including anonymously if preferred. Options for anonymous  
reporting include a specially protected online reporting  
channel, which allows users to communicate under an alias,  
and a 24-hour telephone hotline through which reports can  
be submitted in various languages. In addition to the staff in  
the Investigation Office, there are two external lawyers  
CODE OF CON DUCT OF TH E VOLKSWAGEN GROU P  
https://www.volkswagenag.com/presence/konzern/documents/Verhaltensgrundsätze_  
Group_EN_V2019.pdf  
CODE OF CON DUCT FOR BUSIN ESS PARTN ERS  
www. volkswagenag.com/presence/nachhaltigkeit/documents/policy-  
intern/2019_Code_of_Conduct_for_Business_Partners-DE-EN.pdf  
Group Management Report  
Corporate Governance Report  
67  
(
ombudspersons) available for confidential discussions. The Compliance key performance indicator  
ombudspersons can receive reports and forward them to the To measure the level of target achievement, we defined a  
Investigation Office. strategic indicator for the major brands that manufacture  
The whistleblower system is coordinated by the Central passenger cars:  
Investigation Office in Wolfsburg. This office is also respon- !ꢀ Compliance, a culture of error management and behaving  
sible for dealing with reports concerning Volkswagen AG and  
its subsidiaries. AUDI AG, Dr. Ing. h.c. F. Porsche AG and  
TRATON SE each operate their own investigation office that  
also covers their subsidiaries.  
Group-wide, 3,174 reports (excluding China) were  
registered at the four Investigation Offices in 2019 (2018:  
with integrity. This is based on an evaluation of the answers  
to three questions in the opinion survey relating to compli-  
ance with regulations and processes, dealing with risks and  
errors and behaving with integrity. In the case of negative  
deviations, the affected departments develop and imple-  
ment measures. In the reporting year, the key performance  
indicator further improved on the previous good figure.  
1
,560). This shows that staff are familiar with the whistle-  
blower system and the underlying processes. It is also proof  
that employees are motivated by a speak-up culture to take Strengthening compliance in company processes  
action against misconduct.  
The act implementing the Fourth EU Money Laundering  
Directive into German law presented new requirements for  
Volkswagen AG as a company that is bound by the Gesetz  
Communication, training and advice  
We further expanded training and communication activities über das Aufspüren von Gewinnen aus schweren Straftaten  
relating to compliance in the reporting year. Training on the (GWG – Law on Tracing Profits from Serious Criminal Offences).  
Code of Conduct is mandatory for all employee groups and The Group policy adopted and published in this context by  
forms the basis for the understanding of compliance in the the Board of Management in 2018 defines the minimum  
Group. It takes place in both face-to-face and online training standard to be implemented by all Group companies.  
sessions. The training is regularly repeated with new and  
expanded content and documented in employees’ training risk-based business partner selection process at the Volks-  
history. wagen Group. We began pilot testing the tool at the end of  
In 2018, we designed and developed a new IT tool for a  
In addition, Volkswagen introduced a mandatory anti- 2018. The Group has been gradually introducing this busi-  
corruption training in the reporting year, which is also being ness partner selection process since 2019. A key objective of  
rolled out Group-wide. For the first time, training and raising the new process is the creation of transparency within the  
awareness on this issue is aimed not only at specific groups Volkswagen Group to prevent Group companies from entering  
within the Company, but also at business partners from sales into business relationships with business partners that other  
and procurement departments based on the level of risk.  
Group companies have previously classified as not acting with  
Following the risk-based approach, compliance training – integrity.  
some of which is mandatory – continues to take place on  
New business models are constantly being considered in  
topics including the prevention of money laundering. Com- the Volkswagen Group as part of the enhanced Group strategy  
+
pliance content is also communicated through personal TOGETHER 2025 . These business models focus particularly  
development programs, in various dialog formats and at on digitalization, automation and electrification, but also on  
presentations and events, for example on the topic of anti- the development of and involvement in mobility concepts.  
corruption measures and the whistleblower system.  
The compliance organization helps the strategic business units  
Employees can also use special e-mail addresses to solicit to implement their forward-looking projects through individ-  
advice on compliance issues. They can also contact advisory ual risk assessments and recommendations based on these.  
services within the compliance organization, such as the  
compliance Infopoint at Volkswagen.  
In addition, compliance will become more firmly embed-  
ded in mergers & acquisitions and real estate transactions.  
WH ISTLEBLOWER SYSTEM  
www.volkswagenag.com/en/group/compliance-and-risk-management/whistle  
blowersystem.html  
Phone: + 49 5361 9 46300  
E-Mail: io@volkswagen.de  
6
8
Corporate Governance Report  
Group Management Report  
Effectiveness review  
On September 2, 2019, Volkswagen also announced that the  
Independent reviews by Group Internal Audit in the corpo- Company had concluded a settlement agreement with the US  
rate units and the regular exchange of information with Environmental Protection Agency, which had been the reason  
external bodies help ensure continuous improvement of the for commissioning a second auditor for the Volkswagen  
compliance management system. There are no indications Group. This agreement was concluded by Volkswagen to pre-  
that our current compliance management system was inef- vent it from being excluded from public contracts in the United  
fective in 2019.  
States. This second auditorship is planned to last three years.  
I N D E P E N DE NT M ON I TO R  
RI SK M A NAG EME NT, AU DI T  
In June 2017, in connection with the diesel issue, Carefully managing potential risks to the Company is a key  
Larry D. Thompson was appointed as the Independent Com- component of our daily work. The Volkswagen Group’s risk  
pliance Monitor at Volkswagen under the terms of the Plea management system is oriented toward identifying, asses-  
Agreement with the United States Department of Justice sing, communicating and managing risks at an early stage.  
announced on January 11, 2017 and confirmed by a US This system is reviewed on an ongoing basis and adjusted if  
federal court on April 21, 2017. He also works as Independent and when conditions change. A detailed description of the  
Compliance Auditor under the Third Partial Consent Decree risk management system and our accounting-related internal  
concluded separately with the US Department of Justice and control system can be found in the Risk Report on pages 164  
the US Environmental Protection Agency (EPA) and the Third to 167 of this annual report.  
California Partial Consent Decree agreed with the US State of  
The Supervisory Board has established an Audit Commit-  
California and the environmental authority California Air tee that in particular monitors the financial accounting, the  
Resources Board, CARB (for more information on these financial accounting process, the effectiveness of the internal  
agreements, please see the Litigation section starting on control system, the risk management system and the internal  
page 179). Mr. Thompson will perform his duties under the audit system, the audit of the financial statements and com-  
Plea Agreement and Third Partial Consent Decrees for a pliance. Furthermore, the Audit Committee makes a well-  
period of three years, which also includes taking measures to founded recommendation for the election of the auditor to  
further strengthen the Company’s compliance and its the Supervisory Board, obtains a declaration of independence  
reporting and monitoring mechanisms, as well as the from the auditor, supervises the additional services provided  
implementation of an enhanced compliance and ethics by the auditor and prepares the audit engagement resolution.  
program.  
It also discusses the annual audit planning, the determi-  
In his capacity as the Independent Compliance Monitor nation of areas of emphasis for the audit, the agreed fee and  
on the basis of the Plea Agreement, Mr. Thompson submitted the auditor’s obligation to provide information.  
three reports: on March 30, 2018, February 8, 2019, and  
November 5, 2019; in accordance with the provisions of the COM MU N ICATI O N A N D TRA N SPA RE N CY  
Plea Agreement, the reports will not be published. In addi- The Volkswagen Group publishes a financial calendar listing  
tion, in his capacity as the Independent Compliance Auditor all the relevant dates for its shareholders in its annual  
under the terms of the Third Partial Consent Decrees, report and interim reports as well as on its website at  
Mr. Thompson prepared two annual reports, published on www.volkswagenag.com/en/InvestorRelations.html. Among  
August 27, 2018, and September 4, 2019.  
other things, invitations to the shareholders’ meetings as well  
Volkswagen announced on October 17, 2019, that the US as agendas for these meetings and any motions to be added  
Department of Justice and the monitor had granted a 90-day to the agenda or countermotions received are also available  
extension to the monitorship to be able to demonstrate that on this website. At the shareholders’ meetings, shareholders  
Volkswagen had fulfilled its obligations pursuant to the may exercise their voting rights themselves, have this right  
Plea Agreement. Thanks to this agreement, Volkswagen has exercised on their behalf by a third-party proxy whom they  
9
0 more days to fully test and, where necessary, adjust the have appointed, or use a proxy designated by the Company  
measures that the Group and its brands have put in who votes on their behalf in accordance with their voting  
place, including the monitor’s recommendations, so that instructions. We also give our shareholders the opportunity  
Mr. Thompson is able to submit his certification report on to watch the introductory remarks and the speeches of the  
the Company’s integrity and compliance programs.  
Chairman of the Supervisory Board and the Chairman of the  
Board of Management on the internet.  
Group Management Report  
Corporate Governance Report  
69  
In addition, news and information on the Volkswagen Group Rights” – you can also access details of the notifications filed  
are available on this website. The press releases and other in the reporting period in compliance with sections 33 ff. of  
information are published in both English and German.  
the WpHG as well as notifications relating to other legal  
Immediately after their publication in accordance with issues.  
legal requirements, the Company’s ad-hoc releases are also  
The supervisory body appointments held by Board of  
published on the same website under the heading “Financial Management members and Supervisory Board members can  
News, Ad-hoc Releases & Publications”.  
be found on pages 88 to 91 of this annual report. The share-  
We publish managers’ transactions pursuant to Article 19 holder structure is presented on page 109.  
of the Market Abuse Regulation (Marktmissbrauchsverord-  
nung) or – for previous fiscal years – in accordance with  
section 15a of the Wertpapierhandelsgesetz (WpHG – German  
Securities Trading Act) (old version) under the heading  
“
Corporate Governance”, menu item “Managers’ Trans-  
actions”. On the same web page – under the heading “Finan-  
cial News, Ad-hoc Releases & Publications”, menu item “Voting  
MAN DATORY PU BLICATIONS OF VOLKSWAGEN AG  
www.volkswagenag.com/en/InvestorRelations/news-and-publications.html  
7
0
Remuneration Report  
Group Management Report  
Remuneration Report  
This chapter describes the main elements of the remuneration system for the Board of  
Management. In addition, the Remuneration Report details the individualized remuneration  
of the Board of Management and the Supervisory Board of Volkswagen AG, broken down into  
components, as well as individualized pension provision disclosures for the members of the  
Board of Management.  
PRI N CI PLE S OF B OARD OF M A NAG EMEN T RE MU N E RATIO N  
COMPO N E NT S O F BOAR D OF M A NAGEM EN T RE MU N ERATI ON  
Matters involving the remuneration system and the total In this section, we provide an overview of the Board of Man-  
remuneration of each individual member of the Volkswagen AG agement’s remuneration system before going into the com-  
Board of Management are decided on by the Supervisory ponents of the remuneration for the reporting period.  
Board on the basis of the Executive Committee’s recom-  
mendations. The remuneration system implements the require- Overview of the remuneration system  
ments of the Aktiengesetz (AktG – German Stock Corporation The remuneration system of the Board of Management com-  
Act) and the recommendations of the German Corporate prises non-performance-related and performance-related  
Governance Code (the Code) in the version dated February 7, components. The performance-related remuneration consists  
2017. In particular, the remuneration structure is focused on of an annual bonus with a one-year assessment period and a  
ensuring sustainable business development in accordance long-term incentive (LTI) in the form of a performance share  
with the Gesetz zur Angemessenheit der Vorstandsvergütung plan with a forward-looking three-year term. The perfor-  
(VorstAG – German Act on the Appropriateness of Executive mance share plan is linked to business development in the  
Board Remuneration) and section 87(1) of the AktG. next three years and is thus based on a multiyear, forward-  
At the beginning of 2017, the Supervisory Board of Volks- looking assessment that reflects both positive and negative  
wagen AG resolved to adjust the remuneration system of the developments. The non-performance-related component  
Board of Management with effect from January 1, 2017. The creates an incentive for individual members of the Board of  
system for remuneration of the Board of Management was Management to perform their duties in the best interests of  
approved by the Annual General Meeting on May 10, 2017 the Company and to fulfill their obligation to act with proper  
with 80.96% of the votes cast. The adjustment, in which the business prudence without needing to focus on merely short-  
Supervisory Board was assisted by renowned, independent term performance targets. The performance-related compo-  
external remuneration and legal consultants, resulted in an nents, dependent among other criteria on the financial  
alignment with the Group strategy.  
performance of the Company, serve to ensure the long-term  
The level of the Board of Management remuneration impact of behavioral incentives.  
should be appropriate and attractive in the context of the Com-  
If 100% of the targets agreed with each of the members of  
pany’s national and international peer group. Criteria include the Board of Management are achieved, the annual target  
the tasks of the individual Board of Management member, remuneration for each member will amount to a total of  
their personal performance, the economic situation, and the €4,500,000 (corresponding to  
a fixed remuneration of  
performance of and outlook for the Company, as well as how €1,350,000, a target amount from the annual bonus of  
customary the remuneration is when measured against the €1,350,000 and a target amount from the performance share  
peer group and the remuneration structure that applies to plan of €1,800,000). The annual target remuneration for the  
other areas of Volkswagen. In this context, comparative  
studies on remuneration are conducted on a regular basis.  
Group Management Report  
Remuneration Report  
71  
Chairman of the Board of Management amounts to a total of variable remuneration reflect both positive and negative  
9,000,000 (fixed remuneration of €2,125,000, a target amount developments.  
€
from the annual bonus of €3,045,000, and a target amount  
from the performance share plan of €3,830,000).  
The Supervisory Board may cap the performance-related/  
variable remuneration components in the event of extraordi-  
Annual minimum remuneration of €3.5 million (sum of nary developments.  
fixed remuneration, annual bonus, LTI and any special pay-  
ments) was contractually agreed with Mr. Sommer.  
Annual bonus  
The annual bonus is based upon the result for the respective  
fiscal year. Operating profit achieved by the Volkswagen  
Non-performance-related remuneration  
The non-performance-related remuneration comprises fixed Group plus the proportionate operating profit of the Chinese  
remuneration and fringe benefits. Since 2018, separate remu- joint ventures form half of the basis for the annual bonus,  
neration is no longer provided for appointments assumed at with operating return on sales achieved by the Volkswagen  
Group companies, but is covered by the fixed remuneration. Group making up the second half. Each of the two com-  
The fringe benefits result from noncash benefits and include ponents of the annual bonus are only payable if certain  
in particular the use of operating assets such as company cars thresholds are reached or exceeded.  
and the payment of insurance premiums. Taxes due on these  
noncash benefits are mainly borne by Volkswagen AG.  
The calculated payment amount may be individually  
reduced by up to 20% (multiplier of 0.8) or increased by up to  
The fixed level of remuneration is reviewed regularly and 20% (multiplier of 1.2) by the Supervisory Board, taking into  
adjusted if necessary.  
account the degree of achievement of individual targets agreed  
between the Supervisory Board and the respective member of  
the Board of Management, as well as the success of the full  
Performance-related remuneration  
The performance-related/variable remuneration consists of Board of Management in transforming the Volkswagen  
an annual performance-related bonus with a one-year assess- Group by transferring employees to new areas of activity.  
ment period and a long-term incentive (LTI) in the form of a  
The payment amount for the annual bonus is capped at  
performance share plan with a forward-looking three-year 180% of the target amount for the annual bonus. The cap  
term (long-term incentive components) and phantom arises from 150% of the maximum financial target achieve-  
preferred shares. The components of performance-related/ ment and a performance factor of a maximum of 1.2.  
7
2
Remuneration Report  
Group Management Report  
CALCULATION OF THE PAYMENT AMOUNT FOR THE ANNUAL BONUS  
TARGET  
×
TARGET ACHIEVEMENT  
Company bonus Performance factor  
=
ANNUAL BONUS  
Payment amount  
Operational KPIs  
0 – 150% target achievement)  
×
Multiplier  
(0.8 – 1.2)  
(
5
0 PERCENT COMPONENT 1  
50 PERCENT COMPONENT 2  
Target achievement in percent  
150  
Target achievement in percent  
1
1
50  
00  
100  
50  
5
0
0
5
10  
15  
20  
25  
30  
35  
0
1
2
3
4
5
6
7
8
9
10  
Operating result including Chinese joint  
ventures (proportionate) in € billion  
Operating return on sales in percent  
COM P O N E NT 1: OP E RAT I NG RE SU LT I NCLU D I NG  
CH I N E SE J OI NT V ENTU RE S (P ROP ORT IO NATE )  
COMPO N E NT 2: OPERAT I NG RETU RN O N SA L ES  
€
billion  
2018  
2019  
%
2018  
2019  
Maximum threshold  
00% level of target  
25.0  
17.0  
9.0  
25.0  
17.0  
9.0  
Maximum threshold  
100% level of target  
Minimum threshold  
Actual  
8.0  
6.0  
4.0  
5.9  
98  
8.0  
6.0  
4.0  
6.7  
118  
1
Minimum threshold  
Actual  
18.5  
110  
21.4  
127  
Target achievement (in %)  
Target achievement (in %)  
Group Management Report  
Remuneration Report  
73  
Performance share plan – long-term incentive (LTI)  
P E RFO RM A N CE P ERI OD 2 0 1 7– 2 0 1 9  
The LTI is granted to the Board of Management annually in  
the form of a performance share plan. Each performance  
period of the performance share plan has a term of three  
years. At the time the LTI is granted, the annual target  
€
2017  
2018  
2019  
amount under the LTI is converted on the basis of the initial Maximum threshold  
reference price of Volkswagen’s preferred shares into perfor- 100% level of target  
mance shares of Volkswagen AG, which are allocated to the Minimum threshold  
respective member of the Board of Management purely for Actual  
calculation purposes. The conversion is performed based on Target achievement (in %)  
the unweighted average of the closing prices of Volkswagen’s  
30.0  
20.0  
10.0  
22.69  
113  
30.0  
20.0  
10.0  
23.63  
118  
30.0  
20.0  
10.0  
26.66  
133  
preferred shares for the last 30 trading days preceding  
P E RFO RM A N CE P ERI OD 2 0 1 8– 2 0 2 0  
January 1 of a given fiscal year. At the end of each year, the  
number of performance shares is determined definitively for  
one-third of the three-year performance period based on the  
degree of target achievement for the annual earnings per  
Volkswagen preferred share (EPS – earnings per share per  
preferred share in €). A prerequisite for this is that a threshold  
is reached.  
€
2018  
2019  
Maximum threshold  
30.0  
20.0  
10.0  
23.63  
118  
30.0  
20.0  
10.0  
26.66  
133  
1
00% level of target  
Minimum threshold  
Actual  
Target achievement (in %)  
P E RFO RM A N CE P ERI OD 2 0 1 9– 2 0 2 1  
€
2019  
Maximum threshold  
30.0  
20.0  
10.0  
26.66  
133  
100% level of target  
Minimum threshold  
Actual  
Target achievement (in %)  
7
4
Remuneration Report  
Group Management Report  
After the end of the three-year term of the performance share If the employment contract of a member of the Board of  
plan, a cash settlement takes place. The payment amount Management concludes prior to the end of the performance  
corresponds to the final number of determined performance period due to extraordinary termination based on good  
shares, multiplied by the closing reference price at the end of cause, or if the member of the Board of Management starts  
the three-year period plus a dividend equivalent for the working for a competitor (also referred to as “bad-leaver  
relevant term. The closing reference price is the unweighted cases”), the unpaid performance shares will expire. For mem-  
average of the closing prices for Volkswagen’s preferred bers of the Board of Management who held their seat as of  
shares for the 30 trading days preceding the last day of the December 31, 2016, this rule only applies in the event of a  
three-year performance period. The dividend equivalent reappointment or new appointment.  
corresponds to the dividends distributed during the holding  
period on a genuine Volkswagen preferred share.  
In connection with the appointment of the Chairman of  
the Board of Management, the employment contract of  
Mr. Diess was terminated by mutual agreement in 2018 and a  
new employment contract was entered into, whereby the  
expiry rule described above applies from the 2018 –2020  
performance period onwards.  
PERFORMANCE PERIOD  
Ms. Werner was appointed as a member of the Board of  
Management in 2017. Mr. Blume, Mr. Kilian and Mr. Sommer  
2
017–2019  
2018–2020  
2019–2021  
Initial reference price  
Closing reference price  
Dividend equivalent  
127.84  
177.44  
169.42  
–1  
147.08 were newly appointed to the Board of Management in 2018,  
–1 followed by Mr. Schot in 2019.  
In the introductory phase of the performance share plan  
2
2
2
017  
018  
019  
2.06  
3.96  
4.86  
–
3.96  
4.86  
–
–
(2017–2018), the members of the Board of Management who  
were Board members as of December 31, 2016 will generally  
4.86 receive advances of 80% of their target amount. Mr. Blume  
will receive corresponding advances for the performance  
periods 2018–2020 (proportionate) and 2019–2021. The two  
advances will each be paid after the first year of the per-  
1
Determined at the end of the performance period.  
The payment amount under the performance share plan is formance period. Final settlement is based on actual achieve-  
limited to 200% of the target amount. The payment amount ment of targets at the end of the relevant three-year perfor-  
is reduced by 20% if the average ratio of capex to sales reve- mance period.  
nue or the R&D ratio in the Automotive Division of the last  
three years is smaller than 5%.  
Group Management Report  
Remuneration Report  
75  
CALCULATION OF THE PAYMENT AMOUNT FROM THE PERFORMANCE SHARE PLAN  
TARGET  
PERFORMANCE MEASUREMENT  
PRICE PERFORMANCE  
LTI  
AND DIVIDENDS  
÷
Provisional  
Final number determined for 1/3  
of provisional performance shares  
multiplied by annual target achievement EPS  
per preferred share  
Final  
Closing reference price  
plus dividend  
=
Initial  
Payment  
amount  
performance shares  
performance shares  
(number)  
×
reference price  
(number)  
over term  
⅓
⅓
⅓
×
×
×
Target achievement EPS per preferred share  
Fiscal year 1  
Fiscal year 2  
Fiscal year 3  
I N F ORM AT IO N O N TH E P E RF ORM A NCE SHA RE S  
PERFORMANCE PERIOD  
PERFORMANCE PERIOD  
2018–2020  
PERFORMANCE PERIOD  
2019–2021  
2
017–2019  
Number of  
performance  
Number of  
performance  
Number of  
performance  
shares allocated  
shares allocated  
shares allocated  
Fair value  
Fair value  
Fair value  
€
at the grant date  
at the grant date  
at the grant date  
at the grant date  
at the grant date  
at the grant date  
Herbert Diess  
14,080  
–
14,080  
–
14,080  
–
2,048,640  
19,212  
7,614  
10,624  
7,614  
10,624  
–
3,541  
10,624  
10,624  
80,477  
2,840,468  
1,349,810  
1,799,918  
1,349,810  
1,799,918  
–
26,040  
12,238  
335  
12,238  
12,238  
12,238  
12,238  
12,238  
12,238  
112,041  
3,350,046  
1,574,419  
43,098  
1,574,419  
1,574,419  
1,574,419  
1,574,419  
1,574,419  
1,574,419  
14,414,075  
Oliver Blume (since April 13, 2018)  
Jochem Heizmann (until January 10, 2019)  
Gunnar Kilian (since April 13, 2018)  
Andreas Renschler  
Abraham Schot (since January 1, 2019)  
Stefan Sommer (since September 1, 2018)  
Hiltrud Dorothea Werner  
Frank Witter  
–
2,031,040  
–
1,891,648  
–
–
–
488,446  
12,907  
14,080  
69,227  
1,856,672  
2,025,408  
9,853,408  
1,799,918  
1,799,918  
13,228,206  
Total  
Comprehensive  
income 2019  
arising from  
performance  
shares  
Comprehensive  
income 2018  
arising from  
performance  
shares  
Provision as of Intrinsic value as of  
Provision as of Intrinsic value as of  
Dec. 31, 20181  
€
Dec. 31, 2019  
Dec. 31, 2019  
Dec. 31, 2018  
Herbert Diess  
3,504,374  
984,260  
3,687,200  
3,490,713  
1,614,937  
951,793  
1,614,937  
1,713,961  
3,925,694  
1,317,674  
2,852,956  
2,054,256  
19,536,920  
2,617,527  
401,323  
3,422,628  
401,323  
5,298,813  
–
1,616,319  
1,547,771  
401,323  
759,638  
401,323  
1,991,565  
–
Oliver Blume (since April 13, 2018)  
Jochem Heizmann (until January 10, 2019)  
Gunnar Kilian (since April 13, 2018)  
Andreas Renschler  
Abraham Schot (since January 1, 2019)  
Stefan Sommer (since September 1, 2018)  
Hiltrud Dorothea Werner  
Frank Witter  
–
1,767,329  
–
3,879,394  
–
–
2,934,421  
2,016,260  
5,572,774  
3,925,694  
1,415,440  
5,019,403  
6,981,087  
32,353,713  
2,362,898  
–
2,362,898  
–
–
–
–
97,766  
97,766  
2,782,969  
3,879,394  
15,996,286  
2,166,448  
6,366,831  
20,772,660  
1,542,922  
2,678,125  
9,420,432  
2,362,898  
8,705,012  
Total  
1
Adjusted  
7
6
Remuneration Report  
Group Management Report  
The number of performance shares equals the provisional Total remuneration cap  
performance shares allocated at the grant date of the perfor- In addition to the cap on the individual variable components  
mance share plan. The fair value as at the grant date was of the remuneration for the members of the Board of Man-  
determined using a recognized valuation technique.  
agement, the annual benefits received according to the Code,  
To determine their amount, the performance shares consisting of fixed remuneration and the variable remune-  
expected for future performance periods were taken into ration components (i.e. annual bonus and performance share  
account in addition to the provisional performance shares plan) for one fiscal year may not exceed an amount of  
determined or allocated for the performance periods 2017– €10,000,000 for the Chairman of the Board of Management  
2019, 2018–2020 and 2019–2021. The amount therefore and €5,500,000 for each member of the Board of Manage-  
depends on the individual contract term and the relevant ment. If the total remuneration cap is exceeded, the variable  
vesting arrangements for the performance shares. The components will be reduced proportionately.  
intrinsic value was calculated in accordance with IFRS 2 and  
corresponds to the amount that the members of the Board of Regular review and adjustment  
Management would have received if they had stepped down The Supervisory Board regularly reviews and, if necessary,  
on December 31, 2019. Only the nonforfeitable (vested) adjusts the level of the total remuneration cap and the indi-  
performance shares at the reporting date are included in the vidual targets.  
calculation. The intrinsic value was calculated based on the  
unweighted average share price for the last 30 trading days Other agreements  
(Xetra closing prices of Volkswagen’s preferred shares) Members of the Board of Management with contracts entered  
preceding December 31, 2019, taking the dividends paid per into on or after January 1, 2010 are entitled to payment of  
preferred share during the performance period into account. their normal remuneration for six to twelve months in the  
The net value of all amounts recognized in income for the event of illness. Contracts entered into before that date grant  
performance shares in fiscal year 2019 is recorded in “Com- remuneration for six months. In the event of disability, they  
prehensive income 2019 arising from performance shares” are entitled to the retirement pension.  
according to the IFRSs.  
Surviving dependents receive a widow’s pension of  
66 Ͼ% and orphans’ benefits of 20% of the former member of  
Phantom preferred shares  
the Board of Management’s pension. Contracts with mem-  
The phantom preferred shares for the remuneration withheld bers of the Board of Management whose first term of office  
for 2015 formed part of the Board of Management remu- began after April 1, 2015, provide for an entitlement – in line  
neration until they were paid out in 2019.  
with the principles of the works agreement that also applies  
to employees of Volkswagen AG covered by collective agree-  
ments – to a widow’s pension of 60%, an orphan’s benefit of  
1
0% for half-orphans and an orphan’s benefit of 20% for full  
orphans, based in each case on the former member of the  
Board of Management’s pension.  
Group Management Report  
Remuneration Report  
77  
B EN EF IT S BA SE D ON PHAN TOM P REFE RRE D SHAR ES FROM T H E  
REMU N ERAT ION WIT H H ELD FOR F ISCA L YEA R 2 0 15  
holding period, i.e. April 22, 2019, or the date on which mem-  
bers left the company, was calculated (closing reference price).  
At its meeting on April 22, 2016, Volkswagen AG’s Super- The difference between the target reference price and the  
visory Board accepted the offer made by the members of the initial reference price was deducted from the closing refer-  
Board of Management to withhold 30% of the variable remu- ence price, and the dividends distributed on one real Volks-  
neration for fiscal year 2015 for the Board of Management wagen preferred share during the holding period (dividend  
members active on the date of the resolution and to make its equivalent) were added to the closing reference price. The  
disposal subject to future share price performance.  
figure thus calculated was multiplied by the number of phan-  
This was effected by first converting the amount withheld tom preferred shares so as to calculate the amount to be paid  
based on the average share price for the 30 trading days pre- to each Board of Management member. This ensured that  
ceding April 22, 2016 (initial reference price) into phantom – excluding the dividend equivalents accrued – the amount  
preferred shares of Volkswagen AG with a three-year holding withheld was only paid out in full if the initial reference price  
period and, at the same time, defining a target reference price of the preferred share increased by at least 25%.  
corresponding to 125% of the initial reference price. During  
In January of fiscal year 2019, Mr. Heizmann retired from  
the holding period, the holders of phantom preferred shares the Board of Management as per contract.  
were entitled to dividend equivalents in the amount of the  
dividends paid on real preferred shares.  
The number of phantom preferred shares granted on  
April 22, 2016 to members of the Board of Management who  
The shares were generally reconverted and paid out when were in office at the time did not change in fiscal year 2019  
the three-year holding period had expired or – in the event that (as of settlement in April 2019). In the year under review, the  
members retired from office early – at the time they did so.  
change in fair value of the phantom shares led to the recog-  
To determine the payment amount, the average share nition of an expense of €0.1 million (previous year: total  
price for the 30 trading days preceding the last day of the income of €0.6 million).  
I N F ORM AT IO N O N TH E P HA N TOM P RE FE RRE D S HA RE S H EL D I N 2 0 1 9  
Comprehensive  
income 2019  
arising from  
Comprehensive  
income 2018  
arising from  
Number of  
phantom shares  
Provision  
Dec. 31, 2019  
Provision  
Dec. 31, 2018  
Intrinsic value  
Dec. 31, 2019  
Intrinsic value  
Dec. 31, 2018  
phantom  
preferred shares  
phantom  
preferred shares  
€
Herbert Diess  
4,317  
–
512,740  
–
540,704  
27,705  
–83,688  
Jochem Heizmann  
(
until January 10, 2019)  
8,633  
7,914  
–
–
–
–
1,025,361  
939,964  
–
–
–
–
1,081,283  
991,229  
43,232  
50,791  
12,771  
134,499  
–167,356  
–153,418  
–38,577  
Andreas Renschler  
Frank Witter  
Total  
1,990  
236,357  
249,248  
22,854  
2,714,422  
2,862,464  
–443,040  
7
8
Remuneration Report  
Group Management Report  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M A NAG EMEN T I N ACCO RDAN C E WI TH T H E G ER M AN COMME RCI AL COD E  
2
019  
2018  
Non-performance-  
related  
Performance-  
related  
Long-term  
incentive  
Total  
Total  
€
component  
component  
component  
remuneration  
remuneration  
Herbert Diess  
2,212,694  
1,418,936  
71,391  
4,288,002  
1,901,085  
52,085  
3,350,046  
1,574,419  
43,098  
9,850,742  
4,894,440  
166,574  
7,877,832  
3,515,815  
5,013,141  
3,529,523  
5,004,370  
–
Oliver Blume (since April 13, 2018)  
Jochem Heizmann (until January 10, 2019)  
Gunnar Kilian (since April 13, 2018)  
Andreas Renschler  
1,462,701  
1,609,755  
1,810,079  
1,869,019  
1,465,159  
1,412,781  
1,901,085  
1,901,085  
1,901,085  
1,901,085  
1,901,085  
1,901,085  
1,574,419  
1,574,419  
1,574,419  
1,574,419  
1,574,419  
1,574,419  
4,938,205  
5,085,259  
5,285,583  
5,344,523  
4,940,663  
4,888,285  
Abraham Schot (since January 1, 2019)  
Stefan Sommer (since September 1, 2018)  
Hiltrud Dorothea Werner  
1,603,515  
4,930,160  
4,821,428  
Frank Witter  
Members of the Board of Management who left in the  
previous year  
–
–
–
–
14,040,526  
Total  
13,332,515  
17,647,682  
14,414,075  
45,394,271  
50,336,310  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF  
M A NAGEME NT I N ACCORDA NCE WIT H T H E GE RM AN COR P ORAT E  
GOVE RNAN CE CO DE  
with the Code are reported in the tables as benefits received  
for the fiscal year in which the performance shares under the  
plan were allocated. Mr. Blume will receive corresponding  
The amounts shown as benefits received in the Board of Man- advances for the performance period 2018–2020 (propor-  
agement remuneration tables in accordance with the Code tionate) and 2019–2021.  
correspond, in principle, to the amounts paid out for the fis-  
cal year in question.  
The amounts shown as “Benefits granted” in the Board of  
Management remuneration tables in accordance with the  
In the introductory phase of the performance share plan Code are based on 100% of the targets for the annual bonus  
2017 to 2018), members of the Board of Management who and on the fair value at the grant date for the performance  
(
were Board members as of December 31, 2016 generally share plan.  
received advances on the target amount, which in accordance  
Group Management Report  
Remuneration Report  
79  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M A NAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE  
WIT H T H E GE RM AN COR P ORAT E GOVE RNAN CE CO DE  
HERBERT DIESS  
Chairman of the Board of Management of Volkswagen AG,  
Chairman of the Brand Board of Management of Volkswagen Passenger Cars,  
Volume brand group,  
China  
Benefits received  
2019  
Benefits granted  
€
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
2,125,000  
1,905,414  
76,768  
1,982,182  
3,055,182  
2,603,867  
–
1,905,414  
76,768  
1,982,182  
2,564,750  
2,840,468  
–
2,125,000  
87,694  
2,212,694  
3,045,000  
3,350,046  
–
2,125,000  
2,125,000  
87,694  
Fringe benefits  
87,694  
2,212,694  
4,288,002  
540,445  
–
87,694  
Total  
2,212,694  
2,212,694  
5,481,000  
7,660,000  
–
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2017–2019)  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Phanton shares  
–
–
–
–
2,603,867  
–
2,840,468  
–
–
–
–
–
–
3,350,046  
–
7,660,000  
–
540,445  
7,041,141  
1,354,053  
8,395,194  
–
±
–
Total1  
7,641,230  
850,620  
8,491,850  
7,387,400  
850,620  
8,238,020  
8,607,740  
1,354,053  
9,961,793  
2,212,694  
1,354,053  
3,566,747  
15,353,694  
1,354,053  
16,707,747  
Pension expense  
Total remuneration  
1
The fixed remuneration agreed with Mr. Diess for fiscal year 2018 is €1,905,414 (prorated for the term of office as a full member of the Board of Management up until April 12, 2018  
and for the term of office as Chairman of the Board of Management starting April 13, 2018).  
OLIVER BLUME  
Chairman of the Board of Management of Dr. Ing. h.c. F. Porsche AG,  
Sport & Luxury brand group  
Joined: April 13, 2018  
Benefits granted  
Benefits received  
2019  
€
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
967,500  
45,999  
967,500  
45,999  
1,350,000  
68,936  
1,350,000  
1,350,000  
68,936  
Fringe benefits  
68,936  
1,418,936  
1,901,085  
1,440,000  
–
68,936  
Total  
1,013,499  
1,152,506  
1,032,000  
1,032,000  
–
1,013,499  
967,500  
1,349,810  
1,349,810  
–
1,418,936  
1,500,0001  
1,574,419  
–
1,418,936  
1,418,936  
2,580,000  
3,600,000  
–
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Total  
–
–
–
1,440,000  
4,760,021  
808,544  
5,568,565  
1,574,419  
4,493,355  
808,544  
5,301,899  
–
3,600,000  
7,598,936  
808,544  
8,407,480  
3,198,005  
588,354  
3,786,359  
3,330,809  
588,354  
3,919,163  
1,418,936  
808,544  
2,227,480  
Pension expense  
Total remuneration  
1
In 2019, Mr. Blume was granted a maximum performance-related bonus payment by Porsche AG in the amount of €150,000 which is not taken into consideration in the remuneration  
from Volkswagen AG.  
8
0
Remuneration Report  
Group Management Report  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M A NAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE  
WIT H T H E GE RM A N COR P ORAT E GOV E RNA N CE CO DE  
JOCHEM HEIZMANN  
China  
Left: January 10, 2019  
Benefits received  
2019  
Benefits granted  
€
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
36,986  
34,405  
71,391  
52,085  
1,350,000  
255,076  
1,605,076  
1,608,147  
1,440,000  
–
1,350,000  
255,076  
1,605,076  
1,350,000  
1,799,918  
–
36,986  
34,405  
71,391  
36,986  
43,098  
–
36,986  
36,986  
34,405  
71,391  
66,575  
98,630  
–
Fringe benefits  
34,405  
Total  
71,391  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2017–2019)  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Phantom shares  
–
1,068,593  
–
–
–
–
–
1,440,000  
–
1,799,918  
–
–
–
–
43,098  
–
–
–
98,630  
–
1,068,593  
1,192,069  
–
–
–
Total  
4,653,223  
–
4,754,994  
–
151,475  
–
71,391  
–
236,597  
–
Pension expense  
Total remuneration  
1,192,069  
4,653,223  
4,754,994  
151,475  
71,391  
236,597  
GUNNAR KILIAN  
Human Resources  
Joined: April 13, 2018  
Benefits received  
Benefits granted  
€
2019  
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
112,701  
1,462,701  
1,901,085  
–
967,500  
59,707  
1,027,207  
1,152,506  
–
967,500  
59,707  
1,350,000  
112,701  
1,462,701  
1,350,000  
1,574,419  
–
1,350,000  
1,350,000  
112,701  
1,462,701  
2,430,000  
3,600,000  
–
Fringe benefits  
112,701  
Total  
1,027,207  
967,500  
1,349,810  
1,349,810  
–
1,462,701  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Total  
–
–
–
–
–
–
–
1,574,419  
4,387,120  
886,559  
5,273,679  
–
3,600,000  
7,492,701  
886,559  
8,379,260  
3,363,786  
886,559  
4,250,345  
2,179,713  
703,228  
2,882,941  
3,344,517  
703,228  
4,047,745  
1,462,701  
886,559  
2,349,260  
Pension expense  
Total remuneration  
Group Management Report  
Remuneration Report  
81  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M A NAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE  
WIT H T H E GE RM AN COR P ORAT E GOVE RNAN CE CO DE  
ANDREAS RENSCHLER  
Chairman of the Board of Management of TRATON SE,  
Truck & Bus brand group  
Benefits received  
2019  
Benefits granted  
€
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
1,350,000  
246,305  
1,596,305  
1,608,147  
1,440,000  
–
1,350,000  
246,305  
1,596,305  
1,350,000  
1,799,918  
–
1,350,000  
259,755  
1,609,755  
1,350,000  
1,574,419  
–
1,350,000  
1,350,000  
259,755  
1,609,755  
2,430,000  
3,600,000  
–
Fringe benefits  
259,755  
1,609,755  
1,901,085  
990,754  
–
259,755  
Total  
1,609,755  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2017–2019)  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Phanton shares  
–
–
–
–
1,440,000  
–
1,799,918  
–
–
–
–
–
–
1,574,419  
–
3,600,000  
–
990,754  
4,501,594  
5,025,570  
9,527,164  
–
–
–
Total  
4,644,452  
5,249,526  
9,893,978  
4,746,223  
5,249,526  
9,995,749  
4,534,174  
5,025,570  
9,559,744  
1,609,755  
5,025,570  
6,635,325  
7,639,755  
5,025,570  
12,665,325  
Pension expense  
Total remuneration  
ABRAHAM SCHOT  
Chairman of the Board of Management of AUDI AG,  
Premium brand group  
Joined: January 1, 2019  
Benefits granted  
Benefits received  
€
2019  
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
460,079  
1,810,079  
1,901,085  
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,350,000  
460,079  
1,350,000  
460,079  
1,810,079  
–
1,350,000  
460,079  
Fringe benefits  
Total  
1,810,079  
1,350,000  
1,574,419  
1,574,419  
4,734,498  
2,222,572  
6,957,070  
1,810,079  
2,430,000  
3,600,000  
3,600,000  
7,840,079  
2,222,572  
10,062,651  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2019–2021)  
Total  
–
–
–
3,711,164  
2,222,572  
5,933,736  
1,810,079  
2,222,572  
4,032,651  
Pension expense  
Total remuneration  
8
2
Remuneration Report  
Group Management Report  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M A NAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE  
WIT H T H E GE RM A N COR P ORAT E GOV E RNA N CE CO DE  
STEFAN SOMMER  
Components & Procurement  
Joined: September 1, 2018  
Benefits received  
2019  
Benefits granted  
€
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
450,000  
129,020  
579,020  
536,049  
–
450,000  
129,020  
579,020  
450,000  
488,446  
488,446  
–
1,350,000  
519,019  
1,869,019  
1,350,000  
1,574,419  
–
1,350,000  
1,350,000  
519,019  
1,869,019  
2,430,000  
3,600,000  
–
Fringe benefits  
519,019  
1,869,019  
1,901,085  
–
519,019  
Total  
1,869,019  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Total1  
–
–
–
–
–
–
–
1,574,419  
4,793,438  
761,437  
5,554,875  
–
3,600,000  
7,899,019  
761,437  
8,660,456  
4,019,019  
761,437  
4,780,456  
1,295,687  
270,997  
1,566,684  
1,517,466  
270,997  
1,788,463  
4,019,019  
761,437  
4,780,456  
Pension expense  
Total remuneration  
1
Benefits received and the minimum amount for 2019 and benefits received for 2018 (prorated) include a top-up amount on the minimum remuneration of €3.5 million.  
HILTRUD DOROTHEA WERNER  
Integrity & Legal Affairs  
Benefits received  
Benefits granted  
€
2019  
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
115,159  
1,465,159  
1,901,085  
–
1,350,000  
172,095  
1,522,095  
1,608,147  
–
1,350,000  
172,095  
1,522,095  
1,350,000  
1,799,918  
–
1,350,000  
115,159  
1,465,159  
1,350,000  
1,574,419  
–
1,350,000  
1,350,000  
115,159  
1,465,159  
2,430,000  
3,600,000  
–
Fringe benefits  
115,159  
Total  
1,465,159  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2017–2019)  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Total  
–
–
–
–
–
–
–
–
1,799,918  
–
–
–
–
–
1,574,419  
4,389,578  
956,364  
5,345,942  
–
3,600,000  
7,495,159  
956,364  
8,451,523  
3,366,244  
956,364  
4,322,608  
3,130,242  
953,404  
4,083,646  
4,672,013  
953,404  
5,625,417  
1,465,159  
956,364  
2,421,523  
Pension expense  
Total remuneration  
Group Management Report  
Remuneration Report  
83  
REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M A NAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE  
WIT H T H E GE RM AN COR P ORAT E GOVE RNAN CE CO DE  
FRANK WITTER  
Finance & IT  
Benefits received  
2019  
Benefits granted  
€
2018  
2018  
2019  
2019 (minimum)  
2019 (maximum)  
Fixed remuneration  
1,350,000  
1,350,000  
63,363  
1,413,363  
1,608,147  
1,440,000  
–
1,350,000  
63,363  
1,413,363  
1,350,000  
1,799,918  
–
1,350,000  
62,781  
1,412,781  
1,350,000  
1,574,419  
–
1,350,000  
1,350,000  
62,781  
1,412,781  
2,430,000  
3,600,000  
–
Fringe benefits  
62,781  
1,412,781  
1,901,085  
249,128  
–
62,781  
Total  
1,412,781  
One-year performance-related remuneration  
Multiyear performance-related remuneration  
LTI (performance share plan 2017–2019)  
LTI (performance share plan 2018–2020)  
LTI (performance share plan 2019–2021)  
Phanton shares  
–
–
–
–
1,440,000  
–
1,799,918  
–
–
–
–
–
–
1,574,419  
–
3,600,000  
–
249,128  
3,562,994  
886,120  
4,449,114  
–
–
–
Total  
4,461,510  
849,556  
5,311,066  
4,563,281  
849,556  
5,412,837  
4,337,200  
886,120  
5,223,320  
1,412,781  
886,120  
2,298,901  
7,442,781  
886,120  
8,328,901  
Pension expense  
Total remuneration  
8
4
Remuneration Report  
Group Management Report  
PO ST- EMP LOYM E NT B EN EFI T S  
plan, which is based in principle on a works agreement that  
In the event of regular termination of their service on the also applies to the employees of Volkswagen AG covered by  
Board of Management, the members of the Board of Man- collective agreements and includes retirement, invalidity and  
agement are entitled to a pension, including a surviving surviving dependents’ benefits. A pension contribution in  
dependents’ pension, as well as the use of company cars for the amount of 50% of the fixed level of remuneration for  
the period in which they receive their pension. The agreed Ms. Werner, Mr. Diess and Mr. Witter and in the amount of  
benefits are paid or made available when the Board of Man- 40% of the fixed level of remuneration for Mr. Blume,  
agement member reaches the age of 63. As a departure from Mr. Kilian, Mr. Schott and Mr. Sommer is paid to Volkswagen  
this principle, Mr. Renschler is able to start drawing his Pension Trust e .V . at the end of the calendar year for each year  
pension when he reaches the age of 62.  
they are appointed to the Board of Management. The annual  
The retirement provision for members of the Board of pension contributions result in modules of what is, in princi-  
Management with a pension commitment based on final ple, a lifelong pension in line with the arrangements that also  
remuneration is calculated as a percentage of the fixed apply to employees covered by collective agreements. The  
remuneration, starting from 50%. For Mr. Heizmann and individual pension modules vest immediately upon payment  
Mr. Renschler the individual percentages rise by two percent- to Volkswagen Pension Trust e .V . Instead of a lifelong pension,  
age points for every year of service. In specific cases, credit is benefits can optionally be paid out as a lump sum or in  
given for previous employment periods and retirement installments when the beneficiary reaches retirement age  
pensions earned. In a departure from this rule, a retirement – currently 63 at the earliest. Volkswagen AG has assumed  
pension entitlement of 62% of the fixed level of remu- responsibility for pension entitlements due to Mr. Witter  
neration was set for Mr. Renschler on his appointment. The from the time before his service with the Company, although  
Supervisory Board has capped the percentage at 70%. These these cannot be claimed before he reaches the age of 60.  
benefits are not broken down any further into performance-  
On December 31, 2019, the pension obligations for mem-  
related components and long-term incentive components. bers of the Board of Management in accordance with IAS 19  
Mr. Renschler reached a retirement pension entitlement of amounted to €60.5 (55.8) million. €13.7 (11.9) million was  
70% of his fixed level of remuneration at the end of 2019. The added to the provision in the reporting period in accordance  
increase in the fixed remuneration as a consequence of the with IAS 19. Other benefits such as surviving dependents’  
remuneration system in place from fiscal year 2017 is pensions and the use of company cars are also factored into  
therefore not taken into account for Mr. Heizmann and the measurement of pension provisions. The pension obli-  
Mr. Renschler because their final salary pension commitment gations measured in accordance with German GAAP  
is based on a previous pension scheme. Current pensions are amounted to €44.8 (45.9) million. Measured in accordance  
index-linked in accordance with the index-linking of the with German GAAP, €14.5 (9.5) million was added to the pro-  
highest collectively agreed salary insofar as the application of vision in the reporting period.  
section 16 of the Gesetz zur Verbesserung der betrieblichen  
Altersversorgung (BetrAVG – German Company Pension Act) surviving dependents received €32.7 (44.0) million, or €32.7  
does not lead to a larger increase. (44.0) million measured in accordance with German GAAP, in  
Retired members of the Board of Management and their  
For the members of the Board of Management of Volks- the past year. Obligations for pensions for this group of  
wagen AG appointed before February 24, 2017 with a defined persons measured in accordance with IAS 19 amounted to  
contribution pension scheme, a contribution rate of 50% of €373.7 (324.0) million, or €300.5 (276.2) million measured in  
the fixed remuneration applies. For the members of the accordance with German GAAP.  
Board of Management of Volkswagen AG appointed after  
The following general rule applies to contracts for the first  
February 24, 2017 with a defined contribution pension scheme, term of office of members of the Board of Management  
a contribution rate of 40% of the fixed remuneration applies. entered into after August 5, 2009: the retirement pension to  
The resulting amount will be credited to the pension account. be granted after a member of the Board of Management  
Ms. Werner, Mr. Blume, Mr. Diess, Mr. Kilian, Mr. Schot, leaves the Company is payable when the member reaches the  
Mr. Sommer and Mr. Witter received a defined contribution age of 63.  
Group Management Report  
Remuneration Report  
85  
EA RLY T ERM I NAT ION B E N EF IT S  
The members of the Board of Management are also entitled  
If the appointment to the Board of Management is termi- to a pension and to a surviving dependents’ pension as well  
nated for cause through no fault of the Board of Management as the use of company cars for the period in which they  
member, the claims under Board of Management contracts receive their pension in the event of early termination of  
entered into since November 20, 2009 are limited to a maxi- their service on the Board of Management.  
mum of two years’ remuneration, in accordance with the  
recommendation in section 4.2.3(4) of the Code (severance cial statements and the notes to the annual financial  
payment cap).  
statements of Volkswagen AG for more detailed individual  
Please refer to notes 43 and 46 to the consolidated finan-  
No severance payment is made if the appointment to the disclosures relating to members of the Board of Management  
Board of Management is terminated for good reason for who left the Company in fiscal year 2019.  
which the Board of Management member is responsible.  
PEN SIO N S OF T H E MEMB ER S O F T H E BOA RD O F M A NAGEM EN T I N 2019 (P RIO R- YEA R FIGU R ES I N B RACKE TS)  
Present values as of  
€
Pension expense  
December 311  
Herbert Diess  
1,354,053  
5,592,969  
(3,410,933)  
1,743,034  
(588,354)  
–
(
850,620)  
808,544  
588,354)  
–
Oliver Blume (since April 13, 2018)  
Jochem Heizmann (until January 10, 2019)  
Gunnar Kilian (since April 13, 2018)  
Andreas Renschler  
(
–
(18,098,438)  
2,102,717  
(703,228)  
29,609,167  
(20,109,236)  
2,222,572  
–
886,559  
703,228)  
(
5,025,570  
5,249,526)  
2,222,572  
–
(
Abraham Schot (since January 1, 2019)  
Stefan Sommer (since September 1, 2018)  
Hiltrud Dorothea Werner  
761,437  
1,228,940  
(270,997)  
3,482,194  
(1,872,035)  
14,474,204  
(10,765,942)  
–
(270,997)  
956,364  
(953,404)  
886,120  
(849,556)  
–
Frank Witter  
Members of the Board of Management who left in the previous year  
(1,053,684)  
12,901,219  
10,519,369)  
–
Total  
60,455,797  
(55,819,163)  
(
1
The amount is reported in the total amount for defined benefit plans recognized in the balance sheet (see note 29 to the consolidated financial statements).  
8
6
Remuneration Report  
Group Management Report  
SU PERV IS ORY B OARD RE MU N ERAT ION  
!ꢀ Committee chairpersons receive double this amount, while  
deputy chairpersons receive one-and-a-half times the com-  
mittee remuneration listed previously.  
Following its regular review of Supervisory Board remu-  
neration, the Supervisory Board proposed a reorganization of  
the system of Supervisory Board remuneration to the 2017 !ꢀ Membership of no more than two committees is taken into  
Annual General Meeting, which was approved on May 10,  
017 with 99.98% of the votes cast. The remuneration of the  
members of the Supervisory Board of Volkswagen AG is  
account, whereby the two functions with the highest remu-  
neration are counted if this maximum number is  
exceeded.  
2
comprised entirely of non-performance-related remunera- !ꢀ Supervisory Board members who belonged to the Super-  
tion components. Remuneration for supervisory board work  
at subsidiaries continues in part to comprise a mix of non-  
performance-related and performance- related components.  
The following applies to members of the Supervisory  
Board of Volkswagen AG with effect from January 1, 2017:  
visory Board or one of its committees for only part of the  
fiscal year receive proportionate remuneration.  
!ꢀ Supervisory Board members receive an attendance fee of  
€1,000 for attending a meeting of the Supervisory Board or  
one of its committees; if several meetings are held on one  
day, the attendance fee is paid only once.  
!
ꢀ Members of the Supervisory Board receive fixed remu-  
neration of €100,000 per fiscal year.  
!ꢀ The remuneration and attendance fees are each payable  
after the end of the fiscal year.  
!ꢀ The Chairman of the Supervisory Board receives fixed  
remuneration of €300,000, while the Deputy Chairman In fiscal year 2019, the members of the Supervisory Board  
receives remuneration of €200,000. received €5,327,155 (4,538,986). Of this figure, €2,290,833  
!
ꢀ For their work in the Supervisory Board committees, the related to the work of the Supervisory Board and €944,444  
members of the Supervisory Board also receive additional related to the work in the committees.  
fixed remuneration of €50,000 per committee per fiscal  
year provided the committee met at least once per year for  
the performance of its duties. Memberships of the  
Nomination and Mediation Committees established in  
accordance with section 27(3) of the Mitbestimmungs-  
gesetz (MitbestG – German Codetermination Act) are not  
taken into account.  
Group Management Report  
Remuneration Report  
87  
REMU N ERAT ION OF TH E MEMB E R S OF T H E SU PERVISORY B OAR D  
FIXED  
REMUNERA-  
TION  
WORK IN THE  
COMMITTEES  
OTHER1  
TOTAL  
TOTAL  
€
2019  
2018  
Hans Dieter Pötsch  
Jörg Hofmann2  
300,000  
200,000  
100,000  
100,000  
100,000  
41,667  
100,000  
525,500  
925,500  
584,500  
294,000  
108,000  
111,000  
155,194  
167,000  
114,000  
198,300  
184,500  
114,000  
112,000  
111,000  
346,589  
164,000  
264,233  
272,000  
412,500  
422,500  
–
75,000  
14,000  
5,000  
289,000  
105,000  
107,000  
157,000  
67,500  
Hussain Ali Al Abdulla  
Hessa Sultan Al Jaber  
Bernd Althusmann3  
–
–
50,000  
20,833  
–
7,000  
7,000  
2
Birgit Dietze (until May 31, 2019)  
5,000  
Hans-Peter Fischer2  
100,000  
100,000  
10,278  
7,000  
107,000  
250,500  
14,874  
Marianne Heiß (since February 14, 2018)  
50,000  
–
100,500  
4,596  
2
Uwe Hück (until February 8, 2019)  
Johan Järvklo2  
Ulrike Jakob2  
100,000  
100,000  
100,000  
100,000  
100,000  
100,000  
100,000  
100,000  
100,000  
52,778  
–
7,000  
107,000  
106,000  
107,000  
390,500  
157,000  
387,000  
289,000  
435,000  
433,500  
81,389  
–
6,000  
Louise Kiesling  
Peter Mosch2  
–
7,000  
100,000  
50,000  
125,000  
–
190,500  
7,000  
Bertina Murkovic2  
Bernd Osterloh2  
Hans Michel Piëch  
Ferdinand Oliver Porsche  
Wolfgang Porsche  
162,000  
189,000  
185,000  
183,500  
5,000  
150,000  
150,000  
23,611  
–
2
Conny Schönhardt (since June 21, 2019)  
Athanasios Stimoniaris2  
Stephan Weil3  
100,000  
100,000  
86,111  
382,040  
13,000  
79,241  
–
482,040  
163,000  
165,352  
–
230,225  
164,000  
–
50,000  
–
2
Werner Weresch (since February 21, 2019)  
Members of the Supervisory Board who left in the previous year  
9,444  
–
9,444  
Total  
2,290,833  
944,444  
2,091,877  
5,327,155  
4,538,985  
1
2
Attendance fees, membership of other Group bodies (non-performance-related: €790,810; performance-related: €779,967).  
These employee representatives have stated that they will transfer their Supervisory Board remuneration to the Hans Böckler Foundation in accordance with the guidelines issued by  
the German Confederation of Trade Unions (DGB).  
3
Under section 5(3) of the Niedersächsisches Ministergesetz (German Act Governing Ministers of the State of Lower Saxony), these members of the Supervisory Board are obliged to  
transfer their Supervisory Board remuneration to the State of Lower Saxony as soon as and in so far as it exceeds €6,200 per annum. Remuneration is defined for this purpose as  
Supervisory Board remuneration and attendance fees exceeding the amount of €200.  
8
8
Executive Bodies  
Group Management Report  
Executive Bodies  
Members of the Board of Management and their appointments  
Appointments: as of December 31, 2019 or the leaving date from the Board of Management of Volkswagen AG  
DR.-ING. HERBERT DIESS (*1958)  
Chairman (since April 13, 2018),  
Chairman of the Brand Board of Management  
of Volkswagen Passenger Cars,  
Volume brand group,  
GUNNAR KILIAN (*1975)  
HILTRUD DOROTHEA WERNER (*1966)  
Human Resources  
Integrity & Legal Affairs  
1
1
April 13, 2018 , appointed until 2023  
February 1, 2017 , appointed until 2022  
Nationality: German  
APPOINTMENTS:  
Nationality: German  
China (since January 11, 2019)  
{ꢀWolfsburg AG, Wolfsburg  
FRANK WITTER (*1959)  
1
July 1, 2015 , appointed until 2023  
Finance & IT  
1
Nationality: Austrian  
ANDREAS RENSCHLER (*1958)  
October 7, 2015 , appointed until 2021  
Appointments:  
Chairman of the Board of Management of  
TRATON SE, Truck & Bus brand group  
Nationality: German  
{ꢀFC Bayern München AG, Munich  
1
{ꢀInfineon Technologies AG, Neubiberg  
February 1, 2015 , appointed until 2024  
Nationality: German  
OLIVER BLUME (*1968)  
Appointments:  
Chairman of the Executive Board of  
Dr. Ing. h.c. F. Porsche AG,  
{ꢀDeutsche Messe AG, Hanover  
Sport & Luxury brand group  
ABRAHAM SCHOT (*1961)  
1
April 13, 2018 , appointed until 2023  
Chairman of the Board of Management of AUDI AG,  
Premium brand group  
Nationality: German  
1
January 1, 2019 , appointed until 2020  
PROF. DR. RER. POL. DR.-ING. E.H.  
JOCHEM HEIZMANN (*1952)  
China  
Nationality: Dutch  
DR.-ING. STEFAN SOMMER (*1963)  
Components & Procurement  
Nationality: German  
January 11, 2007 – January 10, 20191  
Nationality: German  
1
Appointments (as of January 10, 2019):  
September 1, 2018 , appointed until 2021  
{ꢀLufthansa Technik AG, Hamburg  
~ꢀOBO Bettermann Holding GmbH Co. KG, Menden  
As part of their duty to manage and supervise the  
Group’s business, the members of the Board of  
Management hold other offices on the supervisory  
boards of consolidated Group companies and other  
significant investees.  
{ Membership of statutory supervisory boards in  
Germany.  
1
Beginning or period of membership of the Board of  
Management.  
~ Comparable appointments in Germany and abroad.  
Group Management Report  
Executive Bodies  
89  
Executive Bodies  
Members of the Supervisory Board and their appointments  
Appointments: as of December 31, 2019 or the leaving date from the Supervisory Board of Volkswagen AG  
HANS DIETER PÖTSCH (*1951)  
Chairman (since October 7, 2015),  
Chairman of the Executive Board and  
Chief Financial Officer of Porsche Automobil  
Holding SE  
DR. HUSSAIN ALI AL ABDULLA (*1957)  
DR. BERND ALTHUSMANN (*1966)  
Minister of State, Qatar  
Minister of Economic Affairs, Labor, Transport and  
Digitalization for the Federal State of Lower Saxony  
1
April 22, 2010 , elected until 2020  
1
Nationality: Qatari  
December 14, 2017 , delegated until 2022  
Appointments:  
Nationality: German  
1
October 7, 2015 , elected until 2021  
~ꢀGulf Investment Corporation, Safat/Kuwait  
(Board member)  
Appointments:  
Nationality: Austrian  
{ꢀDeutsche Messe AG, Hanover (Deputy Chairman)  
~ꢀContainer Terminal Wilhelmshaven JadeWeserPort-  
Marketing GmbH & Co. KG, Wilhelmshaven  
(Chairman)  
Appointments:  
~ꢀMasraf Al Rayan, Doha  
(Chairman and Managing Director)  
~ꢀQatar Investment Authority, Doha  
(Board member)  
{
{
{
{
{
{
{
~
ꢀAUDI AG, Ingolstadt  
ꢀAutostadt GmbH, Wolfsburg  
ꢀBertelsmann Management SE, Gütersloh  
ꢀBertelsmann SE & Co. KGaA, Gütersloh  
ꢀDr. Ing. h.c. F. Porsche AG, Stuttgart  
ꢀTRATON SE, Munich (Chairman)  
ꢀWolfsburg AG, Wolfsburg  
~ꢀJadeWeserPort Realisierungs GmbH & Co. KG,  
Wilhelmshaven (Chairman)  
~ꢀQatar Supreme Council for Economic Affairs  
and Investment, Doha  
~ꢀJadeWeserPort Realisierungs-Beteiligungs GmbH,  
Wilhelmshaven (Chairman)  
(Board member)  
~ꢀNiedersachsen Ports GmbH & Co. KG, Oldenburg  
(Chairman)  
ꢀPorsche Austria Gesellschaft m.b.H., Salzburg  
DR. HESSA SULTAN AL JABER (*1959)  
Member of the Consultative Assembly  
(Shura Council) of the state of Qatar, Doha  
Ex-Minister of Information and Communications  
Technology, Qatar  
(
Chairman)  
ꢀPorsche Holding Gesellschaft m.b.H., Salzburg  
Chairman)  
~
BIRGIT DIETZE (*1973)  
(
First authorized representative of IG Metall Berlin  
June 1, 2016 – May 31, 20191  
~
ꢀPorsche Retail GmbH, Salzburg (Chairman)  
ꢀVfL Wolfsburg-Fußball GmbH, Wolfsburg  
1
~
June 22, 2016 , elected until 2024  
Nationality: German  
(Deputy Chairman)  
Nationality: Qatari  
Appointments (as of May 31, 2019):  
{ꢀVolkswagen Bank GmbH, Braunschweig  
Appointments:  
JÖRG HOFMANN (*1955)  
~ꢀMalomatia, Doha (Chairwoman)  
~ꢀMEEZA, Doha  
Deputy Chairman (since November 20, 2015),  
First Chairman of IG Metall  
DR. JUR. HANS-PETER FISCHER (*1959)  
Chairman of the Board of Management of  
Volkswagen Management Association e.V.  
~ꢀQatar Satellite Company (Es'hailSat), Doha  
(Chairwoman)  
1
November 20, 2015 , appointed until 2022  
1
Nationality: German  
~ꢀTrio Investment, Doha (Chairwoman)  
January 1, 2013 , appointed until 2022  
Appointments:  
Nationality: German  
{ꢀRobert Bosch GmbH, Stuttgart  
Appointments:  
~ꢀVolkswagen Pension Trust e.V., Wolfsburg  
{
~
Membership of statutory supervisory boards in  
Germany.  
1 Beginning or period of membership of the  
Supervisory Board.  
Comparable appointments in Germany and abroad.  
9
0
Executive Bodies  
Group Management Report  
MARIANNE HEIß (*1972)  
BERTINA MURKOVIC (*1957)  
Chairwoman of the Works Council of  
Volkswagen Commercial Vehicles  
DR. JUR. FERDINAND OLIVER PORSCHE (*1961)  
Member of the Board of Management of Familie  
Porsche AG Beteiligungsgesellschaft  
Chief Executive Officer of BBDO Group  
Germany GmbH, Düsseldorf  
1
1
1
February 14, 2018 , elected until 2023  
May 10, 2017 , appointed until 2022  
August 7, 2009 , elected until 2024  
Nationality: Austrian  
Nationality: German  
Appointments:  
Nationality: Austrian  
Appointments:  
Appointments:  
{ꢀAUDI AG, Ingolstadt  
~ꢀMOIA GmbH, Berlin  
{ꢀAUDI AG, Ingolstadt  
{
ꢀPorsche Automobil Holding SE, Stuttgart  
{ꢀDr. Ing. h.c. F. Porsche AG, Stuttgart  
{ꢀPorsche Automobil Holding SE, Stuttgart  
~ꢀPorsche Holding Gesellschaft m.b.H., Salzburg  
~ꢀPorsche Lizenz- und Handelsgesellschaft mbH &  
Co. KG, Ludwigsburg  
BERND OSTERLOH (*1956)  
UWE HÜCK (*1962)  
Chairman of the General and Group Works Councils  
of Volkswagen AG  
Chairman of the General and Group Works Councils  
1
of Dr. Ing. h.c. F. Porsche AG  
January 1, 2005 , appointed until 2022  
July 1, 2015 – February 8, 20191  
Nationality: German  
Nationality: German  
Appointments:  
DR. RER. COMM. WOLFGANG PORSCHE (*1943)  
Chairman of the Supervisory Board of  
Porsche Automobil Holding SE;  
Appointments (as of February 8, 2019):  
{ꢀAutostadt GmbH, Wolfsburg  
{ꢀTRATON SE, Munich  
{ꢀWolfsburg AG, Wolfsburg  
{ꢀDr. Ing. h.c. F. Porsche AG, Stuttgart  
(
Deputy Chairman)  
Chairman of the Supervisory Board of  
Dr. Ing. h.c. F. Porsche AG  
~ꢀAllianz für die Region GmbH, Braunschweig  
1
JOHAN JÄRVKLO (*1973)  
~ꢀPorsche Holding Gesellschaft m.b.H., Salzburg  
~ꢀSEAT, S.A., Martorell  
April 24, 2008 , elected until 2023  
Secretary-General of the European and Global Group  
Works Council of Volkswagen AG  
Nationality: Austrian  
~ꢀŠKODA Auto a.s., Mladá Boleslav  
Appointments:  
1
November 22, 2015 , appointed until 2022  
~ꢀVfL Wolfsburg-Fußball GmbH, Wolfsburg  
~ꢀVolkswagen Immobilien GmbH, Wolfsburg  
{ꢀAUDI AG, Ingolstadt  
Nationality: Swedish  
{ꢀDr. Ing. h.c. F. Porsche AG, Stuttgart (Chairman)  
{ꢀPorsche Automobil Holding SE, Stuttgart  
ULRIKE JAKOB (*1960)  
DR. JUR. HANS MICHEL PIËCH (*1942)  
(Chairman)  
Deputy Chairwoman of the Works Council of  
Volkswagen AG, Kassel plant  
Lawyer in private practice  
~ꢀFamilie Porsche AG Beteiligungsgesellschaft,  
Salzburg (Chairman)  
1
August 7, 2009 , elected until 2024  
1
May 10, 2017 , appointed until 2022  
Nationality: Austrian  
~ꢀPorsche Cars Great Britain Ltd., Reading  
~ꢀPorsche Cars North America Inc., Atlanta  
~ꢀPorsche Greater China, consisting of:  
Porsche (China) Motors Limited, Shanghai  
Porsche Hong Kong Limited, Hong Kong  
~ꢀPorsche Holding Gesellschaft m.b.H., Salzburg  
~ꢀSchmittenhöhebahn AG, Zell am See  
Nationality: German  
Appointments:  
{ꢀAUDI AG, Ingolstadt  
DR. LOUISE KIESLING (*1957)  
{ꢀDr. Ing. h.c. F. Porsche AG, Stuttgart  
{ꢀPorsche Automobil Holding SE, Stuttgart  
(Deputy Chairman)  
Businesswoman  
1
April 30, 2015 , elected until 2021  
Nationality: Austrian  
~ꢀPorsche Cars Great Britain Ltd., Reading  
~ꢀPorsche Cars North America Inc., Atlanta  
PETER MOSCH (*1972)  
~ꢀPorsche Greater China, consisting of:  
Porsche (China) Motors Limited, Shanghai  
Porsche Hong Kong Limited, Hong Kong  
~ꢀPorsche Holding Gesellschaft m.b.H., Salzburg  
~ꢀSchmittenhöhebahn AG, Zell am See  
~ꢀVolksoper Wien GmbH, Vienna  
Chairman of the General Works Council of AUDI AG  
1
January 18, 2006 , appointed until 2022  
Nationality: German  
Appointments:  
{
ꢀAUDI AG, Ingolstadt (Deputy Chairman)  
ꢀAudi Pensionskasse – Altersversorgung der  
AUTO UNION GmbH, VVaG, Ingolstadt  
ꢀAudi Stiftung für Umwelt GmbH, Ingolstadt  
{
~
{
~
Membership of statutory supervisory boards in  
Germany.  
1
Beginning or period of membership of the  
Supervisory Board.  
Comparable appointments in Germany and abroad.  
Group Management Report  
Executive Bodies  
91  
CONNY SCHÖNHARDT (*1978)  
COMMITTEES OF THE SUPERVISORY BOARD  
AS OF DECEMBER 31, 2019  
Union Secretary to the board of IG Metall  
1
June 21, 2019 , appointed until 2022  
Nationality: German  
Members of the Executive Committee  
Hans Dieter Pötsch (Chairman)  
Jörg Hofmann (Deputy Chairman)  
Peter Mosch  
ATHANASIOS STIMONIARIS (*1971)  
Chairman of the Group Works Council of MAN SE  
and of the SE Works Council  
Bernd Osterloh  
1
May 10, 2017 , appointed until 2022  
Dr. Wolfgang Porsche  
Nationality: German  
Stephan Weil  
Appointments:  
{
{
{
{
ꢀMAN SE, Munich  
Members of the Mediation Committee established  
in accordance with section 27(3) of the  
Mitbestimmungsgesetz (German  
Codetermination Act)  
ꢀMAN Truck & Bus SE, Munich  
ꢀRheinmetall MAN Military Vehicles GmbH, Munich  
ꢀTRATON SE, Munich (Deputy Chairman)  
Hans Dieter Pötsch (Chairman)  
Jörg Hofmann (Deputy Chairman)  
Bernd Osterloh  
STEPHAN WEIL (*1958)  
Minister-President of the Federal State of  
Lower Saxony  
Stephan Weil  
1
February 19, 2013 , delegated until 2022  
Nationality: German  
Members of the Audit Committee  
Dr. Ferdinand Oliver Porsche (Chairman)  
Bernd Osterloh (Deputy Chairman)  
Marianne Heiß  
WERNER WERESCH (*1961)  
Chairman of the General and Group Works Councils  
of Dr. Ing. h.c. F. Porsche AG  
Conny Schönhardt  
1
February 21, 2019 , appointed until 2022  
Nationality: German  
Members of the Nomination Committee  
Hans Dieter Pötsch (Chairman)  
Dr. Wolfgang Porsche  
Appointments:  
{ꢀDr. Ing. h.c. F. Porsche AG, Stuttgart  
Stephan Weil  
Special Committee on Diesel Engines  
Dr. Wolfgang Porsche (Chairman)  
Dr. Bernd Althusmann  
Peter Mosch  
Bertina Murkovic  
Bernd Osterloh  
Dr. Ferdinand Oliver Porsche  
{
~
Membership of statutory supervisory boards in  
Germany.  
1
Beginning or period of membership of the  
Supervisory Board.  
Comparable appointments in Germany and abroad.  
9
2
Disclosures Required Under Takeover Law  
Group Management Report  
Disclosures Required Under  
Takeover Law  
This section contains the Volkswagen Group’s disclosures relating to takeover law  
required by sections 289a(1) and 315a(1) of the HGB.  
CA P ITA L STRU CTU RE  
preferred shares entitle the holder to a €0.06 higher dividend  
Volkswagen AG’s share capital amounted to €1,283,315,873.28 than ordinary shares (further details on this right to preferred  
(€1,283,315,873.28) on December 31, 2019. It was composed and additional dividends are specified in Article 27(2) of the  
of 295,089,818 ordinary shares and 206,205,445 preferred Articles of Association of Volkswagen AG).  
shares. Each share conveys a notional interest of €2.56 in the  
share capital.  
The Gesetz über die Überführung der Anteilsrechte an der  
Volkswagenwerk Gesellschaft mit beschränkter Haftung in  
private Hand (VW-Gesetz – Act on the Privatization of Shares  
of Volkswagenwerk Gesellschaft mit beschränkter Haftung) of  
SHA REH OL DER R IGH TS A N D OB LI GATI ON S  
The shares convey pecuniary and administrative rights. The July 21, 1960, as amended on July 30, 2009, includes various  
pecuniary rights include in particular the shareholders’ right provisions in derogation of the German Stock Corporation  
to participate in profits (section 58(4) of the Aktiengesetz Act, for example on the exercise of voting rights by proxy  
(AktG – German Stock Corporation Act)), the right to (section 3 of the VW-Gesetz) and on majority voting require-  
participate in liquidation proceeds (section 271 of the AktG) ments at the Annual General Meeting (section 4(3) of the VW-  
and preemptive rights to shares in the event of capital Gesetz).  
increases (section 186 of the AktG) that can be disapplied by  
In accordance with the Volkswagen AG Articles of Asso-  
the Annual General Meeting with the approval of the Special ciation (Article 11(1)), the State of Lower Saxony is entitled to  
Meeting of Preferred Shareholders, where appropriate. appoint two members of the Supervisory Board of Volks-  
Administrative rights include the right to attend the Annual wagen AG for as long as it directly or indirectly holds at least  
General Meeting to speak there, to ask questions, to propose 15% of Volkswagen AG’s ordinary shares. In addition, resolu-  
motions and to exercise voting rights. Shareholders can tions by the Annual General Meeting that are required by law  
enforce these rights in particular through actions seeking to be adopted by a qualified majority require a majority of  
disclosure and actions for avoidance.  
more than four-fifths of the share capital of the Company  
Each ordinary share grants the holder one vote at the represented when the resolution is adopted (Article 25(2)),  
Annual General Meeting. The Annual General Meeting elects regardless of the provisions of the VW-Gesetz.  
shareholder representatives to the Supervisory Board and  
elects the auditors; in particular, it resolves on the appropri-  
SHA REH OL DI NG S EXCE EDI NG 10 % OF VOTI N G RI G HT S  
ation of net profit, formally approves the actions of the Board Shareholdings in Volkswagen AG that exceed 10% of voting  
of Management and the Supervisory Board, and resolves on rights are shown in the notes to the annual financial  
amendments to the Articles of Association of Volkswagen AG, statements of Volkswagen AG, which are available online at  
capitalization measures and authorizations to purchase https://www.volkswagenag.com/en/InvestorRelations.html.  
treasury shares; if required, it also resolves on the perfor- The current notifications regarding changes in voting rights  
mance of a special audit, the removal before the end of their in accordance with the Wertpapierhandelsgesetz (WpHG – Ger-  
term of office of Supervisory Board members elected at the man Securities Trading Act) are also published on this website.  
Annual General Meeting and the winding-up of the Company.  
Preferred shareholders generally have no voting rights. COM P O S ITI ON O F TH E SU P E RV IS ORY B OA RD  
However, in the exceptional case that they are granted voting The Supervisory Board consists of 20 members, half of whom  
rights by law (for example, when preferred share dividends are shareholder representatives. In accordance with Article  
were not paid in one year and not compensated for in full in 11(1) of the Articles of Association of Volkswagen AG, the  
the following year), each preferred share also grants the State of Lower Saxony is entitled to appoint two of these  
holder one vote at the Annual General Meeting. Furthermore, shareholder representatives for as long as it directly or indi-  
Group Management Report  
Disclosures Required Under Takeover Law  
93  
rectly holds at least 15% of the Company’s ordinary shares. rights to the new shares or bonds. The maximum amount of  
The remaining shareholder representatives on the Super- authorized share capital or contingent capital available for  
visory Board are elected by the Annual General Meeting.  
these purposes is determined by Article 4 of the Articles of  
The other half of the Supervisory Board consists of Association of Volkswagen AG, as amended.  
employee representatives elected by the employees in accor-  
At the Annual General Meeting on May 14, 2019, a  
dance with the Mitbestimmungsgesetz (MitbestG – German resolution was passed authorizing the Board of Management,  
Codetermination Act). A total of seven of these employee with the consent of the Supervisory Board, to increase the  
representatives are Company employees elected by the Company’s share capital by a total of up to €179.2 million  
workforce; the other three employee representatives are trade (corresponding to 70 million shares) on one or more  
union representatives elected by the workforce.  
occasions up to May 13, 2024 by issuing new nonvoting  
The Chairman of the Supervisory Board is generally a preferred shares against cash contributions. This replaced the  
shareholder representative elected by the other members of authorization dating from 2015.  
the Supervisory Board. In the event that a Supervisory Board  
Further details of the authorization to issue new shares  
vote is tied, the Chairman of the Supervisory Board has a and their permitted uses may be found in the notes to the  
casting vote in accordance with the MitbestG.  
consolidated financial statements on page 259.  
The goals for the composition of the Supervisory Board  
are described on page 62 of the Corporate Governance Report.  
Information about the composition of the Supervisory Board  
M ATERIA L AGR EE M ENT S O F TH E PA REN T COM PANY I N TH E EV E NT  
OF A CHA NG E O F CONT ROL F OL LOWI N G A TA K E OV E R B I D  
at the end of the reporting period can be found on pages 89 At the end of fiscal year 2019, a banking syndicate granted  
to 91 of this annual report.  
Volkswagen AG a syndicated line of credit amounting to  
10.0 billion that initially runs until December 2024. It  
€
STATUTO RY R EQ U I RE ME NT S AN D REQU I R EM E NT S OF T H E A RT I-  
CLE S OF A S SO CIATIO N W IT H RE GA RD TO T H E APP O I NTM EN T AN D  
R E M OVA L O F B OA R D O F M A N AG E M E N T M E M B E R S A N D TO  
AMEN D M EN TS TO TH E A RT ICL ES OF ASSOC IATI ON  
replaces the previous line of credit amounting to €5.0 billion  
that would have expired in April 2020. With the new line of  
credit the syndicate members were granted the right to call  
their portion of the syndicated line of credit in two cases. A  
The appointment and removal of members of the Board of call right exists if one individual or several individuals acting  
Management are governed by sections 84 and 85 of the AktG, jointly who as of the date of this agreement exercise control  
which specify that members of the Board of Management are over the Company have legal or economic ownership of  
appointed by the Supervisory Board for a maximum of five shares that together make up more than 90% of the voting  
years. Board of Management members may be reappointed rights of the Company. However, a call right also exists if one  
or have their term of office extended for a maximum of five individual or several individuals acting jointly who as of the  
years in each case. In addition, Article 6 of the Articles of date of this agreement do not exercise control over the  
Association of Volkswagen AG states that the number of Company obtain control over the Company. Such a call right  
Board of Management members is stipulated by the Super- does not exist, however, if one shareholder or several  
visory Board and that the Board of Management must consist shareholders of Porsche Automobil Holding SE or one or  
of at least three persons.  
The Annual General Meeting resolves amendments to the or indirectly obtains control over the Company.  
Articles of Association (section 119(1) of the AktG). In The Volkswagen AG and Ford Motor Company entered  
several legal entities from the Porsche or Piëch family directly  
accordance with section 4(3) of the VW-Gesetz as amended into a Master Collaboration Agreement on January 14, 2019.  
on July 30, 2009 and Article 25(2) of the Articles of Asso- This agreement sets out a framework of obligations, which  
ciation of Volkswagen AG, Annual General Meeting resolu- are to apply to each and every co-operation agreement to be  
tions to amend the Articles of Association require a majority entered into between the Volkswagen AG and Ford Motor  
of more than four-fifths of the share capital represented.  
Company, including the Development Agreement entered  
into in January 2019 for the development of the next  
generation Amarok. The Master Collaboration Agreement  
provides for a right of termination with immediate effect in  
the event of a Change of Control. A Change of Control has  
POWE R S OF T H E BOAR D OF M A NAGEMEN T, I N PA RTICU L A R CO N-  
C E R N I N G T H E I S S U E O F N E W SHA RE S A N D T H E R E P U RCH A SE O F  
TREA SU RY SHA R ES  
According to German stock corporation law, the Annual been defined to mean a change affecting more than 50% of  
General Meeting can authorize the Board of Management, for the voting rights of one of the companies or a change in the  
a maximum period of five years, to issue new shares. It can ability to directly or indirectly control the management of  
also authorize the Board of Management, for a maximum one company through its decision making bodies. The right  
period of five years, to issue bonds on the basis of which new of termination must be exercised within 90 days of the  
shares are to be issued. The Annual General Meeting also company becoming aware of a Change of Control.  
decides the extent to which shareholders have preemptive  
9
4
Business Development  
Group Management Report  
Business Development  
The robust growth of the global economy continued in fiscal year 2019 with a decrease  
in momentum. Global demand for vehicles was lower than in the previous year.  
Amid persistently challenging market conditions, the Volkswagen Group  
delivered 10.97 million vehicles to customers.  
D EV E LOPM E N T S I N T H E G LO BA L E CO N O MY  
individual countries from this region that export raw mate-  
The global economy sustained its robust growth in 2019 with rials. At 1.1 (2.2)%, the growth of the Russian economy, the  
a decrease in momentum: global gross domestic product region’s largest economy, halved compared with the previous  
(
GDP) rose by 2.6 (3.2)%. Economic momentum weakened year.  
compared with the previous year, both in advanced econ-  
The Turkish economy showed a slightly positive rate of  
omies and emerging markets. With interest rates remaining change of 0.5 (2.9)%. Increased tariffs along with the depreci-  
comparatively low and prices for energy and other commod- ation of the Turkish lira, which was accompanied by very  
ities falling year-on-year on the whole, consumer prices also high inflation, led to a decline in purchasing power. South  
declined worldwide. Growing upheaval in trade policy at Africa’s GDP rose by just 0.2 (0.8)% in the reporting period,  
international level and continuing geopolitical tensions led down further on the already low figure for the prior period.  
to much greater economic uncertainty and resulted in a wane Ongoing structural deficits, social unrest and political chal-  
in the international trade of goods.  
lenges weighed on the economy.  
Europe/Other Markets  
Germany  
GDP growth in Western Europe slowed to 1.2 (1.8)% as the Germany’s GDP continued to grow in 2019 on the back of  
year went on. The rate of change in nearly all countries in the strong labor market, though momentum diminished  
northern and southern Europe declined compared with the markedly year-on-year to 0.5 (1.5)%. Both business and con-  
previous year. The uncertain outcome of the Brexit negoti- sumer sentiment darkened further as the year progressed.  
ations between the United Kingdom and the European Union  
(
EU) continued to generate uncertainty, as did the related North America  
question of what form this relationship would take in the Economic growth in the USA declined in the reporting period,  
future. The unemployment rate in the eurozone continued to reaching 2.3 (2.9)%. The economy was supported mainly by  
decrease, falling to an average of 7.5 (8.1)%, though rates domestic consumer demand. The unemployment rate in the  
remained considerably higher – albeit declining – in Greece United States was at 3.7 (3.9)%. Given the global uncertainty,  
and Spain.  
the US Federal Reserve lowered its key rate amid relatively  
At 2.3 (3.3)%, the Central and Eastern Europe region also steady inflation, thus reversing the tightening of monetary  
recorded a slower growth rate in the reporting period than in policy it had initiated in the meantime. The US dollar gained  
the previous year. In Central Europe, GDP growth tapered off strength against the euro in the course of the year. Growth in  
at a relatively high level. Economic growth in Eastern Europe Canada decreased to 1.6 (2.0)%, while the Mexican economy  
was also weaker. Lower prices for energy and other commod- stagnated at a rate of 0.1 (2.1)%.  
ities led to a deterioration in the economic situation of the  
Group Management Report  
Business Development  
95  
E C O NO MI C GRO W T H  
Percentage change in GDP  
Global economy  
Western Europe  
Germany  
USA  
China  
8
7
6
5
4
3
2
1
0
2
015  
2016  
2017  
2018  
2019  
South America  
Sector-specific environment  
Brazil’s economy once again recorded only slight growth, at The sector-specific environment was influenced significantly  
.1 (1.3)%. The situation in South America’s largest economy by fiscal policy measures, which contributed considerably to  
1
remained tense due to political uncertainty, among other the mixed trends in sales volumes in the markets last year.  
factors. The economic situation in Argentina deteriorated fur- These measures included tax cuts or increases, incentive  
ther as the year went on. Amid continuing high inflation and programs and sales incentives, as well as import duties.  
at the same time considerable devaluation of the local cur-  
In addition, non-tariff trade barriers to protect the respec-  
rency, the country remained in recession, with GDP falling by tive domestic automotive industry made the movement of  
2.6 (–2.5)%.  
vehicles, parts and components more difficult.  
Asia-Pacific  
Europe/Other Markets  
At 6.2 (6.6)%, China’s economy recorded a growth rate at a In Western Europe, the number of new passenger car regis-  
high level in 2019, but its rate of expansion was slightly lower trations in the reporting period was up 0.6% on the prior-year  
than in the previous year. Government support provided in figure, at 14.4 million. New vehicle registrations were mixed  
response to the trade policy dispute between China and the in the largest single markets. France (+1.6%) slightly exceeded  
US continued in the course of 2019. The Indian economy saw the previous year’s figure. While Italy stagnated (+0.3%),  
growth of 4.8 (6.8)% in the reporting period. Japan’s GDP grew Spain recorded a moderate (–4.7%) decline. The UK passenger  
by only 1.1 (0.3)%.  
car market saw a weaker continuation of the negative trend  
from the previous years (–2.4%). This was due, among other  
things, to the uncertain outcome of the Brexit negotiations  
with the EU. The share of diesel vehicles (passenger cars) in  
TRE N D S I N TH E M A RKET S FO R PA S SEN GER CA RS A N D  
LIG HT CO MME RC IAL VE H I CLE S  
In fiscal year 2019, the global market volume of passenger Western Europe slipped to 32.0 (36.4)% in the reporting year.  
cars fell below the prior-year level for the second year in a Despite the uncertain outcome of the Brexit negotiations  
row, decreasing to 79.6 million vehicles (–4.0%). While new between the EU and UK, new light commercial vehicle regis-  
registrations in Western Europe and in Central and Eastern trations in Western Europe in the reporting period slightly  
Europe exceeded the prior-year figure, the overall markets in exceeded the prior-year level; WLTP-related pull-forward  
the Middle East, North America, South America and espe- effects provided a degree of stimulus.  
cially Asia-Pacific recorded a dip in demand.  
Global demand for light commercial vehicles in the  
reporting period was down moderately on the previous year.  
9
6
Business Development  
Group Management Report  
E X C HA NGE RA T E MO V E ME NT S FRO M DEC E MBE R 2 0 1 8 T O DEC E MBE R 2 0 1 9  
Index based on month-end prices: as of December 31, 2018 = 100  
EUR to GBP  
EUR to USD  
EUR to CNY  
EUR to JPY  
1
1
05  
00  
9 5  
9 0  
D
J
F
M
A
M
J
J
A
S
O
N
D
In the Central and Eastern Europe region, the market volume However, domestic production and exports once again fell  
of passenger cars in fiscal year 2019 rose slightly by 2.7% short of the comparable prior-year figures in 2019: passenger  
year-on-year to 3.6 million vehicles. New passenger car regis- car production decreased by 9.0% to 4.7 million vehicles,  
trations in the EU member states of Central Europe increased mainly due to the 12.8% drop in passenger car exports to  
further by 5.8% to 1.5 million units. In Eastern Europe, pas- 3.5 million units. This was primarily a result of the slowdown  
senger car sales matched the level of the previous year in global market growth and markedly lower exports of pas-  
(+0.2%). Following a solid start in spite of the value-added tax senger cars fitted with diesel engines.  
increase as of January 1, 2019, the Russian passenger car Demand for light commercial vehicles in Germany in the  
market weakened as the year went on and was down on the reporting period was perceptibly higher than in 2018.  
prior-year figure at the end of the reporting period (–2.2%).  
Registration volumes of light commercial vehicles in North America  
Central and Eastern Europe were at the same level as the At 20.2 million vehicles, sales of passenger cars and light  
previous year, while the number of vehicles sold in Russia in commercial vehicles (up to 6.35 tonnes) in the North America  
the reporting period was distinctly lower than in the prior region in fiscal year 2019 were down slightly on the prior-  
year.  
year figure (–2.3%). The market volume in the USA also fell  
The Turkish passenger car market recorded a substantial somewhat short of the level in 2018 at 17.0 million units  
drop in demand of 20.4%, largely due to the deteriorating (–1.6%). The shift in demand from traditional passenger cars  
macroeconomic situation. In South Africa (–2.7%), the (–10.1%) to light commercial vehicles such as SUVs and  
number of new passenger car registrations in the reporting pickup models (+2.6%) also continued in the reporting  
period was below the comparatively low level seen in recent period. In the Canadian automotive market, the downward  
years, also due to slow macroeconomic momentum.  
trend that had begun in the previous year continued during  
the reporting period (–4.3%). In Mexico, sales of passenger  
cars and light commercial vehicles fell short of the prior-year  
Germany  
New passenger car registrations in Germany in the reporting figure (–8.2%) for the third year in a row.  
period exceeded the previous year’s high level, rising to  
3.6 million units (+5.0%). In addition to the strong labor South America  
market and the rise in commercial demand, sales incentives, In the markets of the South America region, new registrations  
particularly in the form of an environmental bonus, under- for passenger cars and light commercial vehicles decreased  
pinned the positive trend.  
on the whole in 2019 to 4.3 million units (–5.0%). While in  
Brazil the recovery in the demand for automobiles continued,  
Group Management Report  
Business Development  
97  
providing for a growth rate of 7.7%, new registrations, at 145 thousand units. In Brazil, the region’s largest market,  
.7 million, remained much lower than the record level demand for trucks grew very sharply compared with the  
2
achieved in 2012. Exports of vehicles manufactured in Brazil relatively low figure for the prior-year period as a consequence  
continued to decline, falling by 31.9% to 428 thousand units. of the economic recovery. By contrast, Argentina saw new  
In the Argentinian market, the deterioration in the macro- registrations fall substantially. This was due to weak economic  
economic situation once again had a negative impact on performance with a related weakening of the peso and rising  
demand for passenger cars and light commercial vehicles, interest rates.  
with sales figures declining drastically by 43.0%.  
Demand for buses in the markets that are relevant for the  
Volkswagen Group was much higher than in the previous year.  
The markets in Brazil as well as in Western Europe contributed  
Asia-Pacific  
Following slight decreases in 2018, the market volume of in particular to this growth. Demand in Central and Eastern  
passenger cars in the Asia-Pacific region weakened further to Europe was moderately higher year-on-year.  
stand at 34.0 million units at the end of the reporting period  
(
–6.0%). This was largely due to falling demand in China and  
TRE N D S I N TH E M A RKET S FO R P OWE R EN GI N EER I NG  
India. The trade dispute with the United States weighed on The markets for power engineering are subject to differing  
the Chinese market, leading to a distinct reduction (–6.4%). regional and economic factors. Consequently, their business  
On the Indian market, passenger car sales dropped 11.9% in growth trends are mostly independent of each other.  
total compared with the previous year. The Japanese pas-  
senger car market fell 2.4% short of the prior-year volume.  
In 2019, the marine market contracted to a much lower  
level than in the previous year. Demand in merchant shipping  
Demand for light commercial vehicles in the Asia-Pacific fell, mainly due to economic uncertainty such as the trade  
region declined distinctly as against the previous year. Regis- dispute between China and the United States and to environ-  
tration volumes in China, the region’s dominant market and mental requirements, for example a reduction of the sulfur  
the largest market worldwide, fell markedly year-on-year. The content in marine fuel that became effective on January 1,  
number of new vehicle registrations in India saw a noticeable 2020. Demand for cruise ships, passenger ferries, fishing  
decrease versus the prior year, while in Thailand the number vessels and dredgers remained steady. The special market for  
was on a level with the previous year.  
government vessels also continued on a stable trajectory. The  
existing overcapacity in the market curbed investment in  
offshore oil production and thus in new ship construction in  
TRE N D S I N TH E M A RKET S FO R COMME RC IAL V EH ICLE S  
Global demand for mid-sized and heavy trucks with a gross this segment. Plans for tighter emission standards resulted in  
weight of more than six tonnes in the markets that are rele- a positive trend toward gas-powered or dual-fuel-engined  
vant for the Volkswagen Group was higher in fiscal year 2019 ships. China, South Korea and Japan remained the dominant  
than in the previous year, with 609 thousand new vehicle shipbuilding countries, accounting for a global market share  
registrations (+2.8%).  
of 85% measured in terms of the number of ships. Because  
In Western Europe, the number of new truck registrations market volumes are still low, all segments in the marine  
was up 3.1% on the prior-year figure at a total of 306 thousand market were continuing to experience significant competition  
vehicles. In Germany, Western Europe’s largest market, the and strong pricing pressure as a result.  
previous year’s level was exceeded moderately. While demand  
The market for power generation continued the positive  
in the United Kingdom rose markedly due to pull-forward trend seen in 2018. Higher demand was registered in all areas  
effects caused by the uncertain outcome of the Brexit nego- of application, in particular for gas. This confirms the shift  
tiations with the EU, demand in Italy decreased perceptibly.  
away from oil-fired power plants towards dual-fuel and gas-  
The Central and Eastern Europe region saw demand recede fired power plants. Demand for energy solutions remained  
by 6.7% to 159 thousand units owing to the deterioration in high, with a strong trend towards greater flexibility and  
the economic climate. The Russian market contracted further decentralized availability. The economies of key emerging  
as the year progressed, recording a distinct year-on-year markets developed positively. However, continued strong  
decrease. New registrations there were down 6.9% to 73 thou- pressure from competition and pricing was discernible in all  
sand vehicles.  
projects, having a negative impact on the earnings quality of  
In fiscal year 2019, the market volume in South America orders. Furthermore, order placement was often delayed due  
rose markedly compared with the previous year, with the to persistently difficult financing conditions for customers,  
number of new vehicle registrations climbing 15.1% to particularly in emerging markets.  
9
8
Business Development  
Group Management Report  
In 2019, the market for turbomachinery showed a pronounced In Germany, the share of loan-financed or leased new vehicles  
improvement year-on-year. Demand for turbo compressors in was lifted further in the reporting period. There was also  
the raw materials, oil, gas and processing industries recovered greater demand for after-sales products and integrated mobil-  
steadily over the year, buoyed by pent-up demand following ity solutions in the business customer segment.  
several years of muted investment. The steam and gas turbine  
In South Africa, demand for financing and insurance  
business continued to be dominated by overcapacity on the products fell slightly.  
part of electricity producers and recorded only a slight  
In the markets of the USA and Mexico, demand for auto-  
improvement compared with the previous year. Pressure from motive financial services remained at a high level in 2019. In  
competition and pricing eased somewhat year-on-year, and the USA, demand for leasing through captive financial services  
there were signs of a recovery as a result of improved use of products in particular was consistently high.  
market participants’ engineering and manufacturing capacity.  
In Brazil, the consumer credit business was in line with the  
The marine after-sales business for diesel engines per- restrained positive trend seen in 2018. However, the country-  
formed positively and benefited from a continued increase in specific financial services product Consorcio, a lottery-style  
interest in long-term maintenance contracts and retrofitting savings plan, saw falling sales. Nearly half of the new vehicle  
solutions. The power plant after-sales business was negatively sales were covered by financial services products in the  
impacted by shifts in the energy mix and regulatory changes reporting period. In the Argentinian market, the sharp rise in  
in key sales markets. The global after-sales market for turbo- interest rates resulting from the most recent economic crisis  
machinery registered a marked improvement year-on-year posed a challenge for sales of financing and leasing products.  
and, like new construction, benefited from pent-up demand  
from previous years.  
Demand for automotive financial services across the Asia-  
Pacific region was mixed in 2019. In China, new contract  
growth slowed as a result of the downturn in vehicle sales. The  
relaxation of existing restrictions on registrations in metro-  
TRE N D S I N TH E M A RKET F OR F I N A NCIA L SE RVI CE S  
Amid a contraction in the overall market, demand for auto- politan areas, in addition to the situation in the interior of the  
motive financial services was again on a high level in 2019 due, country and for the used vehicles market, offers great  
among other reasons, to the persistently low key interest rates potential in terms of acquiring new customers for automotive-  
in the main currency areas. Service products such as main- related financial services. Demand for financial services prod-  
tenance and servicing agreements or insurance were espe- ucts was slightly weaker in India and in Japan.  
cially popular, as customers in more advanced automotive  
The demand for financial services in the Commercial  
financial services markets are putting their focus on reducing Vehicles Business Area also varied from region to region. In  
total cost of ownership. In the fleet segment, more customers Europe, financial services including after-sales registered a  
elicited the support of automotive financial service providers slight increase compared to 2018. In Brazil, the truck and bus  
in order to optimize their entire mobility management business and the related financial services market recorded  
beyond mere fleet operation. There was also increased strong growth.  
demand from both private and business customers for  
mobility services centered on vehicle usage rather than on  
ownership.  
N EW G RO U P M O DE L S I N 2 0 19  
We launched a large number of attractive new models in fiscal  
Overall, a small increase in the demand for new vehicles year 2019 with which we aim to excite our customers. Our  
was recorded in the European market in 2019. As a conse- extensive product portfolio covers almost all key segments  
quence, the number of new lease and financing contracts and body types, with offerings from small cars to super sports  
signed also increased slightly. The share of loan-financed or cars in the passenger car segment, and from pickups to heavy  
leased new vehicles remained stable in France and Spain, trucks and buses in the commercial vehicles segment, as well  
while Italy saw significant volume growth. Sales of used as motorcycles.  
vehicles in Europe rose somewhat, while a minor decrease was  
The Volkswagen Passenger Cars brand continued its global  
recorded in lease and financing contracts for used vehicles. product initiative in the past year, rounding out its SUV  
There was increased demand for after-sales products such as portfolio with the new T-Cross. The T-Cross wins over custom-  
servicing, maintenance and spare parts agreements in 2019. ers with its colorful individualization options for the vehicle’s  
The number of automotive-related insurances grew modestly. interior and exterior along with considerable versatility in  
Group Management Report  
Business Development  
99  
the interior. The new T-Roc R stands out in particular due to the Superb saloon and the Superb estate have been revamped  
its striking dynamics for its vehicle class. The Passat – a and provide the latest connectivity solutions.  
classic in the model range – was given a fresh look and many  
The SEAT brand continued its SUV product initiative in  
new technical features and is the first Volkswagen to be 2019 with the Tarraco. The model joins the smaller Arona and  
equipped with the latest generation of the infotainment Ateca models in the offroader series and stands out with its  
system that is now permanently connected to the internet. assertive, emotional design language. SEAT launched its first  
Innovative driver assistance systems such as Travel Assist model with an all-electric drive, the Mii electric.  
have also been included. In addition to the Passat GTE, which  
In 2019, Porsche impressed its customers with the all-  
has also been updated, Volkswagen is pushing the electrifi- electric Taycan featuring a puristic design, an all-digital inte-  
cation of its model range with the new e-up!, which now has a rior and dynamic performance. In addition, different versions  
range of up to 260 km. The e-Golf and electric versions of the of the reinterpreted iconic car, the 911, were rolled out; this is  
popular Bora and Lavida saloons were launched in China. The distinguished by many Porsche Connect functions as well as  
Magotan received a sweeping model update. Volkswagen met by vehicle components that can be adjusted to the driving  
the steadily growing demand for SUV models with the situation, such as the chassis and transmission. The Cayenne  
Teramont X SUV coupé and a version of the T-Cross that has Coupé also boasts a variety of features ranging from its  
been adapted to meet the needs of local customers. Successor carbon roof to an E-Hybrid version.  
models to the Bora, Polo and Sagitar were unveiled. To tap the  
After launching the third generation of the Continental  
full potential of the Chinese market, Volkswagen Passenger GT in the preceding year, Bentley rolled out the open-top GTC  
Cars launched the JETTA brand there, closing a gap between version in the reporting period. In addition, the brand  
the volume segment and entry-level mobility with its VA3 expanded its successful Bentayga series by adding the power-  
and VS5 models. JETTA appeals in particular to first-time ful yet low-emission Bentayga Hybrid and the dynamic  
buyers by offering a fresh design, a high level of safety and Bentayga Speed. The new Flying Spur once again claims the  
good value for money. In the United States, a completely apex of the automotive premium class for itself with  
updated version of the Passat was unveiled in 2019. South expressive lines and technical innovations.  
America saw the premiere of the T-Cross, which has been  
tailored to the needs of local customers.  
In 2019, Lamborghini upgraded its Huracán EVO Coupé  
and Spyder super sports cars and brought out the Aventador  
The Audi brand brought out the versatile Q3 Sportback in SVJ Roadster.  
019. In showcasing the RS Q3 and RS Q4 models, the brand is Bugatti celebrated its 110th birthday in 2019 with a  
2
demonstrating its expertise as a manufacturer of high- special edition of the Chiron Sport. The one-off Bugatti La  
performance vehicles. This was also impressively evident Voiture Noire pays homage to the golden era of Ettore and  
elsewhere: the Audi e-tron SUV with its all-electric drive Jean Bugatti in the 1930s.  
system was launched in Europe, China and the United States.  
Volkswagen Commercial Vehicles has extensively updated  
A high-quality interior and a plethora of technical highlights all versions of the T6. The T6.1 impressively offers a new  
make this a compelling vehicle; for example, thin cameras instrument cluster and center console, including the latest  
and displays in the door trims take over the function of the generation of the infotainment system, as well as a com-  
exterior mirrors. With extensive product updates in the A4 pletely redesigned front end.  
and Q7 series, the successful models not only have a fresh  
In 2019, Scania unveiled the new generation of Citywide  
look but are also made more efficient by mild hybrid buses, which will be offered with a wide variety of drive con-  
versions. In China, the best-selling A6 saloon and the Q3 were cepts including an all-electric version.  
modernized from the ground up in 2019.  
MAN presented the latest generation of its Lion’s City  
ŠKODA rolled out the new Scala in the reporting period. series of city buses in fiscal year 2019; these can be ordered  
The hatchback impresses with a spacious interior, the latest with a diesel, gas or electric drive.  
technology based on the Modular Transverse Toolkit and an  
The models Ducati launched in 2019 include the Panigale  
attractive price-performance ratio. With the new Kamiq SUV, V4 R, the Monster 821 Stealth, two versions of the Multistrada  
ŠKODA is meeting the high demand for compact SUVs. Both and four upgraded members of the Scrambler family.  
1
00  
Business Development  
Group Management Report  
VOL KSWAGE N GR O U P D EL IV ER I E S  
The table on page 103 gives an overview of passenger car  
The Volkswagen Group delivered 10,974,636 vehicles to cus- deliveries to customers of the Volkswagen Group in the  
tomers worldwide in 2019. This exceeded the previous year’s regions and the key individual markets. The trends in  
figure by 1.3% and set a new record. The Volkswagen Commer- demand for Group models in these markets and regions are  
cial Vehicles brand has been reported as part of the Passenger described in the following sections.  
Cars Business Area since January 1, 2019. The prior-year  
figures have been adjusted accordingly. The chart on the next Deliveries in Europe/Other markets  
page shows how deliveries changed from month to month In Western Europe, the Volkswagen Group delivered 3,627,693  
and compares each monthly figure to the same month of the passenger cars and light commercial vehicles to customers,  
previous year. Deliveries of passenger cars and commercial exceeding the previous year’s figure by 4.4%. Our deliveries  
vehicles are reported separately in the following.  
rose in France, Italy and the United Kingdom, but registered a  
slight decline in Spain. As the overall market grew by 0.6%  
over the same period, the Group’s share of the passenger car  
market in Western Europe increased to 22.8 (21.9)%. Negative  
effects arose from the public debate on driving bans for diesel  
vehicles and restricted capacity for petrol engines, among  
other things. The successful launch of new models had a  
VOLKSWAGE N GROU P DELIV ER I E S1  
2019  
2018  
%
Passenger Cars  
Commercial Vehicles  
Total  
10,732,415  
242,221  
10,601,014  
232,994  
+1.2 positive effect. Encouraging increases in deliveries were  
+4.0 recorded by the T-Roc and Tiguan Allspace models from  
+1.3 Volkswagen Passenger Cars, the Karoq and Kodiaq from  
ŠKODA, the Arona and Ateca from the SEAT brand, the  
Porsche Macan, and the Crafter from Volkswagen Commercial  
Vehicles. Additionally, new or successor models introduced in  
the previous year were very popular with customers, these  
being the Touareg from Volkswagen Passenger Cars and  
Audi’s A1 Sportback, Q3, A6 Avant and Q8. The T-Cross and  
10,974,636  
10,834,008  
1
Prior-year deliveries have been updated or amended to reflect subsequent statistical  
trends and the changed reporting structure.  
The figures include the Chinese joint ventures.  
G LO BA L D E L IV E R I E S BY T H E PA S S E NG E R CA R S B U S I N E S S A REA  
With its passenger car brands, the Volkswagen Group is pres- Passat from the Volkswagen Passenger Cars brand, the e-tron  
ent in all relevant automotive markets around the world. The (Audi’s first all-electric production model), the Scala and  
key sales markets currently include Western Europe, China, Kamiq from the ŠKODA brand, the SEAT Tarraco and the  
the USA, Brazil, Russia, Mexico and Poland. The Group Porsche Cayenne Coupé were successfully launched on the  
recorded encouraging growth in many key markets.  
market as new or successor models.  
During the reporting period, deliveries of passenger cars  
In the Central and Eastern Europe region, the number of  
to Volkswagen Group customers worldwide rose to 10,732,415 deliveries of passenger cars and light commercial vehicles to  
units amid difficult conditions resulting primarily from Volkswagen Group customers increased by 1.6% year-on-year  
mainly declining overall markets. Year-on-year, the number of during the reporting period. Demand for Group models  
deliveries increased by 131,401 vehicles or 1.2%. The Group’s increased in Russia and Poland, while it declined in the Czech  
new SUV models made a particular contribution to this Republic. Demand developed encouragingly for the T-Roc,  
increase. As the passenger car market as a whole declined by Tiguan and Touareg models from the Volkswagen Passenger  
4.0% over the same period, the Volkswagen Group’s share of Cars brand, for ŠKODA’s Scala, Karoq and Kodiaq models, and  
the global market rose to 12.9 (12.2)%. The largest increases in for the SEAT Arona and Tarraco. The Volkswagen Group’s share  
volume in absolute terms were seen in Germany and Brazil. of the passenger car market in Central and Eastern Europe  
In Argentina and Turkey, among other countries, sales figures was 20.3 (20.6)%.  
were down on the previous year. The Volkswagen Passenger  
In Turkey, the Volkswagen Group delivered 29.4% fewer  
Cars, SEAT, Porsche and Lamborghini brands each exceeded vehicles than in the previous year in a substantially weaker  
their record figures from the previous year. The brands that overall market. In South Africa’s declining passenger car  
achieved the largest growth in absolute terms were SEAT, market, demand for Volkswagen Group vehicles fell by 0.4%.  
Volkswagen Passenger Cars and Audi; ŠKODA and Volkswagen The Polo from Volkswagen Passenger Cars continued to be  
Commercial Vehicles both fell slightly short of the previous the most frequently sold Group model there.  
year’s high figures.  
Group Management Report  
Business Development  
101  
VO L KSW A GE N GRO U P DE L I VE RI E S BY MO N T H  
Vehicles in thousands  
2
2
019  
018  
1
1
,100  
,000  
9 0 0  
8 0 0  
7 0 0  
J
F
M
A
M
J
J
A
S
O
N
D
Deliveries in Germany  
Deliveries in North America  
In the reporting period, the German passenger car market Demand for Volkswagen Group models in North America in  
exceeded the high prior-year level (+5.0%). The Volkswagen the reporting period was 0.5% lower at 948,309 vehicles in a  
Group delivered 1,324,942 vehicles to customers in its home slightly declining overall passenger car and light commercial  
market, 6.1% more than in the previous year, which had been vehicle market. The Group’s market share was 4.7 (4.6)%. The  
positively influenced by the environmental bonus among Jetta and the Tiguan Allspace from the Volkswagen Passenger  
other things. Negative effects caused by the public debate on Cars brand were the most in-demand Group models in North  
driving bans for diesel vehicles and restricted capacity for America.  
petrol engines were compensated by the successful introduc-  
In the weaker US market, demand for Volkswagen Group  
tion of new models, for example. The Golf continued to top models rose by 2.5% year-on-year in 2019. The biggest  
the list of the most popular passenger cars in Germany in increases of all Group models were recorded by the Jetta,  
terms of registrations. The most popular Group models also Tiguan Allspace and Atlas from the Volkswagen Passenger  
included the T-Roc and Tiguan from Volkswagen Passenger Cars brand, the Audi A6 and Q8, and the Porsche Cayenne.  
Cars, the Karoq, Kodiaq and Superb from the ŠKODA brand, The Audi e-tron and the new Porsche Macan were success-  
the Arona and Ateca from the SEAT brand and the Porsche fully launched on the market.  
Macan. The Touareg from Volkswagen Passenger Cars, the  
In Canada, demand for Group models in the reporting  
Audi A1 Sportback, Q3, Q3 Sportback, A6 Avant and Q8 as well period fell by 5.3% year-on-year in a shrinking overall market.  
as the ŠKODA Fabia, all of which had been introduced as new The Golf, Jetta and Audi Q5 models as well as the new Tiguan  
or successor models over the course of the previous year, Allspace and Atlas SUVs from the Volkswagen Passenger Cars  
were also in high demand from customers. The T-Cross and brand were particularly popular.  
the Passat from the Volkswagen Passenger Cars brand, the  
In the Mexican market, which was declining on the whole,  
e-tron (the Audi brand’s first all-electric production model), the Volkswagen Group delivered 7.4% fewer vehicles to cus-  
the ŠKODA Scala and Kamiq, the SEAT Tarraco and the tomers compared with the previous year. The Group models  
Porsche Cayenne Coupé were successfully launched on the with the highest level of demand were the Vento, Jetta and  
market as new or successor models during the reporting Tiguan Allspace from the Volkswagen Passenger Cars brand.  
period. Eight Group models led the Kraftfahrt-Bundesamt  
(
KBA – German Federal Motor Transport Authority) registra-  
tion statistics in their respective segments: the Polo, Golf,  
T-Roc, Tiguan, Touran, Audi A6, Porsche 911 and Multivan/  
Transporter.  
1
02  
Business Development  
Group Management Report  
W O RL DW I DE DE L I V E RI E S O F T HE MO ST SU C C ESSFUL GRO U P MO DE L RA NGE S I N 2 0 1 9  
Vehicles in thousands  
Tiguan  
Polo  
778  
724  
702  
610  
567  
505  
364  
327  
Golf  
Jetta  
Passat  
Lavida  
ŠKODA Octavia  
Audi A4  
Deliveries in South America  
Volkswagen Passenger Cars brand, was also well received by  
The South American market for passenger cars and light customers.  
commercial vehicles declined overall in the reporting year. In  
this region we delivered 551,734 vehicles to customers, 1.8% Deliveries in the Asia-Pacific region  
more than a year before. The Gol and Polo from the Volks- The market volume of passenger cars in the Asia-Pacific region  
wagen Passenger Cars brand were in the greatest demand weakened further in the reporting year. The Volkswagen Group  
among the Group models. The T-Cross from Volkswagen delivered 4,517,375 units to customers in this region. This was  
Passenger Cars was successfully introduced to the market. 0.3% fewer vehicles than in the previous year. The Group’s  
The Volkswagen Group’s share of the passenger car market in market share in the Asia-Pacific region rose to 13.2 (12.4)%.  
South America rose to 12.8 (11.9)%.  
China, the world’s largest single market and the main  
The Brazilian market continued its recovery path in the growth driver of the Asia-Pacific region for many years,  
reporting year. The Volkswagen Group benefited from this recorded a distinct downturn in the reporting period. However,  
development and delivered 15.7% more vehicles to customers the Volkswagen Group slightly increased sales here and  
there than in the previous year. This was due primarily to the delivered 0.6% more vehicles to customers in China than in the  
market launch of the new T-Cross from the Volkswagen Pas- prior year. The T-Roc, Tayron, Tharu, Bora, Passat and Lavida  
senger Cars brand, as well as the success of the Virtus, Jetta models from Volkswagen Passenger Cars, the Audi Q2L e-tron  
and Tiguan Allspace which the Volkswagen Passenger Cars and Q5L, the ŠKODA Karoq and Kamiq, as well as the Porsche  
brand had introduced to the market in the previous year as Macan and Cayenne, all of which had been introduced as new  
new or successor models. Demand was also very encouraging or successor models over the course of the previous year, were  
for Volkswagen Passenger Cars’ Polo and Gol models as well in especially high demand. The T-Cross, Polo, Sagitar and  
as for the Amarok from Volkswagen Commercial Vehicles.  
Teramont X models from the Volkswagen Passenger Cars  
In Argentina, the Group recorded a 38.9% decline in sales brand, the Audi Q3, A6L and Q8, and the ŠKODA Kodiaq GT and  
year-on-year amid a dramatically weaker overall market. The Porsche Cayenne Coupé were successfully launched on the mar-  
Gol and Polo from Volkswagen Passenger Cars and the Amarok ket as new or successor models during the reporting period. In  
from Volkswagen Commercial Vehicles saw the highest demand addition, the Volkswagen sub-brand JETTA celebrated its suc-  
of all Group models. The T-Cross, newly introduced by the cessful launch in China with the VS5 SUV and the VA3 saloon.  
Group Management Report  
Business Development  
103  
The volume of the Indian passenger car market declined in In Japan, the number of passenger cars delivered to Volks-  
the reporting year. Demand for models from the Volkswagen wagen Group customers in 2019 was down 8.2% year-on-year  
Group fell by 15.9% in this period compared with the pre- amid a declining overall market volume. The Tiguan from  
vious year. The Polo from the Volkswagen Passenger Cars the Volkswagen Passenger Cars brand, the Audi Q5 and the  
brand was the Group’s most sought-after model in India.  
Porsche 911 all recorded encouraging growth in demand.  
PA S SEN GER CA R DELI VER I E S TO C U STOME R S BY M A RKET1  
DELIVERIES (UNITS)  
019  
CHANGE  
2
2018  
(%)  
Europe/Other markets  
Western Europe  
of which: Germany  
United Kingdom  
Italy  
4,714,997  
3,627,693  
1,324,942  
544,117  
310,944  
307,847  
305,494  
769,681  
223,452  
165,530  
136,377  
317,623  
90,969  
4,575,023  
3,475,401  
1,248,952  
540,817  
286,980  
280,533  
309,907  
757,575  
216,950  
164,480  
138,922  
342,047  
91,311  
+3.1  
+4.4  
+6.1  
+0.6  
+8.4  
+9.7  
–1.4  
+1.6  
+3.0  
+0.6  
–1.8  
–7.1  
–0.4  
–29.4  
–0.5  
+2.5  
–7.4  
–5.3  
+1.8  
+15.7  
–38.9  
–0.3  
+0.6  
–8.2  
–15.9  
+1.2  
+0.5  
+1.8  
–0.9  
+10.9  
+4.9  
+42.7  
+9.6  
+7.9  
–1.6  
France  
Spain  
Central and Eastern Europe  
of which: Russia  
Poland  
Czech Republic  
Other markets  
of which: South Africa  
Turkey  
78,251  
110,785  
953,188  
638,274  
196,431  
118,483  
542,239  
363,766  
115,426  
4,530,564  
4,202,398  
86,356  
North America  
of which: USA  
Mexico  
948,309  
654,152  
181,910  
112,247  
551,734  
420,880  
70,496  
Canada  
South America  
of which: Brazil  
Argentina  
Asia-Pacific  
4,517,375  
4,228,840  
79,268  
of which: China  
Japan  
India  
51,541  
61,277  
Worldwide  
10,732,415  
6,278,345  
1,845,573  
1,242,767  
574,078  
11,006  
10,601,014  
6,244,888  
1,812,485  
1,253,741  
517,627  
10,494  
Volkswagen Passenger Cars  
Audi  
ŠKODA  
SEAT  
Bentley  
Lamborghini  
Porsche  
8,205  
5,750  
280,800  
82  
256,255  
76  
Bugatti  
Volkswagen Commercial Vehicles  
491,559  
499,698  
1
Prior-year deliveries have been updated or amended to reflect subsequent statistical trends and the changed reporting structure.  
The figures include the Chinese joint ventures.  
1
04  
Business Development  
Group Management Report  
COMME RCIAL VE H IC LE DE LIV ER I E S  
year-on-year to a total of 13,995 units; of this figure 11,280  
Worldwide, the Volkswagen Group delivered a total of 242,221 were trucks and 2,326 were buses.  
mid-sized and heavy trucks, buses and commercial vehicles  
Deliveries in North America in the reporting period  
from the MAN TGE van series in 2019 (+4.0%). Trucks accounted declined by 8.5% to 3,219 vehicles; this included 1,794 trucks  
for 205,936 units (+1.7%), buses for 21,496 units (–5.0%) and and 1,425 buses. The vehicles were handed over almost exclu-  
the TGE from MAN for 14,789 (7,871) deliveries.  
sively to customers in Mexico.  
In Western Europe, total deliveries stood at 119,284 units,  
In South America, the Volkswagen Group sold a total of  
up 10.3% on the previous year’s figure. The growth was mainly 56,826 units (+19.0%); of this figure 48,350 were trucks and  
driven by the German, French and UK markets. Of this figure, 8,476 were buses. In Brazil, deliveries rose by 30.5% following  
100,362 were trucks and 6,042 buses; commercial vehicles continued improvement in the economic climate. Of the  
from the MAN TGE van series amounted to 12,880 units. units delivered, 43,438 were trucks and 6,113 were buses.  
In the period from January to December 2019, deliveries Marked declines in deliveries were recorded in the other  
in the markets of the Central and Eastern Europe region fell South American markets, especially Argentina, due to the  
by 8.7% to 36,130 vehicles; trucks accounted for 33,312 and development of the general economic environment.  
buses for 1,311; light commercial vehicles from the MAN brand  
came to 1,507 units. In Russia, the region’s largest market, 12,767 commercial vehicles to customers in the reporting  
sales declined year-on-year by 21.4% to 10,123 units.  
period; among these 10,838 were trucks and 1,916 were  
In the Asia-Pacific region, the Volkswagen Group delivered  
In the Other markets, particularly in Turkey, deliveries of buses. Overall, this was 18.9% less than in the previous year.  
Volkswagen Group commercial vehicles decreased by 23.5% In China, sales increased by 1.7% to 4,737 vehicles, of which  
4,514 were trucks and 219 were buses.  
COMM E R C IAL VE H IC LE D E LIV ER I E S TO CU STO MER S BY M A R K ET1  
DELIVERIES (UNITS)  
CHANGE  
2019  
2018  
(%)  
Europe/Other markets  
Western Europe  
Central and Eastern Europe  
Other markets  
North America  
South America  
of which: Brazil  
Asia-Pacific  
169,409  
119,284  
36,130  
13,995  
3,219  
165,998  
108,122  
39,590  
18,286  
3,517  
+2.1  
+10.3  
–8.7  
–23.5  
–8.5  
56,826  
49,551  
12,767  
4,737  
47,734  
37,984  
15,745  
4,658  
+19.0  
+30.5  
–18.9  
+1.7  
of which: China  
Worldwide  
242,221  
99,457  
142,764  
232,994  
96,477  
136,517  
+4.0  
Scania  
+3.1  
MAN  
+4.6  
1
Prior-year deliveries have been updated or amended to reflect subsequent statistical trends and the changed reporting structure.  
Group Management Report  
Business Development  
105  
DE LI V E R I E S I N T H E P OWE R E NG I N E E R I N G SE G M E NT  
sor trains, which will be used in the world’s largest tere-  
Orders in the Power Engineering segment are usually part of phthalic acid (PTA) plant, as well as an engineering contract  
major investment projects. Lead times typically range from for several underwater compressor stations, which will be  
just under one year to several years, and partial deliveries as deployed at a depth of 1,350 meters at a gas production facil-  
construction progresses are common. Accordingly, there is a ity in the waters off the coast of Australia.  
time lag between incoming orders and sales revenue from the  
new construction business.  
VOLKSWAGE N GROU P FI NA NCIA L SERV IC ES  
Sales revenue in the Power Engineering segment was The Financial Services Division includes the Volkswagen  
largely driven by Engines & Marine Systems and Turboma- Group’s dealer and customer financing, leasing, banking and  
chinery, which together generated around two-thirds of over- insurance activities, fleet management and mobility offerings.  
all sales revenue.  
The division comprises Volkswagen Financial Services and  
the financial services activities of Scania and Porsche Holding  
Salzburg. As of January 1, 2019, contracts signed by our inter-  
national joint ventures are also included; the comparison  
ORD ER S RE CEI VE D I N T H E PA SSEN GER CA R S SEGM ENT I N  
WE ST E R N E U ROP E  
In the reporting period orders received in Western Europe figures have been adjusted accordingly.  
recorded a slight increase of 2.4% compared to the previous  
The Financial Services Division’s products and services  
year, which had seen a decline due to the introduction of the remained very popular in the 2019 fiscal year. The number of  
WLTP test procedure. Developments in the key markets were new financing, leasing, service and insurance contracts signed  
mixed: while Germany, France and Italy registered increases, was higher than in the previous year at 9.3 (8.8) million  
incoming orders fell in the United Kingdom and Spain.  
worldwide. In the reporting period, the ratio of leased or  
financed vehicles to Group deliveries (penetration rate) in the  
Financial Services Division’s markets was 34.5 (34.2)%. As of  
ORD ER S RE CEI VE D FOR COMM ERC IAL VE H I CLE S  
Orders received for mid-sized and heavy trucks and buses as December 31, 2019, the total number of contracts was  
well as for commercial vehicles from the MAN TGE van series 23.7 million, which is 5.7% higher than at the end of 2018.  
decreased by 6.8% year-on-year to 227,240 vehicles in 2019. The number of contracts in the customer financing/leasing  
In Western Europe, our main sales market, the deteriorating area climbed 4.7% to 11.8 million, while it increased by 6.7%  
economic situation, especially in Germany, and the uncertain to 11.9 million in the service/insurance area.  
outcome of the United Kingdom’s exit from the EU led to a  
In the Europe/Other markets region, the number of new  
marked decline in orders received. Orders received in South contracts signed between January and December 2019  
America were up as a consequence of the economic stabili- increased by 8.0% to 6.9 million. The penetration rate was  
zation in Brazil.  
48.5 (47.9)%. At the end of the reporting year, the total number  
of contracts was 17.5 million, thus exceeding the figure for  
2018 by 6.1%. The customer financing/leasing area accounted  
ORD ER S RE CEI VE D I N T H E P OWE R ENGI N EE RI NG SEGMEN T  
The long-term performance of the Power Engineering busi- for 7.7 million of these contracts (+6.1%), while 9.8 million  
ness is determined by the macroeconomic environment. (+6.2%) related to the service/insurance area.  
Individual major orders lead to fluctuations in incoming  
orders during the year that do not correlate with these long- 31, 2019 was 3.1 million, an increase of 0.8% compared to the  
term trends. previous year. The customer financing/leasing area accounted  
In North America, the number of contracts on December  
Orders received in the Power Engineering segment in 2019 for 1.8 million contracts (–1.3%) and 1.2 million contracts  
amounted to €4.3 (4.0) billion. Engines & Marine Systems and (+4.0%) were owing to the service/insurance area. At 956 thou-  
Turbomachinery generated more than two-thirds of the sand contracts, the number of new contracts signed was 8.3%  
order volume in a persistently difficult market environment.  
In the marine business, for example, hybrid drive systems vehicles to Group deliveries in North America was 59.3 (65.9)%.  
each consisting of dual fuel engines, a MAN Cryo gas system The initial consolidation of Porsche Volkswagen Servicios  
lower than the year before. The ratio of leased or financed  
including an LNG tank, a battery system and an energy man- Financieros Chile S.p.A. led to a marked boost in the number  
agement system, were commissioned for two new ferries. of contracts in South America. 386 (295) thousand new  
Orders were won in Germany for 22 gas-powered engines with contracts were signed in the reporting year. The penetration  
an aggregate output of 270 MW in the power plant business. rate increased to 38.4 (32.0)%. The total number of contracts  
For turbomachinery, we received several orders for compres- as of December 31, 2019 increased by 19.4% year- on-year to  
1
06  
Business Development  
Group Management Report  
703 thousand. The contracts mainly related to the customer  
I NV E NTORI ES  
financing/leasing area.  
Global inventories at Group companies and in the dealer  
In the Asia-Pacific region, the number of new contracts organization were lower at the end of the reporting period  
signed rose by 3.3% to 1.0 million in 2019. The ratio of leased than at year-end 2018.  
or financed vehicles to Group deliveries was 15.5 (15.1)%. The  
total number of contracts at the end of the past financial year  
E M P LOYE ES  
was 2.4 million. This was 5.7% more than on December 31, Including the Chinese joint ventures, the Volkswagen Group  
2
1
018. The customer financing/leasing area accounted for employed an average of 667,748 people in fiscal year 2019, an  
.7 million contracts (+3.7%), the number of contracts in the increase of 1.8% year-on-year. In Germany, we employed  
service/insurance area increased by 11.4% to 0.7 million con- 294,779 people on average in 2019; at 44.1 (44.3)%, their share  
tracts.  
of the total headcount was slightly below the level of the  
previous year.  
SA LE S TO TH E DEALER O RGA N IZAT ION  
The Volkswagen Group had 641,838 active employees  
The Volkswagen Group’s sales to the dealer organization (+0.9%) as of December 31, 2019. In addition, 9,968 employees  
increased by 0.5% to 10,956,499 units (including the Chinese were in the passive phase of their partial retirement and  
joint ventures) in the reporting year. This was primarily due 19,399 young people were in vocational traineeships. The  
to higher demand in its home market of Germany as well as Volkswagen Group’s headcount was 671,205 employees (+1.0%)  
continually rising demand in Brazil and an upward trend in at the end of the reporting period. This was primarily due to  
the United States. Overall, the unit sales volumes fell by 0.6% recruitments in the areas of electric mobility, digitalization  
outside Germany and unit sales rose by 9.0% in Germany. and new mobility offerings. A total of 297,433 people were  
At 12.3 (11.3)%, the proportion of the Group’s total sales employed in Germany (+1.6%), while 373,772 were employed  
accounted for by Germany was higher than in 2018.  
abroad (+0.5%).  
The Tiguan, Polo, Golf, Jetta and Passat were our biggest  
sellers last year. The largest increases in sales were recorded by  
the T-Roc, Tharu, Tiguan and T-Cross models from the Volks-  
wagen Passenger Cars brand, the Audi Q8, Q2 and the new  
e-tron, as well as the ŠKODA Karoq/Yeti and Kodiaq and the  
SEAT Arona and the new Tarraco. Both the Porsche Cayenne  
and the Crafter from the Volkswagen Commercial Vehicles  
brand also achieved a strong growth rate.  
EMPL O YEES BY DI VI SI ON/BUSINESS A REA  
as of December 31, 2019  
Passenger Cars 550,122  
Commercial Vehicles  
Power Engineering  
Financial Services  
86,358  
17,767  
16,958  
PRODU CT IO N  
The Volkswagen Group produced 10,823,378 vehicles world-  
wide in fiscal year 2019, 1.8% less than in the previous year. In  
total, our Chinese joint ventures manufactured 4.1% fewer  
units than in the year before. In Germany, the production  
declined by 8.3%, mainly due to numerous new vehicle start-  
ups as well as the transition to electric vehicles. The  
percentage of the Group’s total production accounted for by  
Germany was lower than in 2018, at 19.5 (20.9)%.  
Group Management Report  
Shares and Bonds  
107  
Shares and Bonds  
Volkswagen AG’s ordinary and preferred shares were trading higher than at  
year-end 2018 amid a volatile market environment in 2019. A strong cash flow  
reduced the refinancing volume.  
EQU ITY M A RKE T S AN D P ERF ORM ANCE O F TH E PRI CE OF  
VOLKSWAGE N’ S SHA RE S  
pollutant and CO  
passenger cars and light commercial vehicles, led to volatile  
2
emissions and fuel consumption for  
In the period from January to December 2019, prices on the share prices.  
international equity markets rose overall amid volatile  
trading.  
The DAX recorded an increase compared with the end of  
018. The more expansionary monetary policy pursued by  
VOLKSWAGE N KEY SHAR E FIGU R E S AN D M A R K ET I N DI CE S  
2
F RO M JA N UA RY 1 TO D E C E M B E R 31 , 2 0 19  
the US Federal Reserve and the European Central Bank had a  
positive effect. Uncertainty regarding the economic policy of  
the US government, the continuing Brexit negotiations  
between the United Kingdom and the EU and the growth of  
the global economy had a negative impact on share prices.  
The prices of Volkswagen AG’s preferred and ordinary  
shares also exceeded the 2018 year-end level in 2019. Healthy  
business figures were the main drivers of the uptrend. In  
particular, uncertainty regarding the future regulatory  
framework for diesel and electric vehicles, the US tariff policy,  
the continuing Brexit negotiations between the United  
Kingdom and the EU, the slowdown of the Chinese market  
and the WLTP (Worldwide Harmonized Light-Duty Vehicles  
Test Procedure), which is a test procedure for determining  
High  
Low  
Closing  
Ordinary share  
Preferred share  
DAX  
Price (€)  
Date  
182.50  
Nov. 7  
184.24  
Nov. 7  
13,408  
Dec. 16  
527  
135.60  
Jan. 3  
134.76  
Jan. 3  
10,417  
Jan. 3  
412  
173.25  
Dec. 30  
176.24  
Dec. 30  
13,249  
Dec. 30  
486  
Price (€)  
Date  
Points  
Date  
ESTX Auto & Parts  
Points  
Date  
Apr. 18  
Jan. 3  
Dec. 30  
1
08  
Shares and Bonds  
Group Management Report  
P RI C E DEV E L O P ME NT F RO M DEC E MBE R 2 0 1 8 T O DEC E MBE R 2 0 1 9  
Index based on month-end prices: December 31, 2018 = 100  
Volkswagen ordinary share +24.6%  
Volkswagen preferred share  
DAX  
+26.9%  
+25.5%  
EURO STOXX Automobiles & Parts +15.2%  
1
1
1
1
30  
20  
10  
00  
90  
D
J
F
M
A
M
J
J
A
S
O
N
D
DIV I DE N D PO LI CY  
DIV I DE N D YI EL D  
Our dividend policy matches our financial strategy. In the  
interests of all stakeholders, we aim for continuous dividend  
growth so that our shareholders can participate appropri-  
ately with our business success. The proposed dividend  
therefore reflects our financial management objectives – in  
particular, ensuring a solid financial foundation as part of  
the implementation of our strategy.  
The current dividend proposal can be found in the  
chapter entitled “Volkswagen AG (condensed in accordance  
with the German Commercial Code)”, on page 130 of this  
annual report. The Board of Management and Supervisory  
Board of Volkswagen AG are proposing a dividend of €6.50  
per ordinary share and €6.56 per preferred share for fiscal  
year 2019. On this basis, the total dividend amounts to  
Based on the dividend proposal for the reporting period, the  
dividend yield on Volkswagen ordinary shares is 3.8 (3.5)%,  
measured by the closing price on the last trading day in 2019.  
The dividend yield on preferred shares is 3.7 (3.5)%.  
EA RN I N GS P ER S HARE  
Basic earnings per ordinary share were €26.60 (23.57) in fis-  
cal year 2019. Basic earnings per preferred share were €26.66  
(23.63). In accordance with IAS 33, the calculation is based on  
the weighted average number of ordinary and preferred  
shares outstanding in the reporting period. Since the num-  
ber of basic and diluted shares is identical, basic earnings per  
share correspond to diluted earnings per share.  
See also note 11 to the Volkswagen consolidated financial  
statements for the calculation of earnings per share.  
€3.3 (2.4) billion. The payout ratio is based on the Group’s  
earnings after tax attributable to Volkswagen AG share-  
holders. This amounts to 24.5% for the reporting period and  
stood at 20.4% in the previous year. In our Group strategy, we  
aim to achieve a payout ratio of at least 30%.  
FURTH ER IN FORMATION ON VOLKSWAGEN SHARES  
www.volkswagenag.com/en/InvestorRelations.html  
Group Management Report  
Shares and Bonds  
109  
SHA RE HO L D E R ST RU C T URE A S O F D E C E MBE R 3 1 , 2 0 1 9  
VOLKSWAGE N S H A RE DATA  
as a percentage of subscribed capital  
Ordinary shares  
Preferred shares  
ISIN  
DE0007664005  
766400  
DE0007664039  
766403  
Porsche Automobil Holding SE 31.3  
WKN  
Foreign institutional investors 26.4  
Deutsche Börse/Bloomberg  
Reuters  
VOW  
VOW3  
Qatar Holding LLC 14.6  
State of Lower Saxony 11.8  
Private shareholders/Others 12.9  
VOWG.DE  
VOWG_p.DE  
DAX, CDAX,  
EURO STOXX,  
German institutional investors  
3.1  
EURO STOXX 50,  
EURO STOXX  
CDAX, Prime All Automobiles & Parts,  
Share, MSCI Euro,  
S&P Global 100 Index  
Prime All Share,  
MSCI Euro  
Primary market indices  
Exchanges  
Berlin, Dusseldorf, Frankfurt, Hamburg,  
Hanover, Munich, Stuttgart, Xetra,  
SIX Swiss Exchange  
SHA REH OL DER STRU CTU RE A S OF DECEMB ER 31, 2019  
At the end of the reporting period, Volkswagen AG’s sub-  
scribed capital amounted to €1,283,315,873.28. The share-  
holder structure of Volkswagen AG as of December 31, 2019  
is shown in the chart on this page.  
The distribution of voting rights for the 295,089,818 ordi-  
nary shares was as follows at the reporting date: Porsche  
Automobil Holding SE, Stuttgart, held 53.1% of the voting  
rights. The second-largest shareholder was the State of Lower  
Saxony, which held 20.0% of the voting rights. Qatar Holding  
LLC was the third-largest shareholder with 17.0%. The  
remaining 9.9% of ordinary shares were attributable to other  
shareholders.  
Notifications of changes in voting rights in accordance  
with the Wertpapierhandelsgesetz (WpHG – German Securities  
Trading Act) are published on our website at www.volkswa-  
genag.com/en/InvestorRelations/news-and-publications.html.  
OUR I NVESTOR RELATIONS TEAM IS AVAI LABLE FOR QUERIES AN D  
COMMENTS:  
WOLFSBURG OFFICE (VOLKSWAGEN AG)  
Phone  
Fax  
+49 (0) 5361 9-00  
+49 (0) 5361 9-30411  
E-mail  
Internet  
investor.relations@volkswagen.de  
www.volkswagenag.com/en/InvestorRelations.html  
1
10  
Shares and Bonds  
Group Management Report  
VOL KSWAG E N S H A RE K EY F I G U RE S  
Dividend development  
2019  
2018  
2017  
2016  
2015  
Number of no-par value shares at Dec. 31  
Ordinary shares  
Preferred shares  
Dividend1  
thousands  
thousands  
295,090  
206,205  
295,090  
206,205  
295,090  
206,205  
295,090  
206,205  
295,090  
206,205  
per ordinary share  
per preferred share  
Dividend paid1  
on ordinary shares  
on preferred shares  
€
€
6.50  
6.56  
3,271  
1,918  
1,353  
4.80  
4.86  
2,419  
1,416  
1,002  
3.90  
3.96  
1,967  
1,151  
817  
2.00  
2.06  
1,015  
590  
0.11  
0.17  
68  
32  
35  
€ million  
€ million  
€ million  
425  
Share price development2  
2019  
2018  
2017  
2016  
2015  
Ordinary share  
Closing  
Price performance  
Annual high  
€
%
€
173.25  
+ 24.6  
182.50  
135.60  
139.10  
– 17.5  
188.00  
131.10  
168.70  
+ 23.4  
173.95  
128.70  
136.75  
–3.9  
144.20  
108.95  
142.30  
–21.0  
247.55  
101.15  
Annual low  
€
Preferred share  
Closing  
Price performance  
Annual high  
Annual low  
Beta factor3  
€
%
€
176.24  
+ 26.9  
184.24  
134.76  
1.17  
138.92  
– 16.5  
188.50  
133.70  
1.17  
166.45  
+ 24.8  
178.10  
125.35  
1.12  
133.35  
–0.3  
138.80  
94.00  
1.22  
133.75  
–27.6  
255.20  
92.36  
1.28  
€
factor  
€ billion  
Market capitalization at Dec. 31  
87.5  
69.7  
84.1  
67.9  
69.6  
Equity attributable to Volkswagen AG share-  
holders and hybrid capital investors at Dec. 31  
Ratio of market capitalization to equity  
€ billion  
factor  
121.8  
0.72  
117.1  
0.60  
108.8  
0.77  
92.7  
0.73  
88.1  
0.79  
Key figures per share  
2019  
2018  
2017  
2016  
2015  
Earnings per ordinary share4  
basic  
diluted  
€
€
26.60  
26.60  
23.57  
23.57  
22.28  
22.28  
10.24  
10.24  
–3.20  
–3.20  
Equity attributable to Volkswagen AG share-  
holders and hybrid capital investors at Dec. 31  
€
242.93  
233.63  
217.13  
184.90  
175.67  
Price/earnings ratio5  
Ordinary share  
Preferred share  
Dividend yield6  
Ordinary share  
Preferred share  
factor  
factor  
6.5  
6.6  
5.9  
5.9  
7.5  
7.3  
13.4  
13.0  
x
x
%
%
3.8  
3.7  
3.5  
3.5  
2.3  
2.4  
1.5  
1.5  
0.1  
0.1  
Stock exchange turnover7  
2019  
2018  
2017  
2016  
2015  
Turnover of Volkswagen ordinary shares  
€ billion  
million shares  
€ billion  
million shares  
%
3.3  
20.9  
41.0  
266.0  
4.6  
4.3  
28.0  
54.1  
346.6  
5.4  
3.5  
23.6  
45.1  
312.3  
5.4  
3.3  
25.4  
41.1  
347.0  
5.0  
6.9  
45.4  
72.4  
444.4  
7.1  
Turnover of Volkswagen preferred shares  
Volkswagen share of total DAX turnover  
1
Figures for the years 2015 to 2018 relate to dividends paid in the following year. For  
019, the figures relate to the proposed dividend.  
Xetra prices.  
See page 126 for the calculation.  
See note 11 to the consolidated financial statements (Earnings per share) for the  
calculation. 2017 figure adjusted (IFRS 9).  
5
6
7
Ratio of year-end-closing price to earnings per share.  
Dividend per share based on the year-end-closing price.  
Order book turnover on the Xetra electronic trading platform (Deutsche Börse).  
2
2
3
4
Group Management Report  
Shares and Bonds  
111  
RE FI NANC I NG ST RUC T URE O F T HE VO L KSWAGEN GRO U P  
as of December 31, 2019  
Commercial paper  
Bonds  
64%  
Asset-backed securities  
30%  
6
%
Money and capital  
market instruments  
Л 1 year  
8%  
> 1 to < 5 years  
53%  
М 5 years  
19%  
2
Maturities  
Currencies  
EUR  
1%  
USD  
16%  
Others  
23%  
6
0
10  
20  
30  
40  
50  
60  
70  
80  
90  
100  
REFI NAN CI NG  
Furthermore, Dr. Ing. h.c. F. Porsche AG issued a green pro-  
Refinancing of the Volkswagen Group is important to ensure missory note loan in the amount of €1.0 billion. The proceeds  
that the Group remains solvent at all times. Cash flows from of this transaction will be used to finance the all-electric  
operating activities contributed to the positive development Porsche Taycan vehicle project.  
of net liquidity in 2019. Consequently, the refinancing vol- The proportion of fixed-rate instruments in the past year  
ume through bonds on the money and capital markets for was roughly four times as high as the proportion of floating  
the Automotive Division declined year-on-year.  
rate instruments.  
Benchmark bonds with an aggregate volume of €7.0 billion  
In our refinancing arrangements, we generally aim to  
were issued for the Financial Services Division. In addition exclude interest rate and currency risk as far as possible with  
to this, private placements were issued in various currencies. the simultaneous use of derivatives.  
In the US capital market a bond with a total volume of  
The table below shows how our money and capital  
USD 3.0 billion was placed with investors in five tranches. market programs were utilized as of December 31, 2019 and  
Notes with a volume of CAD 1.5 billion were issued in the illustrates the financial flexibility of the Volkswagen Group:  
Canadian refinancing market.  
Alongside the placement of senior, unsecured bonds,  
asset-backed securities (ABS) transactions were another  
element of our refinancing activities. ABS transactions in the  
Authorized  
volume  
€ billion  
Amount utilized  
on Dec. 31, 2019  
€ billion  
amount of €2.0 billion were placed in Europe. In addition,  
ABS transactions were issued in USA, China and Australia  
among other countries.  
The Volkswagen Group was also actively involved in the  
commercial paper market with several issuing companies.  
PROGRAMS  
Commercial paper  
Bonds  
42.0  
9.0  
88.5  
12.5  
41.1  
162.0  
of which hybrid issues  
Asset-backed securities  
92.6  
1
12  
Shares and Bonds  
Group Management Report  
RATI N GS  
VOLKSWAGEN AG  
VOLKSWAGEN FINANCIAL SERVICES AG  
VOLKSWAGEN BANK GMBH  
2
019  
2018  
2017  
2019  
2018  
2017  
2019  
2018  
2017  
Standard & Poor’s  
short-term  
A–2  
BBB+  
A –2  
BBB+  
A –2  
BBB+  
A –2  
BBB+  
A –2  
BBB+  
A –2  
BBB+  
A–2  
A–  
A –2  
A –  
A –2  
A –  
long-term  
outlook  
stable  
stable  
stable  
stable  
stable  
stable  
negative  
negative  
negative  
Moody’s Investors Service  
short-term  
P–2  
A3  
P –2  
A3  
P –2  
A3  
P –2  
A3  
P –2  
A3  
P –2  
A3  
P–1  
A1  
P–1  
A1  
P –1  
A3  
long-term  
outlook  
stable  
stable  
negative  
stable  
stable  
negative  
stable  
stable  
negative  
Volkswagen AG’s syndicated credit line of €5.0 billion agreed was left at “stable” and that for Volkswagen Bank GmbH at  
in July 2011 was replaced in December 2019 by a new syndi- “negative”.  
cated credit line of €10.0 billion. The new credit line has a  
In July and August, Moody’s Investors Service left its  
term of five years, with the option to extend the term twice short-term and long-term ratings for Volkswagen AG and  
after obtaining approval from the respective banks, each for a Volkswagen Financial Services AG unchanged at P–2 and A3  
period of one year, until 2026 at the latest. This credit facility and those for Volkswagen Bank GmbH at P–1 and A1. The  
was unused as of the end of 2019.  
outlook for each company was left at “stable”.  
Of the syndicated credit lines worth a total of €10.1 bil-  
lion at other Group companies, €1.4 billion has been drawn  
SU STA I NAB I LI TY RATI N GS  
down. In addition, Group companies had arranged bilateral, Analysts and investors are referring increasingly to company  
confirmed credit lines with national and international banks sustainability profiles when making their recommendations  
in various other countries for a total of €6.9 billion, of which and decisions. They draw primarily on sustainability ratings  
€
2.4 billion was drawn down.  
to evaluate a company’s environmental, social and gover-  
nance performance. At the same time, sustainability ratings  
are instrumental in determining whether we are meeting our  
RATI N GS  
In 2019, the rating agencies Standard & Poor’s and Moody’s goal, and they provide the basis for implementing internal  
Investors Service conducted the regular update of their credit measures.  
ratings for Volkswagen AG, Volkswagen Financial Services AG  
and Volkswagen Bank GmbH.  
After the diesel issue became public knowledge, the Volks-  
wagen Group was downgraded significantly in the MSCI,  
In November and December, Standard & Poor’s con- RobecoSAM, Sustainalytics, oekomISS, VigeoEiris, EcoVadis  
firmed its short-term and long-term ratings of A–2 and BBB+ and RepRisk sustainability indices and consequently  
for Volkswagen AG and Volkswagen Financial Services AG, removed from sustainability indices such as the Dow Jones  
and of A–2 and A– for Volkswagen Bank GmbH. The outlook Sustainability Index and the FTSE4Good Index. In fiscal year  
for Volkswagen AG and Volkswagen Financial Services AG 2019, Volkswagen continued to have a score of A– in the CDP  
and a rating of A in the Water Disclosure Project (WDP).  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
113  
Results of Operations, Financial  
Position and Net Assets  
The Volkswagen Group’s sales revenue increased in fiscal year 2019 compared with the previous  
year. Despite further charges and cash outflows in connection with the diesel issue, operating  
profit and net liquidity in the Automotive Division were above the respective prior-year figure.  
The Volkswagen Group’s segment reporting comprises the The Automotive Division comprises the Passenger Cars and  
four reportable segments of Passenger Cars and Light Com- Light Commercial Vehicles segment, the Commercial Vehicles  
mercial Vehicles, Commercial Vehicles, Power Engineering segment and the Power Engineering segment, as well as the  
and Financial Services, in compliance with IFRS 8 and in line figures from the reconciliation. The Passenger Cars and Light  
with the Group’s internal management and reporting struc- Commercial Vehicles segment is combined with the recon-  
tures. As a result of enhancements to the management struc- ciliation to form the Passenger Cars Business Area, while the  
ture of the Volkswagen Group, we allocate the Volkswagen Commercial Vehicles and Power Engineering segments are  
Commercial Vehicles brand to the Passenger Cars segment as identical to the corresponding business areas. The reorga-  
of January 1, 2019, renaming this segment the Passenger Cars nization of the Volkswagen Commercial Vehicles brand has  
and Light Commercial Vehicles segment. The Commercial not led to any changes in the Automotive Division. The  
Vehicles segment continues to correspond to the Commercial Financial Services Division corresponds to the Financial  
Vehicles Business Area, but now excludes the Volkswagen Services segment.  
Commercial Vehicles brand. The prior-year figures have been  
adjusted accordingly.  
APPLICAT IO N OF N EW I NTE RNATI ONAL F I NA NC IAL REPO RTI NG  
At Volkswagen, segment profit or loss is measured on the STA N DA R D S  
basis of the operating result.  
The new accounting standard IFRS 16, which came into effect  
The reconciliation contains activities and other oper- on January 1, 2019, amends the previous lease accounting  
ations that do not, by definition, constitute segments. These rules with the central aim of recognizing all leases in the  
include the unallocated Group financing activities. Consoli- balance sheet. Accordingly, it establishes that lessees are no  
dation adjustments between the segments (including the longer required to classify their leases as either finance leases  
holding company functions) are also contained in the recon- or operating leases. They will instead generally be required to  
ciliation. The purchase price allocations for Porsche Holding recognize a right-of-use asset and a lease liability in the  
Salzburg and Porsche, Scania and MAN are allocated to their balance sheet for every lease. The right-of-use assets are  
corresponding segments.  
recognized in the balance sheet under those items in which  
K EY F IG U RE S F O R 2 01 9 BY S E G M E NT  
Passenger Cars  
and Light Com-  
mercial Vehicles  
Commercial  
Vehicles  
Power  
Volkswagen  
Group  
€
million  
Engineering Financial Services  
Total segments  
Reconciliation  
Sales revenue  
202,273  
15,610  
7.7  
26,444  
1,653  
6.3  
3,997  
–93  
40,160  
3,212  
8.0  
272,875  
20,381  
–20,242  
–3,422  
252,632  
16,960  
6.7  
Segment result (operating result)  
as a percentage of sales revenue  
–2.3  
Capex, including capitalized  
development costs  
17,098  
1,460  
197  
223  
18,977  
423  
19,401  
1
14  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
the assets underlying the lease would have been reported if disclosure of the Automotive Division’s net liquidity as of  
they were owned by the Volkswagen Group.  
January 1, 2019.  
Using the modified retrospective method (adjustments to  
the opening balance sheet), right-of-use assets were recog-  
nized under noncurrent assets and lease liabilities as finan-  
The prior-year figures have not been adjusted.  
SPE CIA L I TEM S  
cial liabilities for the first time as of January 1, 2019. This led Special items consist of certain items in the financial state-  
to an increase in total assets but did not affect equity. ments whose separate disclosure the Board of Management  
The new approach resulted in a slight increase in oper- believes can enable a better assessment of our economic per-  
ating profit in 2019, because the only items allocated to formance.  
operating profit as of January 1, 2019 are depreciation charges  
In the reporting period, negative special items in connec-  
on right-of-use assets. Interest expenses on lease liabilities in tion with the diesel issue amounting to €–2.3 (–3.2) billion  
the Automotive Division are recognized in the financial affected operating profit in the Passenger Cars Business Area.  
result, with a corresponding negative impact.  
They are attributable to the final administrative fine of €0.5 bil-  
Gross and net cash flow increased by €0.9 billion in the lion imposed by the Stuttgart Public Prosecutor, which ended  
reporting period because of the modified presentation of the ongoing regulatory offense proceeding against Dr. Ing.  
leases in the statement of income as a result of the new h.c. F. Porsche AG, as well as higher expenses for legal risks and  
IFRS 16 (depreciation is a non-cash expense). Repayments of legal defense costs (€2.1 billion). The reversal of provisions for  
the principal portion of the lease liability had a correspond- technical measures had an offsetting effect (€0.3 billion).  
ing negative impact on cash flows from financing activities.  
The initial recognition of lease liabilities as financial liabil- COMPE N SATI ON PA I D TO TH E NO NCO NTROLL I N G I NTE RE ST  
ities in the balance sheet led to a marked increase in third-  
SHA REH OL DER S OF M A N S E  
party borrowings in the cash flow statement, which in turn In August 2018, the control and profit and loss transfer  
resulted in a negative one-off effect of €–4.8 billion on the agreement with MAN SE was terminated by extraordinary  
I NCOME STATEM ENT BY DI VI SI ON  
VOLKSWAGEN GROUP  
2019  
AUTOMOTIVE1  
2019  
FINANCIAL SERVICES  
2019  
€
million  
2018  
2018  
2018  
Sales revenue  
252,632  
–203,490  
49,142  
–20,978  
–9,767  
–1,437  
16,960  
6.7  
235,849  
–189,500  
46,350  
–20,510  
–8,819  
–3,100  
13,920  
5.9  
212,473  
–170,477  
41,996  
–19,712  
–7,522  
–1,014  
13,748  
6.5  
201,067  
–161,298  
39,769  
–19,039  
–7,105  
–2,497  
11,127  
5.5  
40,160  
–33,014  
7,146  
34,782  
–28,201  
6,581  
Cost of sales  
Gross profit  
Distribution expenses  
Administrative expenses  
Net other operating result  
Operating result  
–1,266  
–2,245  
–423  
–1,471  
–1,714  
–603  
3,212  
2,793  
Operating return on sales (%)  
8.0  
8.0  
Share of the result of equity-accounted  
investments  
3,349  
–1,953  
1,396  
3,369  
–1,646  
1,723  
15,643  
–3,489  
12,153  
17  
3,278  
–1,889  
1,389  
15,137  
–3,491  
11,646  
79  
3,310  
–1,576  
1,734  
71  
–64  
7
58  
–70  
Interest result and Other financial result  
Financial result  
–12  
Earnings before tax  
18,356  
–4,326  
14,029  
143  
12,861  
–2,657  
10,203  
–32  
3,219  
–836  
2,383  
64  
2,782  
–832  
1,950  
49  
Income tax expense  
Earnings after tax  
Noncontrolling interests  
Earnings attributable to Volkswagen AG  
hybrid capital investors  
540  
309  
540  
309  
–
–
Earnings attributable to Volkswagen AG  
shareholders  
13,346  
11,827  
11,027  
9,926  
2,319  
1,900  
1
Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
115  
SHA RE O F SA L E S REV E N U E BY MA RKE T 2 0 1 9  
SHA RE O F SA L ES REVEN U E BY DI VI SI O N/BUSI NESS A REA 2 0 1 9  
in percent  
in percent  
Europe (excluding Germany)/ 42 %  
Other markets  
Germany 19 %  
North America 17 %  
South America 4%  
Passenger Cars 72 %  
Commercial Vehicles 10 %  
Power Engineering  
2%  
Financial Services 16 %  
Asia-Pacific 17 %  
notice as of January 1, 2019. Following the announcement SA L E O F I NT E R E ST I N R E N K AG  
that the termination of the control and profit and loss In January 2020, the Board of Management and Supervisory  
transfer agreement had been recorded in the commercial Board of Volkswagen AG resolved to sell the Volkswagen  
register, the noncontrolling shareholders of MAN SE were Group’s 76% interest in RENK AG. The sale is expected to be  
entitled under the provisions of the control and profit and completed in the second half of 2020, subject to regulatory  
loss transfer agreement to tender their shares to Volkswagen approval.  
within a two-month period. This resulted in cash outflows of  
€1.1 billion in 2019 for the acquisition of shares tendered and RESU LT S OF OP E RATIO NS  
for compensation payments. The “Put options and compen-  
sation rights granted to noncontrolling interest sharehold- Results of operations of the Group  
ers” item reported in the balance sheet was reduced accord- Between January and December 2019, the Volkswagen Group  
ingly. The put options granted to noncontrolling interest generated sales revenue of €252.6 billion, exceeding the prior-  
shareholders of MAN SE expired on March 4, 2019. The year figure by 7.1%. Particularly mix improvements, higher  
remaining amount of €0.7 billion was reclassified directly to sales volumes and the healthy business performance of the  
equity; €0.3 billion of this amount is attributable to noncon- Financial Services Division had a positive impact; whereas  
trolling interests.  
the negative exchange rate trend had an offsetting effect. At  
80.6 (81.4)%, most of the sales revenue was generated abroad.  
I P O OF TRATO N SE  
Gross profit rose by €2.8 billion to €49.1 billion. The gross  
Since June 2019, shares of TRATON SE have been traded on margin stood at 19.5 (19.7)%. Adjusted for special items recog-  
the regulated market of the Frankfurt Stock Exchange and the nized here in both periods (positive in the reporting period  
NASDAQ Stockholm Exchange. The offer price was set at due to the reversal of provisions for technical measures in  
€
27.00 per share. This led to an increase of €1.4 billion in the connection with the diesel issue), gross profit amounted to  
Volkswagen Group’s equity, of which €1.2 billion is reported €48.8 (46.6) billion. Excluding special items, the gross margin  
as noncontrolling interests. The cash inflow occurred at the was 19.3 (19.8)% in fiscal year 2019.  
beginning of the third quarter of 2019.  
The Volkswagen Group’s operating profit before special  
items improved by €2.2 billion to €19.3 billion in the reporting  
period. The operating return on sales before special items  
CON TR I BUTIO N OF AUTO NOM OU S I NTEL LI GEN T D RIV I NG  
In July 2019, Volkswagen announced that, together with Ford amounted to 7.6 (7.3)%. The increase was mainly attributable  
Motor Company, it would be investing in Argo AI, a company to positive mix effects, higher volumes, the reversal of  
that is working on the development of a system for autono- impairment losses following the remeasurement of devel-  
mous driving.  
opment costs, product cost optimizations, and the fair value  
Volkswagen will contribute its consolidated subsidiary measurement of certain derivatives. A rise in fixed costs had  
Autonomous Intelligent Driving (AID) to this venture. The a negative impact. Special items in connection with the diesel  
contribution of AID is planned for the first half of 2020, issue weighed on operating profit, reducing this item by  
subject to the required regulatory approvals and other condi- €–2.3 (–3.2) billion. The Volkswagen Group’s operating profit  
tions precedent.  
increased to €17.0 (13.9) billion, while the operating return  
on sales rose to 6.7 (5.9)%.  
1
16  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
The financial result was down by €0.3 billion to €1.4 billion. At €13.7 billion, the Automotive Division’s operating profit  
The interest expenses included in this item rose markedly, was €2.6 billion higher than the prior year. The main con-  
driven by the rise in the refinancing volume, the interest tributing factors were improvements in the mix as well as  
expense on provisions and application of the new IFRS 16. higher vehicle sales, the reversal of impairment losses fol-  
The share of the result of equity-accounted investments was lowing the remeasurement of development costs, product  
at the same level as in 2018. Measurement effects on the cost optimization, the measurement of certain derivatives  
reporting date, especially resulting from net income from and a decline in negative special items. Higher depreciation  
securities and funds, were positive compared with the prior- and amortization charges and a rise in research and devel-  
year period. The previous year’s figure had also been opment costs had an offsetting effect. The operating return  
negatively impacted by the remeasurement of put options on sales increased to 6.5 (5.5)%. The negative special items  
and compensation rights in connection with the control and included in operating profit totaled €–2.3 (–3.2) billion.  
profit and loss transfer agreement with MAN SE.  
Excluding the special items, the Automotive Division’s oper-  
The Volkswagen Group’s profit before tax improved by ating profit rose to €16.1 (14.3) billion. The operating return  
7.3% to €18.4 billion in fiscal year 2019. The return on sales on sales before special items improved to 7.6 (7.1)%. Our  
1
before tax rose to 7.3 (6.6)%. Income taxes resulted in an operating profit largely benefits from the business perfor-  
expense of €4.3 (3.5) billion, which in turn led to a tax rate of mance of our Chinese joint ventures only through deliveries  
23.6 (22.3)%. Profit after tax increased by €1.9 billion to of vehicles and vehicle parts and of license income, as the  
€
14.0 billion.  
joint ventures are accounted for using the equity method and  
therefore included in the financial result.  
Results of operations in the Automotive Division  
The Automotive Division’s sales revenue amounted to  
€
212.5 billion in the reporting period, 5.7% more than in the  
RESU LT S OF OP E RATIO NS I N T H E PA S SEN GER CA R S  
B U SI N E S S A R EA1  
previous year. Primarily, improvements in the mix and  
higher vehicle sales offset negative exchange rate effects. As  
our Chinese joint ventures are accounted for using the equity  
method, the Group’s business performance in the Chinese  
passenger car market is reflected in consolidated sales reve-  
nue primarily by deliveries of vehicles and vehicle parts.  
Cost of sales was up, driven primarily by higher volumes Operating result  
and a rise in depreciation and amortization charges due to the Operating return on sales (%)  
large capex volume, as well as by a year-on-year increase in  
research and development costs recognized in profit or loss.  
The reversal of provisions for items related to the diesel issue  
led here to positive special items in the fiscal year. The ratio  
of cost of sales to sales revenue rose somewhat compared  
€
million  
2019  
2018  
Sales revenue  
182,031  
12,188  
6.7  
172,678  
10,000  
5.8  
1
The Volkswagen Commercial Vehicles brand has been reported in the Passenger Cars  
Business Area since January 1, 2019. The prior-year figures have been adjusted.  
with the prior-year period. Total research and development The Passenger Cars Business Area recorded sales revenue of  
costs, expressed as a percentage of the Automotive Division’s €182.0 billion in the period from January to December 2019,  
sales revenue (research and development ratio or R&D ratio), 5.4% more than in the prior-year period. The growth was  
stood at 6.7 (6.8)% in fiscal year 2019. In addition to new mainly attributable to positive mix effects and the higher  
models, our activities focused above all on the electrification sales volume. This was set against a negative exchange rate  
of our vehicle portfolio, a more efficient range of engines, trend. The operating profit of the Passenger Cars Business  
digitalization and new technologies.  
Area totaled €12.2 billion, up €2.2 billion on the prior year.  
Distribution and administrative expenses were both higher The rise in profit was primarily due to mix and volume  
in the reporting period. The ratio of distribution expenses to improvements, the reversal of impairment losses following  
sales revenue was down on the prior-year period, while the the remeasurement of development costs as well as positive  
ratio of administrative expenses was virtually unchanged effects stemming from product costs and the measurement  
year-on-year. The other operating result amounted to of certain derivatives and a decline in negative special items  
€
–1.0 (–2.5) billion. The year-on-year improvement resulted to €–2.3 (–3.2) billion in connection with the diesel issue.  
from the reversal of impairment losses following the remea- Higher depreciation and amortization charges and a rise in  
surement of development costs, positive exchange rate effects research and development costs were among the main  
and lower expenses arising from the fair value measurement factors reducing profit. The operating return on sales  
of derivatives to which hedge accounting is not applied, as well increased to 6.7 (5.8)%.  
as from a decline in special items related to the diesel issue.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
117  
RESU LT S OF OP E RATIO NS I N T H E COMME RCIAL VE H IC LE S  
B U SI N E S S A R EA1  
Higher volumes and exchange rate effects boosted the  
Financial Services Division’s operating profit to €3.2 billion, a  
15.0% increase on the previous year, again representing a  
considerable contribution to consolidated net profit. The  
operating return on sales was unchanged at 8.0 (8.0)%. The  
return on equity before tax rose to 10.8 (9.9)%.  
€
million  
2019  
2018  
Sales revenue  
26,444  
1,653  
6.3  
24,781  
1,191  
Operating result  
Principles and goals of financial management  
Operating return on sales (%)  
4.8 Financial management in the Volkswagen Group covers liq-  
uidity management, the management of currency, interest  
rate and commodity price risks, as well as credit and country  
risk management. It is performed centrally for all Group com-  
panies by Group Treasury, based on internal guidelines and  
1
The Volkswagen Commercial Vehicles brand has been reported in the Passenger Cars  
Business Area since January 1, 2019. The prior-year figures have been adjusted.  
At €26.4 billion, sales revenue in the Commercial Vehicles risk parameters. Some functions of the Scania, MAN and  
Business Area exceeded the prior-year figure by 6.7% in fiscal Porsche Holding Salzburg subgroups are integrated into the  
year 2019. The operating profit of the Commercial Vehicles financial management. Additionally, these subgroups have  
Business Area improved by €0.5 billion to €1.7 billion; the their own financial management structures.  
operating return on sales stood at 6.3 (4.8)%. Positive effects  
The goal of financial management is to ensure that the  
arising from higher volumes, mix and price improvements Volkswagen Group remains solvent at all times and at the  
more than offset cost increases.  
same time to generate an adequate return from the invest-  
ment of surplus funds. We use cash pooling to optimize the  
use of existing liquidity between the significant companies.  
In this system, the balances, either positive or negative,  
accumulating in the cash pooling accounts are swept daily to  
a regional target account and thus pooled. The aim of  
currency, interest rate and commodity risk management is to  
hedge the prices on which investment, production and sales  
RESU LT S OF OP E RATIO NS I N T H E POWE R EN GI N EE RI N G  
B U SI N E S S A R EA  
€
million  
2019  
2018  
Sales revenue  
3,997  
–93  
3,608 plans are based using derivative financial instruments and  
–64 commodity forwards, and to mitigate interest rate risks  
–1.8 incurred in financing transactions. In the management of  
credit and country risk, diversification is used to limit the  
Volkswagen Group’s exposure to counterparty risk. To  
Operating result  
Operating return on sales (%)  
–2.3  
The Power Engineering Business Area recorded sales revenue achieve this, counterparty risk management imposes internal  
of €4.0 billion in fiscal year 2019, 10.8% more than in the prior limits on the volume of business allowed per counterparty  
year. The operating loss amounted to €–0.1 (–0.1) billion. Vol- when financial transactions are entered into. Various credit  
umes improved while fixed costs rose. The operating return rating criteria are applied in this process. These focus  
on sales amounted to –2.3 (–1.8)%.  
primarily on the capital resources of potential counterparties,  
as well as the ratings awarded by independent agencies. The  
relevant risk limits and the authorized financial instruments,  
Results of operations in the Financial Services Division  
In fiscal year 2019, the Financial Services Division generated hedging methods and hedging horizons are approved by the  
sales revenue of €40.2 billion; the 15.5% rise year-on-year was Group Board of Management Committee for Risk Manage-  
due mainly to the higher business volume.  
ment. For additional information on the principles and goals  
The cost of sales expanded by 17.1% to €33.0 billion, of financial management, please refer to page 187 and to the  
growing slightly faster than sales revenue. Distribution notes to the 2019 consolidated financial statements on pages  
expenses and the other operating result declined, while 293 to 314.  
administrative expenses rose. Costs increased on the whole  
due to volume-related factors. Overall, the ratio of costs to  
sales revenue was down slightly.  
1
18  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
A U T O M O T I V E DI V I SI O N NET C A SH FL O W 2 0 1 9  
€
billion  
3
5
1
.6  
2
9.1  
30  
25  
20  
15  
–14.0  
1
0
–
5.2  
–
0.7  
5
0
1
0.8  
Gross cash flow  
Change in  
working capital  
Capex  
Capitalized  
development costs  
Other  
Net cash flow  
FI NA NC IAL PO SI T ION  
Financial position of the Automotive Division  
The Automotive Division’s gross cash flow was €29.1 billion  
in fiscal year 2019, an increase of €3.1 billion compared with  
Financial position of the Group  
In the period from January to December 2019, the Volks- the prior-year figure. This was driven particularly by healthy  
wagen Group generated gross cash flow of €39.9 (35.6) billion. earnings growth, lower tax payments than in the previous  
The change in working capital amounted to €–22.0 (–28.3) bil- year, and positive effects from the application of the  
lion. The administrative fine imposed after regulatory offense new IFRS 16. The change in working capital amounted to  
proceedings, which was recognized in the reporting period as €+1.6 (–7.4) billion. Year-on-year, above all a significantly  
a special item in connection with the diesel issue, led to an smaller increase in inventories and markedly lower cash  
immediate cash outflow. Cash flows from operating activities outflows attributable to the diesel issue had a positive effect.  
were up by €10.7 billion to €18.0 billion.  
As a result, cash flows from operating activities rose by  
At €20.1 billion, investing activities attributable to oper- €12.2 billion to €30.7 billion.  
ating activities were 3.6% higher in the reporting period than  
in the previous year.  
Investing activities attributable to operating activities  
amounted to €19.9 billion, €1.1 billion up on the prior-year  
Cash outflow from financing activities amounted to period. Investments in property, plant and equipment, invest-  
–0.9 billion, compared with cash inflow of €24.6 billion in ment property and intangible assets, excluding capitalized  
€
the previous year. Financing activities include the dividend development costs (capex) included in this figure stood at  
paid to the shareholders of Volkswagen AG, the acquisition of €14.0 billion, an increase of 6.0% compared with 2018. The  
MAN shares tendered as a result of the termination of the ratio of capex to sales revenue was unchanged at 6.6 (6.6)%.  
control and profit and loss transfer agreement, the cash inflow Capex was primarily allocated to our production facilities and  
resulting from the IPO of TRATON and, most particularly, the to models that we launched in the reporting period or are  
issuance and redemption of bonds and changes in other planning to launch next year. These are primarily vehicles in  
financial liabilities. Following the application of the new the Golf, Atlas, ID.3, ID.4, Audi A3, Audi e-tron, Audi Q3, Audi  
IFRS 16, payments for the principal portion of the lease A6/A7 family and Porsche Taycan model series as well as the  
liability have to be recognized under financing activities since Bentley Continental series. Other investment priorities  
January 1, 2019.  
included the ecological focus of our model range, product  
The Volkswagen Group’s cash and cash equivalents as electrification and digitalization, and our modular toolkits.  
reported in the cash flow statement were lower than in the Additions to capitalized development costs amounting  
prior-year period, at €24.3 (28.1) billion.  
to €5.2 (5.2) billion were on a level with the 2018 figure.  
At the end of the reporting period, the Volkswagen Group’s Strategic investments in a number of companies led to  
net liquidity was €–148.0 billion, compared with €–134.7 bil-  
lion at the end of 2018.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
119  
CA SH FLOW STAT EMEN T BY DIVI SI ON  
VOLKSWAGEN GROUP  
AUTOMOTIVE1  
2019  
FINANCIAL SERVICES  
€
million  
2019  
2018  
2018  
2019  
2018  
Cash and cash equivalents at beginning of period  
Earnings before tax  
28,113  
18,356  
–2,914  
24,439  
342  
18,038  
15,643  
–3,804  
22,561  
524  
23,354  
15,137  
–2,187  
15,958  
320  
13,428  
12,861  
–3,786  
15,581  
503  
4,759  
3,219  
–726  
8,480  
23  
4,609  
2,782  
–19  
Income taxes paid  
Depreciation and amortization expense2  
6,980  
21  
Change in pension provisions  
Share of the result of equity-accounted investments  
Other noncash income/expense and reclassifications3  
Gross cash flow  
460  
244  
520  
303  
–59  
–58  
–734  
445  
–651  
29,097  
1,636  
–345  
–1,176  
1,564  
1,400  
–110  
303  
502  
–83  
–56  
39,950  
–21,966  
–674  
35,613  
–28,341  
–5,372  
–6,400  
3,645  
25,964  
–7,433  
–5,337  
–1,800  
2,793  
10,853  
–23,603  
–329  
283  
9,650  
–20,908  
–34  
Change in working capital  
Change in inventories  
Change in receivables  
–893  
–4,600  
853  
Change in liabilities  
2,297  
733  
Change in other provisions  
1,304  
–1,286  
–11,647  
–7,282  
7,272  
–1,306  
–1,590  
–191  
–96  
20  
Change in lease assets (excluding depreciation)  
Change in financial services receivables  
Cash flows from operating activities  
–13,204  
–10,796  
17,983  
–13,095  
–11,099  
–12,750  
–10,056  
–7,090  
–11,258  
30,733  
18,531  
Cash flows from investing activities attributable to  
operating activities  
–20,076  
–19,386  
–19,898  
–18,837  
–178  
–549  
of which: investments in property, plant and equipment,  
investment property and intangible assets, excluding  
capitalized development costs  
–14,230  
–5,171  
–913  
–13,729  
–5,234  
–705  
–14,007  
–5,171  
–716  
–13,218  
–5,234  
–594  
–223  
–
–510  
–
capitalized development costs  
acquisition and disposal of equity investments  
Net cash flow4  
–196  
–12,928  
3,949  
3,771  
10,413  
–
–111  
–11,807  
–8,332  
–8,882  
20,292  
–
–2,093  
–1,069  
–21,146  
–865  
–12,113  
–2,204  
–21,590  
24,566  
–28  
10,835  
–5,018  
–24,916  
–11,278  
1,368  
–306  
Change in investments in securities, loans and time deposits  
Cash flows from investing activities  
6,129  
–12,708  
4,274  
–28  
Cash flows from financing activities  
of which: Capital transactions with noncontrolling interests  
Capital contributions/capital redemptions  
1,368  
–
1,491  
–970  
1,418  
970  
73  
MAN noncontrolling interest shareholders: compensation  
payments and acquisition of shares tendered  
–1,109  
243  
–2,117  
–173  
–1  
–1,109  
205  
–2,117  
–171  
–1  
–
38  
–
–2  
0
Effect of exchange rate changes on cash and cash equivalents  
Change of loss allowance within cash & cash equivalents  
Net change in cash and cash equivalents  
1
1
–0  
–3,784  
10,075  
–5,256  
9,925  
1,472  
150  
Cash and cash equivalents at Dec. 315  
Securities, loans and time deposits  
Gross liquidity  
24,329  
29,099  
28,113  
28,036  
18,098  
13,458  
31,556  
–10,280  
21,276  
23,354  
8,697  
6,231  
15,641  
4,759  
19,339  
53,428  
56,148  
32,051  
–12,683  
19,368  
21,872  
24,098  
Total third-party borrowings  
Net liquidity6  
–201,468  
–148,040  
–190,883  
–134,735  
–191,189  
–169,316  
–178,200  
–154,103  
1
2
3
Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.  
Net of impairment reversals.  
These relate mainly to the fair value measurement of financial instruments and the reclassification of gains/losses on disposal of noncurrent assets and equity investments to  
investing activities.  
4
Net cash flow: cash flows from operating activities, net of cash flows from investing activities attributable to operating activities (investing activities excluding change in investments  
in securities, loans and time deposits).  
5
6
Cash and cash equivalents comprise cash at banks, checks, cash-in-hand and call deposits.  
The total of cash, cash equivalents, securities, loans to affiliates and joint ventures as well as time deposits net of third-party borrowings (noncurrent and current financial liabilities).  
1
20  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
a €0.1 billion increase in the “Acquisition and disposal of In fiscal year 2019, the Passenger Cars Business Area’s gross  
equity investments” item to €0.7 billion. cash flow was €25.5 billion, up €2.6 billion on the previous  
Compared with the low prior-year figure, the Automotive year due to earnings-related factors, lower tax payments and  
Division’s net cash flow improved markedly by €11.1 billion positive effects of the application of the new IFRS 16. The  
to €10.8 billion. The main reasons were the increase in profit, change in working capital amounted to €3.1 (–5.9) billion.  
a decline in cash outflows attributable to the diesel issue and The smaller increase in inventories than in the previous year  
a smaller increase in inventories.  
and lower cash outflows attributable to the diesel issue had a  
The cash outflow from financing activities amounted to positive effect. Consequently, cash flows from operating  
–11.3 billion in fiscal year 2019; in the previous year, there activities went up by €11.5 billion to €28.5 billion. Investing  
€
had been a cash inflow of €4.3 billion. The dividend paid to activities attributable to operating activities in the Passenger  
the shareholders of Volkswagen AG in May 2019 amounted to Cars Business Area increased to €20.3 (17.3) billion. Capex  
€
2.4 billion, a rise of €0.5 billion compared with the previous was higher, while capitalized development costs declined  
year. The “Capital transactions with noncontrolling interests” slightly. The intragroup sale of the power engineering busi-  
item includes the cash inflow of €1.4 billion resulting from ness by the Commercial Vehicles Business Area to the Passen-  
the IPO of TRATON. As a result of the termination of the ger Cars Business Area and strategic investments in a number  
control and profit and loss transfer agreement with MAN SE, of companies led to a marked year-on-year increase in the  
financing activities also include the acquisition of MAN “Acquisition and disposal of equity investments” item.  
shares tendered, and most particularly, the issuance and Compared with the low prior-year figure, the Passenger Cars  
redemption of bonds and changes in other financial liabil- Business Area’s net cash flow improved by €8.6 billion to  
ities. As from January 1, 2019, payments of the principal €8.3 billion.  
portion of the lease liability are also reported in this item, as  
required following the application of the new IFRS 16.  
As a result of the recognition of lease liabilities as finan-  
cial liabilities required under IFRS 16, third-party borrowings  
in the Automotive Division were €5.4 billion higher at the  
end of the reporting period than at the end of the previous  
fiscal year. Despite this non-cash effect, the Automotive  
Division’s net liquidity was €21.3 billion on December 31,  
FI NA NC IAL PO SI T ION I N T H E CO M M ERCIAL VEH IC L ES  
B U SI N E S S A R EA1  
€
million  
2019  
2018  
2
2
8
019, €1.9 billion above the level at the end of fiscal year Gross cash flow  
018. The Automotive Division’s net liquidity accounted for Change in working capital  
.4 (8.2)% of consolidated sales revenue in the reporting Cash flows from operating activities  
3,357  
–1,249  
2,108  
2,745  
–1,257  
1,488  
period.  
Cash flows from investing activities  
attributable to operating activities  
603  
–1,372  
116  
Net cash flow  
2,711  
FI NA NC IA L P O SI T ION I N T H E PA S S E NG E R CA R S B U S I N E S S A REA1  
1
The Volkswagen Commercial Vehicles brand has been reported as part of the Passenger  
Cars Business Area since January 1, 2019. The prior-year figures have been adjusted.  
€
million  
2019  
2018  
In the reporting period, the Commercial Vehicles Business  
Gross cash flow  
25,474  
3,053  
22,910 Area’s gross cash flow improved by €0.6 billion to  
–5,916 €3.4 billion. The slight year-on-year increase was driven  
16,995 particularly by higher profits. The change in working capital  
Change in working capital  
Cash flows from operating activities  
28,528  
Cash flows from investing activities  
attributable to operating activities  
amounted  
to  
–20,254  
8,273  
–17,303  
–308  
€–1.2 (–1.3) billion. Cash flows from operating activities were  
Net cash flow  
up by €0.6 billion to €2.1 billion. The intragroup sale of the  
power engineering business led to a cash inflow from  
investing activities attributable to operating activities. Net  
cash flow increased to €2.7 (0.1) billion.  
1
The Volkswagen Commercial Vehicles brand has been reported as part of the Passenger  
Cars Business Area since January 1, 2019. The prior-year figures have been adjusted.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
121  
FI NANCIAL POSITION I N THE POWER ENGI N EERI NG BUSI NESS AREA  
N ET A SS ET S  
Consolidated balance sheet structure  
At the end of the reporting period, the Volkswagen Group  
recorded total assets of €488.1 billion, 6.5% more than on  
€
million  
2019  
2018  
Gross cash flow  
265  
–168  
98  
309 December 31, 2018. This increase was mainly the result of the  
–260 higher business volume in the Financial Services Division,  
49 the application of the new IFRS 16 and currency translation  
effects. The structure of the consolidated balance sheet as on  
Change in working capital  
Cash flows from operating activities  
Cash flows from investing activities  
attributable to operating activities  
–247  
–150  
–162  
the reporting date is shown in the chart on page 123. The  
Net cash flow  
–113  
Volkswagen Group’s equity amounted to €123.7 billion,  
€6.3 billion more than at the previous balance sheet date. The  
In fiscal year 2019, the Power Engineering Business Area equity ratio was 25.3 (25.6)%. The “Assets held for sale” item  
recorded gross cash flow of €0.3 (0.3) billion. Due to a decrease mainly comprises the asset carrying amounts expected to be  
in funds tied up in working capital, the change in working derecognized following the disposal of the interest in Renk,  
capital amounted to €–0.2 (–0.3) billion. Cash flows from oper- which was resolved in January 2020. The item also includes  
ating activities were higher than in the previous year. Investing the carrying amount of the shares in Autonomous Intelligent  
activities attributable to operating activities increased by Driving, which is to be used as a contribution to the equity  
€
0.1 billion to €0.2 billion. At €–0.1 (–0.1) billion, net cash investment in the joint venture with Ford, in addition to the  
flow was virtually on a level with the previous year.  
provision of financial resources. The “Liabilities held for sale”  
item comprises the carrying amounts of the respective  
liabilities expected to be derecognized.  
Financial position in the Financial Services Division  
In the reporting period, the Financial Services Division’s  
As of the end of fiscal year 2019, the Group had off-  
gross cash flow was €10.9 (9.6) billion. The change in working balance-sheet commitments in the form of contingent lia-  
capital of €–23.6 (–20.9) billion was a result of an increase in bilities in the amount of €8.5 (9.3) billion, financial guarantees  
funds tied up in working capital, mainly driven by the growth in the amount of €0.4 (0.3) billion and other financial obli-  
in business volume. Cash flows from operating activities gations in the amount of €19.4 (26.6) billion. The previous  
amounted to €–12.7 (–11.3) billion.  
year’s amount of other financial obligations includes obli-  
Investing activities attributable to operating activities gations from long-term leasing and rental contracts, which  
declined by €0.4 billion to €0.2 billion in the reporting IFRS 16 requires to be presented in the affected balance sheet  
period, mainly due to lower capex.  
items as from January 1, 2019. Contingent liabilities relate  
In the Financial Services Division, financing activities primarily to legal risks in connection with the diesel issue as  
resulted in a cash inflow of €10.4 (20.3) billion in fiscal well as potential liabilities from tax risks in the Commercial  
year 2019 for refinancing the business volume. This figure Vehicles Business Area in Brazil. Other financial obligations  
primarily included the issuance and redemption of bonds primarily result from purchase commitments for property,  
and other financial liabilities.  
plant and equipment and irrevocable credit commitments to  
At the end of the reporting period, the Financial Services customers. In addition, they include investments to which  
Division’s negative net liquidity, which is common in the the Group has committed itself in the infrastructure for zero-  
industry, stood at €–169.3 billion; on December 31, 2018, it emission vehicles and in initiatives to promote access to and  
had amounted to €–154.1 billion.  
awareness of this technology. These commitments were  
made as part of the settlement agreements in the USA in  
connection with the diesel issue. Other financial obligations  
include an amount of €1.2 billion for this purpose.  
1
22  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
CON SO LI DATE D B A L A N C E S H E E T BY D I V I S I O N A S O F D E C E M B E R 3 1  
VOLKSWAGEN GROUP  
AUTOMOTIVE1  
2019  
FINANCIAL SERVICES  
€
million  
2019  
2018  
2018  
2019  
2018  
Assets  
Noncurrent assets  
Intangible assets  
300,608  
66,214  
66,152  
48,938  
86,973  
274,620  
64,613  
57,630  
43,545  
78,692  
153,736  
66,010  
65,043  
2,084  
143,153  
64,404  
54,619  
5,297  
9
146,873  
204  
131,467  
209  
Property, plant and equipment  
Lease assets  
1,110  
3,010  
46,853  
87,363  
38,249  
78,684  
Financial services receivables  
–390  
Investments, equity-accounted investments and  
other equity investments, other receivables and  
financial assets  
32,331  
187,463  
46,742  
58,615  
38,620  
16,769  
25,923  
795  
30,140  
183,536  
45,745  
54,216  
37,557  
17,080  
28,938  
–
20,989  
93,081  
41,898  
–640  
18,824  
91,371  
41,302  
–510  
11,342  
94,382  
4,844  
59,255  
20,817  
3,223  
6,243  
–
11,315  
92,165  
4,443  
54,726  
24,524  
3,703  
4,769  
–
Current assets  
Inventories  
Financial services receivables  
Other receivables and financial assets  
Marketable securities  
Cash, cash equivalents and time deposits  
Assets held for sale  
17,803  
13,546  
19,679  
795  
13,033  
13,376  
24,169  
–
Total assets  
488,071  
458,156  
246,816  
234,524  
241,255  
223,632  
Equity and liabilities  
Equity  
123,651  
109,117  
12,663  
117,342  
104,522  
12,596  
92,774  
78,872  
12,663  
88,850  
76,624  
12,596  
30,877  
30,246  
–
28,492  
27,898  
–
Equity attributable to Volkswagen AG  
shareholders  
Equity attributable to Volkswagen AG hybrid  
capital investors  
Equity attributable to Volkswagen AG  
shareholders and hybrid capital investors  
121,781  
1,870  
117,117  
225  
91,535  
1,239  
89,219  
–369  
30,246  
631  
27,898  
594  
Noncontrolling interests  
Noncurrent liabilities  
Financial liabilities  
Provisions for pensions  
Other liabilities  
196,497  
113,556  
41,389  
41,551  
167,924  
172,846  
101,126  
33,097  
38,623  
167,968  
90,822  
17,592  
40,631  
32,600  
63,220  
77,692  
14,187  
32,535  
30,970  
67,982  
105,675  
95,965  
759  
95,154  
86,939  
563  
8,951  
7,652  
99,986  
Current liabilities  
104,703  
Put options and compensation rights granted to  
noncontrolling interest shareholders  
–
87,912  
22,745  
56,896  
370  
1,853  
89,757  
23,607  
52,750  
–
–
–7,312  
19,603  
50,559  
370  
1,853  
–1,504  
20,962  
46,671  
–
–
95,224  
3,142  
6,337  
–
–
91,261  
2,645  
6,079  
–
Financial liabilities  
Trade payables  
Other liabilities  
Liabilities held for sale  
Total equity and liabilities  
488,071  
458,156  
246,816  
234,524  
241,255  
223,632  
1
Including allocation of consolidation adjustments between the Automotive and Financial Services divisions, primarily intragroup loans.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
123  
C O NSO L IDA T E D BA L A NC E SHE E T ST RU C T U RE 2 0 1 9  
in percent  
Noncurrent assets  
Current assets  
38.4 (40.1)  
6
1.6 (59.9)  
Total assets  
Equity  
5. 63 (25.6)  
Noncurrent liabilities  
40.3 (37.7)  
Current liabilites  
34.4 (36.7)  
2
Total equity  
and liabilities  
0
10  
20  
30  
40  
50  
60  
70  
80  
90  
100  
Automotive Division balance sheet structure  
a decreasing effect on the Automotive Division’s equity. The  
At the end of the reporting period, intangible assets were up fact that total assets rose due to, among other factors, the  
slightly on the 2018 fiscal year. The marked increase in implementation of the new IFRS 16 led to a slight decline in  
property, plant and equipment in the Automotive Division the equity ratio to 37.6 (37.9)%, despite an increase in equity.  
was attributable to the new IFRS 16. The high volume of  
At €90.8 (77.7) billion, noncurrent liabilities were markedly  
investments was another factor driving this growth. Shares higher than a year earlier. The noncurrent financial liabilities  
accounted for using the equity method were down on the included in this item rose, mainly as a result of the appli-  
prior-year figure: the business results of the Chinese joint cation of the new IFRS 16. Pension provisions were up signifi-  
ventures, which were at the prior-year level were offset by cantly on the 2018 balance sheet date, mainly because of the  
higher dividend resolutions. Noncurrent assets totaled actuarial remeasurement following a change in the discount  
€153.7 (143.2) billion, thus exceeding the figure at the pre- rate. Noncurrent other liabilities were higher, driven by  
vious balance sheet date.  
effects arising from the measurement of derivatives.  
Current assets rose to €93.1 (91.4) billion compared with  
Current liabilities declined to €63.2 billion, down 7.0%  
the end of 2018. Current other receivables and financial compared with the end of 2018. As a result of the extra-  
assets increased. The Automotive Division’s cash and cash ordinary termination of the control and profit and loss trans-  
equivalents were €4.5 billion lower, at €19.7 billion.  
fer agreement with MAN SE, the “Put options and compen-  
At the end of 2019, the Automotive Division’s equity was sation rights granted to noncontrolling interest share-  
92.8 billion, 4.4% higher than on December 31, 2018. The holders” item was settled: the tendered MAN shares were  
€
good earnings development increased equity. Noncontrolling acquired, the cash compensation was paid and the remaining  
interests were up by €1.2 billion due to the issuance of amount was reclassified directly to equity. Current financial  
TRATON SE shares. As a result of the termination of the liabilities stood at €–7.3 (–1.5) billion. The figures for the  
control and profit and loss transfer agreement with MAN SE, Automotive Division also contain the elimination of intra-  
the amount of €0.7 billion remaining from the put options group transactions between the Automotive and Financial  
and compensation rights in MAN SE granted to noncon- Services divisions. As the current financial liabilities for the  
trolling interest shareholders was reclassified directly to primary Automotive Division were lower than the loans  
equity; €0.3 billion of this amount led to an increase in non- granted to the Financial Services Division, a negative amount  
controlling interests. The noncontrolling interests are now was disclosed in both periods. Trade liabilities decreased.  
primarily held by the noncontrolling interest shareholders of Current other liabilities were higher, primarily due to the  
TRATON, Renk and Audi. Currency translation effects addi- effects from the measurement of derivatives and was attri-  
tionally had a positive effect. Higher actuarial losses from the butable to higher liabilities from buyback transactions.  
remeasurement of pension plans, the dividend paid to the  
On December 31, 2019, the Automotive Division’s total  
shareholders of Volkswagen AG and negative effects from the assets amounted to €246.8 billion, up 5.2% compared with  
measurement of derivatives recognized directly in equity had the end of 2018.  
1
24  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
PA S SEN GER CA R S B U SI N E SS A REA  
BA L A NCE SH E ET STRU CTU R E 1  
COM M E RCIA L V E H IC LE S B U S I N E S S A REA  
BA L A NCE SH E ET STRU CTU R E 1  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
€ million  
Dec. 31, 2019  
Dec. 31, 2018  
Noncurrent assets  
Current assets  
Total assets  
126,387  
75,459  
201,846  
75,773  
78,679  
47,394  
116,537  
70,408  
186,945  
72,110  
66,406  
48,429  
Noncurrent assets  
Current assets  
Total assets  
25,143  
13,420  
38,563  
14,115  
11,367  
13,081  
24,117  
17,366  
41,483  
13,788  
10,532  
17,162  
Equity  
Equity  
Noncurrent liabilities  
Current liabilities  
Noncurrent liabilities  
Current liabilities  
1
The Volkswagen Commercial Vehicles brand has been reported as part of the Passenger  
Cars Business Area since January 1, 2019. The prior-year figures have been adjusted.  
1
The Volkswagen Commercial Vehicles brand has been reported as part of the Passenger  
Cars Business Area since January 1, 2019. The prior-year figures have been adjusted.  
On December 31, 2019, intangible assets in the Passenger Cars Property, plant and equipment in the Commercial Vehicles  
Business Area were higher than at the 2018 balance sheet Business Area increased year-on-year because of the appli-  
date. The new IFRS 16 resulted in a marked rise in property, cation of the new IFRS 16. Noncurrent other receivables and  
plant and equipment. Noncurrent assets rose by a total of financial assets decreased. In total, noncurrent assets amounted  
€9.8 billion to €126.4 billion. Current assets increased by a to €25.1 (24.1) billion and were thus higher than at the end of  
total of €5.1 billion to €75.5 billion. Current other receivables 2018. Current assets declined by €3.9 billion to €13.4 billion.  
and financial assets were above the prior-year figure. Total Current other receivables and financial assets were down  
cash and cash equivalents and securities declined. The markedly because of the intragroup sale of the power engi-  
“Assets held for sale” item comprises the carrying amount neering business. Total securities were markedly up on the  
expected to be derecognized for the shares in Autonomous prior-year figure, while cash and cash equivalents were lower.  
Intelligent Driving. At the end of 2019, the Passenger Cars Total assets stood at €38.6 (41.5) billion at the end of 2019.  
Business At €14.1 (13.8) billion, the Commercial Vehicles Business  
Area  
had  
total  
assets  
amounting  
to  
€201.8 (186.9) billion. The Passenger Cars Business Area’s Area’s equity was slightly up on the previous year. The 7.9%  
equity rose to €75.8 (72.1) billion, mainly due to earnings- rise in noncurrent liabilities compared with the end of 2018  
related factors. At €78.7 billion, noncurrent liabilities were was mainly attributable to higher liabilities from buyback  
18.5% higher in total than on December 31, 2018. The transactions and an increase in pension provisions. Current  
noncurrent financial liabilities included in this item liabilities declined by 23.8% in total. As a result of the extra-  
increased, mainly as a result of the application of the new ordinary termination of the control and profit and loss trans-  
IFRS 16. Pension provisions rose significantly, mainly due to fer agreement with MAN SE, the “Put options and compen-  
the actuarial remeasurement following a change in the sation rights granted to noncontrolling interest shareholders”  
discount rate. Current liabilities declined by 2.1% in total. item was settled: the tendered MAN shares were acquired, the  
Current financial liabilities were higher than at the end cash compensation was paid and the remaining amount was  
of 2018. Current other liabilities were up on the figure as of reclassified directly to equity. Current other liabilities were  
December 31, 2018, primarily due to the effects from the down compared with the previous year’s balance sheet date.  
measurement of derivatives and as a result of higher liabili-  
ties from buyback transactions.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
125  
POWER ENGI N EERI NG BUSI NESS AREA BALANCE SHEET STRUCTU RE  
The Financial Services Division accounted for around  
4
9.4 (48.8)% of the Volkswagen Group’s assets at the balance  
sheet date.  
At €30.9 billion, the Financial Services Division’s equity  
was 8.4% higher than the figure at the previous balance sheet  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Noncurrent assets  
Current assets  
Total assets  
2,206  
4,202  
6,408  
2,885  
777  
2,499 date, driven mainly by healthy earnings. The equity ratio was  
3,597 12.8 (12.7)%.  
6,097  
Noncurrent liabilities were up by 11.1% at the end of 2019,  
Equity  
2,953 mainly because of a rise in noncurrent financial liabilities to  
754 refinance the business volume. Overall, current liabilities  
2,391 were higher than a year earlier. Especially the current finan-  
cial liabilities included in this item recorded an increase.  
Noncurrent liabilities  
Current liabilities  
2,746  
Deposits from the direct banking business totaled  
The Power Engineering Business Area’s intangible assets and €32.5 (29.9) billion, thus exceeding the figure recorded as of  
property, plant and equipment were lower than the respective December 31, 2018.  
prior-year figures. Noncurrent assets decreased in total.  
Current assets rose 16.8% compared with December 31, 2018.  
RETU R N ON I NVE STMEN T (RO I) A N D VA LU E CO NT RI BUTI ON  
The “Assets held for sale” item included in current assets The Volkswagen Group’s financial target system centers on  
mainly comprises the asset carrying amount expected to be continuously and sustainably increasing the value of the  
derecognized following the planned disposal of Renk. Total Company. In order to ensure the efficient use of resources in  
assets in the Power Engineering Business Area stood at the Automotive Division and to measure the success of this,  
€6.4 (6.1) billion at the end of 2019.  
we have been using a value-based management system for a  
On December 31, 2019, the Power Engineering Business number of years, with return on investment (ROI) as a relative  
1
Area’s equity amounted to €2.9 (3.0) billion. Noncurrent lia- indicator and value contribution , a key performance indi-  
bilities were at the prior-year level. Noncurrent financial lia- cator linked to the cost of capital, as an absolute performance  
bilities increased, while other noncurrent liabilities declined. measure.  
Overall, current liabilities were higher than a year earlier.  
The return on investment serves as a consistent target in  
Contributing factors were a rise in current financial liabilities strategic and operational management. If the return on invest-  
and in liabilities held for sale, which include the carrying ment exceeds the market cost of capital, there is an increase  
amount of the liabilities of Renk expected to be derecognized. in the value of the invested capital and a positive value contri-  
bution. The concept of value-based management allows the  
Financial Services Division balance sheet structure  
success of the Automotive Division and individual business  
At the end of 2019, the Financial Services Division had total units to be evaluated. It also enables the earnings power of our  
assets of €241.3 billion, 7.9% more than on December 31, 2018.  
products, product lines and projects – such as new plants – to  
Noncurrent assets were up by 11.7% in total. The property, be measured.  
plant and equipment included in this item decreased. Invest-  
ment property and lease assets rose due to business growth Components of value contribution  
1
and as a result of the application of the new IFRS 16, while Value contribution is calculated on the basis of the operating  
other receivables and financial assets declined by a corre- result after tax and the opportunity cost of invested capital.  
sponding amount. Noncurrent financial services receivables  
rose, driven by higher volumes.  
The operating result shows the economic performance of  
the Automotive Division and is initially a pre-tax figure.  
Current assets amounted to €94.4 (92.2) billion. While Using the various international income tax rates of the  
current financial services receivables increased, current other relevant companies, we assume an overall average tax rate of  
receivables and financial assets declined. As of December 31, 30% when calculating the operating result after tax.  
2019, cash and cash equivalents in the Financial Services  
Division stood at €6.2 billion, up €1.5 billion on the prior-  
year figure.  
1
The value contribution corresponds to the Economic Value Added (EVA®). EVA® is a  
registered trademark of Stern Stewart & Co.  
1
26  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
The cost of capital is multiplied by the average invested  
capital to give the opportunity cost of capital. Invested capital  
is calculated as total operating assets reported in the balance  
sheet (property, plant and equipment, intangible assets, lease  
assets, inventories and receivables) less non-interest-bearing  
CO ST OF CA P I TA L A FTER TA X AUTOMOT IVE D IV IS I ON  
%
2019  
2018  
liabilities (trade payables and payments on account received). Risk-free rate  
Average invested capital is derived from the balance at the Market risk premium  
0.0  
7.5  
0.8  
6.5  
beginning and the end of the reporting period.  
Volkswagen-specific risk premium  
1.3  
1.1  
As the concept of value-based management only com- (Volkswagen beta factor)  
prises our operating activities, assets relating to investments Cost of equity after tax  
in subsidiaries and associates and the investment of cash Cost of debt  
funds are not included when calculating invested capital. Tax  
Interest charged on these assets is reported in the financial Cost of debt after tax  
(1.17)  
8.8  
(1.17)  
8.4  
1.9  
2.5  
–0.6  
1.3  
–0.8  
1.8  
result.  
Proportion of equity  
66.7  
33.3  
6.3  
66.7  
33.3  
6.2  
Proportion of debt  
Determining the current cost of capital  
Cost of capital after tax  
The cost of capital is the weighted average of the required  
rates of return on equity and debt.  
The cost of equity is determined using the Capital Asset  
Pricing Model (CAPM).  
RETU R N ON I NVE STMEN T (RO I) A N D VA LU E CO NT RI BUTI ON I N  
TH E R EPO RT I NG PERI OD  
This model uses the yield on long-term risk-free Bunds, At €13,019 (11,438) million, the Automotive Division’s oper-  
increased by the risk premium attaching to investments in ating result after tax, including the proportionate operating  
the equity market. The risk premium comprises a general result of the Chinese joint ventures, was up on the prior-year  
market risk and a specific business risk.  
The general risk premium of 7.5% reflects the general risk reversals of impairment losses as part of the remeasurement  
of a capital investment in the equity market. of development costs, product cost optimization as well as the  
figure. Improvements in the mix and increased vehicle sales,  
The specific business risk – price fluctuations in Volks- measurement of certain derivatives and a decline in negative  
wagen preferred shares – has been modeled in comparison to special items had a positive impact. In particular, higher  
the MSCI World Index when calculating the beta factor. The depreciation and amortization charges due to the large  
MSCI World Index is a global capital market benchmark for volume of capital expenditure and a rise in research and devel-  
investors.  
opment costs had an offsetting effect. Effects on earnings and  
The analysis period for the beta factor calculation spans assets from purchase price allocation are not taken into account  
five years with annual beta figures calculated on a daily basis as they cannot be influenced operationally by management.  
followed by the subsequent calculation of the average. A beta  
factor of 1.17 (1.17) was determined for 2019.  
In the reporting year, the invested capital rose to  
€116,016 (104,424) million. The increase was particularly due  
The cost of debt is based on the average yield for long- to the change in the accounting for leases (IFRS 16) that  
term debt. As borrowing costs are tax-deductible, the cost of entered into force on January 1, 2019, as well as additions to  
debt is adjusted to account for the tax rate of 30%.  
capex and capitalized development costs.  
A weighting on the basis of a fixed ratio for the fair values  
The return on investment (ROI) is the return on invested  
of equity and debt gives an effective cost of capital for the capital for a particular period based on the operating result  
Automotive Division of 6.3 (6.2)% for 2019.  
after tax. In spite of the additional adverse effects of the special  
items on earnings as well as the increase in the invested capital  
resulting from the new IFRS 16, the ROI improved as a result of  
the higher operating profit and amounted to 11.2 (11.0)%,  
which is above our minimum rate of return on invested capital  
of 9%.  
Group Management Report  
Results of Operations, Financial Position and Net Assets  
127  
At €7,328 (6,474) million, the opportunity cost of capital More information on value-based management is contained  
invested capital multiplied by cost of capital) was up on the in our publication entitled “Financial Control System of the  
(
prior-year level due to the increase in the invested capital. Volkswagen Group”, which can be downloaded from our In-  
After deduction of the opportunity cost of invested capital, vestor Relations website: www.volkswagenag.com/en/Investor-  
operating result after tax – which was negatively impacted Relations/news-and-publications/More_Publications.html.  
by special items – led to a positive value contribution of  
€5,691 (4,964) million.  
RETU R N ON I NVE STMEN T (RO I) A N D VA LU E CO NT RI BUTI ON I N T H E AUTOMOT IVE D I VIS IO N1  
€
million  
2019  
2018  
Operating result after tax  
Invested capital (average)2  
Return on investment (ROI) in %  
Cost of capital in %  
13,019  
116,016  
11.2  
11,438  
104,424  
11.0  
6.3  
6.2  
Cost of invested capital  
Value contribution  
7,328  
5,691  
6,474  
4,964  
1
2
Including proportionate inclusion of the Chinese joint ventures (including the relevant sales and component companies) and allocation of consolidation adjustments between the  
Automotive and Financial Services Divisions.  
When calculating the average invested capital, the effect of the application of the new IFRS 16 for full year 2019 was taken into account.  
1
28  
Results of Operations, Financial Position and Net Assets  
Group Management Report  
SUMM A RY OF BU SI N E SS DEVE LOPMENT A N D ECON OMI C  
POSITI ON  
Including special items related to the diesel issue, the oper-  
ating return on sales rose to 6.7% and was therefore within  
The Board of Management of Volkswagen AG considers busi- the originally forecast range.  
ness development and the economic position to have been  
positive overall.  
The research and development costs reflect our activities  
to safeguard the Company’s future viability; at 6.7%, the R&D  
In an environment dominated by persistently difficult ratio in the Automotive Division was within the expected range.  
market conditions, fierce competition, technological change  
At 6.6%, the Automotive Division’s ratio of capex to sales  
in our industry and growing environmental awareness, we revenue was also within the expected range. At €10.8 billion,  
achieved a new sales record with 11.0 million vehicles deliv- net cash flow was, as forecast, markedly higher than in the  
ered. We saw growth in Europe and South America. The previous year due in particular to the improved profits, lower  
Group’s sales revenue increased by 7.1%, which was slightly cash outflows attributable to the diesel issue and improve-  
better than expected. This was particularly due to mix and ments in working capital. As a consequence, net liquidity was  
price improvements and the healthy business performance in higher than in the year before, at €21.3 billion.  
the Financial Services Division. Consequently, the Volks-  
The return on investment (ROI) in the Automotive Divi-  
wagen Group’s operating profit before special items improved sion of 11.2% was slightly higher than in the previous year and  
to €19.3 billion. At 7.6%, the operating return on sales before exceeded the minimum required rate of return on invested  
special items was slightly above the forecast range of 6.5–7.5%. capital.  
FORE CA ST V ER SU S ACTUA L F IGU R ES  
Original forecast  
for 2019  
Adjusted forecast  
for 2019  
Actual 2018  
Actual 2019  
Deliveries to customers (units)  
Volkswagen Group  
10.8 million  
slight increase  
at prior-year level  
11.0 million  
Sales revenue  
€235.8 billion  
7.3%  
5.9%  
€17.1 billion  
€13.9 billion  
increase of up to 5%  
6.5–7.5%  
increase of up to 5%  
6.5–7.5%  
€252.6 billion  
7.6%  
6.7%  
€19.3 billion  
€17.0 billion  
Operating return on sales before special items  
Operating return on sales  
Operating result before special items  
Operating result  
6.5–7.5%  
a6.5%  
within the forecast range within the forecast range  
within the forecast range within the forecast range  
Passenger Cars Business Area1  
Sales revenue  
Operating return on sales before special items  
Operating return on sales  
Operating result before special items  
Operating result  
€172.7 billion  
7.6%  
5.8%  
€13.2 billion  
€10.0 billion  
increase of up to 5%  
6.5–7.5%  
increase of up to 5%  
6.5–7.5%  
€182.0 billion  
8.0%  
6.7%  
€14.5 billion  
€12.2 billion  
6.5–7.5%  
a6.5%  
within the forecast range within the forecast range  
within the forecast range within the forecast range  
Commercial Vehicles Business Area1  
Sales revenue  
Operating return on sales  
Operating result  
€24.8 billion  
4.8%  
€1.2 billion  
increase of up to 5%  
6.0–7.0%  
within the forecast range within the forecast range  
increase of up to 5%  
6.0–7.0%  
€26.4 billion  
6.3%  
€1.7 billion  
Power Engineering Business Area  
Sales revenue  
€3.6 billion  
slight increase  
slight increase  
€4.0 billion  
Operating result  
€–64 million  
around the prior-year level  
distinctly higher loss  
€–93 million  
Financial Services Division  
Sales revenue  
Operating result  
R&D ratio in the Automotive Division  
Capex/sales revenue in the Automotive Division  
€34.8 billion  
€2.8 billion  
6.8%  
moderate increase  
at prior-year level  
6.5–7.0%  
moderate increase  
at prior-year level  
6.5–7.0%  
€40.2 billion  
€3.2 billion  
6.7%  
6.6%  
6.5–7.0%  
6.5–7.0%  
6.6%  
significant increase,  
positive  
considerable decline  
significant increase,  
positive  
considerable decline  
Net cash flow in the Automotive Division  
Net liquidity in the Automotive Division  
€–0.3 billion  
€19.4 billion  
€10.8 billion  
€21.3 billion  
Return on investment (ROI) in the  
Automotive Division  
slight increase,  
>9%  
slight increase,  
>9%  
11.0%  
11.2%  
1
The Volkswagen Commercial Vehicles brand has been reported as part of the Passenger Cars Business Area since January 1, 2019. The prior-year figures have been adjusted.  
Group Management Report  
Volkswagen AG  
129  
Volkswagen AG  
(Condensed, in accordance with the German Commercial Code)  
Unit sales of Volkswagen AG were on a level with the previous year in 2019,  
while sales and profit increased.  
A N N UA L RE SU LT  
At €7.9 billion, distribution, general and administrative  
Additional special items in connection with the diesel issue expenses were up €0.3 billion on the prior-year figure.  
amounting to €1.8 billion were recognized in fiscal year 2019. The net other operating result was €0.5 billion lower, at  
This was mainly due to further provisions for legal risks. €–0.9 (–0.4) billion. The decrease resulted particularly from  
Special items had an impact of €–1.8(–2.0) billion on other lower income from the reversal of provisions.  
operating income.  
The €0.9 billion increase in the financial result to €9.1 bil-  
At €80.6 billion, sales were 3.4% higher year-on-year due lion resulted mainly from increased income from profit and  
to positive mix effects. Sales generated abroad accounted for loss transfer agreements. Impairments of equity investments  
a share of €50.1 billion or 62.1%. Cost of sales increased by (€1.5 billion) and a disposal loss recognized in connection with  
2
.8% to €74.7 billion.  
Gross profit on sales rose accordingly to €5.9 (5.3) billion.  
the IPO of TRATON SE (€0.8 billion) had an offsetting effect.  
Including taxes on income of €–1.2 (–0.9) billion, net  
income for fiscal year 2019 amounted to €5.0 (4.6) billion.  
I NCOME STATEM ENT O F VO LKSWAGEN AG  
BA L A NCE SH E E T OF VO LKSWAGE N AG A S OF DE C E M B E R 3 1  
€
million  
2019  
2018  
€ million  
2019  
2018  
Sales  
80,621  
– 74,700  
5,921  
78,001  
–72,700  
5,301  
Fixed assets  
120,823  
5,554  
119,713  
5,140  
Cost of sales  
Gross profit on sales  
Inventories  
Receivables1  
35,856  
5,639  
36,965  
14,595  
176,412  
33,090  
19  
'
LVWULEXWLRQꢁ general and administrative  
Cash-in-hand and bank balances  
Total assets  
expenses  
– 7,948  
– 914  
9,115  
– 1,215  
4,958  
4,958  
0
– 7,624  
– 415  
8,264  
– 907  
4,620  
4,620  
3
167,872  
35,629  
18  
Net other operating result  
Financial result1  
Equity  
Special tax-allowable reserves  
Long-term debt  
Medium-term debt  
Short-term debt  
Taxes on income  
39,206  
35,983  
57,036  
40,348  
37,422  
65,533  
Earnings after tax  
Net income for the fiscal year  
Retained profits brought forward  
Appropriations to revenue reserves  
Net retained profits  
– 1,685  
3,273  
– 2,204  
2,419  
1 Including prepaid expenses.  
1
Including write-downs of long-term financial assets.  
1
30  
Volkswagen AG  
Group Management Report  
N ET A SS ET S AN D FI NA NCIA L PO SI TIO N  
DIV I DE N D PO LI CY  
Total assets amounted to €167.9billion on December 31, 2019, Our dividend policy matches our financial strategy. In the  
down €8.5billion on the prior-year figure. Property, plant and interests of all stakeholders, we aim for continuous dividend  
equipment was up by €0.6 billion, with capital expenditure growth so that our shareholders can participate in a manner  
exceeding depreciation charges. Financial assets were on a which is commensurate with our business success. The pro-  
level with the prior year at €112.8 (112.8) billion.  
posed dividend therefore reflects our financial management  
Fixed assets accounted for a share of 72.0 (67.9)% of total objectives – in particular, ensuring a solid financial foundation  
assets.  
as part of the implementation of our strategy.  
Current assets (including prepaid expenses) amounted to  
47.0 (56.6) billion on December 31, 2019.  
In our Group strategy, we aim to achieve a payout ratio of  
at least 30%. The payout ratio is based on the Group’s earnings  
€
At the end of the reporting period, equity was at €35.6 bil- after tax attributable to Volkswagen AG shareholders. It  
lion; the increase was due particularly to the positive net amounts to 24.5% for the reporting period and stood at 20.4%  
income for the year. The equity ratio was 21.2 (18.8)%.  
Other provisions increased by €1.3 billion to €21.4 (20.0) bil-  
lion, due in part to the additional provisions in connection  
in the previous year.  
DIV I DE N D PROP OSA L  
with the diesel issue. Provisions for pensions and similar In fiscal year 2019, net retained profits amounted to €3.3 bil-  
obligations rose by €1.7 billion to €17.8 billion, primarily as a lion. The Board of Management and Supervisory Board are  
result of a change in measurement inputs, while provisions proposing to pay a total dividend of €3.3 billion, i.e. €6.50 per  
for taxes increased by €0.1 billion to €3.8 billion.  
ordinary share and €6.56 per preferred share.  
The €14.2 billion decrease in total liabilities (including  
deferred income) to €89.2 billion is attributable primarily to PROPO SAL O N T H E APPROP RIATI ON OF N ET PROF IT  
lower liabilities to affiliated companies.  
Volkswagen AG’s cash funds, comprising cash instruments  
with a maturity of less than three months, less bank and cash  
pooling liabilities repayable on demand, deteriorated year-  
€
2019  
on-year from €–0.2 billion to €–7.6 billion. The interest-bear- Dividend payout on subscribed capital  
(€1,283 million)  
3,270,791,536.20  
1,918,083,817.00  
1,352,707,719.20  
2,572,003.60  
ing portion of debt amounted to €78.2 (87.9)billion. In our  
assessment, the economic position of Volkswagen AG is just  
as positive overall as that of the Volkswagen Group.  
of which on: ordinary shares  
preferred shares  
Balance (carried forward to new account)  
Net retained profits  
3,273,363,539.80  
E M P LOYE E PAY A N D B E N E F I T S AT VOL KSWAGE N AG  
€
million  
2019  
%
2018  
%
Direct pay including cash benefits  
Social security contributions  
Compensated absence  
Retirement benefits  
8,421  
1,502  
1,310  
682  
70.7  
12.6  
11.0  
5.7  
8,175  
1,437  
1,350  
611  
70.6  
12.4  
11.7  
5.3  
Total expense  
11,916  
100.0  
11,573  
100.0  
Group Management Report  
Volkswagen AG  
131  
V E H I C L E SA L E S  
EXPEN DI TU RE O N ENV I RO NME NTAL PROTE CTIO N  
Volkswagen AG sold a total of 2,580,553 (2,597,126) vehicles When measuring expenditure on environmental protection,  
in fiscal year 2019. Vehicles sold abroad accounted for a share a distinction is made between investments and operating  
of 67.6 (71.0)%.  
costs for production-related environmental protection mea-  
sures. Of our total investments, only those that are spent  
exclusively or primarily on environmental protection are  
PRODU CT IO N  
Volkswagen AG produced a total of 1,069,066 vehicles at its included in environmental protection investments. We distin-  
vehicle production plants in Wolfsburg, Hanover and Emden guish here between additive and integrated investments.  
in the reporting period (–4.0%).  
Additive environmental protection measures are separate  
measures upstream or downstream of the production process.  
In contrast to additive environmental protection measures,  
E M P LOYE ES  
As of December 31, 2019, a total of 119,204 (119,394) people integrated measures reduce the environmental impact  
were employed at the sites of Volkswagen AG, excluding staff already during the production process. In 2019 we invested  
employed at subsidiaries. Of this figure, 5,029 (5,009) were primarily in air pollution control and in soil and water  
vocational trainees. 5,254 (4,785) employees were in the pas- pollution control.  
sive phase of their partial retirement.  
The recognized operating costs relate to measures that  
Female employees accounted for 17.6 (17.3)% of the work- protect the environment against harmful factors by avoiding,  
force. Volkswagen AG employed 6,551 (5,883) part-time reducing, or eliminating emissions by the Company. Resources  
workers. The percentage of foreign employees was 6.4 (6.3)%. are also conserved. For example, these include expenditures  
In the reporting period, 83.2 (83.2)% of the employees in Volks- incurred to operate equipment that protects the environment,  
wagen AG’s production area were in possession of vocational as well as expenditures for measures not relating to such  
or additional training. The proportion of graduates was 20.1 equipment. As in previous years, the emphasis in 2019 was  
(
19.5)% in the same period. The average age of employees in on sewage and waste management.  
fiscal year 2019 was 44.2 (43.9) years.  
RESEARCH A N D DEVE LOPM EN T  
Volkswagen AG’s research and development costs as defined  
in the German Commercial Code increased to €6.1 (5.6) billion  
in the reporting period. 13,378 (12,796) people were employed  
in this area at the end of the reporting period.  
VOLKSWAGE N AG EX P E N D ITU R E O N E NV I RO NM E NTA L P ROTE CTIO N  
€
million  
2019  
2018  
2017  
2016  
2015  
Investments  
9
13  
17  
11  
21  
Operating costs  
233  
230  
227  
223  
244  
1
32  
Volkswagen AG  
Group Management Report  
O P E RA T I NG C O ST S FO R E NV I R O NME NT A L P RO T E C T ION A T V O L KSW A GE N A G 2 0 1 9  
Share of environmental protection areas in percent  
Sewage management  
Waste management  
Air pollution control  
29.9  
27.6  
16.5  
12.3  
8.9  
Soil and water  
pollution control  
Climate protection  
Species and  
landscape conservation  
2.4  
Protection against  
noise and vibration  
2.4  
0
10  
20  
30  
40  
50  
60  
70  
80  
90  
100  
BU SI N E S S DEVE LOPME NT R IS KS A N D OP P ORTU N I T I ES AT  
VOLKSWAGE N AG  
D E P E N D E N T CO M PA NY R E P O RT  
The Board of Management of Volkswagen AG has submitted  
The business development of Volkswagen AG is exposed to to the Supervisory Board the report required by section 312  
essentially the same risks and opportunities as the Volks- of the Aktiengesetz (AktG – German Stock Corporation Act)  
wagen Group. These risks and opportunities are explained and issued the following concluding declaration:  
in the Report on Risks and Opportunities on pages 164 to  
1
89 of this annual report.  
“We declare that, based on the circumstances known to us at  
the time when the transactions with affiliated companies  
within the meaning of section 312 of the German Stock Cor-  
RI SKS A RI S I NG F ROM FI NA N CIA L I N STRU M EN T S  
Risks for Volkswagen AG arising from the use of financial poration Act (AktG) were entered into, our Company received  
instruments are generally the same as those to which the appropriate consideration for each transaction. No trans-  
Volkswagen Group is exposed. An explanation of these risks actions with third parties or measures were either under-  
can be found on pages 187 to 188 of this annual report.  
taken or omitted on the instructions of or in the interests of  
Porsche or other affiliated companies in the reporting period.”  
The Annual Financial Statements of Volkswagen AG (in accordance with the German  
Commercial Code) can be accessed from the electronic company register at  
www.unternehmensregister.de.  
Group Management Report  
Sustainable Value Enhancement  
133  
Sustainable Value Enhancement  
Our goal is to run our business responsibly along the entire value chain. Everyone should benefit  
from this – our customers, our employees, the environment and society. Our enhanced Group  
+
strategy TOGETHER 2025 describes this transformation in the Company. With our new vision  
“
Shaping mobility – for generations to come” we aim to make mobility  
sustainable for present and future generations.  
The main financial key performance indicators for the Volks- master these challenges and become a leading company for  
wagen Group are described in the “Results of Operations, individual mobility in this electric and connected age.  
Financial Position and Net Assets” chapter. Nonfinancial key  
Protecting the climate is currently the greatest global  
performance indicators also provide information on the challenge affecting all three sustainability dimensions. We  
efficiency of our Company’s value drivers. These include the want to provide our own highly unique answer to this and  
processes in the areas of research and development, procure- have decided on an ambitious decarbonization program. With  
ment, production, marketing and sales, information technol- the implementation of this program we want to be a carbon-  
ogy and quality assurance. In all of these processes, we are neutral company by 2050. We are assuming a pioneering role  
aware of our responsibility towards our customers, our by making this voluntary commitment based on the Paris  
employees, the environment and society. In this chapter we Climate Agreement. To this end, we are guided by the speci-  
provide examples of how we want to increase the value of our fications of the Task Force on Climate-Related Financial  
Company in a sustainable way.  
Disclosures (TCFD); for more information, please see our  
Sustainability Report for fiscal year 2019.  
SU STA I NAB I LI TY  
In the field of digitalization we also want to help shape  
For us, sustainability means simultaneously striving for eco- the transformation and are pressing ahead with develop-  
nomic, social and environmental goals in a way that gives ments in our vehicles and mobility services on the one hand  
them equal priority. As one of the largest industrial com- and in our operating processes and management on the  
panies, we wish to put our creative powers to good use other. The digital transformation requires us not just to  
worldwide for the benefit of people and the environment. We develop new technologies and be able to harness them, but  
have thus developed a sustainable style of company manage- also to come up with a forward-looking human resources  
ment and put in place the necessary management structures.  
strategy that takes our employees along this path of change  
We have anchored our goal to sustainably shape mobility and ensures that they are trained and that their jobs are  
for present and future generations in our Group strategy secured.  
+
TOGETHER 2025 . In addition, we want to be an excellent  
employer and a role model for the environment, safety and Parameters and guiding principles  
integrity. Sustainability is thus at the center of our corporate Our actions are determined by the Volkswagen Group Essen-  
actions.  
tials as the foundation of values and the basis for our shared  
A particular challenge when implementing our strategic corporate culture. The Volkswagen Group Essentials support  
goals on all levels of the value chain is the complexity of our managers and employees in overcoming legal and ethical  
Company, with its twelve brands, more than 670 thousand challenges that arise in their daily work. At the same time, we  
employees and 124 production sites. At the same time, we are are guided in our activities by a large number of internal  
guiding our Group through the furthest-reaching process of guidelines on sustainability. These include the Volkswagen  
change in its history. The transformation sweeping our entire Social Charter, the Charter on Labor Relations, the Charter on  
industry is dominated especially by the transition to e-mobil- Vocational Education and Training, and the Charter on Tem-  
ity, digitalization and new mobility services. We want to porary Work.  
1
34  
Sustainable Value Enhancement  
Group Management Report  
On this basis, our objective is to ensure that the Volkswagen THE VOLKSWAGEN GROUP’S STAKEHOLDERS  
Group’s actions are in line with international agreements and  
frameworks such as the Sustainable Development Goals  
(
SDGs) of the United Nations (UN), the declarations of the  
International Labor Organization (ILO), the principles and  
conventions of the Organization for Economic Co-operation  
and Development (OECD) and the UN covenants on basic  
rights and freedoms.  
MEDIA  
ACADEMIA &  
EDUCATION  
RESIDENTS &  
LOCAL  
We have developed our own guiding principles for the  
different aspects of sustainability in conjunction with the so  
called mission statements. These pithy, focused statements  
underscore our goals, programs and measures. In this con-  
text, we created the Group’s new “goTOzero” environmental  
mission statement in 2019 which represents our goal to  
achieve net carbon neutrality with a business approach that  
is as environmentally friendly as possible. In the implemen-  
tation of its environmental mission statement, Volkswagen is  
primarily focusing on the four areas of climate change,  
resources, air quality and environmental compliance.  
AUTHORITIES  
EMPLOYEES  
VOLKSWAGEN  
GROUP  
NGOS &  
CHARITABLE  
ASSOCIATIONS  
COMPETITORS  
CUSTOMERS  
O
We take a similar approach in the area of social sustain-  
ability, where we aspire to act responsibly and fairly to all  
stakeholders as a good corporate citizen. Within the Company,  
the cornerstones of this mission statement are the charac-  
teristics of an attractive employer such as employee profit  
participation plans, job security, career development oppor-  
POLITICS &  
ASSOCIATIONS  
BUSINESS  
PARTNERS &  
SUPPLIERS  
INVESTORS &  
ANALYSTS  
tunities and equal opportunities. Externally, we seek dialog Strategic stakeholder management  
with society, initiate and support social projects and encour- Our stakeholders are individuals, groups, or organizations  
age our staff to take responsibility for the community.  
who have a material influence on or are materially influenced  
by the course or the result of corporate decisions. Our cus-  
tomers and employees are at the center of our stakeholder  
Management and coordination  
The structure and workflows of core processes in Group-wide network. Based on our annual stakeholder assessment we have  
sustainability management were refined in the reporting identified eight more external stakeholder groups of equal  
period. The related specifications, structures and processes value around this core. The Group’s supervisory and advisory  
will subsequently be codified in a separate Group policy. The bodies such as the Supervisory Board and the Works Council,  
core elements include assumption of overall responsibility the Sustainability Council and the Monitor appointed by the  
for sustainability by the Chairman of the Board of Manage- US Department of Justice, act as a special interface between  
ment of Volkswagen AG, specification of the competence of internal and external stakeholders.  
the responsible Board members for specific sustainability  
We understand stakeholder management as systematic,  
management concepts and development of rules of proce- continuous interaction with key stakeholder groups in line  
+
dure by the Group Sustainability Steering Committee. The with our TOGETHER 2025 Group strategy. Stakeholder man-  
members of this steering committee include managers from agement aims to systematically record expectations and use  
central Board of Management business areas and repre- feedback from our stakeholders to critically reflect on stra-  
sentatives of the brands and the Group Works Council. The tegic planning processes.  
steering committee defines concrete strategic goals and  
To be able to systematically incorporate our stakeholders’  
programs, establishes measures for uniform further develop- suggestions and recommendations, we have given our stake-  
ment of sustainability management across divisions, brands holder management an organizational structure in the form  
and regions and decides on fundamental sustainability of external committees. At Group level these are the Sustain-  
issues. It also handles the enhancement of Group-wide sus- ability Council and the Stakeholder Panel. The Panel is com-  
tainability management. The offices of the Group Sustain- prised of 300 national and international opinion leaders. In  
ability Steering Committee are part of the Group’s Sustain- addition, we offer our stakeholders a broad range of oppor-  
ability function.  
tunities for interaction and feedback channels including  
regular discussion panels with stakeholders, stakeholder  
surveys and international cooperative projects.  
Group Management Report  
Sustainable Value Enhancement  
135  
THE VOLKSWAGEN GROUP’S KEY ACTION AREAS  
climate-friendly fiscal policy, a study on the effects of  
digitalization and e-mobility on employment, and a commit-  
ment to a sustainable cobalt supply chain. Furthermore, the  
Sustainability Council formulated further recommendations  
for how technological, political and cultural change should be  
organized to win back trust and lay the foundations for  
future success.  
M
SUPPLIER MANAGEMENT  
CUSTOMER MATTERS  
HUMAN RIGHTS  
DIGITALIZATION  
MOBILITY CONCEPTS  
INTEGRITY, COMPLIANCE,  
GOVERNANCE  
Materiality analysis  
The development of our new corporate vision “Shaping  
mobility – for generations to come” in 2019 played a key role  
in identifying the topics that are material for the Volkswagen  
Group. We seek to provide answers to the challenges of today  
DIVERSITY AND  
EQUALITY  
SHAPING MOBILITY  
FOR GENERATIONS  
TO COME.  
–
CLIMATE CHANGE  
RESOURCES  
ATTRACTIVENESS  
AS AN EMPLOYER  
and tomorrow with our enhanced Group strategy TOGETHER  
+
2
025 . Our goal is to make mobility sustainable for our own  
TRAINING  
and for future generations. With electric drives, digital  
connectivity and autonomous driving, we want to make the  
automobile cleaner, quieter, more intelligent and safer.  
As the starting point for our materiality analysis, we are  
oriented towards the SDGs formulated by the United Nations,  
which describe the social challenges facing companies. Based  
on the results of the analysis we conducted in the reporting  
year, we have defined 16 key action areas. Key action areas  
were revised, restructured and grouped together in the fiscal  
year. In order to identify key topics, we took into account  
CORPORATE  
RESPONSIBILITY  
AIR QUALITY  
PARTICIPATION AND  
CODETERMINATION  
ENVIRONMENTAL  
COMPLIANCE  
HEALTH AND  
OCCUPATIONAL  
SAFETY  
Sustainability Council  
The Volkswagen Group appointed a Sustainability Council in external studies, sector and media analyses, ratings, stake-  
September 2016, initially for the period until 2020, to provide holder surveys, internal and external guidelines and codes,  
+
assistance with sustainability issues. This is made up of the TOGETHER 2025 Group strategy and the individual  
internationally renowned experts from the academic world, departmental strategies.  
politics and society. The Council establishes its own working  
As the details of our Group strategy have not yet been  
methods and areas of focus independently, has far-reaching finalized, we are still in the process of specifying the content  
rights for the purposes of exchanging information, consul- of the key action areas based on values, targets and KPIs.  
tation and initiating action, and consults regularly with the  
Board of Management, top management and the employee Corporate citizenship  
representatives.  
The projects initiated in 2018 started to deliver results in economic impetus for local structural development and  
019:  
equal opportunities. We have always believed in the impor-  
As a good corporate citizen, we aim to be a constant source of  
2
!
ꢀ The Open Source Lab on Sustainable Mobility organized, tance of recognizing our social responsibilities toward our  
among other things, dialog events on the use of open data stakeholders. The main focus of our corporate social engage-  
in the field of mobility and drew up position papers on this ment activities is on supporting future, educational and  
topic.  
community projects at many of our sites across the world. In  
!
!
ꢀ The international program for forecast-based civil protec- 2019, the brands and companies launched or continued over  
tion financing implemented initial mechanisms.  
ꢀ The research project on traffic policy instruments for  
reaching international climate targets published initial  
brief studies.  
520 projects and initiatives worldwide.  
!
ꢀ Visiting professors at the open labs began their work.  
ꢀ The project for the strategic focus of sustainability at Volks-  
wagen reached its first milestones.  
CSR PROJ ECTS  
https://csrprojects.volkswagenag.com/csr-projects.html#all  
!
In addition, the Council decided on three new initiatives: a  
research project on distribution effects and acceptance of  
1
36  
Sustainable Value Enhancement  
Group Management Report  
C O 2 EMI SSI O NS O F T HE VO L KSWAGEN GRO U P’S EURO PEAN ( EU 28) NEW PASSENGER C A R FL EET  
in grams per kilometer  
2
2
2
2
2
019  
018  
017  
016  
015  
124¹  
¹
123  
¹
122  
120  
121  
0
20  
40  
60  
80  
100  
120  
140  
160  
1
Subject to official publication by the European Commission in the annual CO2 fleet monitoring report.  
RESEARCH A N D DEVE LOPM EN T  
2
of 130 g CO /km. The low year-on-year increase was mainly  
Forward-looking mobility solutions with brand-defining  
products and services would be unthinkable without inno-  
vations. This makes our research and development work  
essential for sustainably increasing the value of the Company.  
Together with our Group brands, we have launched  
attributable to rising demand for SUVs. As small volume  
manufacturers, the Lamborghini and Bentley brands each  
have an independent fleet for the purposes of the European  
2
CO legislation and were both above their individual  
targets. In the United States, the regulation of fleet emis-  
sions is different to that in Europe, for example in terms of  
the underlying test process, the period of evaluation, which  
corresponds to the model year rather than the fiscal year,  
and the calculation period, which comprises three model  
years. In fiscal year 2019, we complied with the regulations  
that apply to our greenhouse gas account in the United  
States, subject to any notification by the authorities.  
+
measures based on our future program TOGETHER 2025 to  
link development activities across the Group. At the heart of  
this is an efficient, cross-brand development alliance charac-  
terized by a close network of our experts, collaboration on an  
equal footing, an innovative working environment and the  
pooling of development activities. The aim is to make use of  
synergy effects across the Group and act as a role model for  
the environment, safety and integrity. The development  
alliance is playing a major part in driving the Volkswagen Fuel and drivetrain strategy  
Group’s transformation and helping to make the Group fit for With a view to the legal regulations on emissions, we are  
the future.  
currently developing a forward-looking vehicle and drivetrain  
In view of this strategic focus, we concentrated in the portfolio: we have set ourselves the objective of increasing  
reporting period on continuing to develop forward-looking drive system efficiency with each new model generation  
mobility solutions, establishing technological expertise to – irrespective of whether it is a combustion engine, a hybrid,  
strengthen our competitiveness, expanding our range of a plug-in hybrid, or a purely electric drive system. The Volks-  
products and services and improving the functionality, wagen Group closely coordinates technology and product  
quality, safety and environmental compatibility of our prod- planning with its brands so as to avoid breaches of fleet fuel  
ucts and services.  
consumption limits, since these would entail severe financial  
We use a strategic indicator in Europe and the United penalties.  
States to measure the effectiveness of our measures to reduce  
emissions when driving:  
We anticipate that one in four new Volkswagen Group  
vehicles worldwide will already have a purely electric drive by  
!
ꢀ CO  
ger car fleet in the EU (excluding Lamborghini and Bentley) be up to three million electric vehicles a year. As part of our  
emitted an average of 124 g CO  
/km1 in the reporting electrification offensive, we aim to offer our customers world-  
period, a value that is below the 2019 European target wide up to 75 completely battery electric vehicles and approx-  
2
fleet emissions. The Volkswagen Group’s new passen- the year 2025; depending on market development, this could  
2
Group Management Report  
Sustainable Value Enhancement  
137  
imately 60 hybrid models by 2029. By 2030, the Volkswagen production of materials, the processes at our suppliers and  
Group aims to have electrified its entire model portfolio our own production operations at our sites, the use phase  
–
from high-volume models to premium vehicles. This will with the resulting vehicle emissions and the necessary supply  
mean offering at least one electric version – battery electric, of fuel, and ultimately the recycling of the vehicle at the end  
hybrid or mild hybrid vehicles – of each of our passenger car of its life cycle. We identify the stages of the life cycle at which  
models across all Group brands. To this end, in addition to improvements will have the greatest effect and develop  
the Modular Electric Drive Toolkit (MEB), we are also devel- appropriate solutions. We call this life cycle engineering.  
oping an all-electric platform for our premium and sports Recycling, for example, is an important means of reducing  
brands – the Premium Platform Electric (PPE).  
environmental impact and conserving resources. We there-  
The Volkswagen Group is committed to achieving the fore already take the recyclability of the required materials  
goals of the Paris agreement on climate change and is into consideration when developing new vehicles, use high-  
pursuing the objective of making its vehicle fleet completely quality recycled material and avoid pollutants. Under the  
carbon neutral by 2050.  
European Directive on end-of-life vehicles, passenger cars and  
To enable sustainable, affordable mobility in the future light commercial vehicles must be 85% recyclable and 95%  
for as many people around the world as possible, we offer a recoverable. Our vehicles registered in Europe comply with  
range of drivetrains with a focus on electrification. From these standards.  
today’s perspective, conventional combustion engines look  
set to continue to make up the lion’s share of drive Leveraging synergies increases efficiency  
technology in the coming years. In the interest of using When developing vehicles, we cooperate closely with our  
resources responsibly, it is therefore essential to further brands to leverage synergies. The joint strategy of our devel-  
enhance this engine segment and systematically consolidate opment alliance involves, for example, making the Group  
it for specific markets. Powertrain measures such as more competitive and viable in the long term by deploying  
significantly more sophisticated exhaust gas purification or resources more effectively and efficiently in the research and  
mild hybridization of our vehicles, as well as vehicle development of new mobility-related technologies, products  
measures such as optimized aerodynamics or reduced rolling and services. In our Group-wide development alliance, the  
resistance will be necessary to fulfill future emissions brands therefore not only work with each other, but also for  
standards. With the new Golf 8 we are placing a greater focus each other on key technologies, forming cross-brand net-  
on efficient and sustainable mobility in the volume segment. works of expertise to address topics of importance for the  
The Golf’s new petrol mild hybrid drivetrain significantly future. For example, we have consolidated the Group’s  
reduces fuel consumption. With its ability to shut the engine activities in and responsibility for the development, procure-  
off when coasting and to give an electric boost when the car ment and quality assurance of all battery cells in a central  
drives off, it provides attractive functions related to efficiency Center of Excellence under the umbrella of the Volkswagen  
and driving comfort.  
Passenger Cars brand. In the Center, a pilot line for cell  
It is more important to us than ever to rigorously pursue production was put into operation in 2019 to build up  
our modular approach. We are reducing the number of expertise for the Group in the area of cell design but also  
individual modules so that we can make a large product throughout the entire value chain.  
portfolio economically viable. For example, we will reduce  
We also manage our modules centrally to reduce costs,  
the number of versions of conventional combustion engines capital expenditure and complexity. We are seeking to reduce  
in the Group by more than a third in the long term. This will expenditure in the modular toolkits, while at the same time  
create capacity for the development and production of new facilitating widespread electrification and a focus on autono-  
hybrid and electric drives.  
mous systems. We want to achieve this through a consid-  
erable reduction in complexity using streamlined platforms  
that synergize but do not overlap. To this end, the individual  
Life cycle engineering and recycling  
On their own, technological innovations for reducing fuel Group brands draw on the modular toolkits, thus creating  
consumption are not enough to minimize the effect of synergies between the various models of a product line, as  
vehicles on the environment. We consider the environmental well as across product lines. By streamlining the toolkits, we  
impacts we cause throughout the entire life cycle and at all are giving ourselves the financial leeway needed for develop-  
stages of the value chain. These include the manufacturing ments in the future trends of digitalization and autonomous  
process with the associated extraction of raw materials, the driving. The high-volume passenger car brands have intro-  
1
38  
Sustainable Value Enhancement  
Group Management Report  
duced a product line organization, thus strengthening their Autonomous driving in complex urban environments places  
responsibility for the success of vehicle projects, improving especially heavy demands on technology. We are dedicated to  
project work across different cross-departmental areas, meeting these challenges. Our Autonomous Intelligent  
accelerating decision-making and intensifying the focus on Driving GmbH is working on developing a Group-wide  
project results.  
We are also leveraging synergies by constantly sharing  
system for self-driving vehicles.  
As part of the TOGETHER 2025 strategy, we are working  
+
best practices, for instance in virtual development and with the Software-enabled Car Company module to make  
testing. Last but not least, the centralized development and software one of the core competencies of the Volkswagen  
consolidation of our IT systems is also helping to strengthen Group. Starting on January 1, 2020, we brought together all of  
cooperation across the brands, make development activities our interests and subsidiaries that develop software for  
more comparable and reduce the Group’s IT costs.  
vehicles and digital ecosystems in the Car.Software organi-  
zation, an independent entity with Group responsibility. This  
first step involved around 3,000 employees. Up to the middle  
Sustainable mobility, connectivity and automated driving  
Mobility is a basic prerequisite for economic growth. How- of 2020, experts from the various Group brands and regions  
ever, while the need to be mobile at all times is rising, natural will also work together under the umbrella of the Car.Soft-  
resources are dwindling. This calls for comprehensive mobil- ware organization.  
ity concepts to minimize the environmental impact. Such  
solutions need to be efficient, sustainable, customer-oriented for five applications within the Group: a uniform vehicle  
and accessible any time and anywhere. operating system “vw.os” for all Group vehicles as well as its  
The Car.Software organization is developing software  
We are researching and developing such concepts and connectivity with the Volkswagen Automotive Cloud; a  
solutions in our Group-wide alliance: when shaping the standardized infotainment platform; all assistance systems  
future of mobility, we are looking not only at the automobile including highly automated driving and parking; functions  
but at all modes of transport and transport infrastructures, at for connecting the drivetrain, chassis and charging technol-  
people’s mobility habits and at other relevant factors. Inno- ogy; and ecosystems for all the brands’ mobility services and  
vations such as digital connectivity and automated driving digital business models. By 2025, all new vehicle models  
allow for new approaches to solving problems. We strive to across the Group will be based on uniform, cross-brand  
utilize these and thus to play our part in a comprehensive software solutions. In pursuing this approach, we intend to  
mobility system for the future and to help shape our generate economies of scale in the Group in order to reduce  
industry’s transformation.  
costs for software in the vehicle for all brands.  
We are focusing on establishing a cross-brand business  
area for mobility solutions. We aim to make our mobility Pooling strengths with strategic alliances  
business MOIA a scalable and profitable business model. The aim of our future program TOGETHER 2025 is to trans-  
+
In its pursuit of autonomous driving, the Volkswagen form our core business and to establish a new mobility  
Group further improved its assistance systems and auto- solutions business area at the same time. It is decisive to the  
mated driving functions and introduced these in vehicles in success of this plan that we place our great innovative  
2019. The objective is to market highly automated driving strength on even broader foundations.  
functions for private vehicles, shared mobility systems and Growth in the mobility sector is strongly defined through  
commercial mobility providers as a core competency of the regional innovation activities. Volkswagen therefore concen-  
Group. The Volkswagen Group has presented its vision of an trates its strategic venture capital activities and partnerships  
autonomous mobility system by unveiling the Sedric family, in the Group’s international innovation ecosystem and  
comprising fully autonomous vehicles for short- and long- provides central support to the brands in the identification  
distance mobility, as well as sports cars, self-driving delivery and implementation of technologies that will safeguard our  
vehicles and heavy trucks. These vehicles will enable new competitive position. This approach helps us to identify  
forms of mobility in both cities and rural areas, particularly regional customer needs more precisely, to adjust our prod-  
for user groups that have so far been excluded from access to uct range accordingly and to establish competitive cost  
mobility.  
structures. We therefore rely to a greater extent than in the  
Group Management Report  
Sustainable Value Enhancement  
139  
past on partnerships, acquisitions and venture capital invest- with a fully connected vehicle fleet and our Volkswagen We  
ments. We manage investment selection centrally so as to digital ecosystem. Together, we will press ahead with software  
generate maximum value for the Group and its brands. It is development for the automobile of tomorrow and new  
against this backdrop that we have formed an alliance with services for our customers. Our IT expertise and solutions  
the Ford Motor Company. This involves an intended col- will thereby be comprehensively strengthened and expanded.  
laboration regarding the development of vans and mid-sized  
Battery technology is to become a core competency of the  
pickups. In addition, we plan to invest with Ford in Argo AI, a Volkswagen Group. The battery accounts for 20% to 30% of  
company that is working on the development of a system for the cost of materials in electric vehicles; in future, it will be  
autonomous driving. This alliance allows both car companies one of the most important components when differentiating  
to integrate Argo AI’s self-driving system into their own between products. We have already pooled our in-house  
models independently of each other. The system is supposed expertise in battery cells in a Center of Excellence and at the  
to make fully automated driving possible and to open up new same time intend to accelerate technological change and the  
opportunities, particularly for ride sharing providers and development of expertise through intelligent partnerships.  
delivery services in urban areas, from the use of fully We anticipate that we will need a battery capacity of more  
automated vehicles. In addition, Ford intends to use the than 150 GWh a year in the period to 2025 just to equip our  
Modular Electric Drive Toolkit (MEB) developed by Volks- own electric fleet with lithium-ion batteries. To cover this  
wagen for a zero-emissions volume model that should be enormous demand, we have defined strategic battery cell  
offered in Europe starting in 2023. The aim of the coop- suppliers for our most important markets and the first MEB  
eration is to place both Volkswagen and Ford in a position models, and we aim to initiate further long-term strategic  
that enables them to improve their competitiveness, tailor partnerships in China, Europe and the USA. The joint venture  
their products to better meet the needs of customers world- formed with Northvolt AB will build a 16 GWh battery cell  
wide and at the same time to leverage synergies related to factory in Salzgitter. Looking ahead, we are already preparing  
cost and investment. The completion of the Argo transaction for the next generation: we intend to bring solid-state  
is subject to the approval of various official authorities and batteries to market readiness in partnership with other  
other conditions.  
companies.  
The strategic partnership with Microsoft enables us to  
accelerate our transformation into a mobility service provider  
1
40  
Sustainable Value Enhancement  
Group Management Report  
Our Group brands Volkswagen Passenger Cars, Audi and Company’s innovative power. These fields include driver  
Porsche are involved in the pan-European High-Power assistance systems and automation, connectivity, alternative  
Charging (HPC) joint venture IONITY, under which a compre- drive systems and lightweight construction.  
hensive charging infrastructure is being built to safeguard  
The Automotive Division’s total research and development  
long-distance mobility: after building 200 fast-charging costs in the reporting period amounted to €14.3 (13.6) billion  
stations in 2019 and with 65 more in construction, we plan to and were 4.9% higher than in the previous year; their  
have around 380 of a total of 400 stations in operation along percentage of the Automotive Division’s sales revenue – the  
major transport arteries in Europe by the end of 2020.  
R&D ratio – came to 6.7 (6.8)%. Along with new models, the  
We support the design of the framework conditions for focus was primarily on the electrification of our vehicle port-  
the approval and introduction of our own self-driving system folio, a more efficient range of engines, digitalization and  
by our active involvement in public projects. The experience new technologies. The capitalization ratio was 36.1 (38.4)%.  
we are gathering here will benefit the Group brands and thus Research and development expenditure recognized in profit  
also our customers.  
or loss in accordance with IFRSs increased to €13.2 (12.1) bil-  
lion.  
Key R&D figures  
As of December 31, 2019, our Research and Development  
In fiscal year 2019, we filed 7,614 (7,639) patent applications departments – including the equity-accounted Chinese joint  
worldwide for employee inventions, the majority of them in ventures – employed 54,947 people (+5.8%) Group-wide,  
Germany. The fact that an ever increasing share of these corresponding to 8.2% of the total workforce.  
patents is for important cutting-edge fields underscores our  
RESEARCH A N D DEVE LOPM EN T CO ST S I N TH E AUTOMOT IVE D IV ISI ON  
€
million  
2019  
2018  
Total research and development costs  
14,306  
5,171  
36.1  
13,640  
5,234  
38.4  
of which capitalized development costs  
Capitalization ratio in %  
Amortization of capitalized development costs  
Research and development costs recognized in profit or loss  
4,064  
13,199  
3,710  
12,116  
Sales revenue  
212,473  
14,306  
6.7  
201,067  
13,640  
6.8  
Total research and development costs  
R&D ratio  
Group Management Report  
Sustainable Value Enhancement  
141  
PROCU R EME NT  
important partners again in the reporting period. With the  
In fiscal year 2019, the main task for Procurement was once partners Microsoft, Infineon, Cree/Wolfspeed and AVL List,  
again to safeguard supplies, and to help create competitive, the priority in 2019 was above all on strengthening part-  
innovative products and optimize cost structures. In nerships in the area of zero-emission and autonomous  
addition, we continued to drive digitalized procurement mobility.  
processes forward.  
FAST facilitates the regular exchange of information so  
that both sides are strongly positioned to cope with the  
future challenges facing the automotive industry. Based on a  
Procurement strategy  
The enhanced Group strategy TOGETHER 2025+ stands for set of criteria, a comprehensive assessment of the previous  
more speed, focus and stringency, also within the Procure- year is disclosed to the suppliers so that improvements can  
ment division, and is driving faster change. The focus in 2019 be made together. Alongside the existing supply relation-  
was on implementing the concepts developed in the procure- ships, strategic agreements on globalization and innovation  
ment strategy. Procurement’s key performance indicators are still core issues of this exchange.  
were revised as part of a combined system of targets for  
FAST partners are prioritized in the cross-divisional  
Group Components and Procurement. Alongside the targets innovation process in that they are given the opportunity to  
for material and investment costs and the timely award of present innovations to representatives from the Procurement  
contracts, the system of targets now gives greater weight to and Technical development divisions at upper management  
sustainability aspects and the achievement of carbon level in strategy meetings. FAST partners are invited to attend  
neutrality in the supply chain.  
relevant innovation events at which they can contribute their  
Target-costing strategies are becoming increasingly expertise. At the annual FAST Summit, talks were given on the  
important in Procurement. They allow costs to be made strategic direction of e-mobility and a zero-emission future.  
transparent and concepts to be influenced in the early stage The program will continue to be updated and refined in order  
of product development by focusing on calculatory poten- to take full advantage of the potential from the FAST  
tials. They also provide approaches for worldwide bench- initiative.  
marking and the exchange of best practices.  
A cross-divisional strategic value chain management has E-mobility  
been implemented to support profitable growth and A key task for Procurement is to safeguard supplies for the  
safeguard the availability of hard- and software that is rapidly growing requirements of the e-mobility offensive  
strategically relevant and/or crucial for ensuring supplies. through 2025 with a view to sustainability and optimizing  
Going forward, the newly formed committee for “Strategic cost structures in the process.  
Value Chain Management” will be responsible for taking  
strategically important “make”, “buy” or “partner” decisions.  
The adjustments to our organizational structures in  
Group Procurement are designed to let us focus on high-  
The growing volume of software and the new partners voltage batteries and e-resources. Through benchmarking  
and suppliers this entails necessitate adjustments to the and requirements-based training, we are increasing the  
process chain and Procurement’s award criteria. In future, the purchasing expertise of our procurement organization in the  
newly formed “Corporate Sourcing Committee Digital Car” area of the e-mobility offensive.  
will be in charge of the optimal award of contracts for vehicle  
When awarding contracts to our e-mobility partners, we  
and vehicle-related software. It will thereby create a key provide clear requirements in relation to sustainable supply  
interface to the board-level management function with sources, transparent, traceable supply streams, and energy-  
responsibility for Digital Car & Services, which was estab- and carbon-optimized supply chains. We pool global demand  
lished at the Volkswagen Passenger Cars brand in 2019.  
from the European, American and Asian markets and award  
Group contracts with the goal of cost leadership for e-mobility  
solutions. To this end, we take steps to ensure diversification  
Volkswagen FAST – Supplier network as the basis for success  
With the FAST (Future Automotive Supply Tracks) initiative, and localization of the supplier portfolio in an effort to  
Group Procurement is instrumental in advancing the Volks- reduce economic and geopolitical risks.  
wagen Group and its supply network with a view to partner-  
ships and future-viability.  
Digitalization of supply  
Thanks to the program, which was launched in 2015, We are working systematically to implement a completely  
Volkswagen was able to expand its portfolio of strategically digitalized supply chain. This is intended to help us to ensure  
1
42  
Sustainable Value Enhancement  
Group Management Report  
supply and leverage synergies throughout the Group in order of manufacturing capacity. It is vital that we identify any  
to take a leading position in terms of cost and innovation. We disruptions at an early stage and take rapid action to remedy  
are therefore creating a shared database and using innovative these. Close cooperation with the quality assurance units at  
technologies to enable efficient, networked collaboration in the production sites is crucial for our vehicle projects by  
real time – both within the Group and with our partners. The ensuring a stable supply of purchased parts to start-up and  
objective of our functional area strategy for Procurement is to series production.  
standardize transactions with our suppliers in the future and  
automate them where possible. This will not only reduce Sustainability in supplier relationships  
transaction costs but will also accelerate business processes. Successful relationships with our business partners are based  
Potential supply risks can be reported automatically in order on observance of human rights, compliance with occupa-  
to identify measures and alternatives faster together. The tional health and safety standards, active environmental  
cornerstone for the future of Procurement was laid in 2018 in protection and combating corruption. These sustainability  
the form of Group Procurement’s digitalization strategy. This standards are defined in the contractually binding Volks-  
strategy aims not only to eliminate the weaknesses of Pro- wagen Group requirements for sustainability in relations  
curement’s IT system environment but also to increase the with business partners (Code of Conduct for Business  
organization’s effectiveness, efficiency and future viability.  
Partners). At the same time, the documents signed contain  
the expectation that any subsuppliers will be subject to the  
same obligation. We use the management system to review  
Structure of key procurement markets  
Our procurement process is organized at global level, with a compliance with the requirements, which since 2019 has  
presence in the key markets around the world. This ensures been an explicit condition for award of contract.  
that production materials, investments in property, plant and  
In our recently introduced sustainability rating we deter-  
equipment, and services can be procured worldwide to the mine suppliers’ sustainability performance by means of self-  
quality required on the best possible terms. Networking of disclosures and on-site audits. By the end of 2019, we had  
the brands’ procurement organizations enables us to leverage received 12,646 self-disclosures and the findings of 1,331  
synergies across the Group in the various procurement audits. As a rule, contracts are not awarded to suppliers who  
markets.  
fail to comply with regulations or do not implement these  
In addition to the brands’ procurement units, the Volks- adequately. Tying award decisions to sustainability criteria is  
wagen Group operates eight regional offices. In growth mar- one of the strongest levers for enforcing these. We address  
kets, we identify and train local suppliers to generate cost existing sustainability risks and violations of sustainability  
advantages for all Group production sites. We are also putting principles by systematically implementing measures; this  
a focus on start-ups and software suppliers. In familiar and also includes the upstream supply chain. Depending on the  
established markets, the regional offices support access to the severity, these may entail the inclusion of stipulations and  
latest technologies and innovations.  
measures in performance specifications for suppliers. In con-  
nection with the introduction of the sustainability rating, we  
have once again stepped up our focus on advanced training  
Supply situation for purchase parts and upstream materials  
Systematic safeguarding of the supply of purchase parts is for suppliers: in fiscal year 2019, around 1,100 suppliers in  
one of Procurement’s goals. Adverse effects on production in seven countries took advantage of the training programs.  
the Group caused by unforeseeable events such as natural  
disasters were minimized to the best of our ability.  
Due to the Group’s transformation into a provider of  
sustainable mobility solutions, decarbonization and respon-  
sible raw material sourcing were two particularly important  
topics in 2019. Here we significantly expanded our activities  
Management of purchased parts and suppliers  
Today’s market environment is characterized by persistent in order to meet our own and external requirements. We  
segmentation, diversification and globalization. We face systematically anchored the use of renewable energy in the  
these challenges with our purchased parts and supplier specifications for battery suppliers and agreed measures to  
2
management, which supports and supervises the supplier reduce CO emissions in a series of workshops with strategic  
processes. From development to series production, we focus suppliers. Our commitment to sustainability in connection  
on safeguarding the industrialization processes of the with raw materials was equally emphatic. By focusing on  
purchased parts at the individual supplier locations. The battery raw materials and their potential adverse effects on  
complexity of the components requires regular monitoring people and the environment in the upstream chain, we  
Group Management Report  
Sustainable Value Enhancement  
143  
significantly expanded our activities beyond our direct them in  
a
climate-friendly manner. Moreover, further  
contractual partners. Key activities included the performance strategic initiatives will be implemented in Group Compo-  
of audits, work with certified smelters and development of a nents’ central strategy program “ONE MISSION 2025”. Using  
sustainability standard for mines.  
innovative digitalization strategies such as robot-controlled  
The basis for most of these measures is supply chain process optimization, the transition process to new topics of  
transparency. To increase this, we implemented a series of future relevance will be accelerated.  
pilot projects in 2019 including blockchain projects for  
tracking individual supply chains and auditing critical  
PRODU CT IO N  
subsuppliers at neuralgic points of high-risk supply chains. Our global, cross-brand production network safeguards the  
Worthy of note is the Responsible Sourcing Blockchain Net- processes from the supplier to the factory and assembly line,  
work (RSBN), in which we, along with other large corpo- and from the factory to dealers and customers. Enduring  
rations, aim to track the cobalt supply chain and make it efficiency is a prerequisite for our competitiveness. We meet  
more sustainable.  
challenges of the future with holistic optimizations, forward-  
looking innovations, flexible supply streams and structures,  
and an agile team. In fiscal year 2019, the global vehicle  
COM P O N E NT S B U SI N E SS  
A realignment of the Group-wide components business was production volume was slightly under the previous year’s  
decided on as part of the enhanced Group strategy level, reaching 10.8 million units. Productivity increased by  
+
TOGETHER 2025 and implemented as of January 1, 2019. The around 4.0% year-on-year, despite the continuing difficult  
aim is further improvement of future viability and competi- conditions in many markets.  
tiveness through cross-brand management of component  
activities and  
a
value creation strategy coordinated “Intelligently networked” production strategy  
throughout the Group. Synergies will be leveraged across Production is supporting the enhanced Group strategy  
+
both traditional technologies and topics of the future to TOGETHER 2025 with its functional area strategy,  
advance the progressive transition to e-mobility.  
“Intelligently Networked”. By intelligently connecting people,  
The components business manages some 75 thousand brands and machines, we aim to pool the strengths and  
people worldwide. The focus of their expertise is the develop- potential of our global production and logistics and take  
ment and manufacture of vehicle components. In order to advantage of the resulting synergy effects. We are guided in  
realign these competencies in a future-oriented way, it was this by four strategic goals:  
decided as part of the Group strategy to combine compo- !ꢀ Versatile production network  
nents activities around the world into an independent entity, !ꢀ Efficient production  
Volkswagen Group Components, under the umbrella of Volks- !ꢀ Intelligent production processes  
wagen AG.  
!ꢀ Future-ready production  
The entity has been re-organized into new business areas: With division-specific initiatives we have created content  
Engine and Foundry, Transmissions and Electric Drive Sys- clusters in which expert teams work on the strategic topics  
tems, Chassis, Seats and Battery Cells. In each of the business relevant for production in the Group. Examples include the  
areas, innovative power and competitiveness will be competitive design of our global production network, the  
increased through an economical product portfolio that is reduction and offsetting of environmental impact through-  
viable for the future with a continuously optimized product out the production process, and digitalization with its  
range and economies of scale exploited across all business implications for production and working processes and for  
areas. Group Components in the Volkswagen Group will be collaboration. The overarching aim is to increase productivity  
responsible for the development and production of battery and profitability.  
systems and electric drives for new electric vehicles as well as  
With the production strategy, we have laid the founda-  
for the development and pilot production of battery cells and tions for the successful and sustainable enhancement of our  
the management of production partners. There are also plans production. We use regular reviews to ensure that we con-  
to reuse the battery cells in innovative reutilization concepts stantly align our activities to the current challenges.  
such as the flexible fast charging station and then recycle  
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Sustainable Value Enhancement  
Group Management Report  
Global production network  
common parts and concepts as well as identical production  
With twelve brands and 124 production locations, aspects processes enables reduced capital expenditure and provides  
such as consistent standards for product concepts, plants, the opportunity to better utilize existing capacities. The  
operating equipment and production processes are key to future will also see electric vehicle projects at multibrand  
forward-looking production. These standards enable us to locations such as Zwickau, Germany and Anting, China.  
achieve synergy effects, respond flexibly to market chal-  
We are constantly enhancing our production concepts  
lenges, make optimal use of a flexible production network and aligning them with new technologies. The targeting  
and realize multibrand locations. Currently, almost half of the process anchored in our strategy serves to realize ambitious  
4
5 passenger car locations are already multibrand locations. targets in individual projects.  
The Bratislava site continues to serve as a prime example in  
the Group, producing vehicles for the Volkswagen Passenger Production locations  
Cars, Audi, Porsche, SEAT and ŠKODA brands.  
The Volkswagen Group’s production network is comprised of  
The Volkswagen Group has set itself the goal of becoming 124 locations in which passenger cars, commercial vehicles  
a world-leading provider of battery electric vehicles by 2025. and motorcycles, as well as powertrains and components are  
The basis for this is the introduction of the Modular Electric manufactured.  
Drive Toolkit (MEB), which we are using to complement our  
With 72 locations, Europe remains our most important  
range with additional battery-electric vehicles. We have been production region for vehicles and components. There are 28  
manufacturing battery-electric vehicles based on the MEB in sites in Germany alone. The Asia-Pacific region has 33 loca-  
Zwickau, the Volkswagen Group’s first electric car factory, tions. We have six locations in North America and nine in  
since 2019.  
In order to design multibrand projects and electric mobil-  
South America. The Group operates four locations in Africa.  
2019 saw 89 production start-ups: 29 for new products  
ity to be cost-effective in conjunction with existing concepts, and successor products, and 60 for product upgrades and  
it is important to make production highly flexible and efficient. derivatives.  
Making maximum use of potential synergy effects is also a  
Capacity utilization of the locations in the Volkswagen  
decisive factor for the success of future vehicle projects. Using Group’s production network is further enhanced by sup-  
Group Management Report  
Sustainable Value Enhancement  
145  
plying the locations with complete knock-down (CKD) kits for all sites. Examples include intelligent robotics and data  
local assembly.  
analysis functions for analyzing and comparing cross-plant  
processes. The cloud-based platform can be used to scale new  
applications directly to all sites so that specific services and  
The Group’s production system  
The aim of the Group’s production system is to continuously functions can be put into operation in the area of production  
and sustainably improve production workflows at all the and logistics at the Volkswagen Group. The entire project will  
Group brand and regional sites. The Group´s production take several years to be implemented. Volkswagen is creating  
system is the key component for achieving excellence in its industrial cloud as an open platform with the goal of  
processes in production and production-related environ- incorporating companies from the entire value chain. In the  
ments; we are strengthening this on a continuous basis and long term, the Volkswagen Group aims to integrate its global  
increasing the extent to which it is used.  
supply chain with over 30,000 sites of more than 1,500  
Leadership and individual responsibility are indispens- suppliers and partner companies into the cloud, creating a  
able factors; they are made visible by treating each other with constantly growing, worldwide ecosystem.  
respect and are part of our culture.  
Having our factories working at optimal capacity enables Environmentally efficient production  
us to manufacture high-quality products that give customers We are planning the production of tomorrow with our  
maximum benefits at competitive prices. This is made functional area strategy, “Intelligently Networked”. Emissions  
possible by the standardization of production processes and levels and the use of resources at Volkswagen Group locations  
operating equipment early on in the line, based on the require particular attention. The goTOzero Impact Factory  
principle of concept consistency. This ensures that common program is developing specific steps for more sustainable  
design principles, joining techniques and joining sequences, production, with a vision of a factory that has no adverse  
but also installation and connection concepts are applied in environmental impact. Decarbonization, biodiversity and  
the development and production areas at the brands. The zero plastic waste in production are key elements of this  
principle of concept consistency establishes a foundation for program.  
creating efficient logistics and manufacturing processes.  
We are encouraging networking and communication  
between the brands worldwide in order to leverage synergies.  
Our environmental experts meet regularly in working  
New technologies and digitalization roadmap  
3D  
printing is still one of the key technologies for groups. In addition, we provide training to our employees in  
Industry 4.0 and digitalizing the automotive value chain. It is environmental protection.  
successfully used in select sites of the Volkswagen Group in  
We record and catalog environmental measures in an IT  
the manufacture of components and also operating equip- system and make these available for a Group-wide exchange  
ment. The process opens up wholly new opportunities in the of best practices. In the reporting period, around 1,240  
areas of development, design and production. Due to the implemented measures in the area of environment and  
digital nature of the technology, which requires no tools energy were documented in this system. They serve to  
whatsoever, components and operating equipment can be improve infrastructure and production processes for passen-  
flexibly implemented directly from digital drawings, and ger cars and light commercial vehicles. These activities are  
completely new designs and component geometries can be beneficial from an environmental and economic perspective.  
created.  
With a series of effective, innovative measures, we were once  
Developments for large-scale automotive production again able in the reporting period to reduce environmental  
applications point to considerable potential for the future. To indicator levels, such as those incorporated in the decarboni-  
this end, Volkswagen leverages the diversity of the Group, zation index (DCI), while at the same time improving pro-  
achieved through close collaboration between its brands, and duction processes.  
cooperates with leading technology providers and research  
institutions. Alongside new technologies, moving the IT GoTOzero Impact Logistics  
architecture over to a cloud-based platform solution will be To help achieve the goals of the Group’s goTOzero environ-  
the main task in the coming years on the road to digitalized mental mission statement in the area of logistics, Group  
manufacturing. This will bring the Volkswagen Group closer Logistics is collaborating with colleagues from the brands in  
to the project for the future Industry 4.0. The cloud-based the goTOzero Impact Logistics initiative. This builds on the  
platform with its simplified data exchange is  
a vital preceding Green Logistics initiative. Emissions are reduced by  
prerequisite for making innovations available rapidly across continuously optimizing the production and transport  
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network. The use of new low-emissions technologies for connection to our brands. It is important for us to retain  
transporting production materials and vehicles will also be customers and win new ones. To measure our success in this  
analyzed and accelerated.  
area, we compile and analyze two strategic indicators for the  
The measures the Volkswagen Group is taking to achieve passenger car-producing brands:  
carbon-neutral logistics include moving shipments from !ꢀ Loyalty rate. Proportion of customers of our passenger car  
road to rail and CO  
laboration with Deutsche Bahn AG. In addition, Group  
Logistics is putting the world’s first liquefied natural gas  
2
exemption of rail transport in col-  
brands who have bought another Group model. The loyalty  
of Volkswagen Passenger Cars, Audi, Porsche and ŠKODA  
customers has kept these brands in the upper rankings in  
the core European markets in comparison with competi-  
tors for a number of years thanks to their faithful cus-  
tomers, even though these Group brands have seen a slight  
decrease in the loyalty rate. Compared to other manufac-  
turer groups, the Volkswagen Group continues to hold a  
top spot in the core European markets in terms of loyalty,  
with a considerable margin over the competition.  
(LNG) powered roll-on/roll-off (RoRo) charter ships into  
service for transporting vehicles across the North Atlantic  
and is promoting the use of LNG trucks by freight forwarders  
working for Volkswagen.  
SA LE S AN D M A R KETI NG  
We regard ourselves as an innovative and sustainable  
mobility provider for all commercial and private customers !ꢀ Conquest rate. Newly acquired passenger car customers as  
worldwide – with a unique product portfolio encompassing  
twelve successful brands and innovative financial services.  
Together with their sales partners and importers, our  
passenger car brands agreed on a procedure for integrating  
a proportion of all potential new customers. Here, too, the  
Volkswagen Group has a top ranking in comparison with  
competitors, primarily thanks to the good scores achieved  
by the Volkswagen Passenger Cars brand.  
innovative products and services into the sales network. The In the core European markets, the figures of the Volkswagen  
priority thereby is the safe handling of customer data and the Passenger Cars brand relating to brand image and confidence  
way in which this is processed for digital products and in the brand stabilized further in 2019. Porsche remains in  
services or in connection with the vehicle purchase. The legal top position in the image ranking.  
requirements for handling customer data have been tight-  
In the financial services business, we use two strategic  
ened in many countries. At the same time, new Group indicators:  
vehicles that are permanently connected to the internet are !ꢀ Customer satisfaction. Satisfaction of our customers results  
about to be launched. We are increasingly investing in  
distribution systems and processes with the goal of further  
digitalizing and improving the individual customer experi-  
ence in all distribution channels.  
The Volkswagen Group’s financial strength and profit-  
ability is attributable to an extensive portfolio of strong  
brands. The objective of our Best Brand Equity strategic  
module is to continuously sharpen the brand profiles and  
from a customer-oriented product range and the service  
focus of our staff. In the annual assessment, these two  
aspects serve as suitable indicators for the critical evalu-  
ation as to whether we will achieve our customer satis-  
faction target of 90% in 2025. In 2019, we were within the  
expected range with a satisfaction rate of 83 (82)%. Our  
goal is to satisfy our customers completely. To do so, we are  
developing suitable measures at country level.  
demarcate the respective vehicle segments – that are served !ꢀ Customer loyalty. Trust in and loyalty to our services rely  
by the brands – as clearly as possible. Our aim in this  
endeavor is to achieve high market saturation with maxi-  
mum efficiency and a low level of cannibalization of the  
brands in question. Market positioning is an important  
element for increasing brand values. To this end, we are  
establishing automobile-specific customer segmentation to  
steer the positioning of our brands. It will be continuously  
applied in the strategy and product process.  
on customer satisfaction with our product range and  
service. The re-entering contract rates (defined as financing  
and leasing agreements for repurchases of new Volkswagen  
Group vehicles) that have been surveyed up to now based  
on product sales to our customers are being revised in the  
context of changing customer needs and the development  
of the product offering at our financial services companies.  
E-mobility and digitalization in Group Sales  
Customer satisfaction and customer loyalty  
As part of our electrification campaign, we aim to offer our  
The Volkswagen Group aims its sales activities at exciting its customers worldwide up to 75 completely battery-electric  
customers. This is our top priority, as satisfied customers vehicles and approximately 60 hybrid models by 2029. This  
remain loyal to our brands and recommend our products and campaign will be complemented by vehicle-related, cus-  
services to others. In addition to satisfaction with our tomer-focused offerings, such as customized charging infra-  
products and services, we value our customers’ emotional structure solutions and mobile online services. The Volks-  
Group Management Report  
Sustainable Value Enhancement  
147  
wagen Group is thus transforming from an automotive our customers’ vehicles. With our global after sales network  
manufacturer into a mobility service provider, posing com- including more than 130 of our own warehouses, we ensure  
pletely new challenges for sales.  
that almost all our authorized service facilities around the  
We are making highly targeted use of the opportunities of world can be supplied within 24 hours. We regard ourselves  
digitalization in sales, which include an improved customer as a complete provider of all products and services relevant to  
approach. Our actions are guided by a clearly defined strategy customers in the after sales business. Together with our  
that requires extensive cooperation between the brands to partners, we ensure the worldwide mobility of our customers.  
achieve the greatest possible synergies. Our aim here is to The partner businesses offer the entire portfolio of services in  
create a completely new product experience for the custom- all vehicle classes. We are continuously expanding our range  
ers of our brand – one which impresses with a seamless of tailored services in order to improve convenience for our  
communication process, from the initial interest in customers and increase customer satisfaction.  
purchasing a vehicle, to servicing and ultimately to the sale of  
In the Digital After Sales project, we are modernizing  
the used car. In doing so, we are opening up new business processes and IT systems in After Sales. By adopting an  
models relating to every aspect of the connected vehicle – in approach that focuses product and service development on  
particular with regard to mobility and other services. Vehicles the specific needs of both dealers and customers, we aim to  
are becoming an integral part of the customer’s digital world reduce the time needed for administrative tasks at the dealers  
of experience.  
through automated, interrelated services and also stabilize  
We also align our internal processes and structures to the existing IT systems and boost efficiency. Innovative digital  
methods and new forms of working created by digital after-sales services will additionally improve the customer  
innovation. The result is project teams operating across dif- experience.  
ferent business areas, new forms of cooperation, a more  
Around the world, our commercial vehicles business also  
intensive relationship with the international start-up scene, a prides itself on products of quality and on customer focus.  
consolidation of venture capital expertise – as a form of Our range of trucks, buses and engines is complemented by  
supporting innovative ideas and business models – and new services that guarantee fuel efficiency, reliability and wide  
lean systems and cloud-based IT solutions.  
vehicle availability. The workshop service and service con-  
tracts offer customers a high degree of certainty, in addition  
to a high level of quality. We are reducing servicing times and  
Fleet customer business  
Business relationships with fleet customers are often long- costs with a view to the vehicles’ total operating costs and  
term partnerships. In a volatile environment, this customer helping to retain their value.  
group guarantees more stable vehicle sales than the private  
customer segment.  
In the Power Engineering segment, we help our custom-  
ers ensure the availability of machinery with MAN PrimeServ.  
The Volkswagen Group has an established base of busi- The global network of more than 100 PrimeServ locations  
ness fleet customers, especially in Germany and the rest of guarantees excellent customer focus and offers, among other  
Europe. Our extensive product range enables us to satisfy things, replacement parts of genuine-parts quality, qualified  
their individual mobility needs from a single source.  
In the German passenger car market, which expanded as  
a whole by 5.0% in 2019, the share of fleet customers in total  
technical service and long-term maintenance contracts.  
QUALITY  
registrations was 14.8 (13.6)%. The Volkswagen Group’s share The quality of our products and services plays a key role in  
of this customer segment increased to 44.1 (44.0)%. Outside maintaining customer satisfaction. Customers are particu-  
Germany, the Group’s share of registrations by fleet cus- larly satisfied and loyal when their expectations of a product  
tomers in Europe was up slightly at 25.6 (25.2)%. The upward or service are met or even exceeded. Appeal, reliability and  
trend shows that fleet customers’ confidence in the Group service determine quality as it is perceived by the customer  
remains on a high level.  
throughout the entire product experience. Our objective is to  
positively surprise our customers and inspire enthusiasm in  
all areas, and thus to win them over with our outstanding  
After Sales and Service  
In addition to individual service, the timely provision of quality.  
genuine parts is essential to ensure passenger car customer  
In the reporting period, we transferred operational tasks  
satisfaction in After Sales. The genuine parts supplied by our such as damage analysis from the Group to individual brands  
passenger car brands and the expertise of the service centers and rearranged strategic topics at Group level. This will  
stand for quality and ensure the safety and value retention of underpin the principle “The Group manages the brands, the  
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Sustainable Value Enhancement  
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brands manage the regions and the regions manage the !ꢀ We will become an excellent employer by promoting the  
factories” and strengthen networks across the brands at the  
same time.  
personal development of every single employee even more  
intensively.  
To achieve our goals, we are working on a variety of quality  
initiatives. All are focused on the topics that are decisive to  
Strategy of Group Quality  
When enhancing our future program, we also reviewed our the success of the quality organizations in the Volkswagen  
functional area strategy in depth and coordinated it with the Group.  
brands. We continue to embody outstanding quality and  
ensure reliable mobility for our customers worldwide. This is Contributing to the Group’s strategic indicators  
the strategic goal that guides our actions. Group Quality and We use a strategic indicator to measure the contribution of  
the brands’ quality organizations play an active role at all Group Quality in the major passenger car-producing brands  
stages of product emergence and testing, making an impor- at the top level of consideration.  
tant contribution to successful product launches, high !ꢀ Tow-in 12 MIS. This indicator shows the number of vehicles  
customer satisfaction and low warranty and goodwill costs.  
Advancing digitalization continues to be a major chal-  
lenge for us: software is increasingly becoming a priority for  
the Group as the importance of smart functions in our  
products and services grows. In the reporting year, we  
sharpened the focus of our activities on the “Automotive  
SPICE” process assessment model that we use to improve our  
processes, in order to ensure future viability in the field of  
software-based system development. In doing so, we are  
staying abreast of the progressive regulation, for example of  
autonomous driving functions.  
that need to be towed to a dealer per 1,000 vehicles after  
12 months in service (MIS). It includes all Group vehicles  
categorized as tow-ins by dealers in the German market. It  
also includes vehicles which, after being taken to a repair  
workshop, are unable to continue driving without restric-  
tion. The number of Volkswagen Group tow-ins in the  
German market has fallen fairly steadily in the last five  
years. All six brands featured saw their performance  
improve year-on-year. The brands’ ratios for the 2018  
production year are within or slightly above the target  
corridor in each case. Quality is the Volkswagen Group’s  
top priority. All of the Group brands are therefore striving  
to continuously reduce the number of vehicles that need to  
be towed to a dealer.  
Furthermore, we are developing Group-wide standards on  
cybersecurity so as to protect the users of our vehicles against  
possible attacks. The UNECE (United Nations Economic  
Commission for Europe) provides for corresponding  
certification and homologation in the future to ensure that Legal and regulatory compliance  
companies can guarantee that these aspects are dealt with The legal and regulatory compliance of our products is para-  
properly. This gives rise to the need for Volkswagen to review mount in our work. In our processes we employ the principle  
its organizational structures and processes and adjust these of multiple-party verification, which involves mutual support  
as required. In this context, we have begun to implement an and control between the divisions. Software development is  
Automotive Cyber Security Management System (ACSMS) accompanied by quality milestones at all brands, whereby all  
that will be incorporated into the quality management systems, components and parts that directly influence a  
system.  
The strategy of Group Quality developed in this context require particular vigilance are safeguarded through  
comprises the following four goals:  
multiple-party verification. At the series production stage, we  
ꢀ We will excite our customers with our outstanding quality are also ensuring even more stringently than before that the  
by understanding what exactly they perceive as quality and conformity checks on our products are carried out and  
implementing this in our products. assessed with the participation of all business units involved.  
ꢀ We will contribute to competitive products with optimal This applies particularly to emissions and fuel consumption.  
vehicle’s safety, type approval and functioning and therefore  
!
!
!
quality costs by ensuring robust processes, thereby  
reducing the expense involved in testing each vehicle.  
We are also dedicating even more attention to our quality  
management system than before, reinforcing the process-  
ꢀ In critical business processes, we will reinforce the princi- driven approach Group-wide across all business areas. The  
ple of multiple-party verification and monitor achieve- quality management system in the Volkswagen Group is  
ment of milestones even more closely.  
based on the standard ISO 9001. This standard must be com-  
Group Management Report  
Sustainable Value Enhancement  
149  
plied with for us to obtain type approval for the manufacture  
and sale of our vehicles. We conducted numerous system  
audits in the reporting period to verify that our locations and  
brands comply with the requirements of the standard.  
Particular focus was placed on assessing the risk of non-  
compliance with defined processes. Our quality management  
consultants pay attention to ensuring that these and other  
new requirements, as well as official regulations, are imple-  
mented and complied with; they are supported in this  
endeavor by a central office in Group Quality.  
EMPL O YEES BY MA RKET  
in percent, as of December 31, 2019  
Europe (excluding Germany)/ 31 %  
Other markets  
Germany 44 %  
North America  
South America  
4%  
4%  
Asia-Pacific 16 %  
With these and other measures, the quality organizations  
are helping to ensure that we as a manufacturer and our  
products meet the legal and official requirements.  
Observing regional requirements  
Our customers in the different regions of the world have very  
diverse needs as far as new vehicle models are concerned.  
Another important task is therefore to identify and prioritize  
these regional factors so that they can be reflected in the  
development of new products and the production of estab- Human resources strategy and principles of the human resources policy  
lished vehicle models – together with other important With the functional area strategy for Human Resources  
criteria such as the quality of locally available fuel, road – “Empower to transform” – the Group is continuing with key  
conditions, traffic density, country-specific usage patterns and successful approaches in its human resources policy.  
and, last but not least, local legislation. We mainly use market These include the pronounced stakeholder focus on corpo-  
studies and customer surveys to determine region-specific rate governance, comprehensive participation rights for  
customer requirements.  
employees, outstanding training opportunities, the principle  
To ensure that the perceived quality of our vehicles is at a of long-term service through systematic employee retention  
level commensurate with that of our competitors, we take and the aspiration to appropriately balance performance and  
regional customer needs into account in our vehicle audits. remuneration. At the same time, the new human resources  
Every brand works together with the individual regions to strategy is setting innovative trends. Hierarchies are being  
decide how its product is to be positioned there. This enables dismantled, and modern forms of working such as agile  
us to strengthen the responsibility of the brands and invest working – an approach whereby most of the responsibility for  
less in features that do not resonate with customers. To the work organization is transferred to the teams – are set to  
ensure that the audit returns comparable results, consistent be expanded.  
quality benchmarks apply across all brands and regions. We  
In the Human Resources division, we are guided within  
are continually adapting these to changing requirements. For the framework of our strategy by five overarching objectives:  
more than 40 years now, we have been deploying auditors !ꢀ The Volkswagen Group, including all of its brands and com-  
around the world to assess, from the customer’s perspective,  
panies, aims to be an excellent employer worldwide.  
those vehicles that are ready for delivery and to ensure that !ꢀ Highly competent and dedicated employees strive for  
these vehicles comply with the benchmarks defined.  
excellence in terms of innovation, added value and  
customer focus.  
E M P LOYE ES  
!ꢀ A forward-looking work organization ensures optimal  
working conditions in factories and offices.  
The Volkswagen Group is one of the world’s largest employers  
in the private sector. On December 31, 2019, we employed a !ꢀ An exemplary corporate culture creates an open work  
total of 671,205 people, which includes the Chinese joint  
ventures. This figure represents a 1.0% increase compared  
environment that is characterized by mutual trust and  
collaboration.  
with the end of 2018. The ratio of Group employees in !ꢀ The Company’s human resources work is highly employee-  
Germany to those abroad remained largely stable over the  
past year; at the end of 2019, 44.3 (44.1)% of the workforce  
worked in Germany.  
oriented, strives for operational excellence, and yields stra-  
tegic value-added contributions.  
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During the implementation of our enhanced future program One strategic indicator has been defined for the financial  
+
TOGETHER 2025 , we paid particular attention in the services business:  
reporting period to the level of achievement regarding the !ꢀ External employer ranking. This involves taking part in  
goals set by the applicable strategic KPIs. For the passenger  
car-producing brands, we compile and analyze the following  
information:  
external benchmarking, in general once every two years.  
The aim is to position ourselves as an attractive employer  
and derive appropriate measures to achieve a ranking  
among the top-20 employers by 2025, not just in Europe,  
but globally. Volkswagen Financial Services AG was  
represented in various national and international best-  
employer rankings the last time it participated in 2019.  
Coming in 11th place, it was among the top European  
employers in the “Great Place to Work” employer compe-  
tition.  
!
ꢀ Internal employer attractiveness. This indicator is deter-  
mined by asking respondents, as part of the opinion  
survey, whether they perceive the respective company as an  
attractive employer. The target for 2025 is 89.1 out of a  
possible total of 100 index points. A score of 85.6 index  
points was achieved in the reporting period, contrasted  
with 84.2 points in the previous year. The scope of this  
survey extends beyond the brands that manufacture The implementation of our enhanced Group strategy  
+
passenger cars.  
TOGETHER 2025 has been accompanied by a work package  
!
ꢀ External employer attractiveness. The ability to recruit top that we defined with the Excellent Leadership module under  
talent is of decisive importance, particularly in view of the the slogan "versatility, integrity, strong leadership” to drive  
Company’s transformation into one of the world's leading the change toward a cooperative management culture that  
providers of sustainable mobility solutions and the places even more focus on integrity. Management develop-  
associated development of new business fields. We use this ment and training will undergo fundamental change and an  
strategic indicator to check the positioning of the major even more systematic approach to succession planning will  
passenger car-producing brands on the labor markets once be taken to ensure that the Group has the right people  
a year with regard to graduates and young professionals. available for the right positions at the right time.  
Rankings in surveys conducted by renowned institutions,  
We continued to implement our new system for staff  
in which we aim to achieve top scores for the Group brands development across the Group in 2019. Going forward, the  
featured, serve as the basis for this. In fiscal year 2019, the development paths that lead to management will be  
Audi, Volkswagen Passenger Cars and Volkswagen Com- characterized by greater individual responsibility, trans-  
mercial Vehicles brands recorded slight improvements parency and practical relevance, and will include employees  
year-on-year, and partly achieved the targets set, while from different levels of the hierarchy in the evaluation of  
Porsche, ŠKODA and SEAT fully reached and even exceeded candidates.  
them in some cases.  
To address the challenges of the transformation with  
!
ꢀ Diversity index. Given the cultural diversity in our global success, the Group and the employee representatives have  
markets and the growing economic momentum, success in signed agreements for the future that will position the  
a highly competitive marketplace requires an ever-wider Group’s individual brands more efficiently and also structure  
range of experience, world views, problem-solving solutions employee career prospects. The Volkswagen Passenger Cars  
and product ideas. The diversity of our workforce provides brand’s roadmap for digital transformation is one example,  
potential for innovation in this area, which we aim to make as is the Audi brand’s Audi.Zukunft agreement, both of which  
better use of in future. As we establish diversity manage- were announced in fiscal year 2019.  
ment across the Group, this strategic indicator is used as a  
We are also driving large-scale cultural change to achieve  
percentage of the active workforce worldwide to report the greater openness and transparency in line with our corporate  
development of the proportion of women in management strategy. The seven Volkswagen Group Essentials define the  
and the internationalization of top management. In partic- shared underlying values and the foundation for cultural  
ular, it underpins the objective of the human resources change across all of the brands and companies:  
strategy, which is aimed at contributing to an exemplary !ꢀ We take on responsibility for the environment and society.  
leadership and corporate culture. The proportion of !ꢀ We are honest and speak up when something is wrong.  
women in management amounted to 14.3% in 2019, up on !ꢀ We break new ground.  
the prior-year level; we aim to raise this figure to 20.2% by !ꢀ We live diversity.  
2025. We aim to increase the level of internationalization in !ꢀ We are proud of the work we do.  
top management, the uppermost of our three manage- !ꢀ We not me.  
ment tiers, to 25.0% in 2025; in the past fiscal year this was !ꢀ We keep our word.  
18.4 (19.2)%.  
Group Management Report  
Sustainable Value Enhancement  
151  
Group-wide activities such as team dialog and the role model Vocational training and cooperative education  
program encourage employees to analyze the Group Essen- The core component of training at Volkswagen is vocational  
tials and incorporate them into all work processes. In the role training or, for young people eligible to enter university,  
model program, managers from all brands improve the cooperative education (dual study programs combining uni-  
corporate culture together with their staff.  
versity studies with on-the-job training). As of the end of  
019, the Volkswagen Group trained 19,399 young people. We  
have introduced the principle of dual vocational training at  
2
Training and professional development  
At Volkswagen, our capacity for innovation and our competi- many of the Group’s international locations over the past few  
tive position largely depends on the commitment and years and are continuously working on improvements. Once  
knowledge of our employees, particularly during the trans- a year, Volkswagen honors its highest-achieving vocational  
formation.  
Staff training at Volkswagen is organized systematically  
trainees in the Group with the Best Apprentice Award.  
Even after their vocational training has been completed,  
and according to vocational groups. These comprise all young people at the start of their careers are encouraged to  
employees whose tasks are based on similar technical skills continue their professional development in our Company.  
and who require related expertise in order to perform their This is why we promote particularly talented young special-  
jobs. A skills profile lays down the specialist and interdis- ists in talent groups. These two-year development and training  
ciplinary skills for each job and serves as a guide for training programs accept the highest-achieving 10% of fully qualified  
measures.  
vocational trainees at Volkswagen AG each year. In addition,  
Volkswagen Group employees have access to a wide range fully qualified vocational trainees have the option of working  
of training measures – from further training in general at a Group company outside Germany for twelve months as  
Company-related issues to specific training or personal devel- part of the “Wanderjahre” (Year Abroad) program. In the  
opment programs. Thanks to these opportunities, Volks- reporting period, 33 Volkswagen Group locations in 16  
wagen employees are able to further develop and steadily countries took part in this program.  
deepen their knowledge throughout their working lives. In  
Last but not least, we developed the AGEBI+ program,  
this process, they are also able to learn from more experi- which promotes fully qualified vocational trainees who are  
enced colleagues, who pass on their knowledge as experts in eligible for university and wish to combine a degree program  
the vocational group academies. Training measures are based in subjects that are crucial for Volkswagen’s future with  
on the dual training principle, which combines theoretical closely related practical experience.  
content with practical experience on the job by means of  
specific tasks.  
Development of university graduates  
The range of learning opportunities is being expanded Volkswagen offers two structured entry and development  
continuously. In 2019, the Volkswagen Group Academy com- programs for university graduates and young professionals.  
menced initial partnerships with renowned external training In the StartUp Direct trainee program, graduate trainees gain  
portals to expand online learning, for example on IT topics. an overview of the Company over two years while working in  
The Company will set aside additional funds for the person- their own department and take part in supplementary train-  
nel skills transformation brought on by digitalization. This ing measures. University graduates interested in working  
will be used for special training for the groups of employees internationally can participate in the 18-month StartUp Cross  
and departments affected by the transformation. In addition, program. The aim here is to get to know the Company in all  
Volkswagen is striking out in new directions with the its diversity and to build up a broad network. During their  
Faculty 73 program and is training the software developers participation in the program, young professionals become  
who are needed for the digital transformation internally. The familiarized with several locations in Germany and other  
first academic year started in 2019 with about 100 partici- countries by working in various departments. Both programs  
pants. The program is designed for employees and also also include several weeks’ experience working in production.  
external applicants with IT affinity and an interest in soft- In 2019, Volkswagen AG hired a total of 246 graduate trainees  
ware development.  
as part of these programs, 31.7% of whom were women.  
Young people can also take part in graduate trainee  
As part of the Volkswagen Group Academy, the AutoUni  
conveys knowledge to the Group that is relevant for the programs at the other Group companies as well as at the  
future on the key issues of digitalization and IT by engaging Group’s international locations, such as ŠKODA in the Czech  
external and in-house senior experts in addition to univer- Republic, SEAT in Spain or Scania in Sweden.  
sities.  
1
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Sustainable Value Enhancement  
Group Management Report  
PROPO RT ION OF WOME N  
AGE ST RUC T URE I N YEARS O F VO L KSWA GEN GRO U P EMPL O YEES  
as of December 31  
as of December 31, 2019; in percent  
%
2019  
2018  
Employees  
Vocational trainees1  
Graduate recruits2  
Total management3  
Management3  
Senior management3  
Top management3  
16.8  
24.1  
31.7  
12.1  
13.7  
9.7  
16.5  
25.6  
28.7  
11.5  
13.1  
9.1  
< 20  
20–29  
0–39 29 %  
0–49 25 %  
50–59 20 %  
60 + 4%  
2%  
20 %  
3
4
7.4  
6.1  
1
2
3
Germany, excluding Scania.  
Volkswagen AG  
Germany  
Increasing attractiveness as an employer and development programs  
for specific target groups  
At Volkswagen AG, which entered into its works agreement  
for mobile working already back in 2016, more than 23  
A family-friendly human resources policy is a major com- thousand employees were making use of a more flexible  
ponent of Volkswagen’s attractiveness as an employer; in working arrangement as of the end of the 2019 fiscal year.  
particular, it contributes to greater gender equality. We are  
working continuously to develop family-friendly models for Preventive healthcare and occupational safety  
working time models and to increase the number of women Preventive healthcare and occupational safety are key human  
in management positions. In line with German law on the resources policy topics in the Volkswagen Group. In fiscal  
equal participation of women and men in leadership year 2019, we underpinned these with a corresponding  
positions (Führpos-GleichberG – German Act on the Equal Group policy. This defines basic requirements and objectives  
Participation of Women and Men in Leadership Positions in relating to occupational health and safety, laying down rules  
the Private and Public Sectors), Volkswagen AG is aiming to for the organization thereof as well as the responsibilities of  
have a 13.0% share of women at the first management level the Group, brands and companies.  
and 16.9% at the second management level by the end of  
021. As of December 31, 2019, the proportion of women in wagen’s Health department places strong emphasis on  
the active workforce at the first level of management was preventive approaches with regard to health, fitness and  
In addition to fulfilling statutory requirements, Volks-  
2
1
1
1.4 (10.7)% and at the second level of management it was performance. Employees are given the opportunity to have  
6.4 (15.4)%.  
regular check-ups followed by a talk in which they receive  
We have set targets for every board-level division at Volks- offers that draw on recent scientific findings for improving  
wagen AG regarding the development of the proportion of their individual health. Another task of the Health  
women in management to encourage women with high department is to advise the Group on any potential impact  
potential to advance within the Company. This approach is on employee health resulting from new production  
supported by many different measures ranging from cross- technologies introduced throughout the production chain  
brand mentoring programs to a quota system for the man- and in all work processes. One example of this is a pilot  
agement selection procedure and targets for the share of project conducted in 2019 by Audi BKK and the Hanover  
women among external hires.  
Medical School (MHH) to reduce the risk factors associated  
In recent years, a large number of company regulations with metabolic syndrome, such as high levels of body fat,  
have also come into effect in the Group to make it easier for blood lipids and blood pressure. Telemonitoring of these  
employees to balance the demands of work and home life levels, exercise programs, nutritional consultations and  
and allow staff to arrange their own individual working individual support, combined with modern technology such  
model. These include flexible working hours, variable part- as wearables (electronic aids worn on the body), have led to  
time work and shift models, leave of absence programs significant improvements, particularly among shift workers.  
enabling employees to care for family members, childcare  
services that are associated with the company or are  
company-owned, and mobile working.  
Group Management Report  
Sustainable Value Enhancement  
153  
Employee participation  
long term and are progressively moving our systems and  
Codetermination and employee participation are important applications over to new cloud platforms. Our primary  
pillars of our human resources strategy. Volkswagen aims to concern is further increasing the efficiency of the IT systems  
promote high levels of expertise and a strong sense of team used throughout the Company and standardizing these as far  
spirit. This includes employees’ opinions, assessments and as possible. We are also concentrating on building up our  
criticisms being heard.  
expertise and specialist IT knowledge, especially in key digital  
We brief our employees extensively on upcoming changes technologies such as artificial intelligence and the use of new  
so as to involve them in strategic decision-making as early as IT technologies in products, services and business processes.  
possible. In forming cooperative labor relations characterized  
To safeguard the development of core competencies in  
by social peace, we are guided by universal human rights and our Company in the fields of technology, digitalization and  
the standards of the International Labour Organization (ILO). autonomous driving, we are building up IT resources that will  
Building on these principles, we have agreed various charters help shape and push the Company’s digital transformation.  
and declarations with the European and the World Works  
Councils which set out the principles of labor policy in the year 2019 for this purpose. In addition to managing the  
Volkswagen Group as well as individual employee rights.  
Group’s IT portfolio, this steering committee will enable  
The Group IT Steering Committee was formed in fiscal  
With the opinion survey, a poll of 180 companies of the synergies to be leveraged more efficiently and promote com-  
Group, the Company not only regularly gathers information munication with departments on IT projects. Group-wide  
regarding employee satisfaction, but also inquires about the planning and management of portfolios will ensure coordi-  
shape of our corporate culture and the manner in which, for nated use of budgets and resources in the development,  
example, compliance requirements are implemented. Based implementation and use of IT solutions within the Group.  
on the results, follow-up processes are implemented in which  
Volkswagen is embracing digitalization in the Company  
measures are developed and executed. Over 620,000 employ- at its in-house IT labs, for example. The labs act as centers of  
ees in 50 countries were invited to take part in the survey. The innovation and expertise that conduct research and experi-  
participation rate was 81%. The average result from all of the ment with new technologies. Here, Group IT, research insti-  
answers provided for the questions in the opinion survey – the tutions, technology partners and policy-makers are working  
sentiment rating – is an important parameter of the survey; closely together on future trends in information technology.  
in 2019 it stood at 80.0 out of a possible total of 100 index At the same time, the labs function as liaison offices for start-  
points. The score achieved in 2019 was thus higher than the ups. This allows the experience and strategic expertise of a  
previous year’s figure, which amounted to 78.9 points.  
large company like Volkswagen to be combined with the  
In addition, we also encourage our employees’ involve- pragmatism and speed of young start-ups. Highly specialized  
ment by means of Idea Management. Employees have the experts at the IT labs in San Francisco and Munich, for  
opportunity to put their creativity and knowledge to use in example, are working on exploiting the potential of quantum  
the form of ideas for improvements, thus contributing to computers for areas that have a commercial application. The  
streamlining workflows, further enhancing ergonomics in focus here is on optimization of flows of traffic and simu-  
the workplace, reducing costs and continuously increasing lation of materials and alloys. Initial experimental projects  
efficiency. Through Idea Management employees can actively are also investigating opportunities for combining the  
participate in the planning and design of their work. The potential of quantum computers with self-learning systems  
system also provides monetary incentives by offering set (quantum machine learning).  
rewards.  
In addition to topics such as data analytics (process for  
the systematic analysis of data in electronic form) and  
decentralized databases, which allow network participants to  
I N F ORM AT IO N T ECH NO LOGY ( IT )  
Volkswagen is working hard on strengthening its digital jointly process and store data (distributed ledger technol-  
competencies with a view to shaping and safeguarding the ogies), the IT labs are used to realize knowledge transfer  
Company’s future viability. To this end we are continuously throughout the entire Company, and to make new technol-  
upgrading our IT systems so that they are sustainable in the ogies usable for the Company. For instance, numerous “bot”  
1
54  
Sustainable Value Enhancement  
Group Management Report  
projects are being implemented to automate business pro- At the new software development center established in  
cesses (robotic process automation). Self-learning systems Lisbon in 2019, software architects, designers and developers  
will intelligently analyze data to assist staff in recurring are working together on IT projects in the areas of sales and  
administrative work steps by preparing these activities inde- marketing and on the connected car, among other things.  
pendently and giving them to staff for a decision.  
The project work is flanked by a lean, agile development pro-  
The further convergence of different business areas with cess based on the simultaneous work of teams of two (pair  
IT is also opening up opportunities.  
programming).  
In production, for example, big data processes help us to  
Cutting-edge technologies for the industrial internet of  
analyze faulty machinery and take action at an early stage. Things are being developed at the new software development  
Big data refers to data volumes that are too vast and too center in Dresden. In collaboration with a leading cloud  
complex to be analyzed and evaluated using manual or con- provider, Amazon Web Services, we are working on a digital  
ventional methods. Production processes are also safe- production platform that will enable Volkswagen to signifi-  
guarded by artificial intelligence and camera systems (com- cantly reduce its production costs in the future. ꢀ  
puter vision). The systems and equipment in the factory are  
Safeguarding data and systems at the Volkswagen Group  
combined into an integrated overall system. This will allow is another focus of our IT. In order to also protect our cus-  
efficiency to be increased and digital pilot projects to be tomers against cyberattacks and ensure that our solutions  
integrated into the existing architecture much more easily are in conformity with national and international legislation,  
than before. Applied research in the field of intelligent we are continuing to implement an integrated, cross-brand,  
human-robot collaboration and IT systems to control mobile cross-regional Information Security Management System  
assistive robotics are also important elements of the digi- (ISMS) as part of the Protected Customer program. The Group  
talization of production at the Volkswagen Group.  
offers documents, templates and tools to all Group com-  
Group IT is likewise contributing its expertise in the field panies and brands in the form of an ISMS toolbox to help  
of research and development in conjunction with the dif- them implement their own ISMS. Key central information  
ferent departments. For instance, digitalized work tools such security processes have been audited and certified within the  
as the “virtual concept vehicle” make the product develop- international ISO 27001 framework. This is the most impor-  
ment process faster and more efficient.  
tant standard for information security and extends beyond IT  
Value creation in sales is being increased with the help of to also cover issues such as human resource security, com-  
advanced analytics (a process for systematic analysis of future pliance, physical security and legal requirements. One of the  
events and behavior), for example on distribution parking aims of the program, which is set to run until 2021, is also to  
lots for vehicles and in sales planning.  
safeguard the complete life cycle of our vehicles and the  
The “IT for everyone” initiative aims to give all employees digital mobility services.  
at Volkswagen AG access to digital media and work tools. The  
In fiscal year 2019, another focus of IT was on continuing  
objective is to further improve communication and collabo- the systematic implementation of the European General Data  
ration among production and administrative employees. An Protection Regulation (GDPR), which was combined in a  
important issue in this connection is the growing volume of Group program and rolled out in all corporate functions. In  
official work being performed on mobile devices. The the course of the sustainable implementation of the GDPR,  
Company’s internal network Group Connect promotes the data protection processes and procedures in place in the  
knowledge transfer and networking among all employees. brands will be consolidated and standardized further. When  
The platform puts experts in touch with one another across new IT solutions are being developed, the requirements will  
brands and internationally. In software development centers be enforced from the outset. Transparency in the processing  
we develop cross-brand software for digital ecosystems and and minimization of data is a key goal on which we will  
for new business processes in the Group. We thereby continue to work. To ensure sustainable observance of the  
maintain in-house expertise in the rapid, demand-oriented GDPR, we will systematically press ahead with the establish-  
development of software and IT solutions. This capability will ment of the Company-wide data protection management  
become increasingly important as the Company’s digital system begun in this reporting period as well as with the data  
transformation evolves.  
protection organization.  
Group Management Report  
Sustainable Value Enhancement  
155  
In 2015, Volkswagen AG co-founded Deutsche Cyber-Sicher- !ꢀ Air quality. We are driving e-mobility forward to improve  
heitsorganisation GmbH (DCSO). DCSO is accumulating spe-  
cialist knowledge on cybersecurity and aims to become the  
preferred service provider to European businesses in this field.  
DCSO is a competence center and a managed security service  
the local air quality. By 2025, the share of battery electric  
vehicles in our model portfolio shall be between 20% and  
25%. The share of electric vehicles in our new vehicle fleet  
in Europe and China is set to rise to at least 40% by 2030.  
provider for protecting companies against criminal hackers, !ꢀ Environmental compliance. Where integrity is concerned,  
industrial espionage, government attacks and sabotage.  
we aim to become a role model for a modern, transparent  
and successful enterprise by implementing and moni-  
toring effective management systems that cover the environ-  
mental impacts of our mobility solutions over all life cycle  
E N V I RON M E N TA L STRAT E GY  
As one of the largest automobile manufacturers, Volkswagen  
takes responsibility for the environmental impact of its activ-  
stages.  
+
+
ities. Based on the TOGETHER 2025 Group strategy, we have With our future program TOGETHER 2025 , we have defined a  
set ourselves ambitious environmental targets with our strategic indicator for the major brands that manufacture  
environmental mission statement. With goTOzero, we aspire passenger cars for the EU28, China and USA regions:  
to minimize environmental impacts along the entire life !ꢀ Decarbonization index (DCI). This measures the average  
cycle – from raw material extraction until end-of-life – for all  
our products and mobility solutions in order to keep  
ecosystems intact and to ensure that we have a positive  
impact on society. Compliance with environmental regula-  
tions, standards and voluntary commitments is a basic  
prerequisite of our actions.  
2 2 2  
emissions of CO and CO equivalents (together CO e) over  
the entire life cycle of the portfolio of passenger cars and  
light commercial vehicles and is stated in tonnes per  
vehicle. The DCI encompasses both direct and indirect CO  
emissions at the individual production sites (Scope 1 and 2)  
as well as all further upstream and downstream CO  
2
e
2
e
Our focus is on four prioritized action areas:  
emissions over the life cycle of the vehicles sold – from the  
extraction of raw materials to the use of the vehicle and  
final disposal of old vehicles (Scope 3). As a strategic  
indicator, the DCI enables transparent, comprehensive  
tracking of progress toward climate-friendly mobility. The  
average value was 43.0 t CO e/vehicle in the reporting  
2
period; by 2025 the decarbonization index shall be reduced  
by around 30%.  
!
ꢀ Climate change. We are committed to the 2°C target of the  
Paris Climate Agreement. By 2025, we plan to reduce the  
greenhouse gas emissions of our passenger cars and light  
commercial vehicles by 30% over the total life cycle  
compared with 2015. We use the decarbonization index to  
document our progress. We intend to become a carbon-  
neutral company by 2050.  
!
ꢀ Resources. We intend to reduce production-related environ-  
mental impact, maximize our resource efficiency and pro-  
mote circular economy approaches in the areas of mate-  
rials, energy and water.  
1
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Sustainable Value Enhancement  
Group Management Report  
Organization of environmental protection  
agement systems shall ensure that environmental aspects  
Volkswagen has created an environmental policy that sets out and obligations are taken into account in our business  
guidelines for environmental decision-making, for the man- operations. Disregard for the rules, fraud and misconduct are  
agement of projects and for the Group’s environmental treated as severe compliance violations. Compliance with our  
stewardship. Thus, parameters are set for the conduct and Environmental Policy Statement and with other Group  
working methods of management and staff in five areas: environmental requirements is evaluated annually and  
management behavior, compliance, environmental protec- reported to the Board of Management of Volkswagen AG, the  
tion, collaboration with stakeholders and continuous improve- respective boards of management of the brands or the  
ment.  
The Board of Management of Volkswagen AG is the  
highest internal decision-making level for environmental  
managing directors of the companies.  
SEPARATE N ON- F I NAN CIA L GROU P REPO RT  
issues. The Volkswagen AG’s and brand’s boards of manage- The combined separate nonfinancial report of Volks-  
ment take business, social and environmental criteria into wagen AG and the Volkswagen Group in accordance with  
account when making key company decisions. The Group- sections α89b and 315b Handelsgesetzbuch (HGB – German  
wide management of environmental protection is the Commercial Code) for fiscal year α019 will be available on the  
responsibility of the Group Steering Committee for the website https://www.volkswagenag.com/presence/nachhaltig-  
Environment and Energy. Other bodies take responsibility for keit/documents/sustainability-report/α019/Nichtfinanzieller_  
steering key individual aspects in relation to products such as Bericht_α019_d.pdf in German and at https://www.volks-  
CO2 emissions and exhaust gas emissions. These include the wagenag.com/presence/nachhaltigkeit/documents/sustain-  
Group CO2 Steering Committee, the Group Steering Com- ability-report/α019/Nonfinancial_Report_α019_e.pdf in En-  
mittee for Fleet Compliance and Exhaust Gas, and the Group glish by no later than April 30, α0α0.  
Sustainability Steering Committee.  
The Volkswagen Group coordinates the activities of the  
R E P O RT O N P O ST - BA L A N C E S H E E T DAT E EV E N T S  
brands, which in turn steer the measures in the regions. The For more information on the offer for the acquisition of all  
brands and companies are responsible for their own environ- outstanding ordinary shares of Navistar International  
mental organization. They base their own environmental Corporation by TRATON SE placed on January 30, α0α0, please  
protection activities on the targets, guidelines and principles refer to the details provided in the “Events after the balance  
that apply throughout the Group.  
sheet date” section on page 3α8 of the notes to the consoli-  
We are dedicated to comply with legal and regulatory dated financial statements.  
requirements. Furthermore, we are guided by company  
standards and targets. Our environmental compliance man-  
Group Management Report  
Report on Expected Developments  
157  
Report on Expected Developments  
Global economic growth in 2020 is expected to continue at the prior-year level. Global demand for  
passenger cars will probably vary from region to region and remain at the 2019 level on the whole.  
With our brand diversity, broad product range, technologies and services, we are well prepared for  
the future challenges in the mobility business.  
In the following, we describe the expected development of lize, providing the conflict between Russia and Ukraine does  
the Volkswagen Group and the general framework for its not worsen. The Russian economy is expected to see only  
business activities. Risks and opportunities that could muted growth.  
represent a departure from the forecast trends are presented  
in the Report on Risks and Opportunities.  
For Turkey, we anticipate a rising growth rate amid higher  
inflation. The South African economy will probably be  
Our assumptions are based on current estimates by third- dominated by political uncertainty and social tensions again  
party institutions. These include economic research institutes, in 2020 resulting, in particular, from high unemployment.  
banks, multinational organizations and consulting firms.  
Growth should therefore increase only slightly.  
DEVE LOPMEN T S I N T H E G LOBAL E CON OMY  
Germany  
Our forecasts are based on the assumption that global We expect that gross domestic product (GDP) in Germany will  
economic growth in 2020 will be at the same level as in the increase only at a low rate in 2020. The situation in the labor  
preceding year. We still believe that risks will arise from market will probably remain stable and bolster consumer  
protectionist tendencies, turbulence in the financial markets spending.  
and structural deficits in individual countries. In addition,  
growth prospects will be negatively impacted by continuing North America  
geopolitical tensions and conflicts as well as epidemics We assume that the economic situation in the USA will  
spanning countries and regions, such as the current spread of continue to be stable in 2020. GDP growth should be lower  
the coronavirus. We anticipate that momentum in both the than in the reporting period, however. The US Federal Reserve  
advanced economies and the emerging markets will be could further reduce the key interest rate during 2020.  
similar to that seen in 2019. We expect to see the strongest Economic growth is likely to remain more or less stable in  
rates of expansion in Asia’s emerging economies.  
Canada. In Mexico, we expect it to increase slightly following  
Furthermore, we anticipate that the global economy will stagnation in the previous year.  
also continue to grow in the period from 2021 to 2024.  
South America  
Europe/Other Markets  
The Brazilian economy will most likely stabilize in 2020 and  
In Western Europe, economic growth in 2020 is likely to record somewhat more dynamic growth than in the reporting  
decline slightly compared to the reporting year. Resolving period. Amid sustained high inflation, the economic  
structural problems continues to pose a major challenge, as situation in Argentina is expected to stay very tense.  
does the uncertain impact of the United Kingdom’s exit from  
the EU.  
Asia-Pacific  
In Central Europe, we estimate that growth rates in 2020 In 2020, the Chinese economy is expected to continue growing  
will remain approximately level with those for the past fiscal at a relatively high level, but will lose some of its momentum  
year. The economic situation in Eastern Europe should stabi- compared with prior years. The agreement on trade matters  
1
58  
Report on Expected Developments  
Group Management Report  
with the United States and fiscal policy by the government Sales of passenger cars in 2020 are expected to slightly fall  
are likely to have a stabilizing impact, whereas a further short of the prior-year figures in markets in Central and  
spread of the coronavirus may have a dampening effect on Eastern Europe. In Russia, we anticipate a market volume that  
the economic development. For India, we anticipate an expan- is slightly higher than in the previous year. The number of  
sion rate on a similar scale to the previous years. In Japan, new registrations should recede in most of the other markets  
growth is forecast to remain weak.  
in this region.  
Registrations of light commercial vehicles in the Central  
TRE N D S I N TH E M A RKET S FO R PA S SEN GER CA RS A N D L IGH T  
COMME RCIAL VE H IC LE S  
and Eastern European markets in 2020 will probably be  
noticeably lower than in the previous year. We expect a  
We expect trends in the markets for passenger cars in the distinct decline in market volume for Russia.  
individual regions to be mixed in 2020. Overall, the volume  
The Turkish passenger car market is projected to record a  
of global demand for new vehicles will probably match the sharp increase in 2020 in contrast to the weak preceding year.  
2019 level. We are forecasting growing demand for passenger The volume of new registrations in South Africa in 2020 is  
cars worldwide in the period from 2021 to 2024.  
likely to match the figure for the previous year.  
Trends in the markets for light commercial vehicles in the  
individual regions will also be mixed in 2020; on the whole, Germany  
we anticipate a slight dip in demand in 2020. We expect a After a positive performance overall in recent years, we assume  
return to the growth trajectory for the years 2021 to 2024.  
that demand in the German passenger car market will fall  
The Volkswagen Group is well prepared for the future noticeably year-on-year in 2020.  
challenges pertaining to the automotive mobility business  
We anticipate that registrations of light commercial vehi-  
and the mixed developments in regional automotive mar- cles will be up slightly on the previous year’s level.  
kets. Our brand diversity, our presence in all major world  
markets, our broad and selectively expanded product range, North America  
and our technologies and services put us in a good competi- The volume of demand in the markets for passenger cars and  
tive position worldwide. With electric drives, digital connec- light commercial vehicles (up to 6.35 tonnes) in North America  
tivity and autonomous driving, we want to make the auto- as a whole and in the USA in 2020 is likely to fall slightly short  
mobile cleaner, quieter, more intelligent and safer. We have of the previous year. Demand will probably remain highest  
set ourselves the goal of continuing to excite our customers for models in the SUV and pickup segments. In Canada, the  
in future and meeting their diverse needs with an appealing number of new registrations is also projected to be slightly  
product portfolio of impressive vehicles and forward-looking, lower than the previous year’s level. For Mexico, we expect a  
tailor-made mobility solutions.  
moderate fall in demand compared with the reporting year.  
Europe/Other Markets  
South America  
For 2020, we anticipate that the volume of new passenger car Owing to their dependence on demand for raw materials  
registrations in Western Europe will be distinctly below that worldwide, the South American markets for passenger cars  
recorded in the reporting period. The uncertain impact of the and light commercial vehicles are heavily influenced by  
United Kingdom’s exit from the EU is likely to further developments in the global economy. We expect to see an  
exacerbate the ongoing uncertainty among consumers, con- overall moderate increase in new registrations in the South  
tinuing to dampen demand. We expect a moderate decline on American markets in 2020 compared with the previous year.  
the British and Italian markets in 2020. In France and Spain, In Brazil, demand volume is expected to rise perceptibly  
the markets are likely to fall perceptibly short of the level again in 2020 following the increase in the reporting period.  
seen in the reporting year.  
However, we anticipate that demand in Argentina will be  
For light commercial vehicles, we expect demand in slightly lower year-on-year.  
Western Europe in 2020 to be distinctly lower than the prior-  
year level, owing to the uncertain impact of the United Asia-Pacific  
Kingdom’s exit from the EU and the pull-forward effect on In 2020, the passenger car markets in the Asia-Pacific region  
sales of the WLTP in 2019. In France, the United Kingdom, Italy are expected to be at the prior-year level. We expect, subject  
and Spain we are forecasting a marked drop in some cases.  
to a further spread of the coronavirus, demand in China to be  
Group Management Report  
Report on Expected Developments  
159  
slightly up on the previous year’s level. Attractively priced  
TRE N D S I N TH E M A RKET S FO R P OWE R EN GI N EER I NG  
entry-level models in the SUV segment in particular should We expect the market environment in power engineering to  
still see strong demand. For as long as there is no resolution in remain difficult in 2020, with continuation of the general  
sight, the trade dispute between China and the United States tendencies seen in 2019.  
will continue to weigh on business and consumer confidence.  
In 2020, the market volume for two-stroke engines used  
We anticipate a slight decrease in the Indian market com- in merchant shipping is likely to reach a higher level than in  
pared with the previous year. By contrast, Japan’s market the reporting period. Calls for high energy efficiency and low  
volume is forecast to record a distinct decrease in 2020.  
pollutant emissions will continue to have a significant influ-  
The market volume for light commercial vehicles in 2020 ence on ship designs in the future. We expect sustained stable  
will probably fall moderately short of the previous year’s demand in the market for four-stroke engines used in ferries,  
figure. We are expecting demand in the Chinese market to be cruise ships, dredgers and government vessels. In the offshore  
distinctly below that of the prior year. For India, we are fore- sector, new order volumes of special applications look set to  
casting a moderately higher volume in 2020 than in the be on the low side due to existing overcapacity. Overall, we  
reporting period. In the Japanese market, demand is likely to expect the marine market to be at a slightly higher level than  
be markedly lower than the previous year’s level.  
that seen in the reporting period. The competitive pressure  
will continue unabated.  
TRE N D S I N TH E M A RKET S FO R COMME RC IAL V EH ICLE S  
Demand for energy correlates strongly with macroeco-  
Starting in fiscal year 2020, we are redefining the relevant nomic and demographic trends, especially in emerging mar-  
markets of the Volkswagen Group for trucks and buses based kets. The global trend toward decentralized power stations  
on our core countries. Our relevant truck markets are the 27 and gas-based applications shows no sign of losing momen-  
EU member states excluding Malta, but including the United tum. For 2020, we expect demand to rise slightly for the gas  
Kingdom, Norway and Switzerland (EU27+3), as well as Brazil, sector in particular but to remain at a low level overall. On the  
Russia, Turkey and South Africa. The bus markets relevant for whole, this low level of demand poses a major challenge for  
the Volkswagen Group are the EU27+3, Brazil and Mexico.  
For 2020, we expect new registrations for mid-sized and  
the new market with carbon-neutral technologies.  
In turbomachinery, we expect to see continued strong  
heavy trucks with a gross weight of more than six tonnes to demand in 2020, attributable to an investment backlog and  
be distinctly lower than the 2019 level in markets that are also to stable commodity prices. High capacity utilization of  
relevant for the Volkswagen Group. We regard the declining production equipment by market participants can be  
incoming orders seen in 2019 and the anticipated drop in expected, which is likely to bring about a further easing of  
transport volumes as a sign of a downturn in the European competition. Energy generation is still marked by overca-  
truck market. For the EU27+3 countries, we expect a 10 to pacity on the part of electricity producers in industrialized  
2
0% downturn in the market in 2020. Russia will probably countries, but due to the increase in investments for power  
witness a distinct rebound in demand. In Turkey, we are generation using biomass and the use of natural gas as a  
forecasting a very sharp recovery of demand after a very low transition source of energy, we expect a slight increase in  
level in the prior year. For South Africa, we are forecasting a demand for steam and gas turbines. Renewable energy  
moderate decrease. We estimate that demand in Brazil will be sources in particular are expected to generate growth because  
much higher than in the previous year.  
their irregular electricity production will necessitate greater  
On average, we anticipate solid growth rates in the storage capacity. This is the reason the construction of pilot  
relevant truck markets for the years 2021 to 2024.  
plants for thermal storage is being pushed, which in turn has  
led a build out of the market for turbocompressors and  
A slight year-on-year increase in overall demand for 2020 is turboexpanders.  
likely in the bus markets relevant for the Volkswagen Group.  
We anticipate a stable trend in the marine and power  
We anticipate a moderate decline in the market in the EU27+3 plant after-sales business for diesel engines in 2020. In turbo-  
countries, a moderate increase in Mexico and new registra- machinery, we expect a slight upward trend for the coming  
tions in Brazil will probably be much higher than the prior- year. Particularly in the oil and gas sector we are seeing a  
year level.  
Overall, we expect a noticeable decrease in the demand backlog from recent years.  
for buses on the relevant markets for the period from 2021 to  
024.  
positive trend resulting from the clearing of the investment  
2
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60  
Report on Expected Developments  
Group Management Report  
For the period 2021 to 2024, we expect to see growing demand will probably continue. However, there is still a general event  
in the power engineering markets. However, the extent and risk – defined as the risk arising from unforeseen market  
timing of this growth will vary in the individual business fields. developments.  
TRE N D S I N TH E M A RKET S FO R FI NANC IAL SERV IC ES  
I NT E RE ST RATE T RE N DS  
We believe that automotive financial services will also be very Interest rates remained comparatively low with a few excep-  
important for vehicle sales worldwide in 2020. We expect tions in fiscal year 2019 due to the continuation of expan-  
demand to continue rising in emerging markets where mar- sionary monetary policies worldwide and the challenging  
ket penetration has so far been low. Regions with established overall economic environment. In the major Western indus-  
automotive financial services markets will see a continuation trialized nations, key interest rates persisted at a low level on  
of the trend towards enabling mobility at the lowest possible the whole. The US Federal Reserve changed course in the  
total cost. Integrated end-to-end solutions, which include summer in an effort to shore up the economy, cutting its key  
mobility-related service modules such as insurance and interest rate after several years of successive increases. The  
innovative packages of services, will become increasingly European Central Bank continued its expansionary monetary  
important for this. Additionally, we expect demand to policy. In the light of further expansionary monetary policy  
increase for new forms of mobility, such as rental services, measures, we currently therefore do not expect interest rates  
and for integrated mobility services, for example parking, in the USA and the eurozone to rise in 2020. For the years  
refueling and charging. We estimate that this trend will 2021 to 2024, however, we anticipate a rise in interest rates,  
continue in the years 2021 to 2024.  
though the pace will vary from region to region.  
In the mid-sized and heavy commercial vehicles category,  
we anticipate rising demand for financial services products in  
COM M ODI TY P R I CE TR E N DS  
emerging markets. In these countries in particular, financing Geopolitical and economic uncertainty in different forms  
solutions support vehicle sales and are thus an essential caused the prices for many raw and input materials to vary in  
component of the sales process. In the developed markets, we 2019. For example, average prices for raw materials such as  
expect to see increased demand for telematics services and crude oil, aluminum, lead, copper and coking coal fell, while  
services aimed at reducing total cost of ownership in 2020. prices for iron ore, rare earths, natural rubber and the pre-  
This trend is also expected to continue in the period 2021 to cious metals palladium and rhodium, among others, rose.  
2
024.  
Prices for the raw materials that are relevant for e-mobility  
also developed unevenly: average prices for lithium and  
cobalt fell, while nickel prices were up on the prior-year level.  
EXC HA N G E RAT E T R E N D S  
In 2019, the euro lost ground against the US dollar on an Based on analyses of factors of influence and trends in the  
annual average. The euro/sterling exchange rate remained commodity markets, we expect the prices of most commodi-  
stable overall, despite some volatility amid continued high ties to rise in 2020. For the years 2021 to 2024, we continue to  
uncertainty about the outcome of the Brexit negotiations with expect volatility in the commodity markets with prices  
the EU and the related question of what form this relationship trending upwards. We preventively analyze and limit these  
would take in the future. The currencies of Asian emerging risks using system-based procurement methods. Long-term,  
markets , the Russian ruble and the Mexican peso also posted stable supply agreements ensure that the Group’s needs are  
gains against the euro in the reporting period, in contrast to satisfied and guarantee a high degree of supply reliability.  
the Argentine peso, the Brazilian real and the South African  
rand which posted losses. For 2020, we are forecasting that the N EW M O DEL S I N 20 2 0  
euro will strengthen against the US dollar, sterling and the The Volkswagen Passenger Cars brand will launch the eighth  
Chinese renminbi. The expectation is that the Brazilian real generation of its best-selling Golf model in 2020 and it will  
and Indian rupee will remain relatively weak. The Russian again claim a leading position in the compact class with a  
ruble will probably be unable to maintain the recent positive sharper design, numerous technical highlights and an all-  
gains. For 2021 to 2024, we expect that the euro will be stable digital cockpit. The all-electric ID.3, the first vehicle to be based  
against the key currencies, but that the comparative weakness on the Modular Electric Drive Toolkit, aims to excite its  
of the currencies in the above-mentioned emerging markets customers with a range suited to everyday usability, a forward-  
Group Management Report  
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161  
looking design and equipment such as the augmented reality  
FUTU RE ORGAN I ZATIO NAL ST RU CTU RE OF T H E GROU P  
head-up display. In 2020, the T-Roc will be available as a con- Our plans are based on the Volkswagen Group’s current struc-  
vertible. The Arteon will receive a product upgrade and the tures.  
Arteon Shooting Brake will also be presented. The up! and the  
They do not include a possible sale of RENK AG or the pos-  
Tiguan will likewise receive a model update. In the Chinese sible acquisition of all outstanding ordinary shares of  
market, Volkswagen will continue its electric car offensive Navistar International Corporation.  
with the electric Tharu and the Tayron as a plug-in hybrid.  
The effects of such transactions on the results of oper-  
Alongside these, a multi-purpose vehicle, the coupé versions ations, financial position and net assets are not taken into  
of the Tayron and Tiguan L and the updated Phideon will be account in the forecast of the Volkswagen Group.  
launched. Volkswagen will strengthen its presence in the  
United States with the upgrated Atlas, the new Atlas Cross  
I NVE STME NT AN D FI NA NC IAL PL A N N I NG  
Sport and an electric SUV. South America will see the launch To ensure the Volkswagen Group’s future viability, we will  
of the sporty versions of the Polo and Virtus and the New continue to mobilize our pronounced strengths in inno-  
Urban Coupé Nivus.  
vation and technology and push the Volkswagen Group’s  
In 2020, Audi will launch more versions of the e-tron and transformation while leveraging our economies of scale and  
the likewise all-electric e-tron Sportback. With successor achieving the greatest possible synergies.  
models to the A3 and A3 Sportback, Audi is also looking to  
In our current planning for 2020, the majority of capex  
defend its lead in the premium segment of the compact class. (investments in property, plant and equipment, investment  
The A3 Sportback, the A6 saloon and the Avant will all be property and intangible assets, excluding capitalized develop-  
available as plug-in hybrids in 2020. The A5, Q2 and Q5 model ment costs) will be spent on new products and the continued  
series will be updated.  
rollout and further development of the modular toolkit. The  
ŠKODA will market two vehicles with all-electric drives focus on hybridization, electrification and digitalization of  
e
from 2020 – the Citigo IV and the new Enyaq SUV. Produc- our vehicles has been stepped up again, particularly through  
tion of the successor models to the successful Octavia and the development of the Modular Electric Drive Toolkit (MEB)  
Octavia Combi will also start. In addition, a plug-in hybrid and the Premium Platform Electric (PPE), the all-electric  
will be available in the Octavia and Superb series. The Chi- platform for our premium and sports brands. We are also  
nese, Indian and Russian markets will see the launch of the investing in the modification of selected locations for the  
Rapid model tailored to the requirements of local customers.  
production of electric vehicles. The Automotive Division’s  
In 2020, SEAT will offer the el-Born, an all-electric vehicle ratio of capex to sales revenue will fluctuate around a level of  
with a sporty emotive design. The new Leon is waiting in the 6.0–6.5%.  
wings. CUPRA will also present a particularly powerful  
version of the Leon and expand its product range with the tions to capitalized development costs. Among other things,  
addition of its first standalone model, the CUPRA Formentor. these reflect upfront expenditures in connection with the  
Following the launch of the Taycan in the United States at electrification and updating of our model range.  
Besides capex, investing activities will also include addi-  
the end of 2019, Porsche will gradually introduce the all-  
electric sports car to further markets in 2020.  
With the investments in our facilities and models, as well  
as in the development of electric drives and modular toolkits,  
Bentley will present the luxurious spearhead of the model we are laying the foundations for profitable, sustainable  
series with the Continental GT Mulliner Convertible. growth at Volkswagen. These investments also include com-  
Lamborghini will bring out an upgrade of its Huracán RWD. mitments arising from decisions taken in previous fiscal  
Volkswagen Commercial Vehicles will present the succes- years.  
sor model of the Caddy, popular with families and trades-  
people alike.  
We aim to finance the investments in our Automotive  
Division from our own capital resources and expect cash  
Scania and MAN will also work steadily on introducing flows from operating activities to exceed the Automotive  
new products and services in 2020. Division’s investment requirements. For 2020, we expect  
Ducati will launch the Streetfighter V4 and the Street- further cash outflows resulting from the diesel issue and  
fighter V4 S in addition to three new models from the Panigale significantly higher outflows from mergers & acquisitions.  
family, among others. The Icon Dark model will also expand We estimate that net cash flow in 2020 will subsequently be  
the Scrambler family.  
clearly positive albeit perceptibly below the prior-year figure.  
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Report on Expected Developments  
Group Management Report  
Nevertheless, net liquidity in the Automotive Division will  
probably be distinctly higher than in the reporting period.  
SUM M A RY O F EX P E C T E D D EV E LOPM E N T S  
The Volkswagen Group’s Board of Management expects the  
These plans are based on the Volkswagen Group’s current global economy to continue growing in 2020 at the level of  
structures. A possible sale of RENK AG and related cash the previous year. We still believe that risks will arise from  
inflows are not taken into account. Our planning also does protectionist tendencies, turbulence in the financial markets  
not include cash outflows for a possible acquisition of all and structural deficits in individual countries. In addition,  
outstanding ordinary shares of Navistar International Corpo- growth prospects will be negatively impacted by continuing  
ration.  
geopolitical tensions and conflicts as well as epidemics span-  
Our joint ventures in China are accounted for using the ning countries and regions, such as the current spread of the  
equity method and are therefore not included in the figures coronavirus. We anticipate that momentum in both the  
above. For 2020, the joint ventures plan to invest in advanced economies and the emerging markets will be  
e-mobility, further enhancement of the model portfolio, the similar to that seen in 2019. We expect to see the strongest  
development of new mobility solutions and smart city rates of expansion in Asia’s emerging economies.  
concepts. Their capex will exceed the 2019 level and be  
financed from the companies’ own funds.  
The trend in the automotive industry closely follows  
global economic developments. We assume that competition  
In the Financial Services Division, we are planning higher in the international automotive markets will intensify further.  
investments in 2020 than in the previous year. We expect the  
We predict that trends in the markets for passenger cars  
growth in lease assets and in receivables from leasing, cus- in the individual regions will be mixed in 2020. Overall, the  
tomer and dealer financing to lead to funds tied up in volume of global demand for new vehicles will probably  
working capital, of which around half will be financed from match that of 2019. For 2020, we anticipate that the volume  
the gross cash flow. As is common in the sector, the of new passenger car registrations in Western Europe will be  
remaining funds needed will be met primarily through distinctly below that recorded in the reporting period. After a  
unsecured bonds on the money and capital markets, the positive performance overall in recent years, we expect  
issuing of asset-backed securities, customer deposits from demand in the German passenger car market to fall notice-  
the direct banking business, and through the use of inter- ably year-on-year in 2020. Sales of passenger cars are  
national credit lines.  
expected to fall slightly short of the prior-year figures in  
markets in Central and Eastern Europe in 2020. The volume  
of demand in the markets for passenger cars and light  
TA RGE T S FO R VA LU E-BA SED M A N AGEME NT  
Based on long-term interest rates derived from the capital commercial vehicles (up to 6.35 tonnes) in North America in  
market and the target capital structure (fair value of equity 2020 is likely to be slightly lower than in the prior year. We  
to debt = 2:1), the minimum required rate of return on expect to see an overall moderate increase in new registra-  
invested capital defined for the Automotive Division remains tions for passenger cars and light commercial vehicles in the  
unchanged at 9%.  
South American markets in 2020 compared with the previous  
In spite of the change in the accounting for leases year. The passenger car markets in the Asia-Pacific region are  
IFRS 16), which entered into force in January 2019 and expected to be at the prior-year level in 2020.  
(
increased invested capital in fiscal year 2019, as well as other  
Trends in the markets for light commercial vehicles in the  
adverse effects of the special items on earnings, we exceeded individual regions will also be mixed in 2020; on the whole,  
both the prior-year figure and our minimum rate of return we anticipate a slight dip in demand.  
on invested capital in the reporting period with a return on  
We expect a distinct year-on-year fall in 2020 of new regis-  
investment (ROI) of 11.2 (11.0)% (see also page 125). Invested trations of mid-sized and heavy trucks with a gross weight of  
capital will continue to increase further in 2020 as a result of more than six tonnes in the markets relevant for the Com-  
investments in new models, in the development of alter- mercial Vehicles Business Area. In the bus markets that are  
native drives and modular toolkits and in future technol- relevant for the Volkswagen Group, we expect to see a slight  
ogies. The return on investment (ROI) in the Automotive increase in overall demand in 2020 compared with the pre-  
Division will probably exceed our minimum required rate of vious year.  
return on invested capital and be slightly higher than in the  
previous year.  
We believe that automotive financial services will again  
be very important for vehicle sales worldwide in 2020.  
Group Management Report  
Report on Expected Developments  
163  
The Volkswagen Group is well prepared for the future chal- prior-year. In terms of operating profit for the Group and the  
lenges pertaining to automobility business activities and for Passenger Cars Business Area, we forecast an operating return  
the mixed development of the regional automotive markets. on sales in the range of 6.5–7.5% in 2020. For the Commercial  
Our brand diversity, our presence in all major world markets, Vehicles Business Area, we anticipate an operating return on  
our broad and selectively expanded product range, and our sales of 4.0–5.0% amid a moderate decrease in sales revenue.  
technologies and services put us in a good competitive posi- In the Power Engineering Business Area we expect that sales  
tion worldwide. As part of the transformation of our core revenue will match that of the previous year and that the  
business, we are positioning our Group brands with an even operating loss will become smaller. For the Financial Services  
stronger focus on their individual characteristics and are Division we forecast that sales revenue and the operating  
optimizing the vehicle and drive portfolio. The focus is pri- result will be in line with the previous year.  
marily on our vehicle fleet’s carbon footprint and on the  
In the Automotive Division, the R&D ratio and the ratio of  
most attractive and fastest-growing market segments. In capex to sales revenue will probably fluctuate in the range of  
addition, we are working to leverage the advantages of our 6.0–6.5% in 2020. We anticipate further cash outflows  
multibrand Group even more effectively with the ongoing resulting from the diesel issue and significantly higher  
development of new technologies and the enhancement of outflows from mergers & acquisitions in 2020. Consequently,  
our toolkits. With electric drives, digital connectivity and we estimate that the net cash flow will be clearly positive  
autonomous driving, we want to make the automobile albeit perceptibly below the prior-year figure. Net liquidity in  
cleaner, quieter, more intelligent and safer. We have set the Automotive Division will probably distinctly exceed the  
ourselves the goal of continuing to excite our customers in prior-year level. We expect a slight increase in return on  
future and meeting their diverse needs with an appealing investment (ROI) compared with the previous year. Our  
product portfolio of impressive vehicles and forward-looking, unchanged stated goal is to continue our solid liquidity  
tailor-made mobility solutions.  
policy.  
To achieve sustainable success, we need skilled and dedi-  
We expect deliveries to customers of the Volkswagen  
Group in 2020 to be in line with the previous year amid cated employees. We aim to increase their satisfaction and  
market conditions that continue to be demanding.  
motivation by means of equal opportunities, an attractive  
Challenges will arise particularly from the economic situ- and modern working environment, and a forward-looking  
ation, the increasing intensity of competition, volatile com- organization of work. Every day, we at the Volkswagen Group  
modity and foreign exchange markets and more stringent assume and exercise responsibility in issues relating to the  
emissions-related requirements.  
environment, safety and society. In terms of integrity, Volks-  
We expect the sales revenue of the Volkswagen Group to wagen aims to become a role model for a modern, trans-  
grow by up to 4% in 2020 and the sales revenue of the Passen- parent and successful enterprise. We are also aiming for  
ger Cars Business Area to be moderately higher than in the operational excellence in all business processes.  
1
64  
Report on Risks and Opportunities  
Group Management Report  
Report on Risks and Opportunities  
(
CO N TA I N S T H E R E P O RT I N ACCO R DA N C E W I T H S E C T I O N 2 8 9 ( 4 ) O F T H E H G B )  
Promptly identifying the risks and opportunities arising from our operating activities and taking  
a forward-looking approach to managing them is crucial to our Company’s long-term success.  
A comprehensive risk management and an internal control system help the Volkswagen Group  
deal with risks in a responsible manner.  
In this section, we first explain the objective and structure of  
the Volkswagen Group’s risk management system (RMS) and  
internal control system (ICS) and describe these systems with  
regard to the financial reporting process. We then outline the  
main risks and opportunities arising in our business activi-  
ties.  
THE THREE LINES OF DEFENSE MODEL  
SUPERVISORY BOARD  
BOARD OF MANAGEMENT  
OB J E CT IVE O F TH E RI SK M A NAG E MENT SY STEM A N D I NTE RNA L  
CON TRO L SY STE M AT VOL KSWAG EN  
st  
nd  
2
Group  
Risk Management  
rd  
3
Group  
Internal Audit  
1
Only by promptly identifying, accurately assessing and  
effectively and efficiently managing the risks and oppor-  
tunities arising from our business activities can we ensure  
the Volkswagen Group’s long-term success. The aim of the  
RMS/ICS is to identify potential risks at an early stage so that  
suitable countermeasures can be taken to avert the threat of  
line of defense  
line of defense  
line of defense  
Companies  
and business units  
loss to the Company, and any risks that might jeopardize its areas are covered in full. Uniform Group principles are used  
continued existence can be ruled out.  
as the basis for managing risks in a standardized manner.  
Assessing the likelihood of occurrence and extent of Opportunities are not recorded.  
future events and developments is, by its nature, subject to  
Another key element of the RMS/ICS at Volkswagen is the  
uncertainty. We are therefore aware that even the best RMS three lines of defense model, a basic element required by the  
cannot foresee all potential risks and even the best ICS can European Confederation of Institutes of Internal Auditing  
never completely prevent irregular acts.  
(ECIIA), among other bodies. In line with this model, the  
Volkswagen Group’s RMS/ICS has three lines of defense that  
are designed to protect the Company from significant risks  
occurring.  
STRU CTU R E OF T H E RI SK M A N AG EMEN T SY STE M AN D I NTE RNA L  
CON TRO L SY STE M AT VOL KSWAG EN  
The organizational design of the Volkswagen Group’s RMS/ICS  
The minimum requirements for the RMS/ICS, including  
is based on the internationally recognized COSO framework the concept of the three lines of defense, are set out in  
for enterprise risk management (COSO: Committee of Spon- guidelines for the entire Group.  
soring Organizations of the Treadway Commission). Struc-  
The RMS/ICS was further developed in the past fiscal year.  
turing the RMS/ICS in accordance with the COSO framework A new risk management IT system, Risk Radar, was intro-  
for enterprise risk management ensures that potential risk duced in almost all brands. In this way, we have increased  
Group Management Report  
Report on Risks and Opportunities  
165  
process and data security and reduced our manual workload  
through automated workflows and end-to-end system  
support for the analysis of data. At the same time, risk  
awareness in the Company is further intensified, risk trans-  
parency is improved and risks can be analyzed with end-to-  
end system support. The ICS has been standardized for risky  
business processes in significant companies. We will con-  
tinue to develop our RMS/ICS in the future.  
First line of defense: operational risk management  
The primary line of defense comprises the operational risk  
management and internal control systems at the individual  
Group companies and business units. The RMS/ICS is an  
integral part of the Volkswagen Group’s structure and work-  
flows. Events that may give rise to risk are identified and  
assessed locally in the divisions and at the investees. Counter-  
measures are introduced immediately, the remaining  
potential impacts assessed, and the information incorporated  
into the planning in a timely manner. Material risks are  
reported to the relevant committees on an ad hoc basis. The financial loss (Mat) and reputational damage (Rep) and  
results of the operational risk management process are criminal relevance (Penal). A score between 0 and 10 is  
incorporated into budget planning and financial control on assigned to each of these criteria. The measures taken to  
an ongoing basis. The targets agreed in the budget planning manage and control risk are taken into account in the risk  
rounds are continually reviewed in revolving planning assessment (net perspective). The result is a risk score that  
updates. At the same time, the results of risk mitigation mea- expresses the risk.  
sures are incorporated in a timely manner into the monthly  
The score for a likelihood of occurrence of more than 50%  
forecasts regarding further business development. This in the analysis period is classified as high; for a medium  
means that the Board of Management also has access to an classification the likelihood of occurrence is at least 25%. For  
overall picture of the current risk situation via the docu- the criterion of financial loss, the score rises with an  
mented reporting channels during the year.  
increasing scale; the highest score of 10 is reached upwards of  
The risk management and internal control system in €1 billion. The criterion of reputational damage can have  
operation also includes compliance with the so called Golden characteristics ranging from local erosion of confidence and  
Rules in the areas of control unit software development, loss of trust at local level to loss of reputation at regional or  
emission classification and escalation management. These international level. Criminal relevance is classified based on  
rules are the minimum requirements in the organization, the influence on the local company, the brand or the Group.  
processes and tools & systems categories.  
In addition to strategic, operational and reporting risks,  
risks arising from potential compliance violations are also  
integrated into this process. Moreover, the effectiveness of  
key risk management and control measures is tested and any  
Second line of defense: identifying and reporting systemic and acute  
risks using Group-wide processes  
In addition to the ongoing operational risk management, the weaknesses identified in the process are reported and recti-  
Group Risk Management department sends standardized fied.  
surveys each year on the risk situation and the effectiveness  
All Group companies and units selected from among the  
of the RMS/ICS to the significant Group companies and units entities in the consolidated Group on the basis of materiality  
worldwide (regular Governance, Risk & Compliance (GRC) and risk criteria were subject to the regular GRC process in  
process).  
As part of this process, each systemic risk inherent to the  
fiscal year 2019.  
Quarterly risk reports are produced in addition to the  
process or inherent to the business that is reported is annual risk assessment. These depict the Volkswagen Group’s  
recorded and assessed in our RICORS IT system. The risk acute – short to medium-term – risk situation. The assess-  
assessment is made by multiplying the criterion of likelihood ment of risks from this quarterly risk process (QRP) is  
of occurrence (Prop) with the potential extent of the damage. conducted in the Risk Radar IT system similarly to that of the  
The extent of the damage is calculated from the criteria of annual regular GRC process. All Group brands as well as  
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ANNUAL STANDARD GOVERNANCE, RISK AND COMPLIANCE PROCESS  
Third line of defense: Review by Group Internal Audit  
Group Internal Audit helps the Board of Management to  
monitor the various divisions and corporate units within the  
Group. It regularly checks the risk early warning system and  
the structure and implementation of the RMS/ICS and the  
compliance management system (CMS) as part of its inde-  
pendent audit procedures.  
Selection  
of companies  
and units  
RI SK EA R LY WA R N I N G SY ST EM I N LI N E WIT H TH E KONTRAG  
Follow-up activities  
Data identified/  
The Company’s risk situation is ascertained, assessed and  
documented in accordance with the requirements of the  
Gesetz zur Kontrolle und Transparenz im Unternehmens-  
bereich (KonTraG – German Act on Control and Transparency  
in Business). The requirements for a risk early warning  
system are met by means of the RMS/ICS elements described  
above (first and second lines of defense). Independently of  
this, the external auditors check both the processes and  
procedures implemented in this respect and the adequacy of  
the documentation on an annual basis. The plausibility and  
adequacy of the risk reports are examined on a random basis  
targeting weaknesses  
assessed in the units  
Documentation  
of effectiveness  
in the units  
Reporting  
Porsche Holding Salzburg, Volkswagen Financial Services AG in detailed interviews with the divisions and companies  
and Volkswagen Bank GmbH are included in the QRP.  
concerned together with the external auditors. The latter  
In addition, significant changes to the risk situation that assessed our risk early warning system based on this volume  
can arise in the short term, for instance from unexpected of data and ascertained that the risks identified were  
external events – such as the current spread of the corona- presented and communicated accurately. The risk early  
virus – are reported to the Board of Management as required. warning system meets the requirements of the KonTraG.  
This is necessary if, among other things, the risk may lead to  
damages of over €1 billion.  
In addition, scheduled examinations as part of the audit  
of the annual financial statements are conducted at com-  
Based on the feedback from the annual standard GRC pro- panies in the Financial Services Division. As a credit institu-  
cess and quarterly risk surveys, the overall picture of the tion, Volkswagen Bank GmbH, including its subsidiaries, is  
potential risk situation is updated and the system’s effec- subject to supervision by the European Central Bank, while  
tiveness assessed.  
Volkswagen Leasing GmbH as a financial services institution  
A separate Group Board of Management Committee for and Volkswagen Versicherung AG as an insurance company  
Risk Management examines the key aspects of the RMS/ICS are subject to supervision by the relevant division of the  
every quarter. Its tasks are as follows:  
Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin – the  
ꢀ to further increase transparency in relation to significant German Federal Financial Supervisory Authority). As part of  
risks to the Group and their management,  
the scheduled supervisory process and unscheduled audits,  
ꢀ to explain specific issues where these constitute a signifi- the competent supervisory authority assesses whether the  
cant risk to the Group,  
requirements, strategies, processes and mechanisms ensure  
ꢀ to make recommendations on the further development of solid risk management and solid risk cover. Furthermore, the  
the RMS/ICS,  
Prüfungsverband deutscher Banken (Auditing Association of  
ꢀ to support the open approach to dealing with risks and German Banks) audits Volkswagen Bank GmbH from time to  
promote an open risk culture.  
time.  
Risk reporting to the committees of Volkswagen AG depends  
Volkswagen Financial Services AG operates a risk early  
on materiality thresholds. Systemic risks from a risk score of warning and management system. This system ensures that  
0 and acute risks from a risk score of 40 or potential finan- the locally applicable regulatory requirements are adhered to  
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2
cial damages of €1 billion or more are regularly presented to and at the same time enables appropriate and effective risk  
the Board of Management and the Audit Committee of the management at Group level. Important components of it are  
Supervisory Board of Volkswagen AG.  
regularly reviewed as part of the audit of the annual financial  
statements.  
Group Management Report  
Report on Risks and Opportunities  
167  
Monitoring the effectiveness of the risk management system and the  
internal control system  
Control activities at Group level include analyzing and, if  
necessary, adjusting the data reported in the financial  
To ensure the effectiveness of the RMS/ICS, we regularly opti- statements presented by the subsidiaries, taking into account  
mize it as part of our continuous monitoring and improve- the reports submitted by the auditors and the outcome of the  
ment processes. In the process, we give equal consideration meetings on the financial statements with representatives of  
to both internal and external requirements. On a case-by-case the individual companies. These discussions address both the  
basis, external experts assist in the continuous enhancement plausibility of the single-entity financial statements and  
of our RMS/ICS. The results culminate in both regular and specific significant issues at the subsidiaries. Alongside  
event-driven reporting to the Board of Management and plausibility checks, other control mechanisms applied during  
Supervisory Board of Volkswagen AG.  
the preparation of the single-entity and consolidated finan-  
cial statements of Volkswagen AG include the clear delin-  
eation of areas of responsibility and the application of the  
dual control principle.  
TH E R I SK M A NAGEMEN T AN D I N TEGRAT ED I NTE R NAL CO NTROL  
SY STEM I N T H E CONT EXT OF T H E FI NA NC IAL RE PO RT I NG PRO CE SS  
The accounting-related part of the RMS/ICS that is relevant  
The combined management report of the Volkswagen  
for the financial statements of Volkswagen AG and the Volks- Group and Volkswagen AG is prepared – in accordance with  
wagen Group as well as its subsidiaries comprises measures the applicable requirements and regulations – centrally but  
intended to ensure that the information required for the with the involvement of and in consultation with the Group  
preparation of the financial statements of Volkswagen AG, units and companies.  
the consolidated financial statements and the combined  
In addition, the accounting-related internal control  
management report of the Volkswagen Group and Volks- system is independently reviewed by Group Internal Audit in  
wagen AG is complete, accurate and transmitted in a timely Germany and abroad.  
manner. These measures are designed to minimize the risk of  
material misstatement in the accounts and in the external Integrated consolidation and planning system  
reporting.  
The Volkswagen consolidation and corporate management  
system (VoKUs) enables the Volkswagen Group to consolidate  
and analyze both Financial Reporting’s backward-looking  
data and Controlling’s budget data. VoKUs offers centralized  
Main features of the risk management and integrated internal control  
system in the context of the financial reporting process  
The Volkswagen Group’s accounting is essentially organized master data management, uniform reporting, an authori-  
along decentralized lines. For the most part, accounting zation concept and maximum flexibility with regard to  
duties are performed by the consolidated companies them- changes to the legal environment, providing a future-proof  
selves or entrusted to the Group’s shared service centers. In technical platform that benefits Group Financial Reporting  
principle, the audited financial statements of Volkswagen AG and Group Controlling in equal measure. To verify data  
and its subsidiaries prepared in accordance with IFRSs and consistency, VoKUs has a multi-level validation system that  
the Volkswagen IFRS Accounting Manual are transmitted to primarily checks content plausibility between the balance  
the Group in encrypted form. A standard market product is sheet, the income statement and the notes.  
used for encryption.  
The Volkswagen IFRS Accounting Manual, which has been  
RI SKS A N D OPPO RTU N ITI ES  
prepared in line with external expert opinions in certain In this section, we outline the main risks and opportunities  
cases, ensures the application and assessment of uniform arising in our business activities. In order to provide a better  
accounting policies based on the requirements applicable to overview, we have grouped the risks and opportunities into  
the parent. In particular, it includes more detailed guidance categories. At the beginning of each risk category, we state the  
on the application of legal requirements and industry- most significant risks in order of their importance as  
specific issues. Components of the reporting packages that identified using the risk score from the regular GRC process  
are required to be prepared by the Group companies are also and the quarterly risk process (QRP). We then describe the  
set out in detail there, and requirements have been estab- individual risks in no particular order. Unless explicitly  
lished for the presentation and settlement of intragroup mentioned, there were no material changes to the specific  
transactions and the balance reconciliation process that risks and opportunities compared with the previous year  
builds on this.  
even though the weighting of individual risks has increased  
with the transformation of the industry.  
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Report on Risks and Opportunities  
Group Management Report  
AVERAGE SCORES OF THE RISK CATEGORIES  
10  
Risks from the  
9
macroeconomy,  
6
1
the sector, markets  
and sales  
8
7
6
5
high  
>
50%  
Research and  
development risks  
2
3
2
7
3
4
5
6
7
Operational risks  
4
1
Environmental  
and social risks  
medium  
4
>
25%  
5
Legal risks  
3
2
1
Financial risks  
low  
25%  
<
Risks from mergers &  
acquisitions and/or  
other strategic  
partnerships/  
investments  
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20  
low  
medium  
Potential extent of damage  
weighted score of financial loss, reputational damage and criminal relevance)  
high  
(
The risks from the regular GRC process and the QRP reported Risks and opportunities from the macroeconomy, the sector, markets  
to the Board of Management and the Audit Committee are and sales  
incorporated into the assessment of the Volkswagen Group’s The most significant risks from the regular GRC process and  
risk categories. The risk categories are plotted based on the the QRP lie in restrictions on trade and increasingly pro-  
average scores.  
tectionist tendencies resulting in a negative trend in markets  
We use analyses of the competition and the competitive and unit sales.  
environment in addition to market studies to identify not  
only risks but also opportunities that have a positive impact  
Macroeconomic risks and opportunities  
on the design of our products, the efficiency with which they We believe that risks to continued global economic growth  
are produced, their success in the market and our cost arise primarily from turbulence in the financial and com-  
structure. Where they can be assessed, risks and opportuni- modity markets, increasingly protectionist tendencies, and  
ties that we expect to occur are already reflected in our structural deficits, which pose a threat to the performance of  
medium-term planning and our forecast. The following individual advanced economies and emerging markets. In  
therefore reports on internal and external developments as addition, there are increasing environmental challenges that  
risks and opportunities that, based on existing information, affect individual countries and regions to varying degrees.  
may result in a negative or positive deviation from our The possible worldwide transition from an expansionary  
forecast or targets.  
monetary policy to a more restrictive one also presents risks  
Group Management Report  
Report on Risks and Opportunities  
169  
for the macroeconomic environment. Persistently high and developing markets or are working systematically  
private- and public-sector debt in many places is clouding the towards this goal. Particularly in smaller markets with growth  
outlook for growth and may likewise cause markets to potential, we are increasing our presence with the help of  
respond negatively. Declines in growth in key countries and strategic partnerships in order to cater to local requirements.  
regions often have an immediate impact on the state of the  
Price pressure in established automotive markets for new  
global economy and therefore pose a central risk. In partic- and used vehicles as a result of high market saturation is a  
ular, the Volkswagen Group would be adversely affected by a particular challenge for the Volkswagen Group as a supplier  
disorderly Brexit and by other trade policy measures such as of volume and premium models. Competitive pressures are  
tariffs or non-tariff trade barriers.  
likely to remain high in the future. Individual manufacturers  
The economic development of some emerging economies may respond by offering incentives in order to meet their  
is being hampered primarily by dependence on energy and sales targets, putting the entire sector under additional  
commodity prices and capital inflows, but also by socio- pressure.  
political tensions. Corruption, inadequate government struc-  
tures and a lack of legal certainty also pose risks.  
Excess capacity in global automotive production may  
lead to a rise in inventories and therefore an increase in the  
Geopolitical tensions and conflicts, along with signs of amount of capital tied up. With a decline in demand for vehi-  
fragmentation in the global economy, are a further major risk cles and genuine parts, automotive manufacturers may adjust  
factor to the performance of individual countries and regions. their capacities or intensify measures to promote sales. This  
In light of the existing, strong global interdependence, local would lead to additional costs and greater price pressure.  
developments could have adverse effects on the world  
The growth markets of Central and Eastern Europe, South  
economy. Any escalation of the conflicts in Eastern Europe, America and Asia are particularly important to the Volks-  
the Middle East, or Africa, for example, could cause upheaval wagen Group. These markets harbor considerable potential;  
on the global energy and commodity markets and exacerbate however, the underlying conditions in some countries in  
migration trends. An aggravation of the situation in East Asia these regions make it difficult to increase unit sales figures  
could put further strain on the global economy. The same there. Some have high customs barriers or minimum local  
applies to violent conflicts, terrorist activities, cyber attacks content requirements for production, for example. At the  
and the spread of infectious diseases, which may prompt same time, wherever the economic and regulatory situation  
unexpected, short-term responses from the markets.  
permits, there are opportunities above and beyond current  
On the whole, we do not anticipate a global recession for projections. These arise from faster growth in the emerging  
the year 2020. However, due to the risk factors mentioned, as markets where vehicle densities are currently still low.  
well as cyclical and structural aspects, a decline in global  
economic growth or a period of below-average growth rates is cities will impose a driving ban on diesel vehicles in order to  
possible. comply with emission limits. In China, restrictions on vehicle  
In Europe, there is a risk that further municipalities and  
The macroeconomic environment may also give rise to registrations could enter into force in further metropolitan  
opportunities for the Volkswagen Group if actual develop- areas in the future. Furthermore, China imposed a so-called  
ments differ in a positive way from expected developments.  
“new energy vehicle quota” in 2019, which means that  
battery-electric vehicles, plug-in hybrids and fuel cell vehicles  
will have to account for a certain proportion of a manufac-  
Sector-specific risks and market opportunities/potential  
Western Europe, especially Germany, and China are our main turer’s new passenger car fleet. To ensure compliance with  
sales markets. A drop in demand in these regions due to the emissions standards, we continuously tailor our range of  
economic climate would have a particularly strong impact on vehicle models and engines to the conditions in the relevant  
the Company’s earnings including financial services. We markets. These requirements may lead to higher costs and  
counter this risk with a clear, customer-oriented and inno- consequently to price increases and declines in volumes.  
vative product and pricing policy.  
The demand that built up in individual established markets  
Outside Western Europe and China, delivery volumes are in times of crisis could result in a more marked recovery if the  
spread widely across the key regions: Central and Eastern economic environment eases more quickly than expected.  
Europe, North America and South America. In addition, we  
Economic performance varied in individual regions in fis-  
either already have a strong presence in numerous existing cal year 2019. The resulting challenges for our trading and  
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Report on Risks and Opportunities  
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sales companies, such as efficient inventory management  
China  
and a profitable dealer network, are considerable and are In China, the largest market in the Asia-Pacific region, there  
being met by appropriate measures on their part. However, was a noticeable year-on-year decline in the passenger car  
financing business activities through bank loans remains market in the reporting year. Demand for vehicles is expected  
difficult. Our financial services companies offer dealers finan- to increase in the coming years due to the need for individual  
cing on attractive terms with the aim of strengthening their mobility. However, the current trade dispute with the USA  
business models and reducing operational risk. We have will slow the pace of this growth. It is also expected that  
installed a comprehensive liquidity risk management system demand will shift from the coastal metropolises to the  
so that we can promptly counteract any liquidity bottlenecks interior. In order to leverage the considerable opportunities  
at the dealers’ end that could hinder smooth business opera- offered by this market – also with regard to e-mobility – and  
tions.  
to defend our strong market position in China over the long  
We continue to approve loans for vehicle finance on the term, we are continuously expanding our product range to  
basis of the same cautious principles applied in the past, for include models that have been specially developed for this  
example by taking into account the regulatory requirements market. We are further extending our production capacity in  
of section 25a(1) of the Kreditwesengesetz (KWG – German this growing market through additional production facilities.  
Banking Act).  
Volkswagen may be exposed to increased competition in India  
aftermarkets for regulatory reasons. This is due to the pro- Despite political stability, India’s economic momentum  
visions of the block exemption regulations, which have slowed in 2019. The passenger car market was unable to  
applied to after-sales services since June 2010, and also to the continue its growth path and declined considerably. We  
amendments included in EU Regulation 566/2011 of June 8, expect the market to fall slightly short of the prior-year level  
2
1
011 and EU Regulation 858/2018 applicable from September in 2020 but to return to growth in subsequent years. Against  
, 2020, regarding access by independent market participants this backdrop, the Group is currently consolidating its  
to technical information.  
activities, as India remains an important strategic future  
In Germany, legislation is currently being prepared to market for the Group.  
restrict or abolish design protection for repair parts through  
the introduction of a repair clause. In addition, the European  
USA  
Commission is evaluating the market with regard to existing The volume of the US vehicle market in 2019 was slightly  
design protection. A possible restriction or abolition of design down on the previous year. In 2020, the market volume is  
protection for visible replacement parts could adversely again expected to be slightly down on the reporting period.  
affect the Volkswagen Group’s genuine parts business.  
In the USA, Volkswagen Group of America is consistently pur-  
The automotive industry faces a process of transfor- suing the strategy of becoming a full-fledged volume supplier.  
mation with far-reaching changes. Electric drives, connected The expansion of local production capacity – including a  
vehicles and autonomous driving are associated with both production facility for electric vehicles in the future – will  
opportunities and risks for our sales. In particular, more allow the Group to better serve the market in the North  
rapidly evolving customer requirements, swift implemen- America region. We are also working intensively on offering  
tation of legislative initiatives and the market entry of new additional products specifically tailored to the US market.  
competitors from outside the industry will require changed  
products, a faster pace of innovation and adjustments to Brazil  
business models. There is uncertainty regarding the wide- The economic environment eased somewhat in the reporting  
spread use of electric vehicles and the availability of the year, while Brazil’s political path has been uncertain since the  
necessary charging infrastructure.  
presidential elections. The volume of demand in the vehicle  
Furthermore, we cannot entirely rule out the possibility market continued to recover markedly compared with the  
of freight deliveries worldwide being shifted from trucks to weak prior years. We anticipate a continued upturn in  
other means of transport, and demand for the Group’s demand in 2020. The growing number of automobile manu-  
commercial vehicles falling as a result.  
Below, we outline the regions and markets with the increase in price pressure and competition. The Brazilian  
greatest growth potential for the Volkswagen Group.  
market plays a key role for the Volkswagen Group. To  
facturers with local production has resulted in a sharp  
Group Management Report  
Report on Risks and Opportunities  
171  
strengthen our competitive position here, we offer vehicles As part of the capital goods industry, the Power Engineering  
that have been specially developed for this market and are business is affected by fluctuations in the investment climate.  
locally produced, such as the Gol and the Virtus.  
Even minor changes in growth rates or growth forecasts,  
resulting from geopolitical uncertainties or volatile com-  
modities and foreign exchange markets, for example, can  
Russia  
The volume of the Russian vehicle market in 2019 was lead to significant changes in demand or the cancellation of  
slightly down on the previous year and we are forecasting already existing orders. The measures we use to counter the  
that the passenger car market will slightly exceed the considerable economic risks include flexible production  
reporting year in 2020. However, the heavy reliance on oil concepts and cost flexibility by means of temporary employ-  
and gas income, rising taxes, currency volatility resulting at ment, working time accounts and short-time work, and – if  
present in high vehicle prices, the political crisis and the necessary – structural adjustments.  
related sanctions imposed by the EU and the USA continue to  
impact the development of demand negatively. The market  
Sales risks  
remains strategically important to the Volkswagen Group, As a result of the diesel issue, the Volkswagen Group may  
which is why we have a strong focus on market cultivation experience decreases in demand, possibly exacerbated by  
there.  
media reports or insufficient communication. Other poten-  
tial consequences include lower margins in the new and used  
car businesses and a temporary increase in funds tied up in  
The Middle East  
Political and economic uncertainty is weighing on the working capital. The Volkswagen Group has recognized  
region’s main sales markets, particularly Turkey. Here, the provisions arising from the diesel issue, in particular for the  
continued weakness of the Turkish lira and the resulting high service measures, recalls and customer-related measures.  
inflation, among other things, led to a decline in purchasing Further significant financial liabilities may emerge due to  
power and therefore weaker demand in 2019. Despite the existing estimation risks particularly from technical solu-  
instability, however, the Middle East region offers short-term tions, repurchase obligations, customer-related measures and  
and long-term growth potential. We aim to leverage the possible official or statutory requirements for diesel vehicles.  
potential for growth with a range of vehicles that has been  
The Volkswagen Group’s multibrand strategy may weaken  
specifically tailored to this market, without as yet having our individual Group brands if there are overlaps in customer  
own production facilities there.  
segments or the product portfolio. This effect may be rein-  
forced by the Volkswagen Group’s common-parts strategy, as  
this strategy means that, in some cases, the differences in  
Power Engineering  
Trends in the global economy, such as increasing interest in product substance between the brands are small. This could  
technologies to reduce emissions and a greater international result in internal cannibalization between the Group brands,  
division of labor, are set to continue, despite increased higher marketing costs, or repositioning expenses. By sharp-  
geopolitical and macroeconomic risks compared with the ening the brand identities as part of our Best Brand Equity  
previous year. This also applies to the resulting transport strategic module, we are working to minimize these risks.  
routes and volumes and to the demand for touristic offers  
Viewed over an extended period, the fleet customer  
such as cruises. Growing global energy needs call for inno- business is more stable than the business with retail custom-  
vation in industry and a growing willingness on the part of ers; in 2019, it continued to be characterized by increasing  
governments to invest in line with the global climate policy.  
We are working systematically to leverage market oppor-  
concentration and internationalization.  
The Volkswagen Group is well positioned with its broad  
tunities across the world, for example by positioning our- portfolio of products and drive systems, as well as its target-  
selves as a solution provider for reduced-carbon drive system group-focused customer care. There is no concentration of  
and energy generation technologies as well as for storage default risks at individual fleet customers or markets. The  
technologies. Moreover, significant potential can be lever- consistently high market share in Europe shows that fleet  
aged in the medium term by enhancing our after-sales customers still have confidence in the Group.  
business through the introduction of new products and the  
Consumer demand is shaped not only by real factors such  
expansion of our service network. The requirements for as disposable income, but also by psychological factors that  
occupational safety, which will continue to increase in the cannot be planned for. Unexpected buyer reluctance could  
future, the availability of the plants that are already in stem from households’ worries about the future economic  
operation, the increase in environmental compatibility, and  
efficient operation, together with the large number of  
engines and plants, will provide the basis for growth.  
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situation, for example. This is particularly the case in Should these transpire, they could have an adverse effect on  
saturated automotive markets such as Western Europe, where the further development of the Volkswagen Group. In partic-  
demand could drop as a result of owners holding on to their ular, such occurrences include natural disasters, epidemics  
vehicles for longer. We are countering reluctance to buy with – such as the current spread of the coronavirus –, violent  
our attractive range of models and our strict policy of cus- conflicts and terrorist attacks.  
tomer orientation.  
The spread of the coronavirus could give rise to risks for  
A combination of buyer reluctance in some markets as a global economic growth and subsequently risks for the  
result of the crisis, and increases in some vehicle taxes based Volkswagen Group particularly with regard to procurement,  
on CO emissions – which have already been observed in production and sales.  
2
many European countries – may shift demand towards  
smaller segments and engines. We counter the risk that such Research and development risks  
a shift will negatively impact the Volkswagen Group’s The most significant risks from the regular GRC process and  
financial situation by constantly developing new, fuel- QRP result from the failure to develop products in line with  
efficient vehicles and alternative drive technologies, based on demand and regulations, especially in view of e-mobility and  
our drivetrain and fuel strategy.  
digitalization.  
Automotive markets around the world are exposed to  
risks from government intervention such as tax increases,  
Research and development risks  
which curb private consumption, restrictions on trade, and The automotive industry is undergoing a radical transfor-  
protectionist tendencies. Sales incentives may lead to shifts mation process. Multinational corporations like Volkswagen  
in the timing of demand.  
are facing major challenges in the areas of customer/market,  
Commercial vehicles are capital goods: even minor technological advances and legislation. Key aspects are the  
changes in growth rates or growth forecasts may significantly implementation of increasingly stringent emission and fuel  
affect transport requirements and thus demand. The pro- consumption regulations, taking new test procedures and  
duction fluctuations occurring as a result require a high test cycles (e.g. WLTP) into account, as well as compliance  
degree of flexibility from manufacturers. Although produc- with approval processes (homologation), which are becoming  
tion volumes are significantly lower, the complexity of the increasingly more complex and time-consuming and may  
trucks and buses range does in fact significantly exceed the vary by country. On a national and international level there  
already very high complexity of the passenger cars range. Key are numerous legal requirements regarding the use, handling  
factors for commercial vehicle customers are total cost of and storage of substances and mixtures (including restric-  
ownership, vehicle reliability and the service provided. tions concerning chemicals, heavy metals, biocides, persis-  
Furthermore, customers are increasingly interested in tent organic pollutants), which apply to both the manufac-  
additional services such as freight optimization and fleet turing of automobiles and the automobile itself.  
utilization, which we offer in the commercial vehicle segment  
through the digital brand RIO, for example.  
The economic success and competitiveness of the Volks-  
wagen Group depend on how successful we are in promptly  
Power Engineering’s two-stroke engines are produced tailoring our portfolio of products and services to changing  
exclusively by licensees, particularly in South Korea, China conditions. Given the intensity of competition and the speed  
and Japan. On account of volatile demand in new ship con- of technological development, for example in the fields of  
struction, there is excess capacity in the market for marine digitalization and automated driving, it is crucial to identify  
engines, which may result in a decline in license revenues relevant trends at an early stage and respond accordingly.  
and bad debt losses. Due to changes in the competitive  
Among other things, we therefore conduct trend analyses  
environment, especially in China, there is also the risk of and customer surveys and examine the relevance of the  
losing market share. We address these risks by constantly results for our customers. We counter the risk that it may not  
monitoring the markets, working closely with all licensees be possible to develop modules, vehicles, or services – espe-  
and introducing new and improved technologies.  
cially in relation to e-mobility and digitalization – within the  
specified timeframe, to the required quality standards, or in  
line with cost specifications, by continuously and system-  
Other factors  
Going beyond the risks outlined in the individual risk atically monitoring the progress of all projects. To avoid  
categories, there are other factors that cannot be predicted patent infringements, we intensively analyze third-party  
and whose repercussions are therefore difficult to control. industrial property rights, increasingly in relation to com-  
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173  
munication technologies. We regularly compare the results of are commissioned to carry out projects. Among other things,  
all the analyses with the respective project’s targets; in the Procurement takes into consideration the risk of insufficient  
event of variances, we introduce appropriate countermea- competition if it concentrates on a few financially strong  
sures in good time. Our end-to-end project organization suppliers when awarding contracts.  
supports cooperation among all areas involved in the pro-  
Weakening growth in the global economy, the ongoing  
cess, ensuring that specific requirements are incorporated trade disputes and shifts in customer demand – especially the  
into the development process as early as possible and that technological shift toward e-mobility – along with the  
their implementation is planned in good time.  
resulting changes in call-offs from suppliers are posing chal-  
lenges for us.  
Risks and opportunities from the modular toolkit strategy  
The changed circumstances have restricted suppliers’  
We are continuously expanding our modular toolkits, focusing financing opportunities and increased general uncertainty,  
on future customer requirements, legal requirements and particularly in areas where existing technologies are  
infrastructural requirements.  
becoming obsolete and alternative technologies are gaining  
Higher volumes will, however, increase the risk that in importance. The number of crises and insolvencies among  
quality problems will affect an increasing number of vehicles. suppliers worldwide increased in 2019. Specialists in restruc-  
The Modular Transverse Toolkit (MQB) has created an turing and supply reliability in procurement continuously  
extremely flexible vehicle architecture that permits dimen- monitor the financial situation of our suppliers all over the  
sions determined by the concept – such as the wheelbase, world and take targeted measures to avoid supply bottle-  
track width, wheel size and seat position – to be harmonized necks. Potential resource shortages, possible speculations on  
throughout the Group and utilized flexibly. Other dimen- the market as well as current trends in the automotive  
sions, for example the distance between the pedals and the industry, such as the growing share of electrified vehicles,  
middle of the front wheels, are always the same, ensuring a may also affect the availability and prices of certain raw  
uniform system in the front of the car. Based on the synergy materials. The raw material and demand trend was contin-  
effects thereby achieved, we are able to cut both development uously analyzed and assessed on an interdisciplinary basis  
costs and the necessary one-time expenses as well as manu- over the reporting year to enable steps to be taken at an early  
facturing times. The toolkits also allow us to produce differ- stage in the event of potential bottlenecks.  
ent models from different brands in various quantities, using  
Quality problems may necessitate technical intervention  
the same equipment in a single plant. This means that our involving a considerable financial outlay where costs cannot  
capacities can be used with greater flexibility throughout the be passed on to the supplier or can only be passed on to a  
entire Group, enabling us to achieve efficiency gains.  
limited extent. It is not possible at present to rule out the  
We transferred this principle of standardization with possibility of a further increase in recalls of various models  
maximum flexibility to the Modular Electric Drive Toolkit produced by different manufacturers in which certain airbags  
(
MEB), a concept developed for all-electric drives. The synergy manufactured by Takata were installed. This could also affect  
effects and efficiency gains achieved from the modular Volkswagen Group models.  
toolkit strategy will give us the opportunity to bring e-mobil-  
In addition to financial difficulties, supply risks may arise,  
ity into mass production worldwide with the introduction of for example, as a result of fires or accidents at suppliers. Epi-  
the first MEB-based vehicle.  
demics such as the current spread of the coronavirus may  
also cause bottlenecks. Supply risks are identified without  
delay in procurement through early warning systems and miti-  
Operational risks and opportunities  
The most significant risks from the regular GRC process and gated immediately by applying derived measures. Additional  
QRP lie particularly in the area of cyber security and new measures were taken to safeguard supply and avert future  
regulatory requirements for IT, in quality problems as well as assembly line stoppages caused by suspensions of deliveries.  
in volatile commodity markets.  
Specialists in procurement systematically investigate  
risks resulting from antitrust violations by suppliers and file  
claims for any damages that arise.  
Procurement risks and opportunities  
Current trends in the automotive industry such as e-mobility  
and automated driving are resulting in an increased need for Production risks  
financing among suppliers. The Volkswagen Group’s procure- Volatile developments in the global automotive markets,  
ment risk management system assesses suppliers before they accidents at suppliers and disruption in the supply chain  
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caused production volumes of some vehicle models to tion volumes and quality standards are met during our new  
fluctuate at some plants. In specific markets, we also con- vehicle start-ups throughout the Group.  
tinued to record a trend away from orders for diesel vehicles  
In order to prevent downtime, lost output, rejects and  
and toward increased orders for vehicles with petrol engines. reworking in general, we use the TPM (Total Productive Main-  
We address such fluctuations using tried-and-tested tools, tenance) method at our production facilities. TPM is a contin-  
such as flexible working time models. The design of the uous process that involves the entire workforce. Round-the-  
production network enables us to respond dynamically to clock maintenance of the technical facilities means that they  
varying changes in demand at the sites. “Turntable concepts” are always operational and guaranteed to function reliably.  
even out capacity utilization between production facilities. At  
multibrand sites, volatile demand can also be smoothed disasters, epidemics – currently the spread of the coronavirus  
across brands. – or other events such as fires, explosions, or the leakage of  
Particular events beyond our control such as natural  
Legal changes, for instance in the context of the change- substances hazardous to health and/or the environment, may  
over to the WLTP test procedure, may impact production. For adversely affect production to a significant extent. As a con-  
one thing, a temporary reduction in the range causes demand sequence, bottlenecks or even outages may occur, thus  
to focus on the available variants. Moreover, gaps in produc- preventing the planned volume of production from being  
tion can occur if model variants have not been approved. achieved. We address such risks with, among other things,  
These fluctuations necessitate measures to stabilize produc- fire protection measures and hazardous goods management,  
tion, such as the temporary storage of vehicles until official and, where financially viable, ensure that they are covered by  
approval.  
Short-term changes in customer demand for specific  
equipment features in our products, and the decreasing  
insurance policies.  
Risks arising from long-term production  
predictability of demand, may lead to supply bottlenecks. We In the case of large projects within the Power Engineering  
minimize this risk, for example, by continuously comparing Business Area, risks may arise that are often only identified  
our available resources against future demand scenarios. If over the course of the project. They may result in particular  
bottlenecks in the supply of materials are indicated, we can from contract drafting errors, inaccurate or incomplete infor-  
introduce countermeasures far enough in advance.  
mation used in costing, post-contract changes in economic  
Production capacity is planned several years in advance and technical conditions, weaknesses in project manage-  
for each vehicle project on the basis of expected sales trends. ment, or poor performance by subcontractors. Most notably,  
These are subject to market changes and generally entail a omissions or errors made at the start of a project are usually  
degree of uncertainty. If forecasts are too optimistic, there is a difficult to compensate for or correct, and often entail  
risk that capacity will not be fully utilized. However, forecasts substantial additional expenses.  
that are too pessimistic pose a risk of undercapacity, as a  
We endeavor to identify these risks at an even earlier  
result of which, it may not be possible to meet customer stage and to take appropriate measures to eliminate or mini-  
demand. Volkswagen or its major suppliers may be unable to mize them before they occur by constantly optimizing the  
sufficiently adjust production capacity in the event of project control process across all project phases and by using  
increased fluctuation in demand that goes beyond the a lessons-learned process and regular project reviews. We can  
available technical flexibility.  
thus further reduce risk, particularly during the bidding and  
The range of our models is growing, particularly with the planning phase, for large upcoming projects.  
upcoming electrification offensive, while at the same time,  
product life cycles are becoming shorter; the number of new  
Quality risks  
vehicle start-ups at our sites worldwide is therefore increasing. Right from the product development stage, we aim to identify  
The processes and technical systems we use for this are and rectify quality problems at the earliest point, so as to  
complex and there is thus a risk that vehicle deliveries may avoid delays to the start of production. As we are using an  
be delayed. We address this risk by drawing on experience of increasing number of modular components as part of our  
past start-ups and identifying weaknesses at an early stage so modular toolkit strategy, it is particularly important when  
as to ensure – to the highest degree possible – that produc- malfunctions do occur to identify the cause quickly and  
Group Management Report  
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175  
eliminate the malfunctions. Nonconformity of internally or The high standards we set for the quality of our products also  
externally sourced parts or components may necessitate apply to the way in which we handle our customers’ and  
time-consuming and cost-intensive measures and lead to employees’ data. In particular, the digital technology used for  
recalls and therefore to damage to the Volkswagen Group’s our mobility services must be protected against cyber  
image. In addition, the resulting financial impacts may attacks. New legal regulations including the future UNECE  
exceed provisions. To meet our customers’ expectations and (United Nations Economic Commission for Europe) cyber  
minimize warranty and ex gratia repair costs, we contin- security regulation (WP.29) are creating new requirements for  
uously optimize the processes at our brands with which we our vehicle and software development. These have an equally  
can prevent these defects.  
large impact on our IT systems. We therefore work on an  
Increasing technical complexity and the use of the toolkit interdisciplinary basis to protect our connected vehicles and  
system in the Group mean that the need for high-grade mobility services. Our guiding principles are data security,  
supplier components and software of impeccable quality is transparency and informational self-determination.  
rising. For the future management of cyber security, which is  
We address the risk of unauthorized access to, modifi-  
becoming an increasingly important area, we are establishing cation of, or extraction of corporate and customer data with  
an Automotive Cyber Security Management System (ACSMS) the use of IT security technologies (e.g. firewall and intrusion  
in all brands and integrating it into the existing quality prevention systems) and a multiple-authentication procedure.  
management system. This will allow us to fulfill the legal Additionally, we increase protection by restricting the allo-  
requirements that will apply from 2021.  
cation of access rights to systems and information and by  
Assuring quality is of fundamental importance especially keeping backup copies of critical data resources. Redundant  
in the US, Brazilian, Russian, Indian and Chinese markets, for IT infrastructures protect us against risks that occur in the  
which we develop vehicles specific to the countries and where event of a systems failure or natural or other disasters.  
local manufacturers and suppliers have been established,  
We use commercially available technologies to protect  
particularly as it may be very difficult to predict the impact of our IT landscape, adhering to standards applicable through-  
regulations or official measures. We continuously analyze the out the Company. We future-proof our IT through continual  
conditions specific to each market and adapt quality require- standardization and updates. Continuously increasing auto-  
ments to their individual needs. We counter the local risks we mation enhances process reliability and the quality of proces-  
identify by continuously developing measures and imple- sing.  
menting them locally, thereby effectively preventing quality  
defects from arising.  
The further development and Group-wide use of IT gover-  
nance processes, particularly the further standardization of  
Vehicle registration and operation criteria are defined and the IT risk management process, also help to identify weak-  
monitored by national and, in some cases, international nesses at an early stage and to reduce or avoid risks effec-  
authorities. Furthermore, several countries have special – and tively.  
in some cases new – rules aimed at protecting customers in  
Another focus is the continuous enhancement of Group-  
their dealings with vehicle manufacturers. We have esta- wide security measures with modern technologies and tools,  
blished quality processes to ensure that the Volkswagen such as the further expansion of the IT security command  
Group brands and their products fulfill all respective appli- center for the early detection of and defense against cyber  
cable requirements and that local authorities receive timely attacks.  
notification of all issues requiring reporting. By doing so, we  
Volkswagen complements these technical measures by  
reduce the risk of customer complaints or other negative systematically raising awareness and providing training for  
consequences.  
employees.ꢀꢀ  
IT risks  
Risks from media impact  
At Volkswagen, a global company geared towards further The image of the Volkswagen Group and its brands is one of  
growth, the information technology (IT) used in all divisions the most important assets and forms the basis for long-term  
Group-wide is assuming an increasingly important role. IT business success. Our policy and strategic orientation on  
risks exist in relation to the three protection goals of confi- issues such as integrity, ethics and sustainability is in the  
dentiality, integrity and availability, and comprise in partic- public focus. One of the basic principles of running our  
ular unauthorized access to, modification of and extraction business is therefore to pay particular attention to compli-  
of sensitive electronic corporate or customer data as well as ance with legal requirements and ethical principles. However,  
limited systems availability as a consequence of downtime we are aware that misconduct or criminal acts by individuals  
and disasters. Handling data with integrity ensures that data and the resulting reputational damage can never be fully  
is correct and uncorrupted, and that systems function prevented. In addition, media reactions can have a negative  
without error.  
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effect on the image of the Volkswagen Group and its brands. ensure that our demand for qualified new staff is covered,  
This impact could be amplified through insufficient crisis even amid a shortage of skilled labor.  
communication.  
We counter the risks associated with employee fluctuation  
and loss of knowledge as a result of retirement with intensive,  
department-specific succession planning and training. We  
Environmental and social risks  
The most significant risks from the regular GRC process and have also established a base of senior experts in the Group.  
QRP arise from not meeting CO  
2
-related regulations.  
With this instrument, we use the valuable knowledge of our  
experienced specialists who have retired from Volkswagen.  
The advancing digitalization of our human resources  
Personnel risks  
We counter economic risks as well as changes in the market processes entails risks arising from the processing of  
and the competitive situation with a range of instruments personal data. Volkswagen is aware of its responsibility in the  
that help the Volkswagen Group to remain flexible in terms of processing of this data. We address these risks as part of our  
staff deployment when faced with a fluctuating order situ- data protection management system by implementing a wide  
ation – whether orders are in decline, or there is an increase range of measures.  
in demand for our products. These instruments include time  
One challenge posed by our collaboration with the Moni-  
accounts to which hours are added when overtime is neces- tor lies in the tension that sometimes arises from the conflict  
sary and from which hours are deducted in quiet periods, between the Monitor’s requests for information on the one  
enabling our factories to adjust their capacity to production hand, and both German and international data protection  
volume with measures such as extra shifts, closure days and requirements on the other. This is true particularly in view of  
flexible shift models. The use of temporary workers also the fact that these data protection requirements are open to a  
allows us to be more flexible in our planning. All of these certain degree of interpretation and assessment. In the  
measures help the Volkswagen Group to generally maintain a interest of precluding infringements of the law as far as  
stable permanent workforce, even when orders fluctuate.  
possible, despite a partially unclear legal situation, Volks-  
The technical expertise and individual commitment of wagen is advised by external law firms on these issues.  
employees are indispensable prerequisites for the success of  
the Volkswagen Group. We counter the risk of not being able  
Environmental protection regulations  
to develop sufficient expertise in the Company’s different The specific emission limits for all new passenger car and  
vocational groups with our strategically oriented and holistic light commercial vehicle fleets for brands and groups in the  
human resource development, which gives all employees EU for the period up to 2019 are set out in Regulation (EC)  
attractive training and development opportunities. By No 443/2009 on CO emissions from passenger cars and  
2
boosting our training programs, particularly at our interna- Regulation (EU) No 510/2011 on light commercial vehicles of  
tional locations, we are able to adequately address the up to 3.5 tonnes, which came into effect in April 2009 and  
challenges of technological change.  
June 2011, respectively. These regulations are important  
To counter the potential risk of a shortage of skilled components of the European climate protection policy and  
specialists – especially in the areas of digitalization and IT – therefore form the key regulatory framework for product  
we continuously expand our recruitment tools. Our sys- design and marketing by all vehicle manufacturers selling in  
tematic talent relationship management, for example, enables the European market.  
us to make contact with talented candidates from strate-  
gically relevant target groups at an early stage and to build a car fleet have not been allowed to exceed 130 g CO  
The average CO  
2
emissions of the new European passenger  
/km since  
2
long-term relationship between them and the Group. In 2012. Compliance with this requirement was introduced in  
addition to the standard dual vocational training, programs phases; since 2015 the entire fleet has had to meet this limit.  
such as our StIP integrated degree and traineeship scheme  
2
The EU’s CO regulation for light commercial vehicles sets  
and our Faculty 73 ensure a pipeline of highly qualified and limits to be met from 2014 onwards, with targets having been  
motivated employees. By systematically increasing our phased in over the period to 2017. Under this regulation, the  
attractiveness as an employer, we are able to gain talented average CO  
people in the areas of IT, design and social media, which are Europe must not exceed 175 g CO  
crucial for the future. With tools such as these, we want to On April 17, 2019, the EU adopted new rules for the CO  
regime from 2020 onward. It published these in EU Regu-  
2
emissions from newly registered vehicles in  
2
/km.  
2
Group Management Report  
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177  
lation 2019/631 for passenger cars and light commercial increasingly common. The Volkswagen Group closely coor-  
vehicles on April 25, 2019. This regulation states that, from dinates technology and product planning with its brands so  
2
021 onward, the average emissions from the European as to avoid breaches of fleet fuel consumption limits, since  
passenger car fleet must be no higher than 95 g CO /km; in these would entail severe financial penalties. Volkswagen  
020, this emissions limit will already apply to 95% of the continues to regard diesel technology as an important ele-  
fleet. Up to and including 2020, European fleet legislation will ment in the fulfillment of CO emissions targets.  
be complied with on the basis of the New European Driving EU legislation allows excess emissions and emission  
2
2
2
Cycle (NEDC). After 2021, the NEDC target value will be shortfalls to be offset between vehicle models within a fleet  
replaced by a WLTP target value through a process defined by of new vehicles. Furthermore, the EU permits some flexibility  
lawmakers; this change shall not lead to additional tight- in fulfilling the emissions targets, for example:  
ening of the target value. A similar approach will apply to !ꢀ Emission pools may be formed,  
light commercial vehicles, where a target of 147 g CO  
will apply to the entire fleet in 2020.  
2
/km !ꢀ Relief opportunities may be provided for additional inno-  
vative technologies in the vehicle that apply outside the  
The targets will be further tightened as from 2025: for  
new European passenger car fleets, a reduction of 15% will be !ꢀ Special rules are in place for small-series producers and  
required from 2025 and a reduction of 37.5% from 2030. For niche manufacturers,  
test cycle (eco-innovations),  
new light commercial vehicle fleets, the required reductions !ꢀ Particularly efficient vehicles qualify for super-credits.  
will be 15% from 2025 and 31% from 2030. In each case, the Whether the Group meets its fleet targets depends crucially  
starting point is the fleet value in 2021. These targets can on its technological and financial capabilities, which are  
only be achieved through a high proportion of electric reflected in, for example, our drivetrain and fuel strategy.  
vehicles. Non-fulfillment of the fleet-wide targets will incur  
penalties of €95 per exceeded gram of CO per vehicle sold.  
In the EU, a new, more time-consuming test procedure  
has applied to all new vehicles with WLTP since September  
2
At the same time, regulations governing fleet fuel con- 2018. Other challenges arise in connection with stricter pro-  
sumption are also being developed or introduced outside the cesses and requirements regarding WLTP, such as from test  
EU28, for example in Brazil, Canada, China, India, Japan, criteria and from homologation (achievement of approval).  
Mexico, Saudi Arabia, South Korea, Switzerland, Taiwan and  
The Real Driving Emissions (RDE) regulation for passen-  
the USA. Brazil has introduced a fleet efficiency target as part ger cars and light commercial vehicles is also one of the main  
of a voluntary program which grants tax advantages. To European regulations. New, uniform limits for nitrogen oxide  
receive a 30% tax advantage, manufacturers must, among and particulate emissions in real road traffic have applied to  
other things, achieve a specified fleet efficiency. The fuel con- new vehicle types across the EU since September 2017. This  
sumption regulations in China, which set an average fleet makes the RDE test procedure fundamentally different from  
target of 6.9 liters/100 km for the period 2012–2015, were the Euro 6 standard still in force, which stipulates that the  
continued into the period 2016–2020 with a target of limits on the chassis dynamometer are authoritative. The  
5.0 liters/100 km. Preparations for legislation up to 2025 have RDE regulation is intended primarily to improve air quality in  
begun. In addition to this legislation on fleet fuel con- urban areas and areas close to traffic, leading to stricter  
sumption, a so-called “new energy vehicle quota” applies in requirements for exhaust gas aftertreatment in passenger  
China. This requires every manufacturer to increase the share cars and light commercial vehicles. Stricter RDE processes  
of electric vehicles – which are included with different and requirements have resulted in certain challenges, for  
weightings – in its total sales. The quota for 2020 is 12%, to be example relating to test criteria and homologation.  
fulfilled through battery-electric vehicles, plug-in hybrids, or  
The other main EU regulations affecting the automotive  
fuel cell vehicles. Due to the extension of greenhouse gas industry include:  
legislation in the USA (the law was signed in 2012), uniform !ꢀ EU Directive 2007/46/EC establishing a framework for the  
fuel consumption and greenhouse gas standards apply in all  
type approval of motor vehicles,  
US states in the period from 2017 to 2025. Here, too, law- !ꢀ EU Directive 2009/33/EC on the promotion of clean and  
makers are debating amending the rules from 2021 onward.  
The increased regulation of fleet-based CO emissions and  
energy-efficient road transport vehicles (Green Procure-  
ment Directive),  
2
fuel consumption makes it necessary to use the latest mobil- !ꢀ EU Directive 2006/40/EC relating to emissions from air-  
ity technologies in all key markets worldwide. At the same conditioning systems in motor vehicles,  
time, electrified and also purely electric drives will become !ꢀ The Car Labeling Directive 1999/94/EC,  
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Group Management Report  
!
!
!
ꢀ The Fuel Quality Directive (FQD) 2009/30/EC updating the new technologies, including alternative drive systems and  
fuel quality specifications and introducing energy effi- vehicles powered by alternative fuels. Increasing connectivity  
ciency specifications for fuel production, within transport networks can help to reduce inefficiencies  
ꢀ The Renewable Energy Directive (RED) (2009/28/EC) intro- such as unused transport capacity, empty runs and ineffi-  
ducing sustainability criteria; the follow-up regulation cient routes in existing transport networks. In conjunction  
(
RED2) contains higher quotas for advanced biofuels, with connected traffic management systems, this can result  
ꢀ The revised Energy Taxation Directive 2003/96/EC in optimized goods transport and therefore a reduction in  
updating the minimum tax rates for all energy products CO  
and power.  
2
emissions.  
In the Power Engineering segment, the International  
The implementation of the above-mentioned directives by Maritime Organization (IMO) has introduced the Inter-  
the EU member states serves to support the CO regulations national Convention for the Prevention of Pollution from  
2
in Europe. These are aimed not only at vehicle manufac- Ships (MARine POLlution – MARPOL), with which limits on  
turers, but also at other sectors such as the mineral oil indus- emissions from marine engines will be lowered in phases. A  
try. Vehicle taxes based on CO  
steering effect; many EU member states have already incorpo- confirmed with effect from January 1, 2020. In addition, the  
rated CO elements into their rules on vehicle taxation. IMO has decided on a number of emission control areas in  
2
emissions are having a similar reduction of the sulfur content in marine fuel has been  
2
There is particular momentum in the debate on driving Europe and the USA/Canada that will be subject to special  
bans for diesel vehicles in Germany. This was triggered by the environmental regulations. Expansion to further regions  
failure of some municipalities and cities to comply with the such as the Mediterranean or Japan is already being planned;  
limits for nitrogen dioxide (NO ) immissions. In many places, other regions such as the Black Sea, Alaska, Australia or South  
2
lawsuits have been filed and judgments issued. It is argued Korea are also in discussion. Moreover, emission limits are in  
that only driving bans for diesel vehicles can bring about the force under Regulation (EU) 2016/1628 and in accordance  
2
necessary short-term reduction in NO immissions. The with the regulations of the US Environmental Protection  
discussion may result in sales volumes of diesel vehicles Agency (EPA), for example. We are pushing for a maritime  
declining further and financial liabilities arising from energy transition in specialist bodies and also promote this  
customer-related measures and potential official or statutory to the general public. In a first step, we are supporting the  
requirements.  
switch to liquefied natural gas (LNG) as a fuel for maritime  
Local driving bans are already in place in a number of applications and also offer dual fuel and gas-powered engines  
countries, though these mainly affect older vehicles. Regu- for new and retrofitted vessels. For the long-term and  
lations in Belgium that successively bar older vehicles from climate-neutral operation of seagoing vessels, we advocate  
larger cities are one example. With a view to the future, large power-to-X technology, in which excess sustainably  
urban areas such as Paris and London are discussing banning generated electricity is converted into carbon-neutral gas or  
vehicles with combustion engines.  
liquid fuel.  
As regards stationary equipment, there are a number of  
Commercial vehicles are increasingly subject to ever  
stricter environmental regulations all around the world, par- national rules in place worldwide that limit permitted  
ticularly to regulations relating to climate change and vehicle emissions. On December 18, 2008, the World Bank Group set  
emissions. With Regulation (EU) 2019/1242 of June 20, 2019, limits for gas and diesel engines in its “Environmental,  
which specifies CO emission standards for new heavy trucks Health, and Safety Guidelines for Thermal Power Plants”,  
2
with a permitted gross weight of over 16 tonnes, the EU has which are required to be applied in countries that have  
set heavy commercial vehicle manufacturers very ambitious adopted no national requirements of their own, or  
targets for reducing CO  
The CO  
emissions from such vehicles must be reduced by Group. These guidelines are currently being revised. In  
5% by 2025 and 30% by 2030 compared to a reference value addition, the United Nations adopted the Convention on  
2
emissions within the next decade. requirements that are less strict than those of the World Bank  
2
1
for a monitoring period from July 2019 to June 2020. If they Long-range Transboundary Air Pollution back in 1979,  
fail to meet these targets, vehicle manufacturers will be liable setting limits on total emissions as well as nitrogen oxide for  
to substantial penalties for the excess emissions, amounting the signatory states (including all EU states, other countries  
to €4,250 per excess gram of CO  
2
/tonne-kilometer (tkm) per in Eastern Europe, the USA and Canada). Enhancements to the  
vehicle for the period from 2025 to 2029 and €6,800 per product portfolio in the Power Engineering segment focus on  
excess gram of CO  
onward.  
2
/tkm per vehicle for the period from 2030 improving the efficiency of equipment and systems.  
The allocation method for emissions certificates changed  
Compliance with regulations relating to climate change fundamentally when the third emissions trading period  
and vehicle emissions requires considerable investment in  
Group Management Report  
Report on Risks and Opportunities  
179  
(
2013–2020) began. As a general rule, all emission allowances legal disputes and governmental proceedings in Germany  
for power generators have been sold at auction since 2013. and abroad. Such legal disputes and other proceedings occur,  
For the manufacturing industry and certain power genera- among other things, in relation to or in connection with  
tion installations (e.g. combined heat and power installa- employees, public authorities, services, dealers, investors, cus-  
tions), a portion of the certificates is allocated free of charge tomers, suppliers, products, or other contracting parties. For  
on the basis of benchmarks applicable throughout the EU. the companies in question, these disputes and proceedings  
This portion of free certificates will gradually decrease as the may result in payments such as fines or in other obligations  
trading period progresses; the remaining quantities required or consequences. In particular, substantial compensatory or  
will have to be bought at auction. Furthermore, installation punitive damages may have to be paid and cost-intensive  
operators can partly fulfill their obligation to hold emission measures may have to be implemented. In this context,  
allowances using certificates from climate change projects specific estimation of the objectively likely consequences is  
(Joint Implementation and Clean Development Mechanism often possible only to a very limited extent, if at all.  
projects). In certain (sub-)sectors of industry, there is a risk Risks may also emerge in connection with the adherence  
that production will be transferred to countries outside to regulatory requirements. This particularly applies in the  
Europe due to the amended provisions governing emissions case of regulatory gray areas where Volkswagen and the  
trading, a phenomenon referred to as carbon leakage. A authorities responsible for the respective regulations may  
consistent quantity of certificates will be allocated to these interpret the regulations differently. In addition, legal risks  
sectors free of charge for the period from 2013 to 2020 on the can arise from the criminal activities of individual persons,  
basis of the pan-EU benchmarks. The automotive industry which even the best compliance management system can  
was included in the carbon leakage list that came into effect never completely prevent.  
in 2015. As a result, individual facilities at Volkswagen Group  
Where transparent and economically viable, adequate  
locations in Europe will receive additional certificates free of insurance coverage was taken out for these risks. For the  
charge up to the end of the third trading period. Already back identifiable and measurable risks, provisions considered  
in 2013 the European Commission decided to initially with- appropriate based on existing information were recognized  
hold a portion of the certificates to be auctioned and not to and information about contingent liabilities disclosed. As  
release them for auction until a later date during the third some risks cannot be assessed or can only be assessed to a  
trading period (backloading). The certificates will be directed limited extent, the possibility of material loss or damage not  
into a market stability reserve that was established in 2018. covered by the insured amounts and provisions cannot be  
The reserve will serve to offset any imbalance between the ruled out. This applies particularly to legal risk assessment  
supply of and demand for certificates in emissions trading in regarding the diesel issue.  
the fourth trading period. Furthermore, the European  
Commission is planning further modifications in emissions  
Diesel issue  
trading when the fourth trading period begins (from 2021) On September 18, 2015, the US Environmental Protection  
that may lead to a tightening of the system and thus to price Agency (EPA) publicly announced in a “Notice of Violation”  
increases for the certificates.  
x
that irregularities in relation to nitrogen oxide (NO ) emis-  
In addition to the EU member states, other countries in sions had been discovered in emissions tests on certain  
which the Volkswagen Group has production sites are also Volkswagen Group vehicles with type 2.0 l diesel engines in  
considering introducing an emissions trading system. In the USA. In this context, Volkswagen AG announced that  
China, for example, seven corresponding pilot projects are noticeable discrepancies between the figures achieved in  
underway. These do not affect the Volkswagen Group. The testing and in actual road use had been identified in around  
Chinese government officially implemented a national emis- eleven million vehicles worldwide with type EA 189 diesel  
sions trading system at the end of 2017. Initially, this affects engines. On November 2, 2015, the EPA issued a “Notice of  
only the power generation sector; a gradual expansion is Violation” alleging that irregularities had also been  
being planned.  
discovered in the software installed in US vehicles with type  
V6 3.0 l diesel engines.  
LEGAL RISKS  
Numerous court and governmental proceedings were  
The most significant risks from the regular GRC process and subsequently initiated in various countries. We have since  
QRP are associated with the diesel issue.  
succeeded in making substantial progress and ending many  
of these proceedings.  
Litigation  
Volkswagen AG and the companies in which it is directly or  
indirectly invested are involved in a substantial number of  
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In the USA, Volkswagen AG and certain affiliates reached statements were being prepared, the persons responsible for  
settlement agreements with various government authorities preparing the 2014 annual and consolidated financial  
and private plaintiffs, the latter represented by a Plaintiffs’ statements remained under the impression that the issue  
Steering Committee in a multidistrict litigation in the US state could be solved with comparatively little effort.  
of California. These agreements resolved certain civil claims  
In the course of the summer of 2015, however, it became  
as well as criminal charges under US federal law and the laws successively apparent to individual members of Volks-  
of certain US states in connection with the diesel issue. As wagen AG’s Board of Management that the cause of the  
part of the agreements entered into with the US Department discrepancies in the USA was a modification of parts of the  
of Justice and the State of California (Plea Agreement and software of the engine control unit, which was later identified  
Third Partial Consent Decrees), a Compliance Monitor and as an unlawful “defeat device” as defined by US law. This  
Compliance Auditor was appointed for Volkswagen in 2017 culminated in the disclosure of a “defeat device” to EPA and  
for a term of three years. Although Volkswagen AG and its CARB on September 3, 2015. According to the assessment at  
subsidiaries and affiliates are firmly committed to fulfilling that time of the responsible persons dealing with the matter,  
the obligations arising from these agreements, a breach of the scope of the costs expected by the Volkswagen Group  
these obligations cannot be completely ruled out. In the event (recall costs, retrofitting costs and financial penalties) was not  
of a violation, significant penalties could be imposed as stipu- fundamentally dissimilar to that in previous cases involving  
lated in the agreements, in addition to the possibility of fur- other vehicle manufacturers, and, therefore, appeared to be  
ther monetary fines, criminal sanctions and injunctive relief.  
controllable overall with a view to the business activities of  
The diesel issue is rooted in a modification of parts of the the Volkswagen Group. This assessment by the Volkswagen  
software of the relevant engine control units – which, Group was based, among other things, on the advice of a law  
according to Volkswagen AG’s legal position, is only unlawful firm engaged in the USA for approval issues, according to  
under US law – for the type EA 189 diesel engines that Volks- which similar cases in the past were resolved amicably with  
wagen AG was developing at that time. The decision to the US authorities. The EPA's publication of the “Notice of  
develop and install this software function was taken in late Violation” on September 18, 2015, which the Board of Man-  
2006 below Board of Management level. None of the agement had not expected, especially at that time, then  
members of the Board of Management had, at that time and presented the situation in an entirely different light.  
for several years to follow, knowledge of the development and  
implementation of this software function.  
The AUDI AG Board of Management members in office at  
the time in question have likewise stated that they had no  
In the months following publication of a study by the knowledge of the use of “defeat device” software that was  
International Council on Clean Transportation in May 2014, prohibited by US law in the type V6 3.0 l TDI engines until the  
Volkswagen AG’s Powertrain Development department EPA issued its November 2015 “Notice of Violation.”  
checked the test set-ups on which the study was based for  
Within the Volkswagen Group, Volkswagen AG has devel-  
plausibility, confirming the unusually high NO emissions opment responsibility for the four-cylinder diesel engines  
x
from certain US vehicles with type EA 189 2.0 l diesel engines. such as the type EA 189, and AUDI AG has development  
The California Air Resources Board (CARB) – a part of the responsibility for the six- and eight-cylinder diesel engines  
environmental authority of California – was informed of this such as the type V6 3.0 l and V8 4.2 l diesel engines.  
result, and, at the same time, an offer was made to recalibrate  
In agreement with the respective responsible authorities,  
the engine control unit software of type EA 189 diesel the Volkswagen Group is making technical measures avail-  
engines in the USA as part of a service measure that was able worldwide for virtually all diesel vehicles with type  
already planned in the USA. This measure was evaluated and EA 189 engines. Within its area of responsibility, the Kraft-  
adopted by the Ausschuss für Produktsicherheit (APS – fahrt-Bundesamt (KBA – German Federal Motor Transport  
Product Safety Committee), which initiates necessary and Authority) ascertained for all clusters (groups of vehicles) that  
appropriate measures to ensure the safety and conformity of implementation of the technical measures would not bring  
Volkswagen AG products that have been placed in the market. about any adverse changes in fuel consumption figures, CO  
2
There are no findings that an unlawful “defeat device” under emission figures, engine output, maximum torque, and noise  
US law was disclosed to the APS as the cause of the emissions.  
discrepancies or to the persons responsible for preparing the  
014 annual and consolidated financial statements. Instead, relevant diesel concepts for possible irregularities and retrofit  
at the time the 2014 annual and consolidated financial potentials, measures proposed by AUDI AG have been  
Following the studies carried out by AUDI AG to check all  
2
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Report on Risks and Opportunities  
181  
adopted and mandated by the KBA in various recall orders The respective Group companies appointed renowned law  
pertaining to vehicle models with V6 and V8 TDI engines. firms to clarify the matters underlying the public prose-  
Currently, AUDI AG assumes that the total cost, including the cutor’s accusations. The Board of Management and Super-  
amount based on recalls, of the ongoing largely software- visory Board receive regular updates on the current status.  
based retrofit program that began in July 2017 will be man-  
In an administrative fine order issued on May 7, 2019, the  
ageable and has recognized corresponding balance-sheet risk Stuttgart Office of the Public Prosecutor terminated the  
provisions. AUDI AG has in the meantime developed software regulatory offense proceeding conducted against Dr. Ing.  
updates for many of the affected powertrains and, after h.c. F. Porsche AG in connection with the diesel issue by  
approval by the KBA, already installed these in the vehicles of finding a negligent breach of the obligation to supervise  
a large number of affected customers. The approvals that are occurring in the organizational unit “Prüffeld Entwicklung  
still outstanding are expected in the course of 2020.  
Gesamtfahrzeug/Qualität” (Overall Vehicle Development/  
In connection with the diesel issue, potential conse- Quality - Testing Facility). The administrative order imposes a  
quences for Volkswagen’s results of operations, financial total fine of €535 million, consisting of a penalty payment of  
position and net assets could emerge primarily in the €4 million and the forfeiture of economic benefits in the  
following legal areas:  
amount of €531 million. After thorough examination,  
Dr. Ing. h.c. F. Porsche AG has accepted the fine and paid it in  
1.  
Criminal and administrative proceedings worldwide full, rendering the administrative fine order legally final.  
(excluding the USA/Canada) Further sanctions against or forfeitures by Dr. Ing. h.c. F.  
Criminal investigations, regulatory offense proceedings, Porsche AG are therefore not to be expected in Europe in  
and/or administrative proceedings have been opened in connection with the unitary factual situation underlying the  
some countries (in Germany for example by the Bundes- administrative fine order.  
anstalt für Finanzdienstleistungsaufsicht, BaFin – Federal  
As the type approval authority of proper jurisdiction, the  
Financial Supervisory Authority). The public prosecutor’s KBA moreover continuously tests Audi, VW, and Porsche  
offices in Braunschweig and Munich are investigating the brand vehicles for problematic functions. If certain functions  
core issues of the criminal investigations.  
are deemed impermissible by the KBA, the affected vehicles  
In April 2019, the Braunschweig Office of the Public Prose- are recalled pursuant to a recall order or they are brought  
cutor issued indictments, including one against a former back into compliance by means of a voluntary service mea-  
Chairman of the Board of Management of Volkswagen AG, sure.  
charging, among other things, fraud relating to Type EA 189  
engines in connection with the diesel issue.  
Furthermore, additional administrative actions relating  
to the diesel issue are ongoing in other jurisdictions.  
The companies of the Volkswagen Group continue to  
In September 2019, the Braunschweig Office of the Public  
Prosecutor furthermore indicted the current and a former cooperate with the government authorities.  
Chairman of the Board of Management of Volkswagen AG as  
Whether the criminal and administrative proceedings will  
well as a former member of its Board of Management ultimately result in fines or other consequences for the Com-  
(currently Chairman of the Supervisory Board) on charges of pany, and if so what amounts these may entail, is currently  
market manipulation relating to capital market disclosure subject to estimation risks. According to Volkswagen’s  
obligations in connection with the diesel issue. The Public estimates, the likelihood that a sanction will be imposed is  
Prosecutor’s Office also requested that the court name 50% or less in the majority of these proceedings. Contingent  
Volkswagen AG as a collateral participant in the proceedings.  
liabilities have therefore been disclosed where the amount of  
In July 2019, the Munich II Office of the Public Prosecutor such liabilities could be measured and the likelihood of a  
issued indictments, including one against the former Chair- sanction being imposed was assessed at not lower than 10%.  
man of the Board of Management of AUDI AG, charging, Provisions were recognized to a small extent.  
among other things, fraud relating to 3.0 TDI engines in  
connection with the diesel issue.  
2. Product-related lawsuits worldwide (excluding the USA/  
Based on the information available at the present time, Canada)  
no change in the risk situation of the Volkswagen Group In principle, it is possible that customers in the affected  
results from these indictments.  
markets will file civil lawsuits or that importers and dealers  
The Stuttgart Office of the Public Prosecutor is con- will assert recourse claims against Volkswagen AG and other  
ducting a criminal investigation relating to the diesel issue Volkswagen Group companies. Besides individual lawsuits,  
on suspicion of fraud and illegal advertising that also various forms of collective actions (i.e. assertion of individual  
involves a member of the Board of Management of Dr. Ing. claims by plaintiffs acting jointly or as representatives of a  
h.c. F. Porsche AG.  
class) are available in various jurisdictions. Furthermore, in a  
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number of markets it is possible for consumer and/or compensation claims are made based on purported breaches  
environmental organizations to bring suit to enforce alleged of environmental regulations.  
rights to injunctive relief, declaratory judgment, or damages.  
In Germany, the Verbraucherzentrale Bundesverband e.V.  
Customer class action lawsuits and actions brought by (Federation of Consumer Organizations) filed an action in  
consumer and/or environmental organizations are pending November 2018 with the Braunschweig Higher Regional Court  
against Volkswagen AG and other Volkswagen Group com- for model declaratory judgment against Volkswagen AG. The  
panies in a number of countries including Australia, Belgium, complaint is seeking a ruling that certain preconditions for  
Brazil, Germany, Italy, the Netherlands, Portugal, South Africa, potential consumer claims against Volkswagen AG are met;  
and the United Kingdom. Alleged rights to damages and however, no specific payment obligations would result from  
other relief are asserted in these actions. The pending actions any determinations the court may make. Individual claims  
include in particular the following:  
would have to be established afterwards in subsequent sepa-  
In Australia, various class action lawsuits with opt-out rate proceedings. Oral argument in the consumer action for  
provisions are currently pending against Volkswagen AG and model declaratory judgment began in September 2019. Volks-  
other Volkswagen Group companies, including the Australian wagen AG intends to offer individual settlements to consum-  
subsidiaries. Given the opt-out rule, the class actions have the ers who registered claims under the action for model declara-  
potential to automatically cover all vehicles with type EA 189 tory judgment and meet the settlement criteria. The volume  
engines unless the right to opt out is actively exercised. In all, of such settlements amounts to approximately €830 million.  
approximately 100 thousand vehicles in the Australian  
market with type EA 189 engines are affected. In December companies of the Volkswagen Group in several German  
019 Volkswagen AG reached agreements with the Australian regional courts by financialright GmbH, which is asserting  
In addition, various actions have been brought against  
2
class action plaintiffs that would terminate the litigation. The rights assigned to it by a total of approximately 45 thousand  
court must still approve the settlement. Depending on the customers in Germany, Slovenia, and Switzerland.  
number of claims filed under the class action settlement,  
In England and Wales, suits filed in court by various law  
Volkswagen AG anticipates payment of an amount of up to firms have been joined in a single collective action (group  
AUD 127.1 million plus litigation costs to settle the class litigation). Because of the opt-in mechanism, not all vehicles  
action lawsuits. Two civil suits filed against Volkswagen AG with type EA 189 engines are automatically covered by the  
and other Group companies by the Australian Competition group litigation; potential claimants must instead take action  
and Consumer Commission (ACCC) were settled in the second in order to join. To date, some 90 thousand plaintiffs have  
half of 2019. The settlement is not yet legally final, however, as registered claims under the group litigation. The group  
an appellate court has yet to rule on the amount of the fine. litigation opt-in period has expired.  
Depending on the appellate court decision, Volkswagen AG  
anticipates payment of a fine of up to AUD 125 million plus association Altroconsumo on behalf of Italian customers is  
litigation costs. pending before the Venice Regional Court. This litigation  
In Italy, a class action lawsuit filed by the consumer  
In Belgium, the Belgian consumer organization Test involves damage claims based on alleged breach of contract  
Aankoop VZW has filed a class action to which an opt-out as well as claims based on purported violations of Italian  
mechanism has been held to apply. The class action pertains consumer protection law. Some 82 thousand customers have  
to vehicles purchased by consumers on the Belgian market registered for the class action, whereby the validity of roughly  
after September 1, 2014. The asserted claims are based on half of the registrations is still unclear. In Italy, the court  
purported violations of unfair competition and consumer decision dismissing the class action filed by the consumer  
protection law as well as on alleged breach of contract. association Codacons as inadmissible also became legally  
In Brazil two class actions are pending. One of these final in the reporting year.  
pertains to approximately 17 thousand vehicles. In this liti-  
In the Netherlands, Stichting Volkswagen Car Claim has  
gation, an appeals judgment was rendered in May 2019 that brought an opt-out class action seeking declaratory rulings.  
only partially upheld the lower court's decision. This judg- Any individual claims would then have to be established  
ment initially reduced the damage liability of Volkswagen do afterwards in separate proceedings. In November 2019, the  
Brasil considerably to around BRL 172 million plus interest. Regional Court in Amsterdam held the requests for relief to  
This amount can increase as a result of the adjudicated be inadmissible in part. Oral argument on the merits of the  
inflation rate and the assertion of individual claims alleging class action will take place in 2020.  
declines in the value of affected Amarok vehicles. The  
A Portuguese consumer organization has filed a class  
judgment remains non-final. In the second class action, action with opt-out mechanism in Portugal. There are poten-  
Group Management Report  
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183  
tially up to approximately 139 thousand vehicles affected in Regional Court in Braunschweig will be stayed pending  
the Portuguese market. The complaint seeks vehicle return resolution of the common issues, unless the cases can be  
and alleges damages as well.  
dismissed for reasons independent of the common issues  
In South Africa, an opt-out class action seeking damages that are to be adjudicated in the model case proceedings. The  
is pending that pertains to some 8 thousand vehicles with V6 resolution in the model case proceedings of the common  
and V8 TDI engines in addition to approximately 72 thou- questions of law and fact will be binding for all pending cases  
sand vehicles with type EA 189 engines.  
that have been stayed in the described manner. Oral  
Furthermore, individual lawsuits and similar proceedings argument in the model case proceedings before the Braun-  
are pending against Volkswagen AG and other Volkswagen schweig Higher Regional Court began in September 2018 and  
Group companies in various countries, most of which are will be continued at subsequent hearings.  
seeking damages or rescission of the purchase contract. In  
At the Regional Court in Stuttgart, further investor law-  
Germany, there are over 70 thousand such individual suits have been filed against Volkswagen AG, in some cases  
lawsuits.  
Volkswagen estimates the likelihood that the plaintiffs  
along with Porsche SE as joint and several debtor.  
Holding that the factual situation at issue is by and large  
will prevail to be 50% or less in the great majority of cus- already covered by the model case proceedings being heard  
tomer class actions, complaints filed by consumer and/or by the Braunschweig Higher Regional Court and that these  
environmental organizations, and individual lawsuits. Con- proceedings, being paramount in this regard, preclude  
tingent liabilities are disclosed for these proceedings where further such actions, the Stuttgart Higher Regional Court in  
the amount of such liabilities can be measured and the March 2019 refused to proceed with further capital investor  
chance that the plaintiff will prevail was assessed as not model case proceedings (which include Porsche SE) that had  
implausible. Since most of these proceedings are still in an been referred to it by the Stuttgart Regional Court. The  
early stage, it is in many cases not yet possible to quantify the plaintiff side has appealed one of these decisions to the  
realistic risk exposure. In addition, provisions were recog- Federal Court of Justice.  
nized to the extent necessary based on the current assess-  
ment.  
Further investor lawsuits have been filed at various courts  
in Germany and the Netherlands. Worldwide (excluding USA  
At this time it cannot be estimated how many customers and Canada), investor lawsuits, judicial applications for  
will choose to file lawsuits in the future in addition to those dunning procedures and conciliation proceedings, and  
already pending, given the consumer action for model claims under the KapMuG are currently pending against  
declaratory judgment in Germany, among other things, and Volkswagen AG in connection with the diesel issue, with the  
what their prospect of success will be.  
claims totaling roughly €9.6 billion. Volkswagen AG remains  
of the opinion that it duly complied with its capital market  
3. Lawsuits filed by investors worldwide (excluding the USA/ obligations. Therefore, no provisions have been recognized  
Canada)  
for these investor lawsuits. Insofar as the chance of success  
Investors from Germany and abroad have filed claims for was estimated at not lower than 10%, contingent liabilities  
damages against Volkswagen AG – in some cases along with have been disclosed.  
Porsche Automobil Holding SE (Porsche SE) as joint and  
several debtors – based on purported losses due to alleged 4. Proceedings in the USA/Canada  
misconduct in capital market communications in connection In the USA and Canada, the matters described in the EPA’s  
with the diesel issue.  
“Notices of Violation” are the subject of various types of  
The vast majority of these investor lawsuits are currently lawsuits and requests for information that have been filed in  
pending at the Regional Court in Braunschweig. In August particular by customers, investors, salespersons, and various  
2016, the Regional Court in Braunschweig ordered that government agencies in Canada and the United States,  
common questions of law and fact relevant to the lawsuits including the attorneys general of several US states, against  
pending at the Regional Court in Braunschweig be referred to Volkswagen AG and other Volkswagen Group companies.  
the Higher Regional Court in Braunschweig for binding  
In the fiscal year, Volkswagen AG and certain affiliates  
declaratory rulings pursuant to the Kapitalanleger-Muster- settled the consumer protection claims asserted by the  
verfahrensgesetz (KapMuG – German Act on Model Case Attorney General of the US state of New Mexico, the last  
Proceedings in Disputes Regarding Capital Market Infor- remaining state asserting consumer protection claims.  
mation). In this proceeding, common questions of law and  
The attorneys general of five US states (Illinois, Montana,  
fact relevant to these actions are to be adjudicated in a New Hampshire, Ohio, and Texas) and some municipalities  
consolidated manner by the Higher Regional Court in have suits pending in state and federal courts against  
Braunschweig (model case proceedings). All lawsuits at the Volkswagen AG, Volkswagen Group of America, Inc. and  
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certain affiliates, alleging violations of environmental laws. 5. Additional proceedings  
In the fiscal year, the environmental claims of two US states With its ruling of November 8, 2017, the Higher Regional  
Alabama and Tennessee – were dismissed in full by trial or Court of Celle ordered, upon the request of three US funds,  
–
appellate courts as preempted by federal law with no the appointment of a special auditor for Volkswagen AG. The  
possibility of further appeal, and the New Mexico Attorney special auditor is to examine whether there was a breach of  
General voluntarily dismissed its environmental claims. The duties on the part of the members of the Board of Manage-  
claims asserted by Illinois, Hillsborough County (Florida), and ment and Supervisory Board of Volkswagen AG in connection  
Salt Lake County (Utah) have been dismissed in full, but the with the diesel issue on or after June 22, 2006 and, if so,  
dismissals have been appealed. Certain claims asserted by whether this resulted in damages for Volkswagen AG. The  
Ohio, Texas, and two Texas counties have also been dis- ruling by the Higher Regional Court of Celle is formally  
missed, but these suits are currently proceeding as to other unappealable. However, Volkswagen AG has filed a constitu-  
claims.  
tional complaint with the German Federal Constitutional  
In March 2019, the US Securities and Exchange Commis- Court alleging infringement of its constitutionally guaran-  
sion filed a lawsuit against Volkswagen AG, Volkswagen Group teed rights. It is currently unclear when the Federal  
of America Finance, LLC, VW Credit, Inc. and a former Constitutional Court will reach a decision on this matter.  
Chairman of the Board of Management of Volkswagen AG, Following the formally unappealable ruling from the Higher  
asserting claims under US federal securities law based among Regional Court of Celle, the special auditor appointed by the  
other things on alleged misstatements and omissions in court indicated that he was not available to conduct the  
connection with the offer and sale of certain bonds and asset- special audit on grounds of age. In June 2019, the Hanover  
backed securities.  
Regional Court denied the motion filed by the US funds to  
Furthermore, in December 2019, the Canadian federal replace the special auditor. The opposing side has appealed  
environmental regulator filed charges against Volkswagen AG this denial to the Celle Higher Regional Court; this appeal is  
in respect of 2.0 l and 3.0 l Volkswagen and Audi diesel still pending.  
vehicles at the conclusion of its criminal enforcement-related  
In addition, a second motion seeking appointment of a  
investigation into the diesel emissions issue. Volkswagen AG special auditor for Volkswagen AG to examine matters  
cooperated with the investigation and agreed to a plea relating to the diesel issue has been filed with the Regional  
resolution addressing all of the charges. In January 2020, Court of Hanover. This proceeding has been stayed pending a  
Volkswagen AG pleaded guilty to the charges and agreed to decision by the Federal Constitutional Court in the initial  
pay a penalty of CAD 196.5 million, which was approved by special auditor litigation.  
the court. Following this approval, the Ontario provincial  
environmental regulator withdrew its action against Volks- 6. Risk assessment regarding the diesel issue  
wagen AG as to a quasi-criminal enforcement-related offense An amount of around €2.9 (2.4) billion has been included in  
with respect to certain Volkswagen and Audi 2.0 l diesel the provisions for litigation and legal risks as of December 31,  
vehicles. Additionally, a certified environmental class action 2019 to protect against the currently known legal risks related  
is pending on behalf of residents in Quebec. This action was to the diesel issue based on existing information and current  
authorized on the sole issue of whether punitive damages assessments. Insofar as these can be adequately measured at  
could be recovered. The appeals filed by Volkswagen were this stage, contingent liabilities relating to the diesel issue  
denied. The case remains in the early stages.  
were disclosed in the notes in an aggregate amount of  
To the extent a matter is not separately described above, €3.7 (5.4) billion, whereby €3.4 (3.4) billion of this amount  
an assessment is not yet possible at the current stage of the results from lawsuits filed by investors in Germany. The  
proceedings or has, in accordance with IAS 37.92, not been provisions recognized and the contingent liabilities disclosed  
presented so as not to compromise the results of the as well as the other latent legal risks in the context of the  
proceedings and the interests of the Company.  
diesel issue are in part subject to substantial estimation risks  
given that the fact-finding efforts have not yet been  
concluded, the complexity of the individual relevant factors  
and the ongoing coordination with the authorities. Should  
these legal or estimation risks materialize, this could result in  
further substantial financial charges. In particular, the  
possibility cannot be ruled out that the provisions recognized  
may have to be adjusted in light of knowledge acquired or  
future events.  
Group Management Report  
Report on Risks and Opportunities  
185  
Based on the information as it exists and has been overall with their view is laden with uncertainty. However, a  
established, there continue to be no conclusive findings or positive outcome continues to be expected for MAN Latin  
assessments available to the Board of Management of America. Should the opposite occur, this could result in a risk  
Volkswagen AG regarding the described facts that would of about €0.7 billion for the contested period from 2009  
suggest that a different assessment of the associated risks onwards, which has been stated within the contingent lia-  
should have been made.  
bilities in the notes.  
In line with IAS 37.92, no further statements have been  
made concerning estimates of financial impact or about In 2011, the European Commission conducted searches at  
uncertainty regarding the amount or maturity of provisions European truck manufacturers on suspicion of an unlawful  
and contingent liabilities in relation to the diesel issue. This is exchange of information during the period 1997–2011 and  
so as to not compromise the results of the proceedings or the issued a statement of objections to MAN, Scania and the  
interests of the Company.  
other truck manufacturers concerned in November 2014.  
With its settlement decision in July 2016, the European Com-  
mission fined five European truck manufacturers. MAN’s fine  
Additional important legal cases  
In 2011, ARFB Anlegerschutz UG (haftungsbeschränkt) was waived in full as the company had informed the Euro-  
brought an action against Volkswagen AG and Porsche SE for pean Commission about the irregularities as a key witness.  
claims for damages for allegedly violating disclosure require-  
In September 2017, the European Commission fined  
ments under capital market law in connection with the acqui- Scania €0.88 billion. Scania has appealed to the European  
sition of ordinary shares in Volkswagen AG by Porsche SE in Court of Justice in Luxembourg and will use all means at its  
2008. The damages currently being sought based on allegedly disposal to defend itself. Scania had already recognized a  
assigned rights amounted to approximately €2.26 billion provision of €0.4 billion in 2016.  
plus interest. In April 2016, the Regional Court in Hanover  
Furthermore, antitrust lawsuits for damages were  
had formulated numerous objects of declaratory judgment received from customers. As is the case in any antitrust  
that the cartel senate of the Higher Regional Court in Celle proceedings, this may result in further lawsuits for damages.  
will decide on in model case proceedings under the KapMuG. Neither provisions nor contingent liabilities were stated  
In the first hearing in October 2017, the court already because the early stage of proceedings makes an assessment  
indicated that it currently does not see claims against currently impossible.  
Volkswagen AG as justified, both for want of sufficiently  
In April 2019 the European Commission issued a state-  
specific pleadings and for reasons of law. Volkswagen AG sees ment of objections to Volkswagen AG, AUDI AG, and Dr. Ing.  
the statements of the court’s senate as confirmation that the h.c. F. Porsche AG in connection with the Commission's  
claims made against the Company have absolutely no basis.  
antitrust investigation of the automobile industry. These  
At the time in question (2010/2011), other investors had objections state the European Commission's preliminary  
also asserted claims – including claims against Volkswagen AG evaluation of the matter and afford the opportunity to  
–
arising out of the same circumstances in an approximate comment. The subject matter of the proceedings is limited to  
total amount of €4.6 billion and initiated conciliation the cooperation of German automobile manufacturers on  
proceedings. Volkswagen AG always refused to participate in technical questions in connection with the development and  
these conciliation proceedings; since then, these claims have introduction of SCR systems and gasoline particulate filters  
not been pursued further.  
for passenger cars that were sold in the European Economic  
Area. The manufacturers are not charged with any other  
In Brazil, the Brazilian tax authorities commenced tax pro- misconduct such as price fixing or allocating markets and  
ceedings against MAN Latin America; at issue in these pro- customers. After receiving access to the investigation files  
ceedings are the tax consequences of the acquisition struc- starting in July 2019, Volkswagen in December 2019 filed its  
ture chosen for MAN Latin America in 2009. In December reply to the European Commission's statement of objections.  
2017, a second instance judgment that was negative for MAN In the same matter, the Chinese Competition Authority has  
Latin America was rendered in administrative court also issued information requests to Volkswagen AG, AUDI AG,  
proceedings. MAN Latin America initiated proceedings and Dr. Ing. h.c. F. Porsche AG, and commenced an admin-  
against this judgment before the regular court in 2018. Due istrative action.  
to the difference in the penalties plus interest which could  
potentially apply under Brazilian law, the estimated size of In the proceedings against a number of captive automobile  
the risk in the event that the tax authorities are able to prevail finance companies regarding potential competition law  
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infringements (alleged exchange of competitively sensitive the fuel economy disclosed on the "Monroney label" required  
information), the Italian Competition Authority assessed a by US regulations. In October 2019, the Court granted  
fine of €163 million against Volkswagen AG and Volkswagen preliminary approval of the settlement.  
Bank GmbH in January 2019. Provisions were recognized by  
Volkswagen Bank GmbH. Volkswagen AG and Volkswagen Provisions were recognized by Volkswagen Bank GmbH and  
Bank GmbH filed an appeal against this decision in March Volkswagen Leasing GmbH for possible claims in connection  
2019. In the same context, an antitrust class action lawsuit with financial services provided to consumers.  
has furthermore been filed by customers in Italy against  
Volkswagen Bank GmbH, among others.  
In February 2020, Volkswagen AG and another defendant  
In June 2019, the US District Court for the Northern were served with a lawsuit filed by GT Gettaxi Ltd. The lawsuit  
District of California dismissed two putative class action in particular alleges large damage claims. Volkswagen will  
complaints brought by purchasers of German luxury vehicles evaluate the alleged claims and defend itself against them.  
alleging that, since the 1990s, several automobile manufac-  
turers, including Volkswagen AG and other Group companies, In addition, various proceedings are pending worldwide,  
conspired to unlawfully increase the prices of German luxury particularly in the USA, in which customers are asserting  
vehicles in violation of US antitrust and consumer protection purported claims either individually or in class actions. These  
law. The court held that the plaintiffs have not stated a claim claims are as a rule based on alleged vehicle defects, including  
for relief because the allegations in the complaints do not defects alleged in vehicle parts supplied to the Volkswagen  
plausibly support the alleged anticompetitive agreements. Group (for instance, in the Takata case).  
Plaintiffs filed amended complaints, which Volkswagen  
moved to dismiss. Plaintiffs in Canada filed claims with Risks may also result from actions for infringement of  
similar allegations on behalf of putative classes of purchasers intellectual property, including infringement of patents, trade-  
of German luxury vehicles against several automobile manu- marks or other third-party rights, particularly in Germany  
facturers, including Volkswagen Group Canada Inc., Audi and the USA. These actions pertain among other things to  
Canada Inc., and other Group companies. Neither provisions patents for semiconductor technology used in vehicles, but  
nor contingent liabilities were stated because the early stage may also extend to control, regulation or power-units, and  
of proceedings makes an assessment currently impossible.  
communications technology as well. If Volkswagen is alleged  
In addition, a few national and international authorities or determined to have violated third-party intellectual prop-  
have initiated antitrust investigations. Volkswagen is cooper- erty rights, it may have to pay damages, modify manufac-  
ating closely with the responsible authorities in these investi- turing processes, or redesign products and may be barred  
gations. An assessment of the underlying situation is not from selling certain products. Volkswagen could also face  
possible at this early stage.  
costly litigation. These risks could lead to delivery and  
production restrictions or interruptions.  
Volkswagen has been responding to information requests  
from the US Environmental Protection Agency (EPA) and In line with IAS 37.92, no further statements have been made  
CARB related to automatic transmissions in certain vehicles concerning estimates of financial impact or about  
with gasoline engines. In August 2019, Volkswagen agreed uncertainty regarding the amount or maturity of provisions  
with the EPA to forfeit approximately 220 thousand Green- and contingent liabilities in relation to additional important  
house Gas Emission Credits in response to the EPA’s inquiry. legal cases. This is so as to not compromise the results of the  
Also in August 2019, Volkswagen and the Plaintiffs’ Steering proceedings or the interests of the Company.  
Committee announced the settlement of civil claims relating  
to approximately 98 thousand Volkswagen, Audi, Porsche and  
Tax risks  
Bentley vehicles. Volkswagen's testing of these vehicles in Volkswagen AG and its subsidiaries have operations world-  
connection with the information requests resulted in a 1 mile wide and are audited by local tax authorities on an ongoing  
per gallon change, when rounded according to EPA rules, in basis. Amendments to tax laws as well as changes in their  
Group Management Report  
Report on Risks and Opportunities  
187  
application by the courts and their interpretation by the tax have a term of up to ten years. We thus hedge our principal  
authorities in the respective countries may lead to tax foreign currency risks, mostly against the euro and primarily  
payments that differ from the estimates made in the financial in Australian dollars, Brazilian real, British pound sterling,  
statements.  
Canadian dollars, Chinese renminbi, Czech koruna, Hong  
Risks arise particularly from tax assessment of the cross- Kong dollars, Hungarian forints, Indian rupees, Japanese yen,  
border supply of intragroup goods and services. Through Mexican pesos, Norwegian kroner, Polish zloty, Russian  
organizational measures, such as the implementation of an rubles, Singapore dollars, South African rand, South Korean  
advance pricing agreement as well as the monitoring of won, Swedish kronor, Swiss francs, Taiwan dollars and US  
transfer prices, Volkswagen is constantly monitoring the dollars.  
development of tax risks as well as the impact thereof on the  
consolidated financial statements.  
The hedging of commodity prices entails risks relating to  
the availability of raw materials and price trends. We con-  
Tax provisions were recognized for potential future tinuously analyze potential risks arising from changes in  
retrospective tax payments, while other provisions were commodity and energy prices in the market so that  
recognized for ancillary tax payments arising in this connec- immediate action can be taken whenever these arise. We limit  
tion.  
these risks mainly by entering into forward transactions and  
swaps. We have used appropriate contracts to hedge some of  
our requirements for commodities such as aluminum, lead,  
Financial risks  
The most significant risks from the regular GRC process and coal and copper over a period of up to six years, in the case of  
QRP result from volatile foreign exchange markets.  
nickel for up to nine years. The precious metals platinum,  
palladium and rhodium have shorter hedging periods,  
generally amounting to a maximum of up to three years. We  
Strategies for hedging financial risks  
In the course of our business activities, financial risks may have entered into similar transactions in order to supplement  
arise from changes in interest rates, exchange rates, raw and improve allocations of CO  
emission certificates.  
material prices, or share and fund prices. Management of Pages 293 to 314 of the notes to the consolidated financial  
2
these financial and liquidity risks is the central responsibility statements explain our hedging policy, the hedging rules and  
of the Group Treasury department, which reduces these risks the default and liquidity risks, and quantify the hedging  
using nonderivative and derivative financial instruments. transactions mentioned. Additionally, we disclose informa-  
The Board of Management is informed of the current risk tion on market risk within the meaning of IFRS 7.  
situation at regular intervals.  
We hedge interest rate risk – where appropriate in combi-  
Risks arising from financial instruments  
nation with currency risk – and risks arising from fluctu- Channeling excess liquidity into investments and entering  
ations in the value of financial instruments by means of into derivatives contracts gives rise to counterparty risk.  
interest rate swaps, cross-currency interest rate swaps and Partial or complete failure by a counterparty to perform its  
other interest rate contracts with generally matching obligation to pay interest and repay principal, for example,  
amounts and maturities. This also applies to financing would have a negative impact on the Volkswagen Group’s  
arrangements within the Volkswagen Group.  
earnings and liquidity. We counter this risk through our  
Foreign currency risk is reduced in particular through counterparty risk management, which we describe in more  
natural hedging, i.e. by flexibly adapting our production detail in the section entitled “Principles and Goals of Finan-  
capacity at our locations around the world, establishing new cial Management” starting on page 117. The financial  
production facilities in the most important currency regions instruments held for hedging purposes give rise to both  
and also procuring a large percentage of components locally. counterparty risks and balance sheet risks, which we limit  
We hedge the residual foreign currency risk using hedging using hedge accounting.  
instruments. These mainly comprise currency forwards and  
By diversifying when selecting business partners, we  
currency options. We use these transactions to limit the ensure that the impact of a default is limited and the Volks-  
currency risk associated with forecasted cash flows from wagen Group remains solvent at all times, even in the event  
operating activities, intragroup financing and liquidity of a default by individual counterparties.  
positions in currencies other than the respective functional  
Risks arising from trade receivables and from financial  
currency, for example as a result of restrictions on capital services are explained in more detail in the notes to the  
movements. The currency forwards and currency options can consolidated financial statements, starting on page 293.  
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Liquidity risk  
A residual value risk arises when the expected fair value for  
Volkswagen is reliant on its ability to ensure that there is the disposal of the lease or finance asset may be lower than  
adequate coverage for its financing needs. A liquidity risk the residual value set at contract conclusion. However, there  
consists of potentially being unable to ensure existing capital is an opportunity that disposal of the asset will generate  
requirements by raising funds or being unable to finance the more income than calculated for the residual value.  
Group on reasonable terms, which in turn can have substan-  
tially negative impact on Volkswagen’s business position, is made between direct and indirect residual value risks. A  
assets, financial position and earnings. direct residual value risk means that our financial services  
Referring to the bearer of residual value risk, a distinction  
In principle, the Automotive Division and Financial companies directly bear this risk (as outlined in the contract).  
Services Division refinance themselves independently of one An indirect residual value risk occurs when, based on a  
another. However, they are subject to very similar refinancing residual value guarantee, the residual value risk has passed to  
risks. In the Automotive Division, the company’s solvency is a third party, such as a dealer. In such cases, an initial  
ensured at all times mostly through retained, non-distributed counterparty default risk associated with this third party  
earnings, by drawing down on credit lines and by issuing exists (the residual value guarantor). If the guarantor  
financial instruments on the money and capital markets. The defaults, the residual value risk passes to our financial  
capital requirements of the financial services business are services companies.  
covered mainly by raising funds in the national and inter-  
national financial markets, as well as through customer defined control cycle, which ensures that risks are fully  
deposits from the direct banking business. assessed, monitored, responded to and communicated. This  
Management of the residual value risk is based on a  
Volkswagen finances projects with, for example, loans process structure enables us to manage residual risks  
provided by national development banks such as Kredit- professionally and also to systematically improve and  
anstalt für Wiederaufbau (KfW) or Banco Nacional de enhance the way we handle residual value risks.  
Desenvolvimento Econômico e Social (BNDES) or by supra-  
national development banks such as the European Invest- ateness of the risk provision is assessed regularly, as in the  
ment Bank (EIB). residual value risk potential. In the process, we compare the  
In the course of our risk management, the appropri-  
In addition to confirmed credit lines, unconfirmed lines contractually agreed residual values with the obtainable fair  
of credit from commercial banks supplement our broadly values. These are determined utilizing data from external  
diversified refinancing structure.  
service providers and our own marketing data. We do not  
Financing opportunities can be hindered by worsening take account of the possible gains on residual market values  
financial and general market conditions, a worsening credit when recognizing loss allowances.  
profile and outlook or a downgrade or withdrawal of the  
Resulting from potential of residual value risks, a variety  
credit rating. In such cases, there may be a fall in demand of measures are initiated in order to limit these risks. Current  
from market participants for securities issued by Volkswagen, market circumstances and future influencing factors must be  
which may additionally have a detrimental effect on the considered when making a residual value recommendation  
interest rates payable and restrict access to the capital market. related to new business.  
As a result of the diesel issue, the ability to use refinan-  
Credit risk describes the risk of losses due to defaults in  
cing instruments may possibly be restricted or precluded for customer transactions, specifically by the borrower or lessee.  
the Volkswagen Group. A downgrade of the Company’s rating Default occurs when the borrower or lessee is unable or  
could adversely affect the terms associated with the unwilling to make the payments due. This includes late or  
Volkswagen Group’s borrowings. partial payment of interest and principal on the part of the  
Information on the ratings of Volkswagen AG, Volkswagen contracting party.  
Financial Services AG and Volkswagen Bank GmbH can be  
found on page 112 of this report.  
Credit checks on borrowers are the primary basis for  
lending decisions. Rating and scoring systems are used to  
provide an objective decision-making basis for granting loans  
and leases.  
Risks in the financial services business  
In the course of our financial services activities, we are  
exposed primarily to residual value risks and credit risks.  
Risks are managed and monitored within the framework  
of corresponding processes relating to economic circum-  
Group Management Report  
Report on Risks and Opportunities  
189  
stances and collateral, adherence to limits, contractual infringements and thus to the unauthorized disclosure of  
obligations and conditions stipulated both by outside parties company-specific expertise. Volkswagen monitors the sales  
and the company itself. As such, commitments are managed markets and also protects its expertise with legal action.  
according to the degree of risk involved (standard, intensified  
and problem loan management).  
Risks arising from the recoverability of goodwill or  
More information on risks in the financial services busi-  
brand names  
ness can be found in the 2019 annual reports of Volkswagen Volkswagen tests at least once a year on the basis of  
Financial Services AG and Volkswagen Bank GmbH.  
underlying cash-generating units, if the value of the goodwill  
or the brand names has been impaired. If there are objective  
indications that the recoverable amount of the asset  
concerned is lower than the carrying amount, then Volks-  
Opportunities and risks from mergers & acquisitions and/or other  
strategic partnerships/investments  
The most significant risks from the regular GRC process and wagen recognizes this as a non-cash impairment. An impair-  
QRP are linked to the cooperation with other partners.  
ment can be caused, among other things, by an increase in  
interest rates or deteriorating business prospects.  
Opportunities and risks from partnerships  
+
As part of our future program TOGETHER 2025 , we are  
Risks from the disposal of equity investments  
stepping up our efforts to forge collaborations, both for the An unexpected need for funding, for example in connection  
transformation of our core business and for the establish- with the diesel issue, may lead to assets having to be sold for  
ment of the new mobility solutions business.  
an amount not equivalent to their value.ꢀꢀ  
In the area of battery cells, possible risks could arise from  
potential disagreement with our partners, possible delays in OV E RA L L A S SE S S M E N T O F T H E R I SK A N D O P P O RTU N I T Y P O SI T I O N  
battery cell development, or delayed battery cell production. The Volkswagen Group’s overall risk and opportunity  
With the marketing of the Modular Electric Drive Toolkit position results from the specific risks and opportunities  
to third parties, as is conceivable as part of the strategic shown above. We have put in place a comprehensive risk  
alliance with Ford, for example, damage claims could arise in management system to ensure that these risks are controlled.  
the event of problems with procurement, production and The most significant risks to the Volkswagen Group across all  
quality.  
risk categories result from a negative trend in markets and  
By entering into partnerships at a local level, we aim to unit sales, quality problems, and the failure to develop  
identify regional customer needs more precisely, establish products in line with demand and regulations, especially in  
competitive cost structures and thus develop and offer view of e-mobility and digitalization. We have added cyber  
2
market-driven products. Going forward, we will concentrate security and failure to meet CO -related regulations to this  
to a greater extent than previously on partnerships, acqui- list given their growing importance. The Volkswagen Group is  
sitions and venture capital investments. This will enable us to still exposed to risks from the diesel issue. Depending on the  
generate maximum value for the Group and its brands and to course of events, the spread of the coronavirus could have a  
expand our expertise, particularly in new areas of business. negative impact on 2020. Taking into account all the infor-  
At the same time, there is a risk that the interests of business mation known to us at present, no risks exist which could  
partners differ from our own. Volkswagen owns a large pose a threat to the continued existence of significant Group  
number of patents and other industrial property rights and companies or the Volkswagen Group.  
copyrights. Partnerships can lead to patent and licensing  
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.  
1
90  
Prospects for 2020  
Group Management Report  
Prospects for 2020  
The Volkswagen Group’s Board of Management expects the We believe that automotive financial services will again be  
global economy to continue growing in 2020 at the level of very important for vehicle sales worldwide in 2020.  
the previous year. We still believe that risks will arise from  
The Volkswagen Group is well prepared for the future  
protectionist tendencies, turbulence in the financial markets challenges pertaining to automobility business activities and  
and structural deficits in individual countries. In addition, for the mixed development of the regional automotive mar-  
growth prospects will be negatively impacted by continuing kets. Our brand diversity, our presence in all major world  
geopolitical tensions and conflicts as well as epidemics markets, our broad and selectively expanded product range,  
spanning countries and regions, such as the current spread of and our technologies and services put us in a good com-  
the coronavirus. We anticipate that momentum in both the petitive position worldwide. As part of the transformation of  
advanced economies and the emerging markets will be our core business, we are positioning our Group brands with  
similar to that seen in 2019. We expect to see the strongest an even stronger focus on their individual characteristics, and  
rates of expansion in Asia’s emerging economies.  
are optimizing the vehicle and drive portfolio. The focus is  
We predict that trends in the markets for passenger cars primarily on our vehicle fleet’s carbon footprint and on the  
in the individual regions will be mixed in 2020. Overall, the most attractive and fastest-growing market segments. In  
volume of global demand for new vehicles will probably addition, we are working to leverage the advantages of our  
match that of 2019. For 2020, we anticipate that the volume multibrand Group even more effectively with the ongoing  
of new passenger car registrations in Western Europe will be development of new technologies and the enhancement of  
distinctly below that recorded in the reporting period. After a our toolkits.  
positive performance overall in recent years, we expect  
We expect deliveries to customers of the Volkswagen  
demand in the German passenger car market to fall Group in 2020 to be in line with the previous year amid  
noticeably year-on-year in 2020. Sales of passenger cars are market conditions that continue to be demanding.  
expected to fall slightly short of the prior-year figures in  
Challenges will arise particularly from the economic  
markets in Central and Eastern Europe in 2020. The volume situation, the increasing intensity of competition, volatile  
of demand in the markets for passenger cars and light commodity and foreign exchange markets, and more strin-  
commercial vehicles (up to 6.35 tonnes) in North America in gent emissions-related requirements.  
2020 is likely to be slightly lower than in the prior year. We  
We expect the sales revenue of the Volkswagen Group to  
expect to see an overall moderate increase in new regis- grow by up to 4% in 2020 and the sales revenue of the  
trations for passenger cars and light commercial vehicles in Passenger Cars Business Area to be moderately higher than in  
the South American markets in 2020 compared with the the prior year. In terms of operating profit for the Group and  
previous year. The passenger car markets in the Asia-Pacific the Passenger Cars Business Area, we forecast an operating  
region are expected to be at the prior-year level in 2020.  
return on sales in the range of 6.5–7.5% in 2020. For the  
Trends in the markets for light commercial vehicles in the Commercial Vehicles Business Area, we anticipate an oper-  
individual regions will also be mixed in 2020; on the whole, ating return on sales of 4.0–5.0% amid a moderate decrease in  
we anticipate a slight dip in demand.  
sales revenue. In the Power Engineering Business Area we  
We expect a distinct year-on-year fall in 2020 of new expect that sales revenue will match that of the previous year  
registrations of mid-sized and heavy trucks with a gross and that the operating loss will become smaller. For the  
weight of more than six tonnes in the markets relevant for Financial Services Division we forecast that sales revenue and  
the Commercial Vehicles Business Area. In the bus markets the operating result will be in line with the previous year.  
that are relevant for the Volkswagen Group, we expect to see a  
slight increase in overall demand in 2020 compared with the  
previous year.  
Wolfsburg, February 18, 2020  
The Board of Management  
ꢀ
ꢀ
4
Consolidated Financial  
Statements  
CONSOLIDATED FINANCIAL STATEMENTS  
1
1
1
2
2
95 Income Statement  
96 Statement of Comprehensive Income  
98 Balance Sheet  
00 Statement of Changes in Equity  
02 Cash flow Statement  
258  
258  
258  
259  
259  
20. Inventories  
21. Trade receivables  
22. Marketable securities  
23. Cash, cash equivalents and time deposits  
24. Equity  
2
61  
25. Noncurrent and current financial liabilities  
26. Noncurrent and current other financial liabilities  
27. Noncurrent and current other liabilities  
28. Tax liabilities  
29. Provisions for pensions and other  
post-employment benefits  
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
03 NOTES  
261  
262  
263  
264  
03 Basis of presentation  
03 Effects of new and amended IFRSs  
06 New and amended IFRSs not applied  
06 Key events  
08 Basis of consolidation  
19 Consolidation methods  
20 Currency translation  
21 Accounting policies  
272  
273  
30. Noncurrent and current other provisions  
31. Put options and compensation rights granted to  
noncontrolling interest shareholders  
32. Trade payables  
273  
33 Segment reporting  
36 Income statement disclosures  
274 Other disclosures  
274  
274  
278  
291  
293  
33. IAS 23 (Borrowing Costs)  
34. IFRS 16 (Leases)  
35. IFRS 7 (Financial Instruments)  
36. Cash flow statement  
37. Financial risk management and  
financial instruments  
38. Capital management  
39. Contingent liabilities  
40. Litigation  
41. Other financial obligations  
36  
37  
37  
37  
38  
38  
39  
1. Sales revenue  
2. Cost of sales  
3. Distribution expenses  
4. Administrative expenses  
5. Other operating income  
6. Other operating expenses  
7. Share of the result of  
equity-accounted investments  
8. Interest result  
9. Other financial result  
10. Income tax income/expense  
11. Earnings per share  
314  
316  
317  
326  
327  
327  
328  
328  
328  
2
2
2
2
2
2
2
2
2
39  
40  
40  
44  
42. Total audit fees of the Group auditor  
43. Personnel expenses  
44. Average number of employees during the year  
45. Events after the balance sheet date  
46. Remuneration based on performance shares and  
phantom shares (share-based payment)  
47. Related party disclosures in accordance with IAS 24  
48. German Corporate Governance Code  
49. Remuneration of the Board of Management  
and the Supervisory Board  
45 Balance Sheet disclosures  
45  
48  
50  
52  
12. Intangible assets  
13. Property, plant and equipment  
14. Lease assets and investment property  
15. Equity-accounted investments and other  
equity investments  
330  
334  
334  
2
2
2
2
54  
55  
56  
57  
16. Noncurrent and current financial services receivables  
17. Noncurrent and current other financial assets  
18. Noncurrent and current other receivables  
19. Tax assets  
336 Responsibility Statement  
337 Independent Auditor’s Report  
Consolidated Financial Statements  
Income Statement  
195  
Income Statement  
of the Volkswagen Group for the period January 1 to December 31, 2019  
€
million  
Note  
2019  
2018  
Sales revenue  
1
252,632  
–203,490  
49,142  
–20,978  
–9,767  
11,453  
–12,890  
16,960  
3,349  
235,849  
–189,500  
46,350  
–20,510  
–8,819  
11,631  
–14,731  
13,920  
3,369  
Cost of sales  
2
Gross result  
Distribution expenses  
Administrative expenses  
Other operating income  
Other operating expenses  
Operating result  
3
4
5
6
Share of the result of equity-accounted investments  
Interest income  
7
8
8
9
910  
967  
Interest expenses  
–2,524  
–339  
–1,547  
–1,066  
1,723  
Other financial result  
Financial result  
1,396  
Earnings before tax  
Income tax income/expense  
Current  
18,356  
–4,326  
–4,147  
–180  
15,643  
–3,489  
–3,533  
43  
10  
Deferred  
Earnings after tax  
14,029  
12,153  
of which attributable to  
Noncontrolling interests  
Volkswagen AG hybrid capital investors  
Volkswagen AG shareholders  
143  
540  
17  
309  
13,346  
11,827  
Basic/diluted earnings per ordinary share in €  
Basic/diluted earnings per preferred share in €  
11  
11  
26.60  
26.66  
23.57  
23.63  
1
96  
Statement of Comprehensive Income  
Consolidated Financial Statements  
Statement of Comprehensive Income  
Changes in comprehensive income for the period January 1 to December 31, 2018  
Equity  
Equity  
attributable to  
Volkswagen AG  
shareholders  
attributable to  
Volkswagen AG  
hybrid capital  
investors  
Equity  
attributable to  
noncontrolling  
interests  
€
million  
Total  
12,153  
144  
Earnings after tax  
11,827  
309  
17  
Pension plan remeasurements recognized in other comprehensive income  
Pension plan remeasurements recognized in other comprehensive income, before tax  
145  
–
–1  
Deferred taxes relating to pension plan remeasurements recognized in other  
comprehensive income  
–88  
56  
–88  
57  
–
–
0
–1  
Pension plan remeasurements recognized in other comprehensive income, net of tax  
Fair Value valuation of other participations and securities (equity instruments) that will not  
be reclassified to profit or loss, net of tax  
19  
19  
–
–
Share of other comprehensive income of equity-accounted investments  
that will not be reclassified to profit or loss, net of tax  
34  
34  
–
–
Items that will not be reclassified to profit or loss  
110  
110  
–
–1  
Exchange differences on translating foreign operations  
Gains/losses on currency translation recognized in other comprehensive income  
Transferred to profit or loss  
Exchange differences on translating foreign operations, before tax  
Deferred taxes relating to exchange differences on translating foreign operations  
Exchange differences on translating foreign operations, net of tax  
Hedging  
–406  
–406  
–
1
0
1
–
1
61  
–345  
–8  
61  
–345  
–8  
–
–
–
–
–353  
–353  
Fair value changes recognized in other comprehensive income (OCI I)  
Transferred to profit or loss (OCI I)  
Cash flow hedges (OCI I), before tax  
Deferred taxes relating to cash flow hedges (OCI I)  
Cash flow hedges (OCI I), net of tax  
Fair value changes recognized in other comprehensive income (OCI II)  
Transferred to profit or loss (OCI II)  
Cash flow hedges (OCI II), before tax  
Deferred taxes relating to cash flow hedges (OCI II)  
Cash flow hedges (OCI II), net of tax  
–568  
–1,939  
–2,506  
715  
–1,792  
–1,360  
377  
–983  
291  
–692  
–568  
–1,939  
–2,506  
715  
–1,791  
–1,360  
377  
–983  
291  
–692  
–
–
–
–
–
–
–
–
–
–
0
0
0
0
0
–
–
–
–
–
Fair value valuation of securities and receivables (debt instruments) that may be  
reclassified to profit or loss  
Fair value changes recognized in other comprehensive income  
Transferred to profit or loss  
–5  
1
–5  
1
–
–
–
–
Fair value valuation of securities and receivables (debt instruments) that may be  
reclassified to profit or loss, before tax  
–4  
1
–4  
1
–
–
–
–
0
0
Deferred taxes relating to fair value valuation of securities and receivables (debt  
instruments) recognized in other comprehensive income  
Fair value valuation of securities and receivables (debt instruments) that may be reclassified  
to profit or loss, net of tax  
–3  
–3  
Share of other comprehensive income of equity-accounted investments that  
may be reclassified to profit or loss, net of tax  
28  
–2,811  
–3,612  
911  
–2,701  
9,452  
28  
–2,812  
–3,612  
911  
–2,701  
9,126  
–
–
–
–
–
–
0
0
0
0
Items that may be reclassified to profit or loss  
Other comprehensive income, before tax  
Deferred taxes relating to other comprehensive income  
Other comprehensive income, net of tax  
Total comprehensive income  
309  
17  
Consolidated Financial Statements  
Statement of Comprehensive Income  
197  
Changes in comprehensive income for the period January 1 to December 31, 2019  
Equity  
attributable to  
Volkswagen AG  
hybrid capital  
investors  
Equity  
attributable to  
Volkswagen AG  
shareholders  
Equity  
attributable to  
noncontrolling  
interests  
€
million  
Total  
14,029  
–8,011  
Earnings after tax  
13,346  
540  
143  
Pension plan remeasurements recognized in other comprehensive income  
Pension plan remeasurements recognized in other comprehensive income, before tax  
–7,993  
–
–18  
Deferred taxes relating to pension plan remeasurements recognized in other  
comprehensive income  
2,429  
–5,582  
2,423  
–5,570  
–
–
6
–11  
Pension plan remeasurements recognized in other comprehensive income, net of tax  
Fair Value valuation of other participations and securities (equity instruments) that will not  
be reclassified to profit or loss, net of tax  
–27  
–26  
–
–1  
Share of other comprehensive income of equity-accounted investments  
that will not be reclassified to profit or loss, net of tax  
–3  
–1  
–
–2  
Items that will not be reclassified to profit or loss  
Exchange differences on translating foreign operations  
Gains/losses on currency translation recognized in other comprehensive income  
Transferred to profit or loss  
Exchange differences on translating foreign operations, before tax  
Deferred taxes relating to exchange differences on translating foreign operations  
Exchange differences on translating foreign operations, net of tax  
Hedging  
–5,612  
–5,597  
–
–15  
572  
2
574  
12  
565  
2
567  
12  
–
–
–
–
–
7
0
7
–
7
586  
579  
Fair value changes recognized in other comprehensive income (OCI I)  
Transferred to profit or loss (OCI I)  
Cash flow hedges (OCI I), before tax  
Deferred taxes relating to cash flow hedges (OCI I)  
Cash flow hedges (OCI I), net of tax  
Fair value changes recognized in other comprehensive income (OCI II)  
Transferred to profit or loss (OCI II)  
Cash flow hedges (OCI II), before tax  
Deferred taxes relating to cash flow hedges (OCI II)  
Cash flow hedges (OCI II), net of tax  
–1,622  
–782  
–2,404  
708  
–1,697  
–1,490  
997  
–493  
146  
–347  
–1,618  
–784  
–2,402  
707  
–1,695  
–1,490  
996  
–494  
146  
–348  
–
–
–
–
–
–
–
–
–
–
–4  
2
–2  
1
–1  
0
1
1
0
1
Fair value valuation of securities and receivables (debt instruments) that may be  
reclassified to profit or loss  
Fair value changes recognized in other comprehensive income  
Transferred to profit or loss  
23  
1
23  
1
–
–
–
–
Fair value valuation of securities and receivables (debt instruments) that may be  
reclassified to profit or loss, before tax  
24  
–7  
17  
24  
–7  
17  
–
–
–
–
–
–
Deferred taxes relating to fair value valuation of securities and receivables (debt  
instruments) recognized in other comprehensive income  
Fair value valuation of securities and receivables (debt instruments) that may be reclassified  
to profit or loss, net of tax  
Share of other comprehensive income of equity-accounted investments that  
may be reclassified to profit or loss, net of tax  
78  
–1,363  
–10,263  
3,288  
–6,974  
7,055  
77  
–1,370  
–10,248  
3,282  
–6,967  
6,379  
–
–
–
–
–
1
7
–14  
7
–8  
136  
Items that may be reclassified to profit or loss  
Other comprehensive income, before tax  
Deferred taxes relating to other comprehensive income  
Other comprehensive income, net of tax  
Total comprehensive income  
540  
1
98  
Balance Sheet  
Consolidated Financial Statements  
Balance Sheet  
of the Volkswagen Group as of December 31, 2019  
€
million  
Note  
Dec. 31, 2019  
Dec. 31, 2018  
Assets  
Noncurrent assets  
Intangible assets  
12  
13, 34  
14, 34  
14  
66,214  
66,152  
48,938  
538  
64,613  
57,630  
43,545  
496  
Property, plant and equipment  
Lease assets  
Investment property  
Equity-accounted investments  
Other equity investments  
Financial services receivables  
Other financial assets  
Other receivables  
15  
8,169  
1,902  
86,973  
5,553  
2,722  
341  
8,434  
1,474  
78,692  
6,521  
2,608  
476  
15  
16  
17  
18  
Tax receivables  
19  
Deferred tax assets  
19  
13,106  
10,131  
274,620  
3
00,608  
Current assets  
Inventories  
20  
21  
16  
17  
18  
19  
22  
23  
46,742  
17,941  
58,615  
12,216  
7,272  
45,745  
17,888  
54,216  
11,586  
6,203  
Trade receivables  
Financial services receivables  
Other financial assets  
Other receivables  
Tax receivables  
1,190  
1,879  
Marketable securities  
Cash, cash equivalents and time deposits  
Assets held for sale  
16,769  
25,923  
795  
17,080  
28,938  
–
1
87,463  
183,536  
458,156  
Total assets  
488,071  
Consolidated Financial Statements  
Balance Sheet  
199  
€
million  
Note  
24  
Dec. 31, 2019  
Dec. 31, 2018  
Equity and Liabilities  
Equity  
Subscribed capital  
1,283  
14,551  
96,929  
–3,646  
12,663  
121,781  
1,870  
1,283  
14,551  
91,105  
–2,417  
12,596  
117,117  
225  
Capital reserve  
Retained earnings  
Other reserves  
Equity attributable to Volkswagen AG hybrid capital investors  
Equity attributable to Volkswagen AG shareholders and hybrid capital investors  
Noncontrolling interests  
123,651  
117,342  
Noncurrent liabilities  
Financial liabilities  
Other financial liabilities  
Other liabilities  
25  
26  
27  
28  
29  
28  
30  
113,556  
4,499  
101,126  
3,219  
7,271  
6,448  
Deferred tax liabilities  
Provisions for pensions  
Provisions for taxes  
Other provisions  
5,007  
5,030  
41,389  
2,991  
33,097  
3,047  
21,783  
20,879  
172,846  
196,497  
Current liabilities  
Put options and compensation rights granted to noncontrolling interest shareholders  
31  
25  
32  
28  
26  
27  
28  
30  
–
87,912  
22,745  
408  
1,853  
89,757  
23,607  
456  
Financial liabilities  
Trade payables  
Tax payables  
Other financial liabilities  
Other liabilities  
10,858  
19,320  
1,876  
24,434  
370  
9,416  
17,593  
1,412  
Provisions for taxes  
Other provisions  
23,874  
–
Liabilities associated with assets held for sale  
1
67,924  
167,968  
458,156  
Total equity and liabilities  
488,071  
2
00  
Statement of Changes in Equity  
Consolidated Financial Statements  
Statement of Changes in Equity  
of the Volkswagen Group for the period January 1 to December 31, 2019  
OTHER RESERVES  
Currency  
Capital reserve Retained earnings translation reserve  
€
million  
Subscribed capital  
Unadjusted balance at Jan. 1, 2018  
Changes in accounting policy to reflect IFRS 9 and 15  
Balance at Jan. 1, 2018  
1,283  
14,551  
81,367  
–282  
81,085  
11,827  
57  
–3,223  
–
–
–
1,283  
14,551  
–3,223  
Earnings after tax  
–
–
–
Other comprehensive income, net of tax  
Total comprehensive income  
–
–
–353  
–
–
11,884  
113  
–353  
Disposal of equity instruments  
Capital increases/Capital decreases¹  
Dividends payment  
–
–
–
–
–
–
–
–
–
–
–1,967  
–10  
–
Capital transactions involving a change in ownership interest  
Other changes  
–
–
–
–
–
0
Balance at Dec. 31, 2018  
1,283  
14,551  
91,105  
–3,576  
Balance at Jan. 1, 2019  
1,283  
14,551  
91,105  
13,346  
–5,570  
7,776  
–4  
–3,576  
Earnings after tax  
–
–
–
Other comprehensive income, net of tax  
Total comprehensive income  
Disposal of equity instruments  
Capital increases/Capital decreases  
Dividends payment  
–
–
579  
–
–
579  
–
–
–
–
–
–
–
–
–
–
–
–2,419  
390  
Capital transactions involving a change in ownership interest²  
Other changes  
–
–
173  
–
–
81  
Balance at Dec. 31, 2019  
1,283  
14,551  
96,929  
–2,824  
1
Volkswagen AG recorded an inflow of cash funds amounting to €2,750 million, less transaction costs of €19 million, from the hybrid capital issued in June 2018. Additionally, there were noncash  
effects from the deferral of taxes amounting to €6 million. The hybrid capital is required to be classified as equity instruments granted. The calling of the first tranche of the hybrid capital issued in  
September 2013 resulted in an outflow of cash funds of €1,250 million in September 2018. In addition, other effects of €14 million had to be recognized in equity.  
For the change in capital transactions involving a change in ownership interest see the section entitled “Key events”.  
2
3
As of fiscal year 2019, due to a change of IAS 12, attributable earnings and dividends payment related to hybrid capital are reported without tax effects.  
Explanatory notes on equity are presented in the note relating to equity.  
Consolidated Financial Statements  
Statement of Changes in Equity  
201  
HEDGING  
Equity  
attributable to  
Volkswagen AG  
shareholders and  
hybrid capital  
investors  
Equity  
attributable to  
Volkswagen AG  
hybrid capital  
investors³  
Deferred costs  
of hedging  
(OCI II)  
Equity-  
accounted  
investments  
Cash flow hedges  
OCI I)  
Equity and debt  
instruments  
Noncontrolling  
(
interests  
Total equity  
3
,525  
–
63  
63  
–
91  
–225  
–133  
–
166  
–
11,088  
–
108,849  
–388  
229  
1
109,077  
–387  
56  
3,581  
166  
–
11,088  
309  
–
108,461  
12,136  
–2,701  
9,435  
–
229  
17  
0
108,690  
12,153  
–2,701  
9,452  
–
–
–1,791  
–692  
–692  
–
16  
62  
62  
–
–1,791  
16  
309  
–
17  
–
–
–
–
–
–
–113  
–
–
–
1,501  
–403  
–
1,501  
–2,370  
–10  
–
1,501  
–2,375  
–28  
–
–
–
–4  
–18  
2
–
–
–
–
–
–
101  
12,596  
101  
102  
1,790  
–629  
–230  
228  
117,117  
225  
117,342  
1
,790  
–629  
–230  
–
228  
–
12,596  
117,117  
13,886  
–6,967  
6,920  
–
225  
143  
–8  
117,342  
14,029  
–6,974  
7,055  
–
–
–
–348  
–348  
–
540  
–1,695  
–9  
–9  
4
76  
76  
–
–
–1,695  
540  
136  
–
–
–
–
1
–
–
–
–
–
–
–472  
–
–
–
–
–
–
–
–2,891  
553  
–9  
–2,899  
2,071  
81  
0
–1  
–
–10  
1
1,519  
–1  
–
–
82  
95  
–977  
–235  
295  
12,663  
121,781  
1,870  
123,651  
2
02  
Cash flow statement  
Consolidated Financial Statements  
Cash flow statement  
of the Volkswagen Group for the period January 1 to December 31, 2019  
€
million  
2019  
2018  
Cash and cash equivalents at beginning of period  
Earnings before tax  
Income taxes paid  
28,113  
18,356  
–2,914  
18,038  
15,643  
–3,804  
Depreciation and amortization of, and impairment losses on, intangible assets, property, plant and equipment,  
and investment property¹  
12,046  
3,665  
300  
8,428  
–4  
11,034  
3,668  
170  
7,689  
98  
Amortization of and impairment losses on capitalized development costs¹  
Impairment losses on equity investments¹  
Depreciation of and impairment losses on lease assets¹  
Gain/loss on disposal of noncurrent assets and equity investments  
Share of the result of equity-accounted investments  
Other noncash expense/income  
460  
244  
347  
–730  
–674  
–893  
2,297  
1,646  
–13,204  
–10,796  
17,983  
–14,230  
–5,171  
–673  
–420  
3
Change in inventories  
–5,372  
–6,400  
3,645  
–762  
–11,647  
–7,282  
7,272  
–13,729  
–5,234  
–470  
Change in receivables (excluding financial services)  
Change in liabilities (excluding financial liabilities)  
Change in provisions  
Change in lease assets  
Change in financial services receivables  
Cash flows from operating activities  
Investments in intangible assets (excluding development costs), property, plant and equipment, and investment property  
Additions to capitalized development costs  
Acquisition of subsidiaries  
Acquisition of other equity investments  
Disposal of subsidiaries  
–420  
–26  
Disposal of other equity investments  
177  
210  
Proceeds from disposal of intangible assets, property, plant and equipment, and investment property  
Change in investments in securities  
Change in loans and time deposits  
Cash flows from investing activities  
Capital contributions/capital redemptions  
Dividends paid  
Capital transactions with noncontrolling interest shareholders  
Proceeds from issuance of bonds  
Repayments of bonds  
Changes in other financial liabilities  
Repayments of lease liabilities  
237  
387  
–1,456  
–21,146  
–
–2,899  
1,368  
25,916  
–19,784  
–4,509  
–957  
–865  
243  
282  
–1,378  
–826  
–21,590  
1,491  
–2,375  
–28  
35,308  
–15,290  
5,488  
–29  
24,566  
–173  
–1  
10,075  
28,113  
Cash flows from financing activities  
Effect of exchange rate changes on cash and cash equivalents  
Change of loss allowance within cash and cash equivalents  
Net change in cash and cash equivalents  
Cash and cash equivalents at end of period  
1
–3,784  
24,329  
Cash and cash equivalents at end of period  
Securities, loans and time deposits  
Gross liquidity  
24,329  
29,099  
53,428  
28,113  
28,036  
56,148  
Total third-party borrowings  
Net liquidity  
–201,468  
–148,040  
–190,883  
–134,735  
1
Net of impairment reversals.  
Explanatory notes on the cash flow statement are presented in the section relating to the cash flow statement.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
203  
Notes to the Consolidated  
Financial Statements  
of the Volkswagen Group as of December 31, 2019  
Basis of presentation  
Volkswagen AG is domiciled in Wolfsburg, Germany, and entered in the commercial register at the  
Braunschweig Local Court under No. HRB 100484. The fiscal year corresponds to the calendar year.  
In accordance with Regulation No. 1606/2002 of the European Parliament and of the Council,  
Volkswagen AG prepared its consolidated financial statements for 2019 in compliance with the International  
Financial Reporting Standards (IFRSs), as adopted by the European Union. We have complied with all the IFRSs  
adopted by the EU and required to be applied.  
The accounting policies applied in the previous year were generally retained. The only changes required  
resulted from new or amended standards and in relation to the definition of cash-generating units (see  
disclosure in the “Key Events” section).  
In addition, we have complied with all the provisions of German commercial law that we are also required  
to apply, as well as with the German Corporate Governance Code. For information on notices and disclosures of  
changes regarding the ownership of voting rights in Volkswagen AG in accordance with the  
Wertpapierhandelsgesetz (WpHG – German Securities Trading Act), please refer to the annual financial  
statements of Volkswagen AG.  
The consolidated financial statements were prepared in euros. Unless otherwise stated, all amounts are  
given in millions of euros (€ million).  
All figures shown are rounded, so minor discrepancies may arise from addition of these amounts.  
The income statement was prepared using the internationally accepted cost of sales method.  
Preparation of the consolidated financial statements in accordance with the above-mentioned standards  
requires management to make estimates that affect the reported amounts of certain items in the consolidated  
balance sheet and in the consolidated income statement, as well as the related disclosure of contingent assets  
and liabilities. The consolidated financial statements present fairly the net assets, financial position and results  
of operations as well as the cash flows of the Volkswagen Group.  
The Board of Management completed preparation of the consolidated financial statements on February 18,  
2020. On that date, the period ended in which adjusting events after the reporting period are recognized.  
Effects of new and amended IFRSs  
Volkswagen AG has applied all accounting pronouncements adopted by the EU and effective for periods  
beginning in fiscal year 2019.  
A number of requirements entered into force on January 1, 2019 as part of the 2017 improvements to the  
International Financial Reporting Standards (2017 annual improvements project). They include clarifications to  
IAS 12, IAS 23, IFRS 3 and IFRS 11. Additions were made to IAS 12 (Income Taxes) to clarify that the way any  
income tax consequences of dividend payments are recognized is based on the way the transactions have been  
recognized that made the dividend payment possible. Furthermore, guidance was added to IAS 23 (Borrowing  
Costs) to clarify how the weighted average of the borrowing costs is determined. Moreover, additional guidance  
in IFRS 3 (Business Combinations) and IFRS 11 (Joint Arrangements) explains that, on obtaining control of  
equity investments formerly recognized as joint operations, the rules for a business combination achieved in  
stages must be applied.  
2
04  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The amendments to IAS 28 (Investments in Associates and Joint Ventures) clarify that, with effect from  
January 1, 2019, long-term financial instruments representing a net investment in an associate or joint venture  
that are not accounted for using the equity method should be accounted for using the impairment rules of  
IFRS 9 (Financial Instruments).  
In addition, amendments to IFRS 9 (Financial Instruments) have applied since January 1, 2019, which clarify  
that certain financial instruments that include a prepayment feature with negative compensation can be  
measured at amortized cost or at fair value directly in equity.  
IFRIC 23 (Uncertainty over Income Tax Treatments) also applies: it requires that tax risks must be taken into  
account if it is probable that the tax authorities will not accept tax treatments in the income tax filing.  
Moreover, it was clarified in IAS 19 (Employee Benefits) that the actuarial assumptions must be updated at  
the time of a plan amendment, curtailment, or settlement.  
The Volkswagen Group has opted for early application of the amendments to IFRS 9, IAS 39 and IFRS 7  
Interest Rate Benchmark Reform (published on September 26, 2019). Application of the amendments would  
only have been mandatory from January 1, 2020. This affects hedges that existed at the beginning of the  
reporting period or have subsequently been designated. In application of the associated practical expedient, the  
Volkswagen Group assumes that the effectiveness of designated hedges will not be negatively impacted by the  
IBOR reform and that it will consequently not be necessary to terminate any hedges.  
The amendments referred to above do not materially affect the Volkswagen Group’s net assets, financial  
position and results of operations.  
I FR S 16 – LEA SE S  
IFRS 16 amends the rules for lease accounting and replaces the previous IAS 17 standard and related  
interpretations.  
The main objective of IFRS 16 is to recognize all leases. It establishes that lessees are no longer required to  
classify their leases as either finance leases or operating leases. In general, they are instead required to  
recognize a right-of-use asset and a lease liability for the leases in the balance sheet. In the Volkswagen Group  
the lease liability is measured on the basis of the present value of outstanding lease payments, while the right-  
of-use asset is generally measured at the amount of the lease liability plus any direct costs. During the lease  
term, the right-of-use asset must be depreciated and the lease liability adjusted using the effective interest  
method and taking the lease payments into account. IFRS 16 offers practical expedients for short-term and low-  
value leases; the Volkswagen Group makes use of this option and therefore does not recognize right-of-use  
assets or liabilities for these types of leases. In this respect, the lease payments are continued to be recognized  
in the income statement in the same way as before. At the initial application date, leases whose term ended  
before January 1, 2020 were reclassified as short-term leases, irrespective of the start date of the lease. In  
addition, existing leases were not reassessed at the initial application date to determine whether or not they are  
leases under the criteria of IFRS 16. Instead, contracts classified as leases under IAS 17 or IFRIC 4 are continued  
to be accounted for as leases. Contracts not classified as leases under IAS 17 or IFRIC 4 are continued not to be  
accounted for as leases.  
Lessor accounting essentially follows the previous guidance of IAS 17. Lessors are required to continue to  
classify their leases as finance leases or operating leases on the basis of the risks and rewards incidental to  
ownership of the leased asset.  
The Volkswagen Group accounts for leases in accordance with IFRS 16, using the modified retrospective  
method (within the meaning of IFRS 16.C5(b)), for the first time as of January 1, 2019. Prior-year periods have  
not been restated. According to this method, the lease liability to be recognized at the transition date is the  
present value of the outstanding lease payments, which is determined using the incremental borrowing rates  
as of January 1, 2019. The weighted average interest rate applied in the Volkswagen Group was 3.7%.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
205  
Applying the permitted exemption, the right-of-use asset is adjusted for the amounts that were recognized in  
the balance sheet as provisions for onerous operating leases as of December 31, 2018. The right-of-use assets  
were not tested for impairment in this context at the initial application date.  
The initial recognition of right-of-use assets and lease liabilities had the following effects as of January 1, 2019:  
!
ꢀ Right-of-use assets of €5.5 billion were recognized in the opening balance sheet (including €5.4 billion under  
property, plant and equipment and €0.1 billion under investment property). Prepayments capitalized,  
accrued liabilities and provisions for onerous operating leases were offset with the right-of-use assets. The  
right-of-use assets recognized included an amount of €0.4 billion that had already been recognized under  
finance leases as of December 31, 2018. In connection with the initial application of IFRS 16 there was an  
adjustment to the classification of noncurrent assets, resulting in the reclassification of property, plant and  
equipment of €0.4 billion to lease assets and investment property.  
!
ꢀ Lease liabilities are recognized in the opening balance in an amount of €5.6 billion; they are reported under  
noncurrent and current financial liabilities. The lease liabilities recognized included an amount of €0.4  
billion that had already been recognized under finance leases as of December 31, 2018.  
!ꢀ Initial application did not have any effect on equity.  
The difference between the expected payments for operating leases in an amount of €4.9 billion, discounted  
using the incremental borrowing rate as of December 31, 2018, and the lease liabilities in an amount of  
€
5.6 billion recognized in the opening balance sheet is mainly the result of taking account of existing finance  
leases and a new estimate of expected lease payments, attributable to the capitalization of certain variable lease  
payments, for example. The lease terms taken into account when recognizing lease liabilities were also  
reassessed in accordance with the rules of IFRS 16. In this process, reasonably certain extension or termination  
options were taken into account in determining the lease payments to be recognized. Moreover, the opening  
balance sheet does not include lease payments for low-value or short-term leases.  
Unlike the previous procedure, under which all operating lease expenses were reported under operating  
profit, the only items allocated to operating profit in the Automotive Division under IFRS 16 are depreciation  
charges on right-of-use assets. Interest expense from adding interest on lease liabilities in the Automotive  
Division is reported in the financial result. This had a positive impact of €0.2 billion on the operating result in  
fiscal year 2019.  
The change in the way expenses from operating leases are presented in the statement of cash flows resulted  
in an improvement of €1.0 billion in cash flows from operating activities and net cash flow in fiscal year 2019,  
of which €0.9 billion is attributable to the Automotive Division. Cash flows from financing activities declined  
accordingly. The increase in financial liabilities attributable to the change in accounting rules had a negative  
impact of €5.8 billion on the Volkswagen Group’s net liquidity as of December 31, 2019, of which €5.4 billion is  
attributable to the Automotive Division.  
2
06  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
New and amended IFRSs not applied  
In its 2019 consolidated financial statements, Volkswagen AG did not apply the following accounting  
pronouncements that have already been adopted by the IASB, but were not yet required to be applied for the  
fiscal year.  
Published  
by the IASB  
Application  
mandatory1  
Adopted by  
the EU  
Standard/Interpretation  
Expected impact  
Business Combinations:  
Definition of a Business  
IFRS 3  
Oct. 22, 2018 Jan. 1, 2020  
May 18, 2017 Jan. 1, 20212  
No  
No  
No material impact  
No material impact  
IFRS 17  
Insurance Contracts  
Presentation of Financial Statements  
and Accounting Policies, Changes in  
IAS 1 and Accounting Estimates and Errors:  
IAS 8  
Definition of Material  
Oct. 31, 2018 Jan. 1, 2020  
Yes  
No  
No material impact  
No material impact  
IAS 1  
Classification of liabilities  
Jan. 23, 2020  
Jan. 1, 2022  
1
2
Effective date from Volkswagen AG’s perspective.  
The IASB has proposed to defer the effective date to January 1, 2022.  
Key events  
On September 18, 2015, the US Environmental Protection Agency (EPA) publicly announced in a “Notice of  
Violation” that irregularities in relation to nitrogen oxide (NO ) emissions had been discovered in emissions  
x
tests on certain Volkswagen Group vehicles with type 2.0 l diesel engines in the USA. In this context, Volkswagen  
AG announced that noticeable discrepancies between the figures achieved in testing and in actual road use had  
been identified in around eleven million vehicles worldwide with type EA 189 diesel engines. On November 2,  
2015, the EPA issued a “Notice of Violation” alleging that irregularities had also been discovered in the software  
installed in US vehicles with type V6 3.0 l diesel engines.  
In the months following publication of a study by the International Council on Clean Transportation in  
May 2014, Volkswagen AG’s Powertrain Development department checked the test set-ups on which the study  
x
was based for plausibility, confirming the unusually high NO emissions from certain US vehicles with type  
EA 189 2.0 l diesel engines. The California Air Resources Board (CARB) – a part of the environmental authority of  
California – was informed of this result, and, at the same time, an offer was made to recalibrate the engine  
control unit software of type EA 189 diesel engines in the USA as part of a service measure that was already  
planned in the USA. This measure was evaluated and adopted by the Ausschuss für Produktsicherheit  
(
APS – Product Safety Committee), which initiates necessary and appropriate measures to ensure the safety  
and conformity of Volkswagen AG products that have been placed in the market. There are no findings that an  
unlawful “defeat device” under US law was disclosed to the APS as the cause of the discrepancies or to the  
persons responsible for preparing the 2014 annual and consolidated financial statements. Instead, at the time  
the 2014 annual and consolidated financial statements were being prepared, the persons responsible for  
preparing the 2014 annual and consolidated financial statements remained under the impression that the issue  
could be solved with comparatively little effort.  
In the course of the summer of 2015, however, it became successively apparent to individual members of  
Volkswagen AG’s Board of Management that the cause of the discrepancies in the USA was a modification of  
parts of the software of the engine control unit, which was later identified as an unlawful “defeat device” as  
defined by US law. This culminated in the disclosure of a “defeat device” to EPA and CARB on September 3, 2015.  
According to the assessment at that time of the responsible persons dealing with the matter, the scope of the  
costs expected by the Volkswagen Group (recall costs, retrofitting costs and financial penalties) was not  
fundamentally dissimilar to that of previous cases involving other vehicle manufacturers, and, therefore,  
appeared to be controllable overall with a view to the business activities of the Volkswagen Group. This  
assessment by the Volkswagen Group was based, among other things, on the advice of a law firm engaged in the  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
207  
USA for approval issues, according to which similar cases in the past were resolved amicably with the US  
authorities. The EPA's publication of the “Notice of Violation” on September 18, 2015, which the Board of  
Management had not expected, especially at that time, then presented the situation in an entirely different  
light.  
In fiscal year 2019, additional special items of €2.3 billion had to be recognized in connection with the  
diesel issue. Charges of €2.6 billion were recognized under other operating expenses, which arose from the  
administrative fine order of €0.5 billion issued in May 2019 by the Stuttgart Public Prosecutor, which ended the  
ongoing regulatory offense proceeding against Dr. Ing. h.c. F. Porsche AG, and higher provisions for legal risks.  
This was set against the reversal of reserves for technical measures of €0.3 billion, which reduced cost of sales.  
Furthermore, based on the information as it exists and has been established, there continue to be no  
conclusive findings or assessments available to the Board of Management of Volkswagen AG regarding the  
described facts that would suggest that a different assessment of the associated risks should have been made.  
In August 2018, the control and profit and loss transfer agreement with MAN SE was terminated by  
extraordinary notice as of January 1, 2019. Following the announcement of the termination of the control and  
profit and loss transfer agreement and the recording thereof in the commercial register, the noncontrolling  
shareholders of MAN SE had the right to tender their shares to Volkswagen, pursuant to the provisions of the  
control and profit and loss transfer agreement, within a two-month period. This resulted in cash outflows of  
€1.1 billion in the first half of this year for the acquisition of shares tendered and compensation payments.  
There was a corresponding decline in the amount of put options and compensation rights granted to  
noncontrolling interest shareholders reported in the balance sheet. The put options granted to noncontrolling  
interest shareholders of MAN SE expired on March 4, 2019. The remaining liability of €0.7 billion was  
reclassified directly to equity; €0.3 billion of this amount is attributable to noncontrolling interests.  
Since June 28, 2019, 51 million shares of TRATON SE have been traded on the regulated markets of the Frankfurt  
Stock Exchange and of the Nasdaq Stockholm. The offer price was set at €27.00 per share. This led to an increase  
of €1.4 billion in the Volkswagen Group’s equity, of which €1.2 billion is reported as noncontrolling interests.  
In the case of internally generated intangible assets with finite useful lives and the associated property, plant  
and equipment in the Passenger Cars Business Area, the individual product or product group has in the past  
represented the cash-generating unit. This had to be redefined for the Passenger Cars Business Area in the past  
fiscal year, because the cash flows generated by the individual products are not largely independent of each  
other any longer. In particular, the fact that emission regulations are being tightened worldwide means that the  
cash flows of the individual products influence each other to an increasing extent. As a consequence of the  
change in circumstances, the brands have, since the fourth quarter of 2019, normally been designated as cash-  
generating units in the Passenger Cars Business Area, thus forming the basis for impairment tests and  
profitability assessments when initially recognizing internally generated intangible assets. The changed  
definition of cash-generating units led to a non-recurring reversal of write-downs, which had an effect of  
€0.9 billion on other operating income in the fourth quarter of 2019 and will lead to increased depreciation and  
amortization in subsequent periods. Furthermore, impairment losses of €0.2 billion recognized in the first  
quarters of the fiscal year had to be reversed. In addition, the financial result benefited in an amount of  
€75 million from the reversal of impairment losses at the Chinese joint ventures. The revised definition of cash-  
generating units will in future lead to a slight increase in the capitalization ratio.  
2
08  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Basis of consolidation  
In addition to Volkswagen AG, the consolidated financial statements comprise all significant German and non-  
German subsidiaries, including structured entities that are controlled directly or indirectly by Volkswagen AG.  
This is the case if Volkswagen AG obtains power over the potential subsidiaries directly or indirectly from  
voting rights or similar rights, is exposed, or has rights to, positive or negative variable returns from its  
involvement with the subsidiaries, and is able to influence those returns. In the case of the structured entities  
consolidated in the Volkswagen Group, Volkswagen is able to direct the material relevant activities remaining  
after the change in the structure even if it is not invested in the structured entity concerned and is thus able to  
influence the variable returns from its involvement. The structured entities are used primarily to enter into  
asset-backed securities transactions to refinance the financial services business and to invest surplus liquidity  
in special securities funds. Consolidation of subsidiaries begins at the first date on which control exists, and  
ends when such control no longer exists.  
Subsidiaries whose business is dormant or insignificant, both individually and in the aggregate, for the fair  
presentation of the net assets, financial position and results of operations as well as the cash flows of the  
Volkswagen Group are not consolidated. They were carried in the consolidated financial statements at cost net  
of any impairment losses and reversals of impairment losses required to be recognized.  
Significant companies where Volkswagen AG is able, directly or indirectly, to significantly influence  
financial and operating policy decisions (associates), or that are directly or indirectly jointly controlled (joint  
ventures), are accounted for using the equity method. Joint ventures also include companies in which the  
Volkswagen Group holds the majority of voting rights, but whose articles of association or partnership  
agreements stipulate that important decisions may only be resolved unanimously. Insignificant associates and  
joint ventures are carried at cost net of any impairment losses and reversals of impairment losses required to  
be recognized.  
The composition of the Volkswagen Group is shown in the following table:  
Number  
2019  
2018  
Volkswagen AG and consolidated subsidiaries  
Germany  
151  
714  
152  
712  
Abroad  
Subsidiaries carried at cost  
Germany  
78  
70  
Abroad  
290  
251  
Associates, joint ventures and other equity investments  
Germany  
Abroad  
76  
107  
64  
79  
1,416  
1,328  
The list of all shareholdings that forms part of the annual financial statements of Volkswagen AG can be down-  
loaded from the electronic companies register at www.unternehmensregister.de and from www.volks-  
wagenag.com/ir.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
209  
The following consolidated German subsidiaries with the legal form of a corporation or partnership meet the  
criteria set out in section 264(3) or section 264b of the Handelsgesetzbuch (HGB – German Commercial Code)  
due to their inclusion in the consolidated financial statements and have as far as possible exercised the option  
not to publish annual financial statements:  
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ꢀ Audi Berlin GmbH, Berlin  
ꢀ Audi Electronics Venture GmbH, Gaimersheim  
ꢀ Audi Frankfurt GmbH, Frankfurt am Main  
ꢀ Audi Hamburg GmbH, Hamburg  
ꢀ Audi Hannover GmbH, Hanover  
ꢀ Audi Leipzig GmbH, Leipzig  
ꢀ Audi Stuttgart GmbH, Stuttgart  
ꢀ Autostadt GmbH, Wolfsburg  
ꢀ Bugatti Engineering GmbH, Wolfsburg  
ꢀ Dr. Ing. h.c. F. Porsche AG, Stuttgart  
ꢀ GETAS Verwaltung GmbH & Co. Objekt Augsburg KG, Pullach i. Isartal  
ꢀ GETAS Verwaltung GmbH & Co. Objekt Heinrich-von-Buz-Straße KG, Pullach i. Isartal  
ꢀ HABAMO Verwaltung GmbH & Co. Objekt Sterkrade KG, Pullach i. Isartal  
ꢀ Haberl Beteiligungs-GmbH, Munich  
ꢀ Karosseriewerk Porsche GmbH & Co. KG, Stuttgart  
ꢀ MAHAG GmbH, Munich  
ꢀ MAN Energy Solutions SE, Augsburg  
ꢀ MOIA GmbH, Berlin  
ꢀ MOIA Operations Germany GmbH, Hamburg  
ꢀ Porsche Consulting GmbH, Bietigheim-Bissingen  
ꢀ Porsche Deutschland GmbH, Bietigheim-Bissingen  
ꢀ Porsche Dienstleistungs GmbH, Stuttgart  
ꢀ Porsche Engineering Group GmbH, Weissach  
ꢀ Porsche Engineering Services GmbH, Bietigheim-Bissingen  
ꢀ Porsche Erste Beteiligungsgesellschaft mbH, Stuttgart  
ꢀ Porsche Financial Services GmbH & Co. KG, Bietigheim-Bissingen  
ꢀ Porsche Financial Services GmbH, Bietigheim-Bissingen  
ꢀ Porsche Holding Stuttgart GmbH, Stuttgart  
ꢀ Porsche Leipzig GmbH, Leipzig  
ꢀ Porsche Lizenz- und Handelsgesellschaft mbH & Co. KG, Ludwigsburg  
ꢀ Porsche Logistik GmbH, Stuttgart  
ꢀ Porsche Niederlassung Berlin GmbH, Berlin  
ꢀ Porsche Niederlassung Berlin-Potsdam GmbH, Kleinmachnow  
ꢀ Porsche Niederlassung Hamburg GmbH, Hamburg  
ꢀ Porsche Niederlassung Leipzig GmbH, Leipzig  
ꢀ Porsche Niederlassung Stuttgart GmbH, Stuttgart  
ꢀ Porsche Nordamerika Holding GmbH, Ludwigsburg  
ꢀ Porsche Siebte Vermögensverwaltung GmbH, Wolfsburg  
ꢀ Porsche Smart Mobility GmbH, Stuttgart  
ꢀ Porsche Zentrum Hoppegarten GmbH, Stuttgart  
ꢀ Raffay Versicherungsdienst GmbH, Hamburg  
ꢀ SEAT Deutschland Niederlassung GmbH, Frankfurt am Main  
ꢀ SKODA AUTO Deutschland GmbH, Weiterstadt  
ꢀ VfL Wolfsburg-Fußball GmbH, Wolfsburg  
ꢀ VGRD GmbH, Wolfsburg  
ꢀ Volkswagen AirService GmbH, Braunschweig  
ꢀ Volkswagen Automobile Berlin GmbH, Berlin  
ꢀ Volkswagen Automobile Chemnitz GmbH, Chemnitz  
ꢀ Volkswagen Automobile Frankfurt GmbH, Frankfurt am Main  
ꢀ Volkswagen Automobile Hamburg GmbH, Hamburg  
2
10  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
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ꢀ Volkswagen Automobile Hannover GmbH, Hanover  
ꢀ VOLKSWAGEN Automobile Leipzig GmbH, Leipzig  
ꢀ Volkswagen Automobile Region Hannover GmbH, Hanover  
ꢀ Volkswagen Automobile Rhein-Neckar GmbH, Mannheim  
ꢀ Volkswagen Automobile Stuttgart GmbH, Stuttgart  
ꢀ Volkswagen Beteiligungsverwaltung GmbH, Wolfsburg  
ꢀ Volkswagen Dritte Leasingobjekt GmbH, Braunschweig  
ꢀ Volkswagen Erste Leasingobjekt GmbH, Braunschweig  
ꢀ Volkswagen Fünfte Leasingobjekt GmbH, Braunschweig  
ꢀ Volkswagen Gebrauchtfahrzeughandels und Service GmbH, Langenhagen  
ꢀ Volkswagen Group IT Services GmbH, Wolfsburg  
ꢀ Volkswagen Group Real Estate GmbH & Co. KG, Wolfsburg  
ꢀ Volkswagen Group Services GmbH, Wolfsburg  
ꢀ Volkswagen Immobilien GmbH, Wolfsburg  
ꢀ Volkswagen Konzernlogistik GmbH & Co. OHG, Wolfsburg  
ꢀ Volkswagen Original Teile Logistik GmbH & Co. KG, Baunatal  
ꢀ Volkswagen Osnabrück GmbH, Osnabrück  
ꢀ Volkswagen R GmbH, Wolfsburg  
ꢀ Volkswagen Sachsen GmbH, Zwickau  
ꢀ Volkswagen Sechste Leasingobjekt GmbH, Braunschweig  
ꢀ Volkswagen Siebte Leasingobjekt GmbH, Braunschweig  
ꢀ Volkswagen Software Asset Management GmbH, Wolfsburg  
ꢀ Volkswagen Vermögensverwaltung GmbH, Wolfsburg  
ꢀ Volkswagen Vertriebsbetreuungsgesellschaft mbH, Chemnitz  
ꢀ Volkswagen Vierte Leasingobjekt GmbH, Braunschweig  
ꢀ Volkswagen Zubehör GmbH, Dreieich  
ꢀ Volkswagen Zweite Leasingobjekt GmbH, Braunschweig  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
211  
CON SO LI DATE D S U B SI D IA R I E S  
The fiscal year’s changes in the consolidated Group are shown in the following table:  
Number  
Germany  
Abroad  
Initially consolidated  
Subsidiaries previously carried at cost  
Newly acquired subsidiaries  
Newly formed subsidiaries  
4
0
0
4
13  
3
5
21  
Deconsolidated  
Mergers  
1
2
2
5
5
6
Liquidations  
Sales/Other  
8
19  
The initial consolidation or deconsolidation of these subsidiaries, either individually or collectively, did not  
have a significant effect on the presentation of the net assets, financial position and results of operations. The  
unconsolidated structured entities are immaterial from a Group perspective. In particular, they do not give rise  
to any significant risks to the Group.  
I NV E STM E NT S I N A SS OC IAT ES  
From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG,  
Ehningen (Bertrandt), There Holding B .V ., Rijswijk, the Netherlands (There Holding), and Navistar International  
Corporation, Lisle, Illinois/USA (Navistar), were material at the reporting date.  
Sinotruk  
Sinotruk is one of the largest truck manufacturers in the Chinese market. There is an agreement in place  
between Group companies and Sinotruk regarding a long-term strategic partnership, under which the Group  
participates in the local market. In addition to the partnership with Sinotruk in the volume segment, exports of  
MAN vehicles to China are also helping to expand access to the small, but fast-growing premium truck market.  
Sinotruk’s principal place of business is in Hongkong, China.  
As of December 31, 2019, the quoted market price of the shares in Sinotruk amounted to €1,312 million  
(previous year: €908 million).  
Bertrandt  
Bertrandt is an engineering partner to companies in the automotive and aviation industry. Its portfolio of  
services ranges from developing individual components through complex modules to end-to-end solutions.  
Bertrandt’s principal place of business is in Ehningen.  
As of December 31, 2019, the quoted market price of the shares in Bertrandt amounted to €165 million  
(previous year: €201 million).  
2
12  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
There Holding  
Together with the BMW Group, Daimler AG and other companies, Volkswagen holds an equity investment in  
There Holding B.V., Rijswijk (the Netherlands), an investment company. In turn, There Holding B .V . holds around  
85 % of the shares of HERE International B.V., Eindhoven (the Netherlands). HERE International B.V. is one of the  
world’s largest producers of digital road maps for navigation systems. Since the interest held does not grant  
control in accordance with IFRS 10, HERE International B.V. is included in the financial statements of  
There Holding B.V. as an associate using the equity method.  
Capital increases were implemented at There Holding B.V. in 2019, in which Volkswagen participated. As a  
result, the shares accounted for using the equity method increased by €69 million. The ownership interest in  
There Holding B.V. amounted to 29.7 % as of December 31, 2019.  
In December 2019, it was announced that additional investors would acquire shares in  
HERE International B.V. Following the signing in December 2019, Mitsubishi Corporation (MC) and  
Nippon Telegraph and Telephone Corporation of Japan (NTT) are aiming to jointly acquire 30 % of the shares of  
HERE International B.V. in the first half of 2020, subject to antitrust approval. The interest held by  
There Holding B.V. in HERE International B.V. is expected to decline to around 60 % as a result.  
Navistar  
Navistar International Corporation (Navistar) is a US manufacturer of commercial vehicles; it is based in Lisle,  
Illinois/USA. Navistar and TRATON GROUP companies have entered into master agreements for strategic  
technology and supply cooperation as well as a procurement joint venture.  
Since two members of TRATON SE’s Executive Board are represented on the Board of Directors of Navistar  
and because of the agreed cooperations, the investment in Navistar is reported as an equity-accounted  
investment in the consolidated financial statements.  
As of December 31, 2019, the quoted market price of the shares in Navistar amounted to €429 million  
(December 31, 2018: €377 million).  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
213  
SUMM A RIZ ED F I NANC IAL I N F OR M ATION ON M AT ERIAL A S SO CIATE S ON A 10 0 % BA SI S  
€
million  
Sinotruk1  
Bertrandt2  
There Holding  
Navistar3  
2019  
Equity interest in %  
25  
29  
30  
17  
Noncurrent assets  
Current assets  
2,351  
6,127  
50  
575  
468  
313  
153  
578  
1,131  
467  
–
1,762  
4,441  
6,336  
3,206  
–3,339  
Noncurrent liabilities  
Current liabilities  
Net assets  
4,669  
3,758  
0
1,597  
Sales revenue  
8,047  
627  
–
1,058  
16  
–
–
–390  
–
10,004  
Earnings after tax from continuing operations  
Earnings after tax from discontinued operations  
Other comprehensive income  
Total comprehensive income  
Dividends receivedϤ  
216  
–
0
–1  
15  
6
1
7
627  
47  
–389  
–
223  
–
2018  
Equity interest in %  
25  
29  
30  
17  
Noncurrent assets  
Current assets  
2,239  
6,461  
54  
586  
469  
306  
167  
583  
1,763  
1,846  
4,528  
6,478  
3,356  
–3,461  
2
–
Noncurrent liabilities  
Current liabilities  
Net assets  
5,250  
3,395  
1
1,764  
Sales revenue  
8,047  
558  
–
1,020  
25  
–
–
–351  
–
8,625  
310  
–
Earnings after tax from continuing operations  
Earnings after tax from discontinued operations  
Other comprehensive income  
Total comprehensive income  
Dividends receivedϤ  
0
0
–7  
245  
555  
–
558  
50  
25  
7
–358  
–
1
2
3
4
Balance sheet amounts refer to the June 30 reporting date and income statement amounts refer to the period from July 1 to June 30.  
Balance sheet amounts refer to the September 30 reporting date and income statement amounts refer to the period from October 1 to September 30.  
Balance sheet amounts refer to the October 31 reporting date and income statement amounts refer to the period from November 1 to October 31.  
Proportionate dividends are shown net of withholding tax.  
2
14  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
RECO NC I L IATI ON OF TH E FI NANC I A L I N F ORM AT IO N TO T H E CA R RYI NG AMOU N T OF TH E E QU ITY- ACCOU NTE D  
I NV E STM E NT S  
€
million  
Sinotruk  
Bertrandt  
There Holding  
Navistar  
2019  
Net assets at January 1  
3,395  
627  
0
583  
16  
1,764  
–390  
1
–3,461  
216  
Profit or loss  
Other comprehensive income  
Changes in reserves  
–1  
7
1
–
222  
–
–21  
Foreign exchange differences  
Dividends¹  
–46  
–218  
3,758  
940  
–388  
552  
–
–60  
–20  
578  
167  
80  
–
–20  
Net assets at December 31  
Proportionate equity  
1,597  
475  
–
–3,339  
–560  
1,007  
447  
Consolidation/Goodwill/Others  
Carrying amount of equity-accounted investments  
247  
475  
2018  
Net assets at January 1  
3,060  
558  
0
583  
25  
2,209  
–351  
–7  
–3,816  
310  
Profit or loss  
Other comprehensive income  
Changes in reserves  
0
245  
–3  
–
–87  
–
13  
Foreign exchange differences  
Dividends¹  
13  
–
–191  
–22  
–232  
3,395  
849  
–402  
447  
–25  
583  
168  
163  
331  
–
Net assets at December 31  
Proportionate equity  
1,764  
522  
–
–3,461  
–582  
1,012  
430  
Consolidation/Goodwill/Others  
Carrying amount of equity-accounted investments  
522  
1
Dividends are shown before withholding tax.  
SUMM A RIZ ED F I NANC IAL I N F OR M ATION ON I N D I VI DUALLY IMM AT ERIAL A S SO CIATE S ON TH E BA SI S OF TH E  
VOLKSWAGE N GROU P’S PROP ORTI ONATE I N TER E ST  
€
million  
2019  
2018  
Earnings after tax from continuing operations  
Earnings after tax from discontinued operations  
Other comprehensive income  
27  
–
–20  
–
12  
39  
597  
1
Total comprehensive income  
–20  
332  
Carrying amount of equity-accounted investments  
There were unrecognized losses of €54 million (previous year: €– million) relating to investments in associates.  
Furthermore, there were no contingent liabilities or financial guarantees relating to associates.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
215  
I NT E RE ST S I N JOI NT V E N TU RE S  
From a Group perspective, the joint ventures FAW-Volkswagen Automotive Company Ltd., Changchun, China,  
SAIC-Volkswagen Automotive Company Ltd., Shanghai, China, and SAIC-Volkswagen Sales Company Ltd.,  
Shanghai, China, were material at the reporting date due to their size.  
FAW-Volkswagen Automotive Company  
FAW-Volkswagen Automotive Company develops, produces and sells passenger cars. There is an agreement in  
place between Group companies and the joint venture partner China FAW Corporation Limited regarding a  
long-term strategic partnership. The principal place of business is in Changchun, China.  
SAIC-Volkswagen Automotive Company  
SAIC-Volkswagen Automotive Company develops and produces passenger cars. There is an agreement in place  
between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding  
a long-term strategic partnership. The principal place of business is in Shanghai, China.  
SAIC-Volkswagen Sales Company  
SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. There is an  
agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry  
Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai, China.  
2
16  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
SUMM A RIZ ED F I NANC IAL I N F OR M ATION ON T H E M ATERIA L JO I N T VENTU R ES ON A 10 0 % BA SI S  
FAW-Volkswagen  
Automotive  
Company  
SAIC-Volkswagen  
Automotive  
Company1  
SAIC-Volkswagen  
Sales Company  
€
million  
2019  
Equity interest in %  
40  
50  
30  
Noncurrent assets  
12,069  
11,876  
5,423  
1,221  
–
9,355  
8,251  
6,513  
1,130  
–
896  
4,477  
210  
160  
–
Current assets  
of which cash and cash equivalents  
Noncurrent liabilities  
of which financial liabilities²  
Current liabilities  
15,321  
29  
11,674  
1
4,665  
–
of which financial liabilities²  
Net assets  
7,403  
4,802  
548  
Sales revenue  
44,181  
1,825  
125  
26,922  
2,190  
53  
32,115  
21  
Depreciation and amortization  
Interest income  
5
Interest expenses  
4
2
–
Earnings before tax from continuing operations  
Income tax expense  
4,775  
1,251  
3,524  
–
3,594  
845  
2,749  
–
659  
166  
493  
–
Earnings after tax from continuing operations  
Earnings after tax from discontinued operations  
Other comprehensive income  
Total comprehensive income  
Dividends received³  
–49  
3
–
3,475  
1,332  
2,752  
1,732  
493  
153  
2018  
Equity interest in %  
40  
50  
30  
Noncurrent assets  
10,651  
10,903  
3,764  
1,260  
–
8,580  
6,689  
4,412  
1,205  
–
671  
3,680  
206  
110  
–
Current assets  
of which cash and cash equivalents  
Noncurrent liabilities  
of which financial liabilities²  
Current liabilities  
12,936  
–
8,526  
4
3,692  
–
of which financial liabilities²  
Net assets  
7,358  
5,538  
549  
Sales revenue  
41,607  
1,335  
123  
28,863  
1,479  
64  
33,212  
8
Depreciation and amortization  
Interest income  
5
Interest expenses  
–
1
–
Earnings before tax from continuing operations  
Income tax expense  
4,851  
1,186  
3,665  
–
4,588  
1,040  
3,548  
–
665  
167  
498  
–
Earnings after tax from continuing operations  
Earnings after tax from discontinued operations  
Other comprehensive income  
Total comprehensive income  
Dividends received³  
47  
1
–
3,712  
1,209  
3,549  
1,626  
498  
148  
1
SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. Therefore, the sales revenue reported for SAIC-Volkswagen  
Automotive Company was mostly generated from its business with SAIC-Volkswagen Sales Company.  
Excluding trade liabilities.  
2
3
Proportionate dividends are shown net of withholding tax.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
217  
RECO NC I L IATI ON OF TH E FI NANC I A L I N F ORM AT IO N TO T H E CA R RYI NG AMOU N T OF TH E E QU ITY- ACCOU NTE D  
I NV E STM E NT S  
FAW-Volkswagen  
SAIC-Volkswagen  
Automotive  
Company  
Automotive  
Company  
SAIC-Volkswagen  
Sales Company  
€
million  
2019  
Net assets at January 1  
7,358  
3,524  
–49  
5,538  
2,749  
3
549  
493  
–
Profit or loss  
Other comprehensive income  
Changes in share capital  
Changes in reserves  
–
–
–
–
–
–
Foreign exchange differences  
Dividends¹  
54  
37  
16  
–3,483  
7,403  
2,961  
–760  
2,201  
–3,524  
4,802  
2,401  
–803  
1,599  
–509  
548  
164  
–
Net assets at December 31  
Proportionate equity  
Consolidation/Goodwill/Others  
Carrying amount of equity-accounted investments  
164  
2018  
Net assets at January 1  
6,851  
3,665  
47  
5,405  
3,548  
1
546  
498  
–
Profit or loss  
Other comprehensive income  
Changes in share capital  
Changes in reserves  
–
–
–
–
–
–
Foreign exchange differences  
Dividends¹  
68  
–23  
–1  
–3,273  
7,358  
2,943  
–593  
2,350  
–3,393  
5,538  
2,769  
–851  
1,918  
–494  
549  
165  
–
Net assets at December 31  
Proportionate equity  
Consolidation/Goodwill/Others  
Carrying amount of equity-accounted investments  
165  
1
Dividends are shown before withholding tax.  
SUM M A RIZ E D F I NA NC IA L I N F OR M ATION ON I N D I V I DUA LLY IM M AT E RIA L JOI NT V E N TU RE S ON T H E B A SI S OF TH E  
VOLKSWAGE N GROU P’S PROP ORTI ONATE I N TER E ST  
€
million  
2019  
2018  
Earnings after tax from continuing operations  
Earnings after tax from discontinued operations  
Other comprehensive income  
434  
–
319  
–
3
–2  
Total comprehensive income  
436  
1,887  
317  
1,939  
Carrying amount of equity-accounted investments  
There were unrecognized losses of €29 million (previous year: €– million) relating to investments in joint  
ventures. Contingent liabilities to joint ventures amounted to €224 million (previous year: €183 million), while  
financial guarantees stood at €134 million (previous year: €146 million). Cash funds of €276 million (previous  
year: €268 million) are deposited as collateral for asset-backed securities transactions and are therefore not  
available to the Volkswagen Group.  
2
18  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
I FR S 5 – N ON -CU RRE NT A SS E T S H E LD F OR SA LE  
On July 12, 2019, Volkswagen announced that, together with Ford Motor Company (Ford), it would be investing  
in Argo AI, a company that is working on the development of a system for autonomous driving. The investment  
will firstly include the provision of financial resources totaling USD 1.0 billion, spread over several years, and  
secondly Volkswagen will contribute its consolidated subsidiary Autonomous Intelligent Driving (AID).  
Furthermore, Volkswagen will acquire existing Argo AI shares from Ford for a purchase price of  
USD 500 million, payable in three equal annual installments. The transaction, including the contribution of  
AID, is expected to be completed in the first half of 2020 – subject to the required regulatory approvals and  
other conditions precedent.  
On January 30, 2020, the Board of Management and Supervisory Board of Volkswagen AG resolved to sell the  
Volkswagen Group’s 76% interest in RENK AG. RENK AG is a global provider of high-quality gear units and  
propulsion systems for various areas of application. It is part of the Power Engineering segment. The sale is  
expected to be completed in the second half of 2020 – subject to approval by the regulatory authorities.  
In accordance with IFRS 5, the RENK AG subgroup and AID are reported as disposal groups held for sale and  
measured at their carrying amounts.  
The assets and liabilities of the disposal groups are each reported in separate balance sheet accounts. The main  
categories of the assets and liabilities of the disposal groups are presented below:  
€
million  
Dec. 31, 2019  
Intangible assets  
Property, plant and equipment  
Inventories  
110  
261  
230  
4
Cash and securities  
Tax assets  
2
Other assets  
190  
795  
Assets held for sale  
Financial liabilities  
9
72  
Provisions  
Other liabilities  
289  
370  
Liabilities associated with assets held for sale  
Accumulated income and expenses in connection with the disposal groups classified as held for sale and  
recognized in other comprehensive income amount to €4.6 million.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
219  
Consolidation methods  
The assets and liabilities of the German and foreign companies included in the consolidated financial  
statements are recognized in accordance with the uniform accounting policies used within the Volkswagen  
Group. In the case of companies accounted for using the equity method, the same accounting policies are  
applied to determine the proportionate equity, based on the most recent audited annual financial statements of  
each company.  
In the case of subsidiaries consolidated for the first time, assets and liabilities are measured at their fair  
value at the date of acquisition. Their carrying amounts are adjusted in subsequent years. Goodwill arises when  
the purchase price of the investment exceeds the fair value of identifiable net assets. Goodwill is tested for  
impairment once a year to determine whether its carrying amount is recoverable. If the carrying amount of  
goodwill is higher than the recoverable amount, an impairment loss must be recognized. If this is not the case,  
there is no change in the carrying amount of goodwill compared with the previous year. If the purchase price of  
the investment is less than the identifiable net assets, the difference is recognized in the income statement in  
the year of acquisition. Goodwill is accounted for at the subsidiaries in the functional currency of those  
subsidiaries. Any difference that arises from the acquisition of additional shares of an already consolidated  
subsidiary is taken directly to equity. Unless otherwise stated, the proportionate equity directly attributable to  
noncontrolling interests is determined at the acquisition date as the share of the fair value of the assets  
(excluding goodwill) and liabilities attributable to them. Contingent consideration is measured at fair value at  
the acquisition date. Subsequent changes in the fair value of contingent consideration do not generally result  
in the adjustment of the acquisition-date measurement. Acquisition-related costs that are not equity  
transaction costs are not added to the purchase price, but instead recognized as expenses in the period in which  
they are incurred.  
The consolidation process involves adjusting the items in the separate financial statements of the parent  
and its subsidiaries and presenting them as if they were those of a single economic entity. Intragroup assets,  
liabilities, equity, income, expenses and cash flows are eliminated in full. Intercompany profits or losses are  
eliminated in Group inventories and noncurrent assets. Deferred taxes are recognized for consolidation  
adjustments, and deferred tax assets and liabilities are offset where taxes are levied by the same tax authority  
and have the same maturity.  
2
20  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Currency translation  
Transactions in foreign currencies are translated in the single-entity financial statements of Volkswagen AG  
and its consolidated subsidiaries at the rates prevailing at the transaction date. Foreign currency monetary  
items are recorded in the balance sheet using the middle rate at the closing date. Foreign exchange gains and  
losses are recognized in the income statement. This does not apply to foreign exchange differences from loans  
receivable that represent part of a net investment in a foreign operation. The financial statements of foreign  
companies are translated into euros using the functional currency concept, under which asset and liability  
items are translated at the closing rate. With the exception of income and expenses recognized directly in  
equity, equity is translated at historical rates. The resulting foreign exchange differences are recognized in other  
comprehensive income until disposal of the subsidiary concerned, and are presented as a separate item in  
equity.  
Income statement items are translated into euros at weighted average rates.  
The rates applied are presented in the following table:  
BALANCE SHEET MIDDLE RATE  
ON DECEMBER 31  
INCOME STATEMENT  
AVERAGE RATE  
€
1 =  
2019  
2018  
2019  
2018  
Argentina  
Australia  
ARS  
AUD  
BRL  
67.23626  
1.60080  
43.15687  
1.62240  
53.78083  
1.61071  
32.89363  
1.58021  
Brazil  
4.51350  
4.44485  
4.41485  
4.30729  
Canada  
CAD  
CZK  
INR  
1.46205  
1.55930  
1.48595  
1.53032  
Czech Republic  
India  
25.40650  
80.15450  
121.89500  
21.24340  
7.81470  
25.72450  
79.90650  
125.91000  
22.52035  
7.87725  
25.66983  
78.86396  
122.08649  
21.56326  
7.73444  
25.64308  
80.71466  
130.40158  
22.71496  
7.80766  
Japan  
JPY  
Mexico  
MXN  
CNY  
PLN  
KRW  
RUB  
ZAR  
SEK  
People’s Republic of China  
Poland  
4.25970  
4.29780  
4.29784  
4.26098  
Republic of Korea  
Russia  
1,296.35000  
69.84685  
15.76470  
10.44505  
0.84995  
1,276.90000  
79.83765  
16.46690  
10.25070  
0.89690  
1,304.89265  
72.46709  
16.17716  
10.58593  
0.87744  
1,299.41384  
74.08214  
15.62243  
10.25830  
0.88476  
South Africa  
Sweden  
United Kingdom  
USA  
GBP  
USD  
1.12275  
1.14525  
1.11974  
1.18156  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
221  
Accounting policies  
M EA SU R E M E N T P R I N C I P L E S  
With certain exceptions, such as financial instruments measured at fair value and provisions for pensions and  
other post-employment benefits, items in the Volkswagen Group are accounted for under the historical cost  
convention. The methods used to measure the individual items are explained in more detail below.  
I NTA NG I B LE A SS E TS  
Purchased intangible assets are recognized at cost and amortized over their useful life using the straight-line  
method. This relates in particular to software, which is normally amortized over three years.  
In accordance with IAS 38, research costs are recognized as expenses when incurred.  
Since the fourth quarter of 2019, development costs for future series products and other internally  
generated intangible assets are capitalized at cost, provided the cash-generating unit to which the respective  
intangible asset is attributable is not impaired. If the criteria for recognition as assets are not met, the expenses  
are recognized in the income statement in the year in which they are incurred.  
Capitalized development costs include all direct and indirect costs that are directly attributable to the  
development process. The costs are amortized using the straight-line method from the start of production over  
the expected life cycle of the models or powertrains developed – generally between two and ten years.  
Amortization recognized during the year is allocated to the relevant functional areas in the income  
statement.  
Brand names from business combinations usually have an indefinite useful life and are therefore not  
amortized. An indefinite useful life is usually the result of a brand’s further use and maintenance.  
Goodwill, intangible assets with indefinite useful lives and intangible assets that are not yet available for  
use are tested for impairment at least once a year. Assets in use and other intangible assets with finite useful  
lives are tested for impairment only if there are specific indications that they may be impaired. The  
Volkswagen Group generally applies the higher of value in use and fair value less costs to sell of the relevant  
cash-generating unit to determine the recoverable amount of goodwill and intangible assets with finite and  
indefinite useful lives. Since the fourth quarter of 2019, normally the respective brand is the cash-generating  
unit that is used as the testing level. Measurement of value in use is based on management’s current planning.  
This planning is based on expectations regarding future global economic trends and on assumptions derived  
from those trends about the markets for passenger cars and commercial vehicles, market shares and the  
profitability of the products. The planning for the Financial Services segment is likewise prepared on the basis  
of these expectations, and also reflects the relevant market penetration rates and regulatory requirements. The  
planning for the Power Engineering segment reflects expectations about trends in the various individual  
markets. The planning includes reasonable assumptions about macroeconomic trends (exchange rate, interest  
rate and commodity price trends) and historical developments. The planning period generally covers five years.  
For information on the assumptions applied to the detailed planning period, please refer to the Report on  
Expected Developments, which is part of the Management Report. For subsequent years, plausible assumptions  
are made regarding future trends. The planning assumptions are adapted to reflect the current state of  
knowledge.  
Estimation of cash flows is generally based on the expected growth trends for the markets concerned. The  
estimates for the cash flows following the end of the planning period are generally based on a growth rate of up  
to 1% p.a. (previous year: up to 1% p.a.) in the Passenger Cars segment, and on a growth rate of up to 1% p.a.  
(previous year: up to 1% p.a.) in the Power Engineering and Commercial Vehicles segments.  
2
22  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Value in use is determined for the purpose of impairment testing of goodwill, indefinite-lived intangible assets  
and finite-lived intangible assets – mainly capitalized development costs – using the following pretax weighted  
average cost of capital (WACC) rates, which are adjusted if necessary for country-specific discount factors:  
WACC  
2019  
2018  
Passenger Cars segment  
5.7%  
7.7%  
7.9%  
5.5%  
6.8%  
7.8%  
Commercial Vehicles segment  
Power Engineering segment  
The WACC rates are calculated based on the risk-free rate of interest, a market risk premium and the cost of debt.  
Additionally, specific peer group information on beta factors and leverage are taken into account; changes in  
the leverage as a result of the initial application of IFRS 16 are taken into account appropriately. The  
composition of the peer groups used to determine beta factors is continuously reviewed and adjusted if  
necessary.  
P ROP E RTY, P L A N T A N D E QU I PM E NT  
Property, plant and equipment is carried at cost less depreciation and – where necessary – write-downs for  
impairment. Investment grants are generally deducted from cost. Cost is determined on the basis of the direct  
and indirect costs that are directly attributable. Special operational equipment is reported under other  
equipment, operating and office equipment. Property, plant and equipment is depreciated using the straight-  
line method over its estimated useful life. The useful lives of items of property, plant and equipment are  
reviewed on a regular basis and adjusted if required.  
Depreciation is based mainly on the following useful lives:  
Useful life  
Buildings  
20 to 50 years  
10 to 20 years  
6 to 12 years  
3 to 15 years  
Site improvements  
Technical equipment and machinery  
Other equipment, operating and office equipment, including special tools  
Impairment losses on property, plant and equipment are recognized in accordance with IAS 36 where the  
recoverable amount of the asset concerned has fallen below the carrying amount. Recoverable amount is the  
higher of value in use and fair value less costs to sell. Value in use is determined using the principles described  
for intangible assets. The discount rates for product-specific tools and other investments are the same as the  
discount rates for capitalized development costs given above for each segment. If the reasons for impairments  
recognized in previous years no longer apply, the impairment losses are reversed up to a maximum of the  
amount that would have been determined if no impairment loss had been recognized (see also disclosures on  
adjustments to cash-generating units in the “Key Events” section).  
In accordance with the principle of substance over form, assets that have been formally transferred to third  
parties under a sale and leaseback transaction including a repurchase option also continue to be accounted for  
as separate assets.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
223  
LEA SE S  
Until December 31, 2018, the Volkswagen Group accounted for leases in accordance with IAS 17. A lease was  
defined as a contract under which the lessor transfers to the lessee the right to use an asset for an agreed period  
of time in return for a series of payments. The accounting treatment of the lease at the lessee and lessor  
depended on the distribution of the risks and rewards associated with the leased asset.  
If the material risks and rewards were attributable to the Volkswagen Group as lessee, the leased assets  
concerned were recognized at fair value or at the present value of the minimum lease payments (if lower) and  
depreciated using the straight-line method over the asset’s useful life, or over the term of the lease if this was  
shorter. The payment obligations arising from the future lease payments were discounted and recorded as a  
liability in the balance sheet.  
Where the Volkswagen Group was the lessee of operating lease assets, i.e. if not all material risks and  
rewards were transferred, lease and rental payments were recorded directly as expenses in profit or loss.  
Since January 1, 2019, the Volkswagen Group has accounted for leases in accordance with IFRS 16, which  
defines a lease as a contract or part of a contract in which a lessor transfers to a lessee the right to use an asset  
for an agreed period of time in exchange for consideration.  
RIG HT- OF-U SE A S SET S/ LEA SE L IA B I LI TI E S  
If the Volkswagen Group is the lessee, it generally recognizes in its balance sheet a right-of-use asset and a lease  
liability for all leases. In the Volkswagen Group the lease liability is measured on the basis of the present value  
of outstanding lease payments, while the right-of-use asset is always measured at the amount of the lease  
liability plus any initial direct costs.  
During the lease term, the right-of-use asset is always depreciated on a straight-line basis over the term of  
the lease. The lease liability is adjusted using the effective interest method and taking the lease payments into  
account.  
The right-of-use assets are reported in the balance sheet under those items in which the assets underlying  
the lease would have been recognized if the Volkswagen Group had been their beneficial owner. For this reason,  
the right-of-use assets are presented under noncurrent assets, mostly in property, plant and equipment, as of  
the balance sheet date and included in impairment tests of property, plant and equipment conducted in  
accordance with IAS 36.  
There are practical expedients for short-term and low-value leases; the Volkswagen Group makes use of this  
option and therefore does not recognize right-of-use assets or liabilities for these types of leases. In this respect,  
the lease payments will continue to be recognized in the income statement. Leases are accounted for as of low  
value if the value of the leased asset as new is no higher than €5,000. Furthermore, the accounting rules of  
IFRS 16 are not applied to leases of intangible assets.  
A large number of leases contain extension and termination options. The determination of the lease terms  
considers all relevant facts and circumstances that create an economic incentive to exercise or not to exercise  
the option. Optional periods are taken into account in determining the lease term, if it is reasonably certain  
that the option will or will not be exercised.  
LEA SE AS SE TS  
The accounting treatment of leases of lease assets is based on the classification into operating leases and  
finance leases. The classification is made on the basis of the distribution of risks and rewards incidental to  
ownership of the lease asset.  
If the lease is an operating lease, the Volkswagen Group is exposed to the material risks and rewards. The  
lease asset is recognized at amortized cost in the Volkswagen Group’s noncurrent assets and the lease  
installments collected in the period are recognized as income in the income statement.  
Vehicles leased out under operating leases are recognized at cost and depreciated to their estimated residual  
value using the straight-line method over the term of the lease. Impairment losses identified as a result of an  
impairment test in accordance with IAS 36 are recognized. The forecast residual values are adjusted to include  
constantly updated internal and external information on residual values, depending on specific local factors  
and the experiences gained in the marketing of used cars. This requires management to make assumptions in  
particular about vehicle supply and demand in the future, as well as about vehicle price trends. Such  
assumptions are based either on qualified estimates or on data published by external experts. Qualified  
2
24  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
estimates are based on external data – if available – that reflects additional information that is available  
internally, such as historical experience and current sales data.  
Under a finance lease, the material risks and rewards are transferred to the lessee. The lease asset is  
derecognized from the Volkswagen Group’s noncurrent assets, and instead a receivable is recognized in the  
amount of the net investment in the lease.  
I NV E STM E NT P ROP ERTY  
Real estate and buildings held in order to obtain rental income (investment property) are carried at amortized  
cost; the useful lives applied to depreciation generally correspond to those of the property, plant and  
equipment used by the Company itself. The fair value of investment property must be disclosed in the notes if  
it is carried at amortized cost. Fair value is generally estimated using an investment method based on internal  
calculations. This involves determining the income value for a specific building on the basis of gross income,  
taking into account additional factors such as land value, remaining useful life and a multiplier specific to  
property.  
CA PITAL IZAT ION OF BOR ROWI NG CO ST S  
Borrowing costs of qualifying assets are capitalized as part of the cost of these assets. A qualifying asset is an  
asset that necessarily takes at least a year to get ready for its intended use or sale.  
E Q U I T Y - ACCO U N T E D I NV E STM E N TS  
The cost of equity-accounted investments is adjusted to reflect the share of increases or reductions in equity at  
the associates and joint ventures after the acquisition that is attributable to the Volkswagen Group, as well as  
any effects from purchase price allocation. Additionally, the investment is tested for impairment if there are  
indications of impairment and written down to the lower recoverable amount if necessary. The recoverable  
amount is determined using the principles described for indefinite-lived intangible assets. If the reason for  
impairment ceases to apply at a later date, the impairment loss is reversed to the carrying amount that would  
have been determined had no impairment loss been recognized.  
FI NA NC IAL I N ST R UMEN T S  
Financial instruments are contracts that give rise to a financial asset of one company and a financial liability or  
an equity instrument of another. Regular way purchases or sales of financial instruments are accounted for at  
the settlement date – that is, at the date on which the asset is delivered.  
Financial assets are classified and measured on the basis of the entity’s business model and the characteristics  
of the financial asset’s cash flows.  
IFRS 9 classifies financial assets into the following categories:  
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ꢀ financial assets at fair value through profit or loss;  
ꢀ financial assets at fair value through other comprehensive income (debt instruments);  
ꢀ financial assets at fair value through other comprehensive income (equity instruments); and  
ꢀ financial assets at amortized cost.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
225  
Financial liabilities are classified into the following categories:  
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ꢀ financial liabilities at fair value through profit or loss; and  
ꢀ financial liabilities measured at amortized cost.  
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In the Volkswagen Group, the categories presented above are allocated to the “at amortized cost” and “at fair  
value” classes.  
F I N A N C I A L A S SE T S A N D L I A B I L I T I E S AT A M O RT I Z E D CO ST  
Financial assets measured at amortized cost are held under a business model that is aimed at collecting  
contractual cash flows (“hold” business model). The cash flows of these assets relate solely to payments of  
principal and interest on the principal amount outstanding. The amortized cost of a financial asset or liability  
is the amount:  
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ꢀ at which a financial asset or liability is measured at initial recognition;  
ꢀ minus any principal repayments;  
ꢀ taking account of any loss allowances, write-downs for impairment and uncollectibility relating to financial  
assets; and  
!
ꢀ plus or minus the cumulative amortization of any difference between the original amount and the amount  
repayable at maturity (premium, discount), amortized using the effective interest method over the term of  
the financial asset or liability.  
Financial liabilities measured at amortized cost using the effective interest method relate to liabilities to banks,  
bonds, commercial paper and notes, loans and other liabilities. Gains or losses resulting from changes in  
amortized cost, including the effects of changes in exchange rates, are recognized through profit or loss. For  
reasons of materiality, discounting or unwinding of discounting is not applied to current liabilities (due within  
one year).  
Financial assets and liabilities measured at amortized cost are  
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ꢀ receivables from financing business;  
ꢀ trade receivables and payables;  
ꢀ other receivables and financial assets and liabilities;  
ꢀ financial liabilities; and  
ꢀ cash, cash equivalents and time deposits.  
FI NA NC IAL AS SE TS AN D LIAB I L IT I ES AT FA I R VA LU E  
Changes in the carrying amount of financial assets measured at fair value are recognized either through OCI or  
through profit or loss.  
The fair value through OCI (debt instruments) category comprises exclusively debt instruments. Changes in  
fair value are always recognized directly in equity, net of deferred taxes. Certain changes in the fair value of  
these debt instruments (impairment losses, foreign exchange gains and losses, interest calculated using the  
effective interest method) are recognized immediately in profit or loss.  
Financial assets measured at fair value through other comprehensive income (debt instruments) are held  
under a business model aimed at both collecting contractual cash flows and selling financial assets (“hold and  
sell” business model).  
Financial assets that are equity instruments are also measured at fair value. Here Volkswagen exercises the  
option to recognize changes in fair value always through other comprehensive income, i.e. gains and losses  
from the measurement of equity investments are never recycled to the income statement and instead  
reclassified to revenue reserves on disposal (no reclassification).  
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Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Any financial assets not measured at either amortized cost or through other comprehensive income are  
allocated to the fair value through profit or loss category. Financial assets at fair value through profit or loss are  
aimed in particular at generating cash flows by selling financial instruments (“sell” business model).  
At Volkswagen, this category primarily comprises  
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ꢀ hedging relationships to which hedge accounting is not applied and  
ꢀ investment fund units.  
!
All financial liabilities at fair value through profit or loss relate to derivatives to which hedge accounting is not  
applied.  
Fair value generally corresponds to the market or quoted market price. If no active market exists, fair value  
is determined using other observable inputs as far as possible. If no observable inputs are available, fair value is  
determined using valuation techniques, such as by discounting the future cash flows at the market interest  
rate, or by using recognized option pricing models, and, as far as possible, verified by confirmations from the  
banks that handle the transactions.  
In the case of current financial receivables and liabilities, amortized cost generally corresponds to the  
principal or repayment amount.  
The fair value option for financial assets and financial liabilities is not used in the Volkswagen Group.  
Financial assets and financial liabilities are generally presented at their gross amounts and only offset if the  
Volkswagen Group currently has a legally enforceable right to set off the amounts and intends to settle on a net  
basis.  
Subsidiaries, associates and joint ventures that are not consolidated for reasons of materiality do not fall  
within the scope of IFRS 9 and IFRS 7.  
DER IVAT IVE S AN D H ED GE ACCOU NTI NG  
Volkswagen Group companies use derivatives to hedge balance sheet items and future cash flows (hedged  
items). Appropriate derivatives such as swaps, forward transactions and options are used as hedging  
instruments. The criteria for the application of hedge accounting are that the hedging relationship between the  
hedged item and the hedging instrument is clearly documented and that the hedge is highly effective.  
The accounting treatment of changes in the fair value of hedging instruments depends on the nature of the  
hedging relationship. In the case of hedges against the risk of change in the fair value of balance sheet items  
(fair value hedges), both the hedging instrument and the hedged risk portion of the hedged item are measured  
at fair value. Several risk portions of hedged items are grouped into a portfolio if appropriate. In the case of a  
fair value portfolio hedge, the changes in fair value are accounted for in the same way as for a fair value hedge  
of an individual underlying. Gains or losses from the measurement of hedging instruments and hedged items  
are recognized in profit or loss. In the Volkswagen Group, IAS 39 is applied alongside IFRS 9 to account for  
portfolio hedges of interest rate risk in the Financial Services Division.  
In the case of hedges of future cash flows (cash flow hedges), the hedging instruments are also measured at  
fair value. The designated effective portion of the hedging instrument is accounted for through OCI I and the  
non-designated portion through OCI II. They are only recognized in the income statement when the hedged  
item is recognized in profit or loss. The ineffective portion of cash flow hedges is recognized through profit or  
loss immediately.  
Derivatives used by the Volkswagen Group for financial management purposes to hedge against interest  
rate, foreign currency, commodity price, equity price, or fund price risks, but that do not meet the strict hedge  
accounting criteria of IFRS 9, are classified as financial assets or liabilities at fair value through profit or loss  
(referred to below as derivatives to which hedge accounting is not applied). This also applies to options on  
shares.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
227  
External hedging instruments of intragroup hedged items that are subsequently eliminated in the consolidated  
financial statements are also assigned to this category as a general rule. Assets and liabilities measured at fair  
value through profit or loss consist of derivatives or components of derivatives that are not included in hedge  
accounting. These relate for example to the non-designated currency forwards used to hedge sales revenue,  
interest rate hedges, commodity futures and currency forwards relating to commodity futures.  
RECE IVAB LE S FROM FI NAN CE LEA SE S  
Where a Group company is the lessor – generally of vehicles – a receivable in the amount of the net investment  
in the lease is recognized in the case of finance leases, in other words where substantially all the risks and  
rewards are transferred to the lessee.  
IMPAI RME NT LO S SE S ON F I NA NC IAL I N ST RUME NT S  
Financial assets are exposed to default risk, which is taken into account by recognizing loss allowances or, if  
losses have already been incurred, by recognizing impairment losses. Default risk on loans and receivables in  
the financial services segment is accounted for by recognizing specific loss allowances and portfolio-based loss  
allowances.  
In particular, a loss allowance is recognized on these financial assets in the amount of the expected loss in  
accordance with Group-wide standards. The actual specific loss allowances for the losses incurred are then  
charged to this loss allowance. A potential impairment is assumed not only for a number of situations such as  
delayed payment over a certain period, the institution of enforcement measures, the threat of insolvency or  
overindebtedness, application for or the opening of bankruptcy proceedings, or the failure of reorganization  
measures, but also for receivables that are not past due.  
Portfolio-based loss allowances are recognized by grouping together insignificant receivables and  
significant individual receivables for which there is no indication of impairment into homogeneous portfolios  
on the basis of comparable credit risk features and allocating them by risk class. Average historical default  
probabilities are used in combination with forward-looking parameters for the portfolio concerned to calculate  
the amount of the impairment loss.  
Credit risks must be considered for all financial assets measured at amortized cost or fair value through  
profit or loss (debt instruments), as well as for contract assets in accordance with IFRS 15 and lease receivables  
within the scope of IFRS 16. The rules on impairment also apply to risks from irrevocable credit commitments  
not recognized in the balance sheet and to the measurement of financial guarantees.  
As a matter of principle, a simplified process, which takes historical default rates and forward-looking  
information into account, and specific loss allowances are used to account for impairment losses on receivables  
outside the Financial Services segment.  
DEFE RRE D TA XE S  
Deferred tax assets are generally recognized for tax-deductible temporary differences between the tax base of  
assets and liabilities and their carrying amounts in the consolidated balance sheet, as well as on tax loss  
carryforwards and tax credits provided it is probable that they can be used in future periods. Deferred tax  
liabilities are generally recognized for all taxable temporary differences between the tax base of assets and  
liabilities and their carrying amounts in the consolidated balance sheet.  
Deferred tax liabilities and assets are recognized in the amount of the expected tax liability or tax benefit,  
as appropriate, in subsequent fiscal years, based on the expected enacted tax rate at the time of realization. The  
tax consequences of dividend payments are generally not taken into account until the resolution on  
appropriation of earnings available for distribution has been adopted.  
Deferred tax assets that are unlikely to be realized within a clearly predictable period are reduced by loss  
allowances.  
Deferred tax assets for tax loss carryforwards are usually measured on the basis of future taxable income  
over a planning period of five fiscal years.  
Deferred tax assets and deferred tax liabilities are offset where taxes are levied by the same taxation  
authority and relate to the same tax period.  
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Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
I NV E NTORI ES  
Raw materials, consumables and supplies, merchandise, work in progress and self-produced finished goods  
reported in inventories are carried at the lower of cost or net realizable value. Cost is determined on the basis of  
the direct and indirect costs that are directly attributable. Borrowing costs are not capitalized. The  
measurement of same or similar inventories is generally based on the weighted average cost method.  
NON CU RR ENT A S SET S H ELD FOR SALE AN D D I SCO N TI N U ED OPERAT I ON S  
Under IFRS 5, noncurrent assets or groups of assets and liabilities (disposal groups) are classified as held for sale  
if their carrying amounts will be recovered principally through a sale transaction rather than through  
continuing use. Such assets are carried at the lower of their carrying amount and fair value less costs to sell, and  
are presented separately in current assets and liabilities in the balance sheet.  
Discontinued operations are components of an entity that have either been disposed of or are classified as  
held for sale. The assets and liabilities of operations that are held for sale represent disposal groups that must  
be measured and reported using the same principles as noncurrent assets held for sale. The income and  
expenses from discontinued operations are presented in the income statement as profit or loss from  
discontinued operations below the profit or loss from continuing operations. Corresponding disposal gains or  
losses are contained in the profit or loss from discontinued operations. The prior-year figures in the income  
statement are adjusted accordingly.  
PEN SIO N PROV I S ION S  
The actuarial valuation of pension provisions is based on the projected unit credit method stipulated by IAS 19  
for defined benefit plans. The valuation is not only based on pension payments and vested entitlements known  
at the balance sheet date, but also reflects future salary and pension trends, as well as experience-based staff  
turnover rates. Remeasurements are recognized in retained earnings in other comprehensive income, net of  
deferred taxes.  
P ROV I SI ON S F OR I NCO M E TA X E S  
Tax provisions contain obligations resulting from current income taxes. Deferred taxes are presented in  
separate items of the balance sheet and income statement. Provisions are recognized for potential tax risks on  
the basis of the best estimate of the liability.  
SHA RE-BA SED PAYM ENT  
The share-based payment consists of phantom shares and performance shares. The obligations arising from the  
share-based payment are accounted for as cash-settled plans in accordance with IFRS 2. The cash-settled share-  
based payments are measured at fair value until maturity. Fair value is determined using a recognized valuation  
technique. The compensation cost is allocated over the vesting period.  
OTH E R P ROV I SI O NS  
In accordance with IAS 37, provisions are recognized where a present obligation exists to third parties as a  
result of a past event, where a future outflow of resources is probable and where a reliable estimate of that  
outflow can be made.  
Provisions not resulting in an outflow of resources in the year immediately following are recognized at  
their settlement value discounted to the balance sheet date. Discounting is based on market interest rates. An  
average discount rate of –0.10% (previous year: 0.20%) was used in the Eurozone. The settlement value also  
reflects cost increases expected at the balance sheet date.  
Provisions are not offset against claims for reimbursement.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
229  
Insurance contracts that form part of the insurance business are recognized in accordance with IFRS 4.  
Reinsurance acceptances are accounted for without any time delay in the year in which they arise. Provisions  
are generally recognized based on the cedant’s contractual duties. Estimation techniques based on  
assumptions about future changes in claims are used to calculate the claims provision. Other technical  
provisions relate to the provision for cancellations.  
The share of the provisions attributable to reinsurers is calculated in accordance with the contractual  
agreements with the retrocessionaries and reported under other assets.  
CON TI NGE NT L IA B I LI TI E S  
If the criteria for recognizing a provision are not met, but the outflow of financial resources is not remote, such  
obligations are disclosed in the notes to the consolidated financial statements (see the “Contingent liabilities”  
section). Contingent liabilities are only recognized if the obligations are more certain, i.e. the outflow of  
financial resources has become probable and their amount can be reliably estimated.  
L I A B I LI T I E S  
Noncurrent liabilities are recorded at amortized cost in the balance sheet. Differences between historical cost  
and the repayment amount are amortized using the effective interest method.  
Liabilities to members of partnerships from puttable shares are recognized in the income statement at the  
present value of the redemption amount at the balance sheet date.  
Lease liabilities are carried at the present value of the lease payments.  
Current liabilities are recognized at their repayment or settlement value.  
REVEN U E A N D EXPENSE RECOG N ITI ON  
Sales revenue, interest and commission income from financial services and other operating income are  
recognized only when the relevant service has been rendered or the goods have been delivered, i.e. when the  
customer has obtained control of the good or service. Where new and used vehicles and original parts are sold,  
the Company’s performance invariably occurs upon delivery, because that is the point when control is  
transferred, and the inventory risk and, for deliveries to a dealer, invariably also the pricing decision pass to the  
customer. Revenue is reported net of sales allowances (discounts, rebates, or customer bonuses). The  
Volkswagen Group measures sales allowances and other variable consideration on the basis of experience and  
by taking account of current circumstances. Vehicles are normally sold on payment terms. A trade receivable is  
recognized for the period between vehicle delivery and receipt of payment. Any financing component included  
in the transaction is only recognized if the period between the transfer of the goods and the payment of  
consideration is longer than one year and the amount to be accrued is significant.  
Sales revenue from financing and finance lease agreements is recognized using the effective interest  
method. If non-interest-bearing or low-interest vehicle financing arrangements are agreed, sales revenue is  
reduced by the interest benefits granted. Sales revenue from operate leases is recognized over the term of the  
contract on a straight line basis.  
In contracts under which the goods or services are transferred over a period of time, revenue is recognized,  
depending on the type of goods or services provided, either according to the stage of completion or, to simplify,  
on a straight-line basis; the latter is only allowed, if revenue recognition on a straight-line basis does not differ  
materially from recognition according to the stage of completion. As a rule, the stage of completion is  
determined as the proportion that contract costs incurred by the end of the reporting period bear to the  
estimated total contract costs (cost-to-cost method). Contract costs incurred invariably represent the best way  
to measure the stage of completion for the performance obligation. If the outcome of a performance obligation  
satisfied over time is not sufficiently certain, but the company expects, as a minimum, to recover its costs,  
revenue is only recognized in the amount of contract costs incurred (zero profit margin method). If the  
expected costs exceed the expected revenue, the expected losses are recognized immediately in full as expenses  
by recognizing impairment losses on the associated contract assets recognized, and additionally by recognizing  
provisions for any amounts in excess of the impairment losses. Since long-term construction contracts  
invariably give rise to contingent receivables from customers for the period to completion or payment by the  
customer, contract assets are recognized for the corresponding amounts. A trade receivable is recognized as  
soon as the Company has transferred the goods or services in full.  
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Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
If a contract comprises several separately identifiable components (multiple-element arrangements), these  
components are recognized separately in accordance with the principles outlined above.  
If services are sold to the customer at the same time as the vehicle, and the customer pays for them in  
advance, the Group recognizes a corresponding contract liability until the services have been transferred.  
Examples of services that customers pay for in advance are servicing, maintenance and certain warranty  
contracts as well as mobile online services. For extended warranties granted to customers for a particular  
model, a provision is normally recognized in the same way as for statutory warranties. If the warranty is  
optional for the customer or includes an additional service component, the sales revenue is deferred and  
recognized over the term of the warranty.  
Income from the sale of assets for which a Group company has a buyback obligation is recognized only  
when the assets have definitively left the Group. If a fixed repurchase price was agreed when the contract was  
entered into, the difference between the selling price and the present value of the repurchase price is recognized  
as income ratably over the term of the contract. Prior to that time, the assets are carried as inventories in the  
case of short contract terms and as lease assets in the case of long contract terms.  
Sales revenue is always determined on the basis of the price stated in the contract. If variable consideration  
(
e.g. volume-based bonus payments) has been agreed in a contract, the large number of contracts involved  
means that revenue has to be estimated using the expected value method. In exceptional cases, the most  
probable amount method may also be used. Once the expected sales revenue has been estimated, an additional  
check is carried out to determine whether there is any uncertainty that necessitates the reversal of the revenue  
initially recognized so that it can be virtually ruled out that sales revenue subsequently has to be adjusted  
downward. Provisions for reimbursements arise mainly from dealer bonuses.  
In multiple element arrangements, the transaction price is allocated to the different performance  
obligations of the contract on the basis of relative standalone selling prices. In the Automotive Division, non-  
vehicle-related services are invariably measured at their standalone selling prices for reasons of materiality.  
Cost of sales includes the costs incurred to generate the sales revenue and the cost of goods purchased for  
resale. This item also includes the costs of additions to warranty provisions. Research and development costs  
not eligible for capitalization in the period and amortization of development costs are likewise carried under  
cost of sales. Reflecting the presentation of interest and commission income in sales revenue, the interest and  
commission expenses attributable to the financial services business are presented in cost of sales.  
Dividend income is recognized on the date when the dividend is legally approved.  
G OV E R N M E N T G RA N T S  
Government grants related to assets are deducted when arriving at the carrying amount of the asset and are  
recognized in profit or loss over the life of the depreciable asset as a reduced depreciation expense. If the Group  
becomes entitled to a grant subsequently, the amount of the grant attributable to prior periods is recognized as  
profit or loss.  
Government grants related to income, i.e. that compensate the Group for expenses incurred, are recognized  
in profit or loss for the period in those items in which the expenses to be compensated by the grants are also  
recognized. Grants in the form of nonmonetary assets (e.g. the use of land free of charge or the transfer of  
resources free of charge) are disclosed as a memo item.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
231  
ESTIM AT ES A N D A S SUMP TIO N S BY M A NAGEME NT  
Preparation of the consolidated financial statements requires management to make certain estimates and  
assumptions that affect the reported amounts of assets and liabilities, and income and expenses, as well as the  
related disclosure of contingent assets and liabilities of the reporting period. The estimates and assumptions  
relate largely to the following matters:  
The impairment testing of nonfinancial assets (especially goodwill, brand names, capitalized development  
costs and special operational equipment) and equity-accounted investments, or investments accounted at cost,  
and the measurement of options on shares in companies that are not traded in an active market require  
assumptions about the future cash flows during the planning period, and possibly beyond it, as well as about  
the discount rate to be applied. The estimates made in order to separate cash flows mainly relate to future  
market shares, the trend in the respective markets and the profitability of the Volkswagen Group’s products. In  
addition, the recoverability of the Group’s lease assets depends in particular on the residual value of the leased  
vehicles after expiration of the lease term, because this represents a significant portion of the expected cash  
flows. A change to the definition of cash-generating units in the Passenger Cars Business Area was required in  
the past fiscal year. More detailed information on impairment tests and the measurement parameters used for  
those tests can be found in the explanations on the accounting policies for intangible assets.  
If there are no observable market inputs, the fair values of assets acquired and liabilities assumed in a  
business combination are measured using recognized valuation techniques, such as the relief-from-royalty  
method or the residual method.  
Impairment testing of financial assets requires estimates about the extent and probability of occurrence of  
future events. As far as possible, estimates are derived from experience taking into account current market data  
as well as rating categories and scoring information. The section entitled “IFRS 7 (Financial Instruments)”  
contains further details on how to determine loss allowances.  
Accounting for provisions is also based on estimates of the extent and probability of occurrence of future  
events, as well as estimates of the discount rate. As far as possible, these are also based on experience or  
external opinions. The assumptions applied in the measurement of pension provisions are described in the  
“Provisions for pensions and other post-employment benefits” section. Remeasurements are recognized in  
other comprehensive income and do not affect profit or loss reported in the income statement. Any change in  
the estimates of the amount of other provisions is always recognized in profit or loss. The provisions are  
regularly adjusted to reflect new information obtained. The use of expected values means that additional  
amounts must frequently be recognized for provisions, or that unused provisions are reversed. Similarly to  
expenses for the recognition of provisions, income from the reversal of provisions is allocated to the respective  
functions. Warranty claims from sales transactions are calculated on the basis of losses to date, estimated  
future losses and the policy on ex gratia arrangements. In addition, assumptions must be made about the  
nature and extent of future warranty and ex gratia claims.  
For the provisions recognized in connection with the diesel issue, assumptions were made in particular  
about working hours, material costs and hourly wage rates, depending on the series, model year and country  
concerned. In addition, assumptions are made about future resale prices of repurchased vehicles. These  
assumptions are based on qualified estimates, which are based in turn on external data, and also reflect  
additional information available internally, such as values derived from experience. Further information on the  
legal proceedings and on the legal risks associated with the diesel issue can be found in the “Litigation” section.  
Tax provisions were recognized for potential future tax back payments, while other provisions were  
recognized for ancillary tax payments arising in this connection.  
Volkswagen AG and its subsidiaries have operations worldwide and are audited by local tax authorities on  
an ongoing basis. Amendments to tax laws and changes in legal precedent and their interpretation by the tax  
authorities in the respective countries may lead to tax payments that differ from the estimates made in the  
financial statements.  
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Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The measurement of the tax provision is based on the most likely exposure resulting from this risk  
materializing. Volkswagen decides whether to account for multiple tax uncertainties separately or in groups on  
the merits of each individual case considered, depending on which type of presentation is better suited to  
predicting the extent to which the tax risk will materialize. The pricing of individual products and services is  
complex, especially in relation to contracts for the cross-border supply of intragroup goods and services,  
because it is in many cases not possible to observe market prices for internally generated products, or the use of  
market prices for similar products is subject to uncertainty because they are not comparable. In these cases,  
prices – including for tax purposes – are determined on the basis of standardized, generally accepted valuation  
techniques.  
If actual developments differ from the assumptions made for recognizing the provisions, the figures  
actually recorded may differ from the estimates expected originally.  
An overview of other provisions can be found in the “Noncurrent and current other provisions” section.  
Government grants are recognized based on an assessment as to whether there is reasonable assurance that  
the Group companies will fulfill the attached conditions and the grants will be awarded. This assessment is  
based on the nature of the legal entitlement and past experience.  
Estimates of the useful life of finite-lived assets are based on experience and are reviewed regularly. Where  
estimates are modified the residual useful life is adjusted and an impairment loss is recognized, if necessary.  
Estimates of lease terms under IFRS 16 are based on the non-cancelable period of a lease and an assessment  
of whether existing extension and termination options will be exercised.ꢀThe determination of the lease term  
and the discount rates used impacts on the amounts to be recognized for right-of-use assets and lease  
liabilities.  
Measuring deferred tax assets requires assumptions regarding future taxable income and the timing of the  
realization of deferred tax assets.  
The estimates and assumptions are based on underlying assumptions that reflect the current state of  
available knowledge. Specifically, the expected future development of business was based on the circumstances  
known at the date of preparation of these consolidated financial statements and a realistic assessment of the  
future development of the global and sector-specific environment. Our estimates and assumptions remain  
subject to a high degree of uncertainty because future business developments are subject to uncertainties that  
in part cannot be influenced by the Group. This applies in particular to short- and medium-term cash flow  
forecasts and to the discount rates used.  
Developments in this environment that differ from the assumptions and that cannot be influenced by  
management could result in amounts that differ from the original estimates. If actual developments differ from  
the expected developments, the underlying assumptions and, if necessary, the carrying amounts of the assets  
and liabilities affected are adjusted.  
Global gross domestic product (GDP) rose by 2.6% (previous year: 3.2%) in 2019.ꢀOur forecasts are based on  
the assumption that global economic growth will slow down somewhat in 2020. As a result, from today's  
perspective, we are not expecting material adjustments in the following fiscal year in the carrying amounts of  
the assets and liabilities reported in the consolidated balance sheet.  
Estimates and assumptions by management were based in particular on assumptions relating to the  
development of the general economic environment, the automotive markets and the legal environment. These  
and further assumptions are explained in detail in the Report on Expected Developments, which is part of the  
Group Management Report.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
233  
Segment reporting  
Segments are identified on the basis of the Volkswagen Group’s internal management and reporting. In line  
with the Group’s multibrand strategy, each of its brands (operating segments) is managed by its own Board of  
Management. The Group targets and requirements laid down by the Board of Management of Volkswagen AG  
must be complied with. Segment reporting comprises four reportable segments: Passenger Cars and Light  
Commercial Vehicles, Commercial Vehicles, Power Engineering and Financial Services. As a result of an internal  
management change as from January 1, 2019, light commercial vehicles of the Volkswagen Commercial  
Vehicles brand are no longer allocated to the Commercial Vehicles segment, but reported under the Passenger  
Cars and Light Commercial Vehicles segment. The prior-year figures have been adjusted accordingly.  
The activities of the Passenger Cars and Light Commercial Vehicles segment cover the development of  
vehicles and engines, the production and sale of passenger cars and light commercial vehicles, and the  
corresponding genuine parts business. In the Passenger Cars and Light Commercial Vehicles reporting  
segment, the individual brands are being combined into a single reportable segment, in particular as a  
response to the high degree of technological and economic interlinking in the production network.  
Furthermore, there is collaboration within key areas such as procurement, research and development or  
treasury.  
The Commercial Vehicles segment primarily comprises the development, production and sale of trucks and  
buses, the corresponding genuine parts business and related services. Just as in the case of the car brands, there  
is collaboration within the areas procurement, development and sales. The aim is to achieve further forms of  
interlinking.  
The activities of the Power Engineering segment consist of the development and production of large-bore  
diesel engines, turbo compressors, industrial turbines and chemical reactor systems, as well as the production  
of gear units, propulsion components and testing systems.  
The activities of the Financial Services segment comprise dealer and customer financing, leasing, banking  
and insurance activities, fleet management and mobility services. In this segment, combinations occur  
especially while taking into account the comparability of the type of services as well as the regulatory situation.  
Purchase price allocation for companies acquired is allocated directly to the corresponding segments.  
At Volkswagen, segment profit or loss is measured on the basis of the operating result.  
In the segment reporting, the share of the result of joint ventures is contained in the share of the result of  
equity-accounted investments in the corresponding segments.  
The reconciliation contains activities and other operations that by definition do not constitute segments.  
It also includes the unallocated Group financing activities. Consolidation adjustments between the segments  
are also contained in the reconciliation.  
Investments in intangible assets, property, plant and equipment, and investment property are reported net  
of investments in right-of-use assets from leases.  
As a matter of principle, business relationships between the companies within the segments of the  
Volkswagen Group are transacted at arm’s length prices.  
2
34  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
RE P O RT I NG SE G M E NT S 20 1 81  
Passenger Cars  
and Light  
Commercial  
Vehicles  
Commercial  
Vehicles  
Power  
Engineering  
Financial  
Services  
Total  
Volkswagen  
Group  
€
million  
segments Reconciliation  
Sales revenue from  
external customers  
176,613  
12,895  
189,508  
12,700  
629  
23,803  
979  
3,605  
3
31,592  
3,190  
34,782  
6,523  
469  
235,613  
17,067  
252,680  
21,567  
1,186  
236  
235,849  
–
Intersegment sales revenue  
Total sales revenue  
–17,067  
–16,830  
–56  
24,781  
1,966  
89  
3,608  
378  
–
235,849  
21,511  
1,296  
262  
Depreciation and amortization  
Impairment losses  
110  
Reversal of impairment losses  
Segment result (operating result)  
156  
6
2
98  
262  
–
13,068  
1,191  
–64  
2,793  
16,988  
–3,068  
13,920  
Share of the result of  
equity-accounted investments  
3,094  
213  
3
58  
3,369  
–
3,369  
Interest result and  
other financial result  
164  
297  
971  
2
–70  
712  
393  
–2,039  
–
–1,646  
8,434  
Equity-accounted investments  
6,731  
18  
8,434  
Investments in intangible assets,  
property, plant and equipment,  
and investment property  
16,709  
1,380  
176  
510  
18,776  
187  
18,962  
1
The prior-year figures have been adjusted to reflect a change in the allocation of Light Commercial Vehicles of the Volkswagen Commercial Vehicles brand.  
RE P O RT I NG SE G M E NT S 20 1 9  
Passenger Cars  
and Light  
Commercial  
Vehicles  
Commercial  
Vehicles  
Power  
Engineering  
Financial  
Services  
Total  
Volkswagen  
Group  
€
million  
segments Reconciliation  
Sales revenue from  
external customers  
186,511  
15,762  
202,273  
14,622  
201  
25,401  
1,043  
26,444  
2,280  
1
3,995  
2
36,446  
3,714  
40,160  
8,080  
538  
252,353  
20,522  
272,875  
25,402  
740  
280  
–20,522  
–20,242  
–996  
252,632  
–
Intersegment sales revenue  
Total sales revenue  
3,997  
420  
–
252,632  
24,406  
949  
Depreciation and amortization  
Impairment losses  
209  
Reversal of impairment losses  
Segment result (operating result)  
886  
71  
2
181  
1,140  
–15  
1,124  
16,960  
15,610  
1,653  
–93  
3,212  
20,381  
–3,422  
Share of the result of  
equity-accounted investments  
3,053  
225  
–1  
71  
3,349  
–
3,349  
Interest result and  
other financial result  
–1,582  
6,232  
–70  
1
–64  
784  
–1,715  
8,169  
–238  
–
–1,953  
8,169  
Equity-accounted investments  
1,118  
34  
Investments in intangible assets,  
property, plant and equipment,  
and investment property  
17,098  
1,460  
197  
223  
18,977  
423  
19,401  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
235  
RECO NC I L IATI ON  
€
million  
2019  
2018¹  
Segment sales revenue  
Unallocated activities  
Group financing  
272,875  
969  
252,680  
981  
28  
24  
Consolidation  
–21,239  
252,632  
–17,835  
235,849  
Group sales revenue  
Segment result (operating result)  
Unallocated activities  
Group financing  
20,381  
–72  
16,988  
–22  
–38  
–17  
Consolidation  
–3,312  
16,960  
1,396  
18,356  
–3,029  
13,920  
1,723  
15,643  
Operating result  
Financial result  
Consolidated result before tax  
1
The prior-year figures have been adjusted to reflect a change in the allocation of Light Commercial Vehicles of the Volkswagen Commercial Vehicles brand.  
BY RE G IO N 2 0 1 8  
Europe/Other  
markets¹  
North  
America  
South  
America  
Hedges  
sales revenue  
€
million  
Germany  
43,526  
95,217  
Asia-Pacific  
43,166  
2,830  
Total  
235,849  
166,285  
Sales revenue from  
external customers  
99,563  
36,110  
37,656  
29,332  
10,405  
2,795  
1,535  
–
Intangible assets, property, plant  
and equipment, lease assets and  
investment property  
1
Excluding Germany.  
BY RE G IO N 2 0 1 9  
Europe/Other  
markets¹  
North  
America  
South  
America  
Hedges  
sales revenue  
€
million  
Germany  
48,991  
Asia-Pacific  
43,974  
3,562  
Total  
252,632  
181,842  
Sales revenue from  
external customers  
105,009  
47,353  
43,351  
26,771  
11,297  
3,064  
11  
–
Intangible assets, property, plant  
and equipment, lease assets and  
investment property  
101,092  
1
Excluding Germany.  
Allocation of sales revenue to the regions follows the destination principle.  
The allocation of interregional intragroup transactions has been unitary presented according to the  
economic ownership regarding the segment assets.  
2
36  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Income statement disclosures  
1
.ꢀSales revenue  
STRU CTU R E OF G ROU P SA LE S R EV EN U E 2 01 81  
Passenger Cars  
and Light  
Commercial  
Vehicles  
Commercial  
Vehicles  
Power  
Engineering  
Financial  
Services  
Volkswagen  
Group  
€
million  
Total Segments  
Reconciliation  
Vehicles  
141,339  
12,703  
16,035  
3,316  
–
–
–
–
157,374  
16,019  
–10,548  
–100  
146,826  
15,919  
Genuine parts  
Used vehicles and  
third-party products  
11,776  
1,387  
–
–
13,163  
–609  
12,554  
Engines, powertrains  
and parts deliveries  
11,773  
–
676  
–
–
3,608  
–
–
12,449  
3,608  
582  
–9  
–3  
12,440  
3,605  
582  
Power Engineering  
Motorcycles  
–
–
582  
889  
–
–
Leasing business  
1,651  
–
26,667  
29,207  
–4,200  
25,006  
Interest and similar  
income  
230  
1,440  
8,776  
6
12  
–
–
7,302  
–
7,537  
1,451  
–187  
83  
7,351  
1,535  
Hedges sales revenue  
Other sales revenue  
1,699  
24,781  
–
814  
11,289  
252,680  
–1,258  
–16,830  
10,031  
235,849  
1
89,508  
3,608  
34,782  
1
Since January 1, 2019, sales revenue from the sale of light commercial vehicles of the Volkswagen Commercial Vehicles brand has not been reported in the  
Commercial Vehicles segment. The prior-year figures have been adjusted accordingly.  
STRU CTU R E OF G ROU P SA LE S R EV EN U E 2 01 9  
Passenger Cars  
and Light  
Commercial  
Vehicles  
Commercial  
Vehicles  
Power  
Engineering  
Financial  
Services  
Volkswagen  
Group  
€
million  
Total Segments  
Reconciliation  
Vehicles  
154,377  
13,329  
17,387  
3,464  
–
–
–
–
171,764  
16,793  
–14,552  
–117  
157,212  
16,676  
Genuine parts  
Used vehicles and  
third-party products  
12,583  
1,415  
–
–
13,997  
–549  
13,449  
Engines, powertrains  
and parts deliveries  
11,496  
–
641  
–
–
3,997  
–
–
12,137  
3,997  
603  
–21  
–2  
12,116  
3,994  
603  
Power Engineering  
Motorcycles  
–
–
603  
986  
–
0
Leasing business  
1,735  
0
30,795  
33,517  
–4,370  
29,147  
Interest and similar  
income  
235  
–143  
8,808  
5
–18  
–
–
8,031  
0
8,271  
–161  
–205  
171  
8,066  
11  
Hedges sales revenue  
Other sales revenue  
1,814  
26,444  
–
1,334  
40,160  
11,956  
272,875  
–597  
11,359  
252,632  
2
02,273  
3,997  
–20,242  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
237  
For segment reporting purposes, the sales revenue of the Group is presented by segment and market.  
Other sales revenue comprises revenue from workshop services and license revenue, among other things.  
Of the sales revenue recognized in the period under review, an amount of €6,333 million was included in  
contract liabilities as of January 1, 2019.  
€359 million (previous year: €667 million) of the sales revenue recognized in the period under review is  
attributable to performance obligations satisfied in a prior period.  
In addition to existing performance obligations of €3,967 million (previous year: €3,614 million) in the  
Power Engineering segment, most of which are expected to be satisfied or for which sales revenue is expected to  
be recognized by December 31, 2020, the vast majority of the Volkswagen Group’s performance obligations that  
are unsatisfied as of the reporting date relate to vehicle deliveries. Most of these deliveries had already been  
made at the time this report was prepared, or will be made in the first quarter of 2020. The calculation of the  
amounts for the Power Engineering Business Area took account of both contracts with a term of more than one  
year and service contracts under which the Volkswagen Group realizes sales revenue in exactly the same  
amount as the customer benefits from the provision of services by the Company. In the case of variable  
consideration, sales revenue is only recognized to the extent that there is reasonable assurance that this sales  
revenue will not subsequently have to be reversed or adjusted downward.  
2
. Cost of sales  
Cost of sales includes interest expenses of €2,705 million (previous year: €2,270 million) attributable to the  
financial services business.  
This item also includes impairment losses on intangible assets (primarily development costs), property,  
plant and equipment (primarily other equipment, operating and office equipment), and lease assets in the  
amount of €830 million (previous year: €1,165 million). The impairment losses totaling €295 million (previous  
year: €631 million) recognized during the reporting period on intangible assets and items of property, plant  
and equipment result in particular from lower values in use of various products in the Passenger Cars segment,  
from market and exchange rate risks, and in particular from expected declines in volumes. The impairment  
losses on lease assets in the amount of €535 million (previous year: €534 million) are predominantly  
attributable to the Financial Services segment. They are based on constantly updated internal and external  
information that is factored into the forecast residual values of the vehicles. Thereof, €25 million (previous  
year: €24 million) are reported in current lease assets.  
Government grants related to income amounted to €657 million in the fiscal year (previous year:  
€466 million) and were generally allocated to the functional areas.  
3
. Distribution expenses  
Distribution expenses amounting to €21.0 billion (previous year: €20.5 billion) include nonstaff overheads and  
personnel costs, and depreciation and amortization applicable to the distribution function, as well as the costs  
of shipping, advertising and sales promotions.  
4
. Administrative expenses  
Administrative expenses of €9.8 billion (previous year: €8.8 billion) mainly include nonstaff overheads and  
personnel costs, as well as depreciation and amortization charges applicable to the administrative function.  
2
38  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
5
. Other operating income  
€
million  
2019  
2018  
Income from reversal of loss allowances on receivables and other assets  
Income from reversal of provisions and accruals  
Income from foreign currency hedging derivatives within hedge accounting  
Income from foreign exchange gains  
1,482  
969  
1,586  
1,144  
822  
686  
2,346  
1,177  
498  
2,530  
1,138  
483  
Income from other hedges  
Income from sale of promotional material  
Income from cost allocations  
985  
1,139  
14  
Income from investment property  
12  
Gains on asset disposals and the reversal of impairment losses  
Miscellaneous other operating income  
1,182  
2,116  
1,453  
390  
2,383  
11,631  
1
Foreign exchange gains mainly comprise gains from changes in exchange rates between the dates of  
recognition and payment of receivables and liabilities denominated in foreign currencies, as well as exchange  
rate gains resulting from measurement at the closing rate. Foreign exchange losses from these items are  
included in other operating expenses.  
Income from other hedges includes primarily foreign exchange gains from the fair value measurement of  
financial instruments used to hedge exchange rates and commodity prices and that are not designated in a  
hedging relationship. Foreign exchange losses are included in other operating expenses.  
6
. Other operating expenses  
€
million  
2019  
2018  
Loss allowances on trade receivables including construction contracts  
Loss allowances on other receivables and other assets  
Losses from foreign currency hedging derivatives within hedge accounting  
Expenses from other hedges  
317  
1,783  
997  
315  
1,833  
856  
1,332  
2,013  
563  
1,592  
2,800  
650  
Foreign exchange losses  
Expenses from cost allocations  
Expenses for termination agreements  
54  
36  
Losses on disposal of noncurrent assets  
119  
161  
Miscellaneous other operating expenses  
5,712  
2,890  
6,488  
14,731  
1
Allowances on other receivables and other assets include allowances on receivables from long-term  
construction contracts amounting to €0.3 million (previous year: €1.0 million).  
Expenses from other hedges include primarily foreign exchange losses from the fair value measurement of  
financial instruments used to hedge exchange rates and commodity prices and that are not designated in a  
hedging relationship.  
Miscellaneous other operating expenses consist mainly of litigation expenses in connection with the diesel  
issue (see the “Key Events” section for more information).  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
239  
7
. Share of the result of equity-accounted investments  
€
million  
2019  
2018  
Share of profits of equity-accounted investments  
of which from joint ventures  
3,501  
3,257  
244  
3,551  
3,320  
231  
of which from associates  
Share of losses of equity-accounted investments  
of which from joint ventures  
152  
182  
10  
23  
of which from associates  
142  
159  
3,349  
3,369  
8
. Interest result  
€
million  
2019  
2018  
Interest income  
910  
904  
6
967  
950  
Other interest and similar income  
Income from valuation of interest derivatives  
Interest expenses  
17  
–2,524  
–1,401  
–6  
–1,547  
–974  
–1  
Other interest and similar expenses  
Expenses from valuation of interest derivatives  
Interest expenses included in lease payments  
Interest result from discounting/unwinding discount on other noncurrent liabilities  
Net interest on the net defined benefit liability  
Interest result  
–217  
–238  
–662  
–1,614  
–27  
77  
–623  
–580  
2
40  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
9
. Other financial result  
€
million  
2019  
2018  
Income from profit and loss transfer agreements  
19  
–72  
178  
–374  
27  
77  
–54  
Cost of loss absorption  
Other income from equity investments  
101  
Other expenses from equity investments  
–360  
–355  
1,161  
–1,130  
–41  
Income from marketable securities and loans  
Realized income of loan receivables and payables in foreign currency  
Realized expenses of loan receivables and payables in foreign currency  
Gains and losses from remeasurement and impairment of financial instruments  
Gains and losses from fair value changes of derivatives not included in hedge accounting  
Gains and losses from fair value changes of derivatives included in hedge accounting  
Other financial result  
877  
–980  
228  
–240  
0
–453  
–12  
–339  
–1,066  
1
0. Income tax income/expense  
COM P O N E NT S O F TA X I N COM E A N D EX P E N SE  
€
million  
2019  
2018  
Current tax expense, Germany  
1,473  
2,673  
4,147  
32  
1,131  
2,401  
3,533  
79  
Current tax expense, abroad  
Current income tax expense  
of which prior-period income (–)/expense (+)  
Deferred tax income (–)/expense (+), Germany  
Deferred tax income (–)/expense (+), abroad  
Deferred tax income (–)/expense (+)  
Income tax income/expense  
115  
429  
65  
–472  
–43  
180  
4,326  
3,489  
The statutory corporation tax rate in Germany for the 2019 assessment period was 15%. Including trade tax  
and the solidarity surcharge, this resulted in an aggregate tax rate of 29.8% (previous year: 29.9%).  
A tax rate of 29.8% (previous year: 29.8%) was used to measure deferred taxes in the German consolidated  
tax group.  
The local income tax rates applied for companies outside Germany vary between 0% and 45%. In the case of  
split tax rates, the tax rate applicable to undistributed profits is applied.  
The realization of tax benefits from tax loss carryforwards from previous years resulted in a reduction in  
current income taxes in 2019 of €692 million (previous year: €732 million).  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
241  
The tax loss carryforwards and the expiry of loss carryforwards that could not be used changed as follows:  
PREVIOUSLY UNUSED TAX LOSS  
CARRYFORWARDS  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Indefinitely to be carried forward  
Carried forward within 10 years  
Carried forward from 10 to 20 years  
Total  
14,498  
568  
13,217  
636  
5,579  
20,645  
6,648  
20,501  
EXPIRY OF UNUSABLE TAX LOSS  
CARRYFORWARDS  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Non-expiring tax loss carryforwards  
Expiry within 10 years  
Expiry from 10 to 20 years  
Expiry over 20 years  
Total  
5,919  
473  
5,390  
432  
1,743  
62  
2,047  
126  
8,197  
7,995  
The benefit arising from previously unrecognized tax losses or tax credits of a prior period that is used to  
reduce current tax expense in the current fiscal year amounts to €36 million (previous year: €94 million).  
Deferred tax expense was reduced by €66 million (previous year: €116 million) because of a benefit arising  
from previously unrecognized tax losses and tax credits of a prior period. Deferred tax expense resulting from  
the write-down of a deferred tax asset amounts to €58 million (previous year: €95 million). Deferred tax  
income resulting from the reversal of a write-down of deferred tax assets amounts to €35 million (previous  
year: €231 million).  
Tax credits granted by various countries amounted to €378 million (previous year: €385 million).  
No deferred tax assets were recognized for deductible temporary differences of €897 million (previous year:  
€1,123 million) and for tax credits of €138 million (previous year: €123 million) that would expire in the next  
20 years, or for tax credits of €0 million (previous year: €3 million) that will not expire.  
In accordance with IAS 12.39, deferred tax liabilities of €231 million (previous year: €213 million) for  
temporary differences and undistributed profits of Volkswagen AG subsidiaries were not recognized because  
control exists.  
Deferred tax expense resulting from changes in tax rates amounted to €116 million at Group level  
(
previous year: €79 million).  
Deferred taxes in respect of temporary differences and tax loss carryforwards of €1,006 million (previous  
year: €8,235 million) were recognized without being offset by deferred tax liabilities in the same amount. In  
fiscal year 2018, the deferred tax assets of companies within the German tax group were recognized due to  
positive results in the past and were included in this analysis. The companies concerned are expecting positive  
tax income in the future, following losses in the reporting period or the previous year.  
2
42  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
€7,820 million (previous year: €4,532 million) of the deferred taxes recognized in the balance sheet was  
credited to equity and relates to other comprehensive income. €53 million (previous year: €2 million) of this  
figure is attributable to noncontrolling interests. There were effects from capital transactions with  
noncontrolling interest shareholders in the reporting period. In fiscal years 2019 and 2018, there were only  
immaterial changes arising from items that will not be reclassified to profit or loss and were recognized directly  
in equity. The first-time application of IFRS 9 in the year 2018 resulted in adjustments and reclassifications  
totaling €33 million, which were accounted for as a deduction from equity. Changes in deferred taxes classified  
by balance sheet item are presented in the statement of comprehensive income.  
In fiscal year 2018, tax effects of €6 million resulting from equity transaction costs were recognized in  
equity. The calling of the first tranche of the hybrid capital issued in September 2013 resulted in a reduction of  
equity in the amount of €5 million in the year 2018.  
D E F E R R E D TA X E S C L A S S I F I E D BY BA L A N C E S H E E T I TE M  
The following recognized deferred tax assets and liabilities were attributable to recognition and measurement  
differences in the individual balance sheet items and to tax loss carryforwards:  
DEFERRED TAX ASSETS  
DEFERRED TAX LIABILITIES  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Dec. 31, 2019  
Dec. 31, 2018  
Intangible assets  
267  
5,576  
18  
370  
4,677  
35  
10,555  
8,493  
43  
10,402  
6,996  
179  
Property, plant and equipment, and lease assets  
Noncurrent financial assets  
Inventories  
2,348  
2,458  
821  
838  
Receivables and other assets  
(including Financial Services Division)  
2,270  
3,768  
2,113  
3,653  
9,670  
7
7,990  
5
Other current assets  
Pension provisions  
9,013  
6,429  
52  
33  
Liabilities and other provisions  
13,358  
10,173  
4,167  
3,581  
Loss allowances on deferred tax assets from  
temporary differences  
–141  
36,478  
3,068  
–151  
29,758  
3,246  
–
33,809  
–
–
30,024  
–
Temporary differences, net of loss allowances  
Tax loss carryforwards, net of loss allowances  
Tax credits, net of loss allowances  
Value before consolidation and offset  
of which noncurrent  
239  
259  
–
–
39,786  
26,307  
29,627  
2,947  
33,262  
21,530  
26,038  
2,906  
33,809  
26,736  
29,627  
826  
30,024  
23,147  
26,038  
1,044  
5,030  
Offset  
Consolidation  
Amount recognized  
13,106  
10,131  
5,007  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
243  
In accordance with IAS 12, deferred tax assets and liabilities are offset if, and only if, they relate to income taxes  
levied by the same taxation authority and relate to the same tax period.  
The tax expense reported for 2019 of €4,326 million (previous year: €3,489 million) was €1,144 million  
lower (previous year: €1,188 million) than the expected tax expense of €5,470 million that would have resulted  
from application of a tax rate for the Group of 29.8% (previous year: 29.9%) to the earnings before tax of the  
Group.  
RECO NC I L IATI ON OF EX PE CT ED TO EFFE CTIVE I NCOME TA X  
€
million  
2019  
18,356  
5,470  
2018  
15,643  
4,677  
Profit before tax  
Expected income tax income (–)/expense (+)  
(tax rate 29.8%; previous year: 29.9%)  
Reconciliation:  
Effect of different tax rates outside Germany  
Proportion of taxation relating to:  
tax-exempt income  
–843  
–684  
–1,124  
509  
–1,152  
440  
expenses not deductible for tax purposes  
effects of loss carryforwards and tax credits  
permanent differences  
163  
255  
51  
61  
Tax credits  
–54  
–69  
Prior-period tax expense  
–151  
116  
–406  
79  
Effect of tax rate changes  
Nondeductible withholding tax  
Other taxation changes  
359  
502  
–170  
4,326  
23.6  
–214  
3,489  
22.3  
Effective income tax expense  
Effective tax rate in %  
2
44  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
1
1. Earnings per share  
Basic earnings per share are calculated by dividing earnings attributable to Volkswagen AG shareholders by the  
weighted average number of ordinary and preferred shares outstanding during the reporting period. Since  
there were no transactions in 2019 and 2018 that had a dilutive effect on the number of shares, diluted earnings  
per share are equivalent to basic earnings per share.  
In accordance with Article 27(2) No. 3 of the Articles of Association of Volkswagen AG, the dividend paid for  
each preferred share is €0.06 higher than that paid for each ordinary share.  
2019  
2018  
Weighted average number of:  
Ordinary shares – basic/diluted  
Preferred shares – basic/diluted  
Shares  
Shares  
295,089,818  
206,205,445  
295,089,818  
206,205,445  
Earnings after tax  
€ million  
€ million  
€ million  
€ million  
€ million  
€ million  
14,029  
143  
540  
13,346  
7,849  
5,497  
12,153  
17  
309  
11,827  
6,955  
4,872  
Earnings attributable to noncontrolling interests  
Earnings attributable to Volkswagen AG hybrid capital investors  
Earnings attributable to Volkswagen AG shareholders  
of which basic/diluted earnings attributable to ordinary shares  
of which basic/diluted earnings attributable to preferred shares  
Earnings per ordinary share – basic/diluted  
Earnings per preferred share – basic/diluted  
€
€
26.60  
26.66  
23.57  
23.63  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
245  
Balance sheet disclosures  
1
2. Intangible assets  
CHA N G E S I N I NTA NGI B LE A S SE TS I N T H E P E R IO D J A N UA RY 1 TO DE CEM B E R 3 1, 20 1 8  
Capitalized  
development costs  
for products under  
development  
Capitalized  
development  
costs for products  
currently in use  
Other  
intangible assets  
€
million  
Brand names  
Goodwill  
Total  
Cost  
Balance at Jan. 1, 2018  
16,995  
23,443  
7,115  
28,952  
8,588  
85,093  
Foreign exchange differences  
–43  
–131  
–20  
–125  
–103  
–421  
Changes in  
consolidated Group  
–
6
–
4,192  
–4,040  
32  
0
1,042  
4,040  
1,890  
32,020  
12  
581  
18  
5,815  
41  
Additions  
–
–
Transfers  
–
–
–
–
41  
Disposals  
127  
2,049  
88,496  
Balance at Dec. 31, 2018  
16,952  
23,318  
7,215  
8,992  
Amortization and impairment  
Balance at Jan. 1, 2018  
83  
0
95  
14,999  
6,496  
21,674  
Foreign exchange differences  
–2  
0
–1  
–55  
–79  
–137  
Changes in  
consolidated Group  
–
3
0
–
0
–
–
–1  
–1  
Additions to cumulative  
amortization  
3,665  
669  
4,337  
Additions to cumulative  
impairment losses  
–
–
–
–
–
–
3
–15  
–
41  
15  
13  
1
57  
1
Transfers  
Disposals  
1,897  
109  
2,005  
Reversal of impairment  
losses  
–
–
42  
–
0
42  
Balance at Dec. 31, 2018  
84  
1
42  
16,768  
6,989  
23,883  
Carrying amount at  
Dec. 31, 2018  
16,868  
23,317  
7,173  
15,251  
2,003  
64,613  
2
46  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
CHA N G E S I N I NTA NGI B LE A S SE TS I N T H E P E R IO D J A N UA RY 1 TO DE CEM B E R 3 1, 20 1 9  
Capitalized  
development costs  
for products under  
development  
Capitalized  
development  
costs for products  
currently in use  
Other  
intangible assets  
€
million  
Brand names  
Goodwill  
Total  
Cost  
Balance at Jan. 1, 2019  
16,952  
23,318  
7,215  
32,020  
8,992  
88,496  
Foreign exchange differences  
–18  
–57  
33  
77  
12  
46  
Changes in  
consolidated Group  
5
17  
–
3,251  
–4,301  
–
–
1,920  
4,299  
–
234  
770  
54  
256  
5,940  
52  
Additions  
–
–
–
Transfers  
–
61  
Classified as held for sale  
Disposals  
15  
47  
122  
–
16  
8
1,421  
36,895  
126  
9,889  
1,571  
93,098  
Balance at Dec. 31, 2019  
16,878  
23,247  
6,188  
Amortization and impairment  
Balance at Jan. 1, 2019  
84  
1
42  
16,768  
6,989  
23,883  
Foreign exchange differences  
0
–
0
45  
6
51  
Changes in  
consolidated Group  
–
3
–
–
–
–
–
147  
680  
147  
Additions to cumulative  
amortization  
4,049  
4,731  
Additions to cumulative  
impairment losses  
–
–
0
–
15  
–
7
–1  
–
8
1
4
2
34  
2
Transfers  
Classified as held for sale  
Disposals  
–
–
12  
12  
16  
–
1,422  
114  
1,551  
Reversal of impairment  
losses  
–
–
3
396  
3
402  
Balance at Dec. 31, 2019  
86  
–
45  
19,053  
7,700  
26,884  
Carrying amount at  
Dec. 31, 2019  
16,793  
23,247  
6,143  
17,842  
2,189  
66,214  
Other intangible assets comprise in particular concessions, purchased customer lists and dealer relationships,  
industrial and similar rights, and licenses in such rights and assets.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
247  
The allocation of the brand names and goodwill to the operating segments is shown in the following table:  
€
million  
2019  
2018  
Brand names by operating segment  
Porsche  
13,823  
932  
13,823  
949  
Scania Vehicles and Services  
MAN Truck & Bus  
MAN Energy Solutions  
Ducati  
1,127  
415  
1,127  
415  
404  
404  
Other  
93  
150  
16,793  
16,868  
Goodwill by operating segment  
Porsche  
18,825  
2,699  
587  
18,825  
2,755  
587  
Scania Vehicles and Services  
MAN Truck & Bus  
MAN Energy Solutions  
Ducati  
265  
267  
290  
290  
ŠKODA  
160  
158  
Porsche Holding Salzburg  
Other  
151  
156  
271  
280  
23,247  
23,317  
The impairment test for recognized goodwill and brand names is based on value in use. Recoverability is not  
affected by a variation in the growth forecast with respect to the perpetual annuity or in the discount rate of  
+
/–0.5 percentage points.  
Research and development costs developed as follows:  
€
million  
2019  
2018  
%
Total research and development costs  
14,306  
5,171  
36.1  
13,640  
5,234  
38.4  
4.9  
of which capitalized development costs  
Capitalization ratio in %  
–1.2  
Amortization of capitalized development costs  
Research and development costs recognized in profit or loss  
4,064  
13,199  
3,710  
12,116  
9.6  
8.9  
2
48  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
1
3. Property, plant and equipment  
C H A N G E S I N P R O P E RTY, P L A NT A N D E Q U I PM E N T I N T H E P E R I O D J A N UA RY 1 TO D E C E M B E R 3 1, 2 01 8  
Land, land rights  
and buildings,  
including  
buildings on  
third-party land  
Other  
equipment,  
operating and  
office equipment  
Payments on  
account and  
assets under  
construction  
Technical  
equipment and  
machinery  
€
million  
Total  
Cost  
Balance at Jan. 1, 2018  
34,335  
–98  
45,450  
–216  
9
68,909  
–79  
6,876  
–59  
155,569  
–452  
Foreign exchange differences  
Changes in consolidated Group  
Additions  
168  
6
6
189  
597  
1,103  
1,753  
1,424  
46,676  
4,960  
2,048  
1,495  
74,350  
6,452  
–4,703  
35  
13,112  
–43  
Transfers  
858  
Disposals  
117  
3,071  
165,305  
Balance at Dec. 31, 2018  
35,743  
8,537  
Depreciation and impairment  
Balance at Jan. 1, 2018  
14,621  
–39  
32,286  
–130  
7
53,352  
–59  
69  
–5  
100,327  
–232  
18  
Foreign exchange differences  
Changes in consolidated Group  
Additions to cumulative depreciation  
Additions to cumulative impairment losses  
Transfers  
10  
1
–
1,062  
22  
3,222  
21  
5,593  
273  
–
9,876  
574  
258  
–18  
0
–5  
47  
–25  
–1  
Disposals  
83  
1,370  
26  
1,318  
14  
2,770  
117  
Reversal of impairment losses  
Balance at Dec. 31, 2018  
36  
41  
15,552  
20,191  
34,057  
12,618  
57,803  
16,546  
263  
8,274  
107,675  
57,630  
Carrying amount at Dec. 31, 2018  
of which assets leased under finance leases  
Carrying amount at Dec. 31, 2018  
267  
5
41  
0
314  
Future finance lease payments due, and their present values, are shown in the following table:  
€
million  
2019  
2020 – 2023  
from 2024  
Total  
Finance lease payments  
68  
18  
51  
231  
73  
360  
119  
241  
659  
210  
449  
Interest component of finance lease payments  
Carrying amount of liabilities  
158  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
249  
C H A N G E S I N P R O P E RTY, P L A NT A N D E Q U I PM E N T I N T H E P E R I O D J A N UA RY 1 TO D E C E M B E R 3 1, 2 01 9  
Land, land rights  
and buildings,  
including  
buildings on  
third-party land  
Other  
equipment,  
operating and  
office equipment  
Payments on  
account and  
assets under  
construction  
Technical  
equipment and  
machinery  
€
million  
Total  
Cost  
Balance at Jan. 1, 2019¹  
39,976  
198  
46,684  
181  
74,702  
303  
8,536  
36  
169,898  
718  
Foreign exchange differences  
Changes in consolidated Group  
Additions  
56  
16  
28  
8
108  
1,862  
1,867  
124  
1,716  
2,776  
206  
5,403  
2,946  
54  
6,104  
–7,109  
21  
15,084  
481  
Transfers  
Classified as held for sale  
Disposals  
406  
303  
1,077  
50,090  
1,331  
81,997  
29  
2,740  
183,143  
Balance at Dec. 31, 2019  
43,531  
7,526  
Depreciation and impairment  
Balance at Jan. 1, 2019¹  
15,418  
48  
34,052  
131  
3
57,821  
218  
263  
6
107,554  
402  
Foreign exchange differences  
Changes in consolidated Group  
Additions to cumulative depreciation  
Additions to cumulative impairment losses  
Transfers  
0
15  
0
18  
1,927  
53  
3,407  
2
6,237  
63  
–
11,572  
260  
142  
–59  
–
151  
26  
20  
38  
149  
Classified as held for sale  
Disposals  
88  
30  
145  
149  
32  
1,014  
14  
1,169  
331  
–
2,332  
487  
Reversal of impairment losses  
Balance at Dec. 31, 2019  
109  
242  
7,284  
17,389  
26,142  
36,498  
13,592  
62,862  
19,135  
116,991  
66,152  
Carrying amount at Dec. 31, 2019  
1
Value in the opening balance adjusted (see disclosures on IFRS 16).  
In the previous year, payments for assets leased under operating leases recognized in the income statement  
amounted to €1,690 million. With respect to internally used assets, € 1,544 million of this figure was  
attributable to minimum lease payments and €13 million to contingent lease payments in the previous year.  
The payments of €133 million under subleases primarily related to minimum lease payments in the previous  
year.  
Government grants of €146 million (previous year: €207 million) were deducted from the cost of property,  
plant and equipment and as in the previous year noncash benefits received amounting to €0.4 million were not  
capitalized as the cost of assets.  
In connection with land and buildings, real property liens of €1,221 million (previous year: €1,062 million)  
are pledged as collateral for partial retirement obligations, financial liabilities and other liabilities.  
2
50  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
1
4. Lease assets and investment property  
CHA N G E S I N LEA SE A SS E T S A N D I NV E STM E N T P RO P E RTY I N T H E P E RIO D JA N UA RY 1 TO DE CE M B E R 3 1, 2 0 1 8  
€
million  
Lease assets  
Investment property  
Total  
Cost  
Balance at Jan. 1, 2018  
52,226  
609  
748  
12  
–
52,973  
621  
Foreign exchange differences  
Changes in consolidated Group  
Additions  
–138  
–138  
21,256  
–106  
38  
2
21,294  
–104  
Transfers  
Disposals  
16,354  
57,493  
13  
786  
16,367  
58,279  
Balance at Dec. 31, 2018  
Depreciation and impairment  
Balance at Jan. 1, 2018  
13,007  
60  
279  
2
13,287  
62  
Foreign exchange differences  
Changes in consolidated Group  
Additions to cumulative depreciation  
Additions to cumulative impairment losses  
Transfers  
–57  
–
–57  
7,282  
510  
16  
0
7,298  
511  
–8  
0
–8  
Disposals  
6,744  
103  
8
6,752  
103  
Reversal of impairment losses  
Balance at Dec. 31, 2018  
0
13,947  
43,545  
290  
496  
14,237  
44,042  
Carrying amount at Dec. 31, 2018  
In the previous year, we had expected to receive the following payments from noncancelable leases and rental  
agreements:  
€
million  
2019  
2020 – 2023  
from 2024  
Total  
Lease payments  
4,108  
5,187  
17  
9,312  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
251  
CHA N G E S I N LEA SE A SS E T S A N D I NV E STM E N T P RO P E RTY I N T H E P E RIO D JA N UA RY 1 TO DE CE M B E R 3 1, 2 0 1 9  
€
million  
Lease assets  
Investment property  
Total  
Cost  
Balance at Jan. 1, 2019¹  
57,998  
1,075  
–46  
803  
5
58,802  
1,080  
–48  
Foreign exchange differences  
Changes in consolidated Group  
Additions  
–1  
43  
0
24,906  
–533  
24,949  
–533  
Transfers  
Disposals  
19,015  
64,384  
6
19,021  
65,229  
Balance at Dec. 31, 2019  
845  
Depreciation and impairment  
Balance at Jan. 1, 2019¹  
14,076  
333  
291  
1
14,367  
334  
Foreign exchange differences  
Changes in consolidated Group  
Additions to cumulative depreciation  
Additions to cumulative impairment losses  
Transfers  
73  
–
73  
8,087  
510  
17  
–
8,103  
510  
–151  
7,314  
169  
0
–151  
7,315  
169  
Disposals  
1
Reversal of impairment losses  
Balance at Dec. 31, 2019  
0
15,446  
48,938  
307  
538  
15,753  
49,476  
Carrying amount at Dec. 31, 2019  
1
Value in the opening balance adjusted (see disclosures on IFRS 16).  
Lease assets include assets leased out under the terms of operating leases and assets covered by long-term  
buyback agreements.  
Investment property includes apartments rented out and leased dealerships with a fair value of  
€
1,206 million (previous year: €1,106 million). Fair value is estimated using an investment method based on  
internal calculations (Level 3 of the fair value hierarchy). Operating expenses of €56 million (previous year:  
46 million) were incurred for the maintenance of investment property in use. Expenses of €0.1 million  
previous year: €0.6 million) were incurred for unused investment property.  
€
(
2
52  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
1
5. Equity-accounted investments and other equity investments  
CHA N GE S I N E Q U ITY -ACCOU NT E D I NV E STM ENT S A N D OTH E R EQU ITY I NV E STM EN T S  
I N T H E P E R IO D J A N UA RY 1 TO DE CEM B E R 3 1, 20 1 8  
Equity-accounted  
€
million  
investments  
Other equity investments  
Total  
Gross carrying amount  
Balance at Jan. 1, 2018  
8,431  
–9  
1,827  
9
10,259  
0
Foreign exchange differences  
Changes in consolidated Group  
Additions  
269  
247  
–
–368  
693  
0
–99  
939  
Transfers  
0
Disposals  
84  
19  
103  
Changes recognized in profit or loss  
Dividends¹  
3,371  
–3,460  
62  
–
3,371  
–3,460  
62  
–
Other changes recognized in other comprehensive income  
Balance at Dec. 31, 2018  
1
8,826  
2,142  
10,968  
Impairment losses  
Balance at Jan. 1, 2018  
238  
–1  
507  
–1  
745  
–2  
Foreign exchange differences  
Changes in consolidated Group  
Additions  
–
–4  
–4  
155  
–
172  
0
326  
0
Transfers  
Disposals  
–
5
5
Reversal of impairment losses  
Balance at Dec. 31, 2018  
Carrying amount at Dec. 31, 2018  
–
1
1
392  
8,434  
668  
1,474  
1,060  
9,908  
1
Dividends are shown before withholding tax.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
253  
CHA N GE S I N E Q U ITY -ACCOU NT E D I NV E STM ENT S A N D OTH E R EQU ITY I NV E STM EN T S  
I N T H E P E R IO D J A N UA RY 1, D E CE M B E R 3 1, 2 01 9  
Equity-accounted  
investments  
€
million  
Other equity investments  
Total  
Gross carrying amount  
Balance at Jan. 1, 2019  
8,826  
22  
2,142  
6
10,968  
28  
Foreign exchange differences  
Changes in consolidated Group  
Additions  
16  
–252  
856  
0
–236  
1,093  
0
236  
–
Transfers  
Classified as held for sale  
Disposals  
–
15  
15  
76  
88  
164  
Changes recognized in profit or loss  
Dividends¹  
3,326  
–3,786  
75  
–
3,326  
–3,786  
41  
–
Other changes recognized in other comprehensive income  
Balance at Dec. 31, 2019  
–34  
2,616  
8,639  
11,255  
Impairment losses  
Balance at Jan. 1, 2019  
392  
1
668  
0
1,060  
1
Foreign exchange differences  
Changes in consolidated Group  
Additions  
–
–131  
226  
–
–131  
369  
–
143  
–
Transfers  
Classified as held for sale  
Disposals  
–
0
0
–
31  
31  
Reversal of impairment losses  
Balance at Dec. 31, 2019  
Carrying amount at Dec. 31, 2019  
67  
470  
8,169  
18  
85  
714  
1,902  
1,183  
10,071  
1
Dividends are shown before withholding tax.  
Equity-accounted investments include joint ventures in the amount of €5,851 million (previous year:  
€6,372 million) and associates in the amount of €2,318 million (previous year: €2,062 million).  
Of the other changes recognized in other comprehensive income, €53 million (previous year: €7 million) is  
attributable to joint ventures and €22 million (previous year: €55 million) to associates. They are mainly the  
result of foreign exchange differences in the amount of €94 million (previous year: €9 million), pension plan  
remeasurements in the amount of €1 million (previous year: €31 million) and fair value measurement of cash  
flow hedges in the amount of €–27 million (previous year: €28 million).  
2
54  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
1
6. Noncurrent and current financial services receivables  
FAIR  
FAIR  
CARRYING AMOUNT  
VALUE  
CARRYING AMOUNT  
VALUE  
€
million  
Current  
Noncurrent Dec. 31, 2019 Dec. 31, 2019  
Current Noncurrent Dec. 31, 2018 Dec. 31, 2018  
Receivables from  
financing business  
Customer financing  
Dealer financing  
Direct banking  
22,873  
16,781  
305  
49,175  
2,512  
5
72,048  
19,293  
310  
73,248  
19,270  
310  
21,487  
14,781  
284  
45,089  
2,099  
3
66,575  
16,879  
288  
67,500  
16,839  
288  
39,958  
51,692  
91,650  
92,827  
36,551  
47,191  
83,742  
84,627  
Receivables from  
operating leases  
285  
–
285  
285  
219  
–
219  
219  
Receivables from  
finance leases  
18,371  
8,615  
35,281  
53,652  
54,742  
17,446  
31,501  
48,948  
49,572  
5
86,973  
145,588  
147,855  
54,216  
78,692  
132,909  
134,418  
The receivables from customer financing and finance leases contained in financial services receivables of  
145.6 billion (previous year: €132.9 billion) increased by €2 million (previous year: decreased by €26 million)  
€
as a result of a fair value adjustment from portfolio hedging.  
The receivables from customer and dealer financing are secured by vehicles or real property liens. Of the  
receivables, €181 million (previous year: €175 million) was furnished as collateral for financial liabilities and  
contingent liabilities.  
The receivables from dealer financing include €22 million (previous year: €24 million) receivable from  
unconsolidated affiliated companies.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
255  
The receivables from finance leases – almost all of them for vehicles – were based on the following expected  
cash flows as of December 31, 2018:  
€
million  
2019  
2020 – 2023  
from 2024  
Total  
Future payments from finance lease receivables  
18,768  
–1,321  
33,611  
–2,256  
156  
–9  
52,534  
–3,586  
Unearned finance income from finance leases (discounting)  
Present value of minimum lease payments outstanding  
at the reporting date  
17,446  
31,355  
146  
48,948  
1
7. Noncurrent and current other financial assets  
CARRYING AMOUNT  
CARRYING AMOUNT  
Noncurrent  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Dec. 31, 2018  
Positive fair value  
of derivatives  
1,622  
1,628  
3,250  
2,047  
1,932  
3,979  
Receivables from loans,  
bonds, profit participation  
rights (excluding interest)  
6,639  
3,955  
3,278  
646  
9,917  
4,601  
5,513  
4,026  
3,441  
1,149  
6,521  
8,953  
5,175  
Miscellaneous financial assets  
1
2,216  
5,553  
17,769  
11,586  
18,107  
Other financial assets include receivables from related parties of €9.7 billion (previous year: €8.8 billion). Other  
financial assets amounting to €244 million (previous year: €89 million) were furnished as collateral for  
financial liabilities and contingent liabilities. There is no original right of disposal or pledge for the furnished  
collateral on the part of the collateral taker.  
In addition, the miscellaneous financial assets include cash and cash equivalents that serve as collateral  
(mainly under asset-backed securities transactions).  
2
56  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The positive fair values of derivatives relate to the following items:  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Transactions for hedging  
foreign currency risk from assets using fair value hedges  
foreign currency risk from liabilities using fair value hedges  
interest rate risk using fair value hedges  
interest rate risk using cash flow hedges  
foreign currency and price risk from future cash flows (cash flow hedges)  
Hedging transactions Total  
39  
36  
109  
77  
662  
561  
13  
54  
785  
2,049  
2,851  
1,128  
3,979  
1,535  
1,715  
3,250  
Assets related to derivatives not included in hedging relationships  
Total  
Positive fair values of €6 million (previous year: €24 million) were recognized from transactions for hedging  
interest rate risk (fair value hedges) used in portfolio hedges.  
Further details on derivative financial instruments as a whole are given in the section entitled “Financial  
risk management and financial instruments".  
1
8. Noncurrent and current other receivables  
CARRYING AMOUNT  
CARRYING AMOUNT  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Noncurrent  
Dec. 31, 2018  
Other recoverable income  
taxes  
4,244  
3,028  
806  
1,916  
2,722  
5,050  
4,945  
9,995  
4,189  
2,015  
6,203  
773  
1,835  
2,608  
4,962  
3,849  
8,811  
Miscellaneous receivables  
7,272  
Miscellaneous receivables include assets to fund post-employment benefits in the amount of €65 million  
previous year: €76 million). This item also includes the share of the technical provisions attributable to  
(
reinsurers amounting to €58 million (previous year: €60 million).  
Current other receivables are predominantly non-interest-bearing.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
257  
Other receivables include contingent receivables from long-term construction contracts recognized using the  
percentage of completion (PoC) method. They were reported under trade receivables in the previous year. They  
correspond to the contract assets recognized under contracts with customers and changed as follows:  
€
million  
2019  
2018  
Contingent construction contract receivables at Jan. 1  
Additions and disposals  
352  
–36  
–
338  
4
Changes in consolidated Group  
–
Change in valuation allowances  
1
10  
–
Classified as held for sale  
4
Changes in estimates and assumptions as well as contract modifications  
Foreign exchange differences  
–
–
2
0
Contingent construction contract receivables at Dec. 31  
314  
352  
Costs to fulfill contracts were not capitalized in the Volkswagen Group. The Volkswagen Group capitalizes costs  
to obtain a contract and amortizes them on a straight-line basis over the life of the contract only if they are  
material, the underlying contract has a term of at least one year, and these costs would not have been incurred,  
if the corresponding contract had not been entered into. On December 31, 2019, costs to obtain contracts  
amounting to €65 million (previous year: €– million) were recognized as assets. In 2019, amortization charges  
on capitalized costs to obtain contracts amounted to €13 million (previous year: €– million). No impairment  
losses were recognized on capitalized costs to obtain contracts in 2019 and 2018.  
1
9. Tax assets  
CARRYING AMOUNT  
CARRYING AMOUNT  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Noncurrent  
Dec. 31, 2018  
Deferred tax assets  
Tax receivables  
В
13,106  
341  
13,106  
1,531  
В
1,879  
1,879  
10,131  
476  
10,131  
2,355  
1,190  
1
,190  
13,447  
14,637  
10,606  
12,486  
€7,490 million(previous year: €6,036 million) of the deferred tax assets are due within one year.  
2
58  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
2
0. Inventories  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Raw materials, consumables and supplies  
Work in progress  
6,099  
4,110  
30,617  
5,699  
222  
5,543  
4,382  
30,553  
5,107  
168  
Finished goods and purchased merchandise  
Current lease assets  
Prepayments  
Hedges on inventories  
–6  
–8  
46,742  
45,745  
At the same time as the relevant revenue was recognized, inventories in the amount of €192 billion (previous  
year: €179 billion) were included in cost of sales. Loss allowances (excluding lease assets) recognized as  
expenses in the reporting period amounted to €672 million (previous year: €902 million). Vehicles amounting  
to €340 million (previous year: €316 million) were assigned as collateral for partial retirement obligations.  
2
1. Trade receivables  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Trade receivables from  
third parties  
13,445  
180  
4,283  
32  
13,356  
206  
unconsolidated subsidiaries  
joint ventures  
3,958  
51  
associates  
other investees and investors  
1
317  
17,941  
17,888  
In the previous year contingent receivables from long-term construction contracts recognized using the  
percentage of completion (PoC) method were reported under trade receivables, which are now included in other  
receivables.  
The fair values of the trade receivables correspond to the carrying amounts.  
2
2. Marketable securities  
The marketable securities serve to safeguard liquidity. They are short-term fixed-income securities and shares.  
Most securities are measured at fair value. Current securities amounting to €639 million (previous year:  
€997 million) were furnished as collateral for financial liabilities and contingent liabilities. There is no original  
right of disposal or pledge for the furnished collateral on the part of the collateral taker.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
259  
2
3. Cash, cash equivalents and time deposits  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Bank balances  
25,264  
659  
28,522  
416  
Checks, cash-in-hand, bills and call deposits  
25,923  
28,938  
Bank balances are held at various banks in different currencies and include time deposits, for example.  
2
4. Equity  
The subscribed capital of Volkswagen AG is composed of no-par value bearer shares with a notional value of  
2.56. As well as ordinary shares, there are preferred shares that entitle the bearer to a €0.06 higher dividend  
€
than ordinary shares, but do not carry voting rights.  
The Annual General Meeting on May 14, 2019 resolved to create authorized capital of up to €179 million,  
expiring on May 13, 2024, to issue new preferred bearer shares.  
In June 2018, Volkswagen AG placed unsecured subordinated hybrid notes with an aggregate principal  
amount of €2.8 billion via a subsidiary, Volkswagen International Finance N.V., Amsterdam, the Netherlands  
(
VIF). The perpetual hybrid notes were issued in two tranches and can be called by VIF. The first call date for the  
first tranche (€1.3 billion and a coupon of 3.375%) is after 6 years, and the first call date for the second tranche  
(€1.5 billion and a coupon of 4.625%) is after 10 years.  
Interest may be accumulated depending on whether a dividend is paid to Volkswagen AG shareholders.  
Under IAS 32, these hybrid notes must be classified in their entirety as equity. The capital raised was recognized  
in equity, less a discount and transaction costs and net of deferred taxes. The interest payments payable to the  
noteholders will be recognized directly in equity. IAS 32 only allows these hybrid notes to be classified as debt  
once the respective hybrid note was called.  
In July 2018, Volkswagen AG called the first tranche of hybrid notes with an aggregate principal amount of  
€
1.3 billion placed in 2013 via VIF (issuer). In addition, other effects of €14 million had to be recognized in  
equity.  
The expiry of the put options granted to noncontrolling interest shareholders of MAN SE on March 4, 2019  
resulted in an increase in equity of €0.7 billion. See the “Key Events” section for more information.  
C H A N G E I N O R D I N A RY A N D P R E F E R R E D S H A R E S A N D SU B S C R I B E D C A P I TA L  
SHARES  
019  
€
2
2018  
2019  
2018  
Balance at January 1  
Capital increase  
501,295,263  
–
501,295,263  
–
1,283,315,873  
–
1,283,315,873  
–
Balance at December 31  
501,295,263  
501,295,263  
1,283,315,873  
1,283,315,873  
2
60  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The capital reserves comprise the share premium totaling €14,225 million (previous year: €14,225 million)  
from capital increases, the share premium of €219 million from the issuance of bonds with warrants and an  
amount of €107 million appropriated on the basis of the capital reduction implemented in 2006. No amounts  
were withdrawn from the capital reserves.  
DIV I DE N D PROP OSA L  
In accordance with section 58(2) of the Aktiengesetz (AktG – German Stock Corporation Act), the dividend  
payment by Volkswagen AG is based on the net retained profits reported in the annual financial statements of  
Volkswagen AG prepared in accordance with the German Commercial Code. Based on these annual financial  
statements of Volkswagen AG, net retained profits of €3,273 million are eligible for distribution following the  
transfer of €1,685 million to the revenue reserves. The Board of Management and Supervisory Board will  
propose to the Annual General Meeting that a total dividend of €3,271 million, i.e. €6.50 per ordinary share and  
€6.56 per preferred share, be paid from the net retained profits. Shareholders are not entitled to a dividend  
payment until it has been resolved by the Annual General Meeting.  
A dividend of €4.80 per ordinary share and €4.86 per preferred share was distributed in fiscal year 2019.  
NON CO NTROLL I N G I NT E RE ST S  
As of December 31, 2019, noncontrolling interests amounted to €1,870 million (previous year: €225 million).  
Most of the noncontrolling interests in equity arose as a result of the IPO of the TRATON GROUP. See the “Key  
Events” section for further details.  
The table below shows summarized financial information of the TRATON GROUP, including goodwill and  
fair value adjustments at the acquisition date:  
€
million  
TRATON GROUP  
Equity interest in %¹  
10.28  
1,640  
125  
Equity interest  
Earnings after tax attributable to noncontrolling interests  
Noncurrent assets  
Current assets  
29,623  
16,728  
14,938  
16,664  
Noncurrent liabilities  
Current liabilities  
Sales revenue  
26,901  
1,517  
–316  
Earnings after tax  
Other comprehensive income, net of tax  
Gross cash flow  
3,433  
–2,346  
1,087  
634  
Change in working capital  
Cash flows from operating activities  
Cash flows from investing activities  
Net cash flow  
1,721  
1
The percentage only includes direct noncontrolling interests.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
261  
2
5. Noncurrent and current financial liabilities  
CARRYING AMOUNT  
CARRYING AMOUNT  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Noncurrent  
Dec. 31, 2018  
Bonds  
19,789  
18,103  
17,337  
30,252  
68,839  
20,147  
15,337  
2,395  
88,629  
38,250  
32,674  
32,647  
19,132  
22,381  
18,455  
28,555  
62,416  
18,975  
15,447  
1,455  
81,549  
41,356  
33,903  
30,010  
Commercial paper and notes  
Liabilities to banks  
Deposits business  
Loans and miscellaneous  
liabilities  
1,429  
1,002  
1,629  
5,208  
3,058  
6,210  
1,183  
51  
2,433  
399  
3,617  
449  
Lease liabilities  
87,912  
113,556  
201,468  
89,757  
101,126  
190,883  
2
6. Noncurrent and current other financial liabilities  
CARRYING AMOUNT  
CARRYING AMOUNT  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Noncurrent  
Dec. 31, 2018  
Negative fair values of  
derivative financial  
instruments  
2,245  
691  
1,950  
116  
4,195  
807  
1,439  
661  
1,134  
113  
2,573  
774  
Interest payable  
Miscellaneous financial  
liabilities  
7,922  
2,434  
10,356  
7,316  
1,972  
9,288  
10,858  
4,499  
15,358  
9,416  
3,219  
12,635  
2
62  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The negative fair values of derivatives relate to the following items:  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Transactions for hedging  
foreign currency risk from assets using fair value hedges  
foreign currency risk from liabilities using fair value hedges  
interest rate risk using fair value hedges  
interest rate risk using cash flow hedges  
foreign currency and price risk from future cash flows (cash flow hedges)  
Hedging transactions Total  
107  
5
65  
10  
97  
61  
53  
17  
2,172  
2,435  
1,760  
4,195  
936  
1,088  
1,484  
2,573  
Liabilities related to derivatives not included in hedging relationships  
Total  
Negative fair values of €63 million (previous year: €22 million) were recognized from transactions for hedging  
interest rate risk (fair value hedges) used in portfolio hedges.  
Further details on derivative financial instruments as a whole are given in the section entitled “Financial  
risk management and financial instruments".  
2
7. Noncurrent and current other liabilities  
CARRYING AMOUNT  
CARRYING AMOUNT  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Noncurrent  
Dec. 31, 2018  
Payments received on account  
of orders  
7,474  
5,202  
12,676  
6,936  
4,300  
11,235  
Liabilities relating to  
other taxes  
2,812  
610  
133  
162  
2,946  
772  
2,273  
546  
112  
43  
2,384  
589  
social security  
wages and salaries  
Miscellaneous liabilities  
5,848  
2,576  
1,008  
766  
6,856  
3,342  
26,591  
5,299  
2,539  
17,593  
947  
6,247  
3,585  
24,041  
1,046  
6,448  
1
9,320  
7,271  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
263  
The liabilities from payments on account received under contracts with customers correspond to contract  
liabilities under contracts with customers. They changed as follows:  
CHAN GE S I N LIA B I LI TI E S FROM PAYM ENT S ON ACCOU NT R ECE IVE D U N DER CON TRACT S WI TH CU STOMER S  
€
million  
2019  
2018  
Liabilities from advance payments received under contracts with customers at Jan. 1  
Additions and disposals  
9,669  
1,245  
12  
7,261  
2,395  
Changes in consolidated Group  
4
Classified as held for sale  
167  
–
–
Changes in estimates and assumptions as well as contract modifications  
Foreign exchange differences  
–
148  
8
Liabilities from advance payments received under contracts with customers at Dec. 31  
10,907  
9,669  
2
8.ꢀTax liabilities  
CARRYING AMOUNT  
CARRYING AMOUNT  
€
million  
Current  
Noncurrent  
Dec. 31, 2019  
Current  
Noncurrent  
Dec. 31, 2018  
Deferred tax liabilities  
Provisions for taxes  
Tax payables  
В
1,876  
408  
5,007  
2,991  
–
5,007  
4,867  
408  
В
1,412  
456  
5,030  
3,047  
–
5,030  
4,458  
456  
2,283  
7,998  
10,282  
1,867  
8,077  
9,944  
€387 million(previous year: €407 million) of the deferred tax liabilities are due within one year.  
2
64  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
2
9. Provisions for pensions and other post-employment benefits  
Provisions for pensions are recognized for commitments in the form of retirement, invalidity and dependents’  
benefits payable under pension plans. The benefits provided by the Group vary according to the legal, tax and  
economic circumstances of the country concerned, and usually depend on the length of service and  
remuneration of the employees.  
Volkswagen Group companies provide occupational pensions under both defined contribution and defined  
benefit plans. In the case of defined contribution plans, the Company makes contributions to state or private  
pension schemes based on legal or contractual requirements, or on a voluntary basis. Once the contributions  
have been paid, there are no further obligations for the Volkswagen Group. Current contributions are  
recognized as pension expenses of the period concerned. In 2019, they amounted to a total of €2,565 million  
(previous year: €2,385 million) in the Volkswagen Group. Of this figure, contributions to the compulsory state  
pension system in Germany amounted to €1,796 million (previous year: €1,745 million).  
In the case of defined benefit plans, a distinction is made between pensions funded by provisions and  
externally funded plans.  
The pension provisions for defined benefits are measured by independent actuaries using the  
internationally accepted projected unit credit method in accordance with IAS 19, under which the future  
obligations are measured on the basis of the ratable benefit entitlements earned as of the balance sheet date.  
Measurement reflects actuarial assumptions as to discount rates, salary and pension trends, employee turnover  
rates, longevity and increases in healthcare costs, which were determined for each Group company depending  
on the economic environment. Remeasurements arise from differences between what has actually occurred  
and the prior-year assumptions as well as from changes in assumptions. They are recognized in other  
comprehensive income, net of deferred taxes, in the period in which they arise.  
Multi-employer pension plans exist in the Volkswagen Group in the United Kingdom, Switzerland, Sweden  
and the Netherlands. These plans are defined benefit plans. A small proportion of them are accounted for as  
defined contribution plans, as the Volkswagen Group is not authorized to receive the information required in  
order to account for them as defined benefit plans. Under the terms of the multi-employer plans, the  
Volkswagen Group is not liable for the obligations of the other employers. In the event of its withdrawal from  
the plans or their winding-up, the proportionate share of the surplus of assets attributable to the Volkswagen  
Group will be credited or the proportionate share of the deficit attributable to the Volkswagen Group will have  
to be funded. In the case of the defined benefit plans accounted for as defined contribution plans, the  
Volkswagen Group’s share of the obligations represents a small proportion of the total obligations. No probable  
significant risks arising from multi-employer defined benefit pension plans that are accounted for as defined  
contribution plans have been identified. The expected contributions to those plans will amount to €22 million  
for fiscal year 2020.  
Owing to their benefit character, the obligations of the US Group companies in respect of post-employment  
medical care in particular are also carried under provisions for pensions and other post-employment benefits.  
These post-employment benefit provisions take into account the expected long-term rise in the cost of  
healthcare. In fiscal year 2019, €18 million (previous year: €14 million) was recognized as an expense for  
healthcare costs. The related carrying amount as of December 31, 2019 was €266 million (previous year:  
€231 million).  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
265  
The following amounts were recognized in the balance sheet for defined benefit plans:  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Present value of funded obligations  
Fair value of plan assets  
21,090  
12,478  
8,613  
32,710  
2
15,606  
10,920  
4,686  
28,312  
23  
Funded status (net)  
Present value of unfunded obligations  
Amount not recognized as an asset because of the ceiling in IAS 19  
Net liability recognized in the balance sheet  
of which provisions for pensions  
of which other assets  
41,324  
41,389  
65  
33,022  
33,097  
76  
SIG N I FICA NT P E NS IO N A RRA N GE M ENT S I N T H E VOLKSWAGE N GROU P  
For the period after their active working life, the Volkswagen Group offers its employees benefits under  
attractive, modern occupational pension arrangements. Most of the arrangements in the Volkswagen Group are  
pension plans for employees in Germany classified as defined benefit plans under IAS 19. The majority of these  
obligations are funded solely by recognized provisions. These plans are now largely closed to new members.  
To reduce the risks associated with defined benefit plans, in particular longevity, salary increases and  
inflation, the Volkswagen Group has introduced new defined benefit plans in recent years whose benefits are  
funded by appropriate external plan assets. The above-mentioned risks have been largely reduced in these  
pension plans. The proportion of the total defined benefit obligation attributable to pension obligations  
funded by plan assets will continue to rise in the future. The significant pension plans are described in the  
following.  
German pension plans funded solely by recognized provisions  
The pension plans funded solely by recognized provisions comprise both contribution-based plans with  
guarantees and final salary plans. For contribution-based plans, an annual pension expense dependent on  
income and status is converted into a lifelong pension entitlement using annuity factors (guaranteed modular  
pension entitlements). The annuity factors include a guaranteed rate of interest. At retirement, the modular  
pension entitlements earned annually are added together. For final salary plans, the underlying salary is  
multiplied at retirement by a percentage that depends on the years of service up until the retirement date.  
The present value of the guaranteed obligation rises as interest rates fall and is therefore exposed to interest  
rate risk.  
The pension system provides for lifelong pension payments. The companies bear the longevity risk in this  
respect. This is accounted for by calculating the annuity factors and the present value of the guaranteed  
obligation using the latest generational mortality tables – the “Heubeck 2018 G” mortality tables – which  
already reflect future increases in life expectancy.  
To reduce the inflation risk from adjusting the regular pension payments by the rate of inflation, a pension  
adjustment that is not indexed to inflation was introduced for pension plans where this is permitted by law.  
2
66  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
German pension plans funded by external plan assets  
The pension plans funded by external plan assets are contribution-based plans with guarantees. In this case, an  
annual pension expense dependent on income and status is either converted into a lifelong pension  
entitlement using annuity factors (guaranteed modular pension entitlement) or paid out in a single lump sum  
or in installments. In some cases, employees also have the opportunity to provide for their own retirement  
through deferred compensation. The annuity factors include a guaranteed rate of interest. At retirement, the  
modular pension entitlements earned annually are added together. The pension expense is contributed on an  
ongoing basis to a separate pool of assets that is administered independently of the Company in trust and  
invested in the capital markets. If the plan assets exceed the present value of the obligations calculated using  
the guaranteed rate of interest, surpluses are allocated (modular pension bonuses).  
Since the assets administered in trust meet the IAS 19 criteria for classification as plan assets, they are  
deducted from the obligations.  
The amount of the pension assets is exposed to general market risk. The investment strategy and its  
implementation are therefore continuously monitored by the trusts’ governing bodies, on which the  
companies are also represented. For example, investment policies are stipulated in investment guidelines with  
the aim of limiting market risk and its impact on plan assets. In addition, asset-liability management studies  
are conducted if required so as to ensure that investments are in line with the obligations that need to be  
covered. The pension assets are currently invested primarily in fixed-income or equity funds. The main risks  
are therefore interest rate and equity price risk. To mitigate market risk, the pension system also provides for  
cash funds to be set aside in an equalization reserve before any surplus is allocated.  
The present value of the obligation is the present value of the guaranteed obligation after deducting the  
plan assets. If the plan assets fall below the present value of the guaranteed obligation, a provision must be  
recognized in that amount. The present value of the guaranteed obligation rises as interest rates fall and is  
therefore exposed to interest rate risk.  
In the case of lifelong pension payments, the Volkswagen Group bears the longevity risk. This is accounted  
for by calculating the annuity factors and the present value of the guaranteed obligation using the latest  
generational mortality tables – the “Heubeck 2018 G” mortality tables – which already reflect future increases  
in life expectancy. In addition, the independent actuaries carry out annual risk monitoring as part of the review  
of the assets administered by the trusts.  
To reduce the inflation risk from adjusting the regular pension payments by the rate of inflation, a pension  
adjustment that is not indexed to inflation was introduced for pension plans where this is permitted by law.  
Calculation of the pension provisions was based on the following actuarial assumptions:  
GERMANY  
2019  
ABROAD  
2019  
%
2018  
2018  
Discount rate at December 31  
Payroll trend  
1.09  
3.59  
1.50  
1.24  
–
1.97  
3.48  
1.50  
1.17  
–
2.30  
2.16  
2.68  
3.75  
5.56  
3.16  
2.66  
2.41  
3.93  
5.50  
Pension trend  
Employee turnover rate  
Annual increase in healthcare costs  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
267  
These assumptions are averages that were weighted using the present value of the defined benefit obligation.  
With regard to life expectancy, consideration is given to the latest mortality tables in each country.  
The discount rates are generally defined to reflect the yields on prime-rated corporate bonds with matching  
maturities and currencies. The iBoxx AA 10+ Corporates index was taken as the basis for the obligations of  
German Group companies. Similar indices were used for foreign pension obligations.  
The payroll trends cover expected wage and salary trends, which also include increases attributable to  
career development.  
The pension trends either reflect the contractually guaranteed pension adjustments or are based on the  
rules on pension adjustments in force in each country.  
The employee turnover rates are based on past experience and future expectations.  
The following table shows changes in the net defined benefit liability recognized in the balance sheet:  
€
million  
2019  
2018  
Net liability recognized in the balance sheet at January 1  
Current service cost  
33,022  
1,555  
660  
–67  
8,689  
27  
32,666  
1,410  
620  
399  
–957  
–105  
–530  
3
Net interest expense  
Actuarial gains (–)/losses (+) arising from changes in demographic assumptions  
Actuarial gains (–)/losses (+) arising from changes in financial assumptions  
Actuarial gains (–)/losses (+) arising from experience adjustments  
Income/expenses from plan assets not included in interest income  
Change in amount not recognized as an asset because of the ceiling in IAS 19  
Employer contributions to plan assets  
654  
21  
969  
–9  
708  
–9  
Employee contributions to plan assets  
Pension payments from company assets  
873  
–25  
2
842  
24  
Past service cost (including plan curtailments)  
Gains (–)/losses (+) arising from plan settlements  
Changes in consolidated Group  
2
–3  
10  
Classified as held for sale  
14  
–
Other changes  
–8  
–5  
Foreign exchange differences from foreign plans  
Net liability recognized in the balance sheet at December 31  
–4  
–30  
33,022  
41,324  
The change in the amount not recognized as an asset because of the ceiling in IAS 19 contains an interest  
component, part of which was recognized in the financial result in profit or loss, and part of which was  
recognized outside profit or loss directly in equity.  
2
68  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The change in the present value of the defined benefit obligation is attributable to the following factors:  
€
million  
2019  
2018  
Present value of obligations at January 1  
Current service cost  
43,918  
1,555  
921  
–67  
8,689  
27  
43,829  
1,410  
901  
399  
–957  
–105  
19  
Interest cost  
Actuarial gains (–)/losses (+) arising from changes in demographic assumptions  
Actuarial gains (–)/losses (+) arising from changes in financial assumptions  
Actuarial gains (–)/losses (+) arising from experience adjustments  
Employee contributions to plan assets  
Pension payments from company assets  
Pension payments from plan assets  
19  
873  
300  
–25  
–8  
842  
237  
24  
Past service cost (including plan curtailments)  
Gains (–)/losses (+) arising from plan settlements  
Changes in consolidated Group  
0
–7  
10  
Classified as held for sale  
182  
–2  
–
Other changes  
–460  
–73  
43,918  
Foreign exchange differences from foreign plans  
Present value of obligations at December 31  
135  
53,800  
In the previous year, actuarial gains/losses arising from changes in demographic assumptions were mainly the  
result of the first-time application of the “Heubeck 2018 G” mortality tables.  
Following the regular review of our pension plans, one plan used by South American subsidiaries had to be  
classified as a defined contribution plan in fiscal year 2018, and this led to a change in the pension obligation  
reported in the above table. The decrease in the present value of the defined benefit obligation in the amount of  
€460 million is shown under other changes.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
269  
Changes in the relevant actuarial assumptions would have had the following effects on the defined benefit  
obligation:  
DEC. 31, 2019  
DEC. 31, 2018  
Present value of defined benefit obligation if  
Discount rate  
€ million Change in percent  
€ million Change in percent  
is 0.5  
percentage  
points higher  
48,598  
59,888  
56,633  
51,258  
54,331  
–9.67  
11.32  
5.27  
40,048  
48,398  
46,147  
41,892  
44,382  
–8.81  
10.20  
5.07  
is 0.5  
percentage  
points lower  
is 0.5  
percentage  
points higher  
Pension trend  
is 0.5  
percentage  
points lower  
–4.73  
0.99  
–4.61  
1.05  
is 0.5  
percentage  
points higher  
Payroll trend  
Longevity  
is 0.5  
percentage  
points lower  
53,319  
55,719  
–0.89  
3.57  
43,507  
45,311  
–0.94  
3.17  
increases by  
one year  
The sensitivity analysis shown above considers the change in one assumption at a time, leaving the other  
assumptions unchanged versus the original calculation, i.e. any correlation effects between the individual  
assumptions are ignored.  
To examine the sensitivity of the defined benefit obligation to a change in assumed longevity, the estimates  
of mortality were reduced as part of a comparative calculation to the extent that doing so increases life  
expectancy by approximately one year.  
The average duration of the defined benefit obligation weighted by the present value of the defined benefit  
obligation (Macaulay duration) is 22 years (previous year: 19 years).  
2
70  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The present value of the defined benefit obligation is attributable as follows to the members of the plan:  
€
million  
2019  
2018  
Active members with pension entitlements  
Members with vested entitlements who have left the Company  
Pensioners  
33,027  
3,136  
25,783  
2,580  
17,637  
15,555  
43,918  
53,800  
The maturity profile of payments attributable to the defined benefit obligation is presented in the following  
table, which classifies the present value of the obligation by the maturity of the underlying payments:  
€
million  
2019  
2018  
Payments due within the next fiscal year  
Payments due between two and five years  
Payments due in more than five years  
1,161  
5,121  
1,160  
5,251  
47,518  
37,508  
43,918  
5
3,800  
Changes in plan assets are shown in the following table:  
€
million  
2019  
2018  
Fair value of plan assets at January 1  
10,920  
261  
654  
969  
9
11,192  
281  
–530  
708  
9
Interest income on plan assets determined using the discount rate  
Income (+)/expenses (–) from plan assets not included in interest income  
Employer contributions to plan assets  
Employee contributions to plan assets  
Pension payments from plan assets  
299  
10  
237  
2
Gains (+)/losses (–) arising from plan settlements  
Changes in consolidated Group  
–5  
0
Classified as held for sale  
167  
7
–
Other changes  
–455  
–46  
10,920  
Foreign exchange differences from foreign plans  
Fair value of plan assets at December 31  
139  
12,478  
Other changes in the previous year were attributable to the change in the presentation of a plan used by South  
American subsidiaries.  
The investment of the plan assets to cover future pension obligations resulted in income of €915 million  
(
previous year: expenses of €250 million).  
Employer contributions to plan assets are expected to amount to €927 million (previous year: €769 million)  
in the next fiscal year.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
271  
Plan assets are invested in the following asset classes:  
DEC. 31, 2019  
DEC. 31, 2018  
Quoted prices  
in active markets  
No quoted prices  
in active markets  
Quoted prices  
in active markets  
No quoted prices  
in active markets  
€
million  
Total  
Total  
Cash and cash equivalents  
Equity instruments  
Debt instruments  
501  
–
–
5
501  
401  
855  
666  
375  
2
–
4
669  
375  
401  
850  
1,041  
1,044  
Direct investments in  
real estate  
–
15  
110  
–28  
20  
110  
–13  
11  
–21  
100  
–17  
26  
112  
–38  
Derivatives  
Equity funds  
Bond funds  
2,653  
5,729  
170  
2,673  
5,857  
170  
1,433  
5,443  
193  
1,459  
5,561  
193  
128  
–
118  
–
Real estate funds  
Other funds  
1,225  
83  
22  
1,247  
676  
890  
6
896  
Other instruments  
594  
80  
568  
648  
44.6% (previous year: 53.3%) of the plan assets are invested in German assets, 27.0% (previous year: 27.4%) in  
other European assets and 28.4% (previous year: 19.3%) in assets in other regions.  
Plan assets include €14 million (previous year: €3 million) invested in Volkswagen Group assets and  
€14 million (previous year: €12 million) in Volkswagen Group debt instruments.  
The following amounts were recognized in the income statement:  
€
million  
2019  
2018  
Current service cost  
1,555  
662  
–25  
2
1,410  
623  
24  
Net interest on the net defined benefit liability  
Past service cost (including plan curtailments)  
Gains (–) or losses (+) arising from plan settlements  
Net income (–) and expenses (+) recognized in profit or loss  
2
2,194  
2,059  
The above amounts are generally included in the personnel costs of the functional areas in the income  
statement. Net interest on the net defined benefit liability is reported in interest expenses.  
2
72  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
3
0. Noncurrent and current other provisions  
Obligations  
arising from sales  
Employee  
expenses  
Litigation and  
legal risks  
Miscellaneous  
provisions  
€
million  
Total  
Balance at Jan. 1, 2018  
Foreign exchange differences  
Changes in consolidated Group  
Utilization  
27,867  
39  
4,886  
–17  
5,802  
–88  
7,631  
–21  
46,185  
–88  
–2  
–7  
–1  
–44  
–53  
10,437  
12,179  
1,632  
2,019  
2,396  
2,131  
2,415  
3,153  
16,880  
19,483  
Additions/New provisions  
Unwinding of discount/effect of change in  
discount rate  
–108  
2,503  
27,035  
13,986  
13,050  
27,035  
199  
5
99  
–19  
516  
9
662  
–114  
3,780  
44,754  
23,874  
20,879  
44,742  
241  
Reversals  
Balance at Dec. 31, 2018  
of which current  
5,155  
2,248  
2,906  
5,155  
15  
4,913  
2,349  
2,563  
4,913  
–14  
7,651  
5,291  
2,360  
7,639  
41  
of which noncurrent  
Balance at Jan. 1, 2019¹  
Foreign exchange differences  
Changes in consolidated Group  
Classified as held for sale  
Utilization  
–1  
3
–1  
0
2
33  
10  
–
12  
55  
9,442  
11,618  
1,899  
2,633  
1,913  
2,835  
2,404  
3,486  
15,658  
20,572  
Additions/New provisions  
Unwinding of discount/effect of change in  
discount rate  
3
2,391  
225  
128  
–29  
531  
20  
795  
220  
3,845  
Reversals  
Balance at Dec. 31, 2019  
of which current  
of which noncurrent  
26,988  
13,468  
13,520  
5,993  
2,466  
3,527  
5,260  
3,112  
2,147  
7,976  
5,388  
2,588  
46,217  
24,434  
21,783  
1
Value in the opening balance adjusted (see disclosures on IFRS 16).  
The obligations arising from sales contain provisions covering all risks relating to the sale of vehicles,  
components and genuine parts through to the disposal of end-of-life vehicles. They primarily comprise  
warranty obligations, calculated on the basis of losses to date and estimated future losses. They also include  
provisions for discounts, bonuses and similar allowances which are incurred after the balance sheet date, but  
for which there is a legal or constructive obligation attributable to sales revenue before the balance sheet date.  
Provisions for employee expenses are recognized for long-service awards, time credits, partial retirement  
arrangements, severance payments and similar obligations, among other things.  
In addition to residual provisions relating to the diesel issue, the provisions for litigation and legal risks  
contain amounts related to a large number of legal disputes and official proceedings in which Volkswagen  
Group companies become involved in Germany and internationally in the course of their operating activities.  
In particular, such legal disputes and other proceedings may occur in relation to suppliers, dealers, customers,  
employees, or investors. Please refer to the “Litigation” section for a discussion of the legal risks.  
Miscellaneous provisions relate to a wide range of identifiable specific risks, price risks and uncertain  
obligations, which are measured in the amount of the expected settlement value.  
Miscellaneous provisions additionally include provisions amounting to €568 million (previous year:  
€562 million) relating to the insurance business.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
273  
3
1. Put options and compensation rights granted to noncontrolling interest shareholders  
In the previous year, this balance sheet item consisted primarily of the present value of the cash settlement of  
90.29 per share in accordance with section 305 of the Aktiengesetz (AktG – German Stock Corporation Act)  
€
offered to MAN shareholders in connection with the control and profit and loss transfer agreement. The put  
options granted to noncontrolling interest shareholders expired in the fiscal year. The liability for shares not  
tendered and for compensation payments remaining after these rights expired was reclassified directly to  
equity.  
Further information can be found in the “Key Events” section.  
3
2. Trade payables  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Trade payables to  
third parties  
21,948  
222  
375  
195  
5
22,928  
235  
unconsolidated subsidiaries  
joint ventures  
327  
associates  
113  
other investees and investors  
4
22,745  
23,607  
2
74  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Other disclosures  
3
3. IAS 23 (Borrowing Costs)  
Capitalized borrowing costs amounted to €68 million (previous year: €62 million) and related mainly to  
capitalized development costs. An average cost of debt of 1.6% (previous year: 1.5%) was used as a basis for  
capitalization in the Volkswagen Group.  
3
4. IFRS 16 (Leases)  
1
. LE SSEE ACCOU NTI NG  
The Volkswagen Group is a lessee, mainly as a result of leasing office equipment, real estate and other means of  
production. The leases are negotiated individually and include a large number of contract terms and  
conditions. The following amounts for right-of-use assets resulting from leases are included in the balance  
sheet items:  
PRE SEN TATI ON O F AN D C HAN GE S I N R IGH T- OF-U SE ASSET S FROM LEA SE S FO R TH E PERI OD  
F RO M JA N UA RY 1 TO D E C E M B E R 31 , 2 0 19  
Right of use on  
land, land rights  
and buildings incl.  
buildings on third  
party land  
Right of use on  
technical  
equipment and  
machinery  
Right of use on  
other equipment,  
operational and  
office equipment  
€
million  
Total  
Cost  
Balance at Jan. 1, 2019  
Foreign exchange differences  
Changes in consolidated Group  
5,139  
82  
77  
0
294  
1
5,510  
83  
13  
–
0
13  
Additions  
1,201  
–8  
5
459  
–5  
1
1,666  
–52  
10  
Transfers  
–39  
–
Classified as held for sale  
Disposals  
9
166  
6,253  
0
11  
738  
177  
7,034  
Balance at Dec. 31, 2019  
44  
Depreciation and impairment  
Balance at Jan. 1, 2019  
63  
3
17  
0
4
0
84  
4
Foreign exchange differences  
Changes in consolidated Group  
Additions to cumulative depreciation  
Additions to cumulative impairment losses  
Transfers  
1
–
–
1
810  
–
6
126  
–
942  
–
–
–8  
1
–
0
–8  
1
Classified as held for sale  
Disposals  
–
0
19  
–
0
4
23  
0
Reversal of impairment losses  
Balance at Dec. 31, 2019  
–
0
848  
5,404  
23  
21  
126  
611  
998  
6,036  
Carrying amount at Dec. 31, 2019  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
275  
Subleases of right-of-use assets generated income of €20 million in the fiscal year.  
The measurement of right-of-use assets from leases and the associated lease liabilities is based on a best  
estimate regarding the exercise of extension and termination options. If there are material changes in  
circumstances or in the contract, this estimate is updated.  
The tables below show how the lease liabilities are assigned in the balance sheet and give an overview of their  
contractual maturities:  
A S SI G N M E N T O F L EA SE L I A B I L I T I E S TO T H E R E SP E CT I V E BA L A N CE S H E E T I T E M S  
€
million  
Dec. 31, 2019  
Financial liabilities – Noncurrent  
Financial liabilities – Current  
Lease liabilities – Total  
5,208  
1,002  
6,210  
M ATU RITY A NA LY SI S OF LEA SE L I A B I LI TI E S  
REMAINING  
CONTRACTUAL MATURITIES  
within one  
€
million  
under one year  
to five years  
over five years  
Total  
Lease liabilities at Dec. 31, 2019  
1,002  
2,613  
2,595  
6,210  
Interest expenses of €230 million were incurred for lease liabilities in the fiscal year.  
No right-of-use assets are recognized for low-value or short-term leases. Expenses for leasing low-value  
assets totaled €270 million in the fiscal year. This figure does not include any expenses for short-term leases,  
which totaled €333 million in the fiscal year. Variable lease expenses not included in the measurement of lease  
liabilities accounted for €1 million in the fiscal year.  
Leases gave rise to cash outflows totaling €1,797 million in the fiscal year.  
The table below shows a summary of potential future cash outflows, that have not been included in the  
measurement of the lease liabilities:  
€
million  
2019  
Future cash outflows to which the lessee is potentially exposed  
Variable lease payments  
1
0
Residual value guarantees  
Extension options  
3,575  
3
Termination options  
Obligations under leases not yet commenced  
359  
3,938  
2
76  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
2
. LE S SO R ACCO U NTI N G  
The Volkswagen Group is a lessor in both the finance lease business and the operating lease business. The  
subject of these transactions is primarily motor vehicles and, to a small extent, land and buildings and items of  
equipment for dealerships.  
The Volkswagen Group fully accounts for the default risk on lease receivables by recognizing loss  
allowances, which are recognized in accordance with the requirements of IFRS 9. As lessor, the Volkswagen  
Group covers risks arising from the assets underlying the leases by, among other measures, taking account of  
residual value guarantees received for parts of the lease portfolio and by taking account of forward-looking  
residual values forecast on the basis of internal and external information as part of residual value management.  
The forecast residual values are regularly reviewed.  
2
. 1 OPERATI N G L EASE S  
Assets leased under long-term operating leases amounted to €49,476 million at the end of the fiscal year.  
While €538 million is attributable to investment property, assets separately reported as lease assets in the  
balance sheet amount to €48,938 million. They relate primarily to vehicles in an amount of €48,853 million  
as well as land, land rights and buildings, including buildings on third-party land, in an amount of  
€
78 million. The remaining assets relate to technical equipment and machinery as well as other equipment,  
operating and office equipment. More information on changes in value of investment property and lease  
assets can be found in the section entitled “Lease assets and investment property”.  
The following cash inflows from expected outstanding, non-discounted operating lease payments are expected  
over the coming years:  
€
million  
2020  
2021  
2022  
2023  
2024  
From 2025  
Total  
Lease payments  
9,370  
6,436  
3,677  
997  
338  
344  
21,164  
B REA K D OWN O F I NCOM E F R O M O P E RATI NG L EA S E S  
€
million  
2019  
Lease income  
12,014  
13  
Income from variable lease payments  
Total  
12,027  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
277  
2
. 2 FI NA N CE LEA SE S  
Interest income from the net investment in the leases amounted to €2.4 billion in the fiscal year.  
Furthermore, a selling profit from the finance leases in the amount of €1.2 billion was recognized.  
The following table shows the reconciliation of outstanding lease payments under finance leases to the net  
investment:ꢀ  
€
million  
Dec. 31, 2019  
Non-discounted lease payments  
Non-guaranteed residual value  
Unearned interest income  
Loss allowance on lease receivables  
Net investment  
54,302  
4,112  
–3,789  
–971  
53,652  
The following cash inflows from expected outstanding, non-discounted finance lease payments are expected  
over the coming years:  
€
million  
2020  
2021  
2022  
2023  
2024  
From 2025  
Total  
Lease payments  
19,428  
14,590  
12,179  
6,883  
847  
373  
54,302  
2
78  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
3
5.ꢀIFRS 7 (Financial Instruments)  
The table below shows the carrying amounts of financial instruments by measurement category:  
CA RRYI N G AMOU NT OF FI NA NC IA L I N STR UMEN T S BY I FR S 9 M EASU REME NT CAT EGO RY  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Financial assets at fair value through profit or loss  
Financial assets at fair value through other comprehensive income (debt instruments)  
Financial assets at fair value through other comprehensive income (equity instruments)  
of which classified as held for sale  
16,331  
3,139  
68  
15,556  
3,542  
148  
3
–
Financial assets measured at amortized cost  
149,203  
158  
143,466  
–
of which classified as held for sale  
Financial liabilities at fair value through profit or loss  
Financial liabilities measured at amortized cost  
1,760  
229,229  
44  
1,484  
225,989  
–
of which classified as held for sale  
CL A SS ES O F FI NA NCIA L I N STR UME NT S  
Financial instruments are divided into the following classes at the Volkswagen Group:  
!
!
!
!
!
ꢀ financial instruments measured at fair value;  
ꢀ financial instruments measured at amortized cost;  
ꢀ derivative financial instruments within hedge accounting;  
ꢀ not allocated to any measurement category; and  
ꢀ credit commitments and financial guarantees (off-balance sheet).  
RECO NC I L IATI ON OF BA L A NCE S H EET IT EM S TO C L AS SE S OF F I NA N CIAL I N STRUMEN TS  
The following table shows the reconciliation of the balance sheet items to the relevant classes of financial  
instruments, broken down by the carrying amount and fair value of the financial instruments.  
The fair value of financial instruments measured at amortized cost, such as receivables and liabilities, is  
calculated by discounting using a market rate of interest for a similar risk and matching maturity. For reasons  
of materiality, the fair value of current balance sheet items is generally deemed to be their carrying amount.  
For reconciliation to the carrying amounts, the “Not allocated to a measurement category” column in the table  
also includes items other than financial instruments.  
The risk variables governing the fair value of the receivables are risk-adjusted interest rates.  
“Financial instruments measured at fair value” also include shares in partnerships and corporations.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
279  
RE CO NC I L IATI O N O F BA L A NCE S H E E T IT E M S TO C L A S SE S O F F I NA N CIA L I N STRU M E N TS A S O F D E CE M B E R 3 1, 20 1 8  
DERIVATIVE  
FINANCIAL  
INSTRUMENTS  
WITHIN HEDGE  
ACCOUNTING  
NOT  
ALLOCATED  
TO A  
MEASUREMENT SHEET ITEM AT  
CATEGORY  
MEASURED  
AT FAIR  
VALUE  
BALANCE  
MEASURED AT  
AMORTIZED COST  
DEC. 31, 2018  
€
million  
Carrying amount  
Carrying amount  
Fair value  
Carrying amount  
Carrying amount  
Noncurrent assets  
Equity-accounted  
investments  
–
134  
286  
772  
–
–
–
–
–
–
8,434  
1,340  
31,501  
–
8,434  
1,474  
78,692  
6,521  
476  
Other equity investments  
Financial services receivables  
Other financial assets  
Tax receivables  
–
–
46,905  
4,240  
–
47,789  
4,252  
–
1,510  
–
476  
Current assets  
Trade receivables  
–
22  
17,537  
36,529  
9,150  
29  
17,537  
36,529  
9,150  
29  
–
352  
17,665  
1
17,888  
54,216  
11,586  
1,879  
Financial services receivables  
Other financial assets  
Tax receivables  
–
1,341  
–
1,094  
–
1,850  
–
Marketable securities  
16,940  
140  
140  
–
17,080  
Cash, cash equivalents and  
time deposits  
–
28,938  
28,938  
–
–
28,938  
Noncurrent liabilities  
Noncurrent financial  
liabilities  
–
100,727  
2,085  
100,964  
2,087  
–
399  
–
101,126  
3,219  
Other noncurrent  
financial liabilities  
767  
368  
Current liabilities  
Put options and  
compensation rights  
granted to noncontrolling  
interest shareholders  
–
–
–
1,853  
89,707  
23,607  
1,853  
89,707  
23,607  
–
–
–
–
51  
–
1,853  
89,757  
23,607  
Current financial liabilities  
Trade payables  
Other current  
financial liabilities  
718  
–
7,977  
33  
7,977  
33  
721  
–
–
9,416  
456  
Tax payables  
423  
2
80  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
RE CO NC I L IATI O N O F BA L A NCE S H E E T IT E M S TO C L A S SE S O F F I NA N CIA L I N STRU M E N TS A S O F D E CE M B E R 3 1, 20 1 9  
DERIVATIVE  
FINANCIAL  
INSTRUMENTS  
NOT  
ALLOCATED  
TO A  
MEASURED  
AT FAIR  
VALUE  
BALANCE  
SHEET ITEM AT  
DEC. 31, 2019  
MEASURED AT  
AMORTIZED COST  
WITHIN HEDGE MEASUREMENT  
ACCOUNTING  
CATEGORY  
€
million  
Carrying amount  
Carrying amount  
Fair value  
Carrying amount  
Carrying amount  
Noncurrent assets  
Equity-accounted  
investments  
–
54  
–
–
–
–
–
–
8,169  
1,848  
35,281  
–
8,169  
1,902  
86,973  
5,553  
341  
Other equity investments  
Financial services receivables  
Other financial assets  
Tax receivables  
288  
1,012  
–
51,404  
3,625  
–
52,581  
3,628  
–
–
916  
–
341  
Current assets  
Trade receivables  
1
22  
17,940  
39,936  
10,120  
9
17,940  
39,936  
10,120  
9
–
–
–
18,656  
–
17,941  
58,615  
12,216  
1,190  
Financial services receivables  
Other financial assets  
Tax receivables  
1,477  
–
619  
–
1,181  
–
Marketable securities  
16,681  
88  
88  
–
16,769  
Cash, cash equivalents and  
time deposits  
–
3
25,923  
158  
25,923  
158  
–
–
–
25,923  
795  
Assets held for sale  
634  
Noncurrent liabilities  
Noncurrent financial  
liabilities  
–
108,348  
2,549  
110,679  
2,554  
–
5,208  
–
113,556  
4,499  
Other noncurrent  
financial liabilities  
943  
1,007  
Current liabilities  
Current financial liabilities  
Trade payables  
–
–
86,911  
22,745  
86,911  
22,745  
–
–
1,002  
–
87,912  
22,745  
Other current  
financial liabilities  
817  
–
8,614  
19  
8,614  
19  
1,427  
–
–
10,858  
408  
Tax payables  
389  
Liabilities associated with  
assets held for sale  
–
44  
44  
–
326  
370  
The carrying amount of lease receivables was €53.9 billion (previous year: €49.2 billion) and their fair value  
fair value hierarchy level 3) was €55.0 billion (previous year: €49.8 billion).  
(
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
281  
Uniform valuation techniques and inputs are used to measure fair value. The fair value of Level 2 and 3  
financial instruments is measured in the individual divisions on the basis of Group-wide specifications. The  
measurement techniques used are explained in the section entitled “Accounting policies”. The fair value of  
Level 3 receivables was measured by reference to individual expectations of losses; these are based to a  
significant extent on the Company’s assumptions about counterparty credit quality. The inputs used are not  
observable in an active market.  
The following tables contain an overview of the financial assets and liabilities measured at fair value by level:  
FI NA NC IAL ASSE TS AN D LIAB I L IT I ES MEA SU RE D AT FAI R VA LU E BY LEVEL  
€
million  
Dec. 31, 2018  
Level 1  
Level 2  
Level 3  
Noncurrent assets  
Other equity investments  
Financial services receivables  
Other financial assets  
134  
286  
772  
56  
–
25  
–
53  
286  
415  
–
357  
Current assets  
Financial services receivables  
Other financial assets  
22  
1,094  
–
–
–
880  
–
22  
214  
–
Marketable securities  
16,940  
16,940  
Noncurrent liabilities  
Other noncurrent financial liabilities  
Current liabilities  
767  
718  
–
–
250  
419  
516  
299  
Other current financial liabilities  
€
million  
Dec. 31, 2019  
Level 1  
Level 2  
Level 3  
Noncurrent assets  
Other equity investments  
Financial services receivables  
Other financial assets  
Current assets  
54  
288  
43  
–
0
–
11  
288  
417  
1,012  
–
595  
Other financial assets  
Financial services receivables  
Other financial assets  
Marketable securities  
Assets held for sale  
1
22  
–
–
1
22  
173  
–
–
–
1,304  
–
1,477  
16,681  
3
–
16,681  
–
–
3
Noncurrent liabilities  
Other noncurrent financial liabilities  
Current liabilities  
943  
817  
–
–
425  
570  
518  
247  
Other current financial liabilities  
2
82  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
F AI R VA LU E O F F I NA N CIA L AS SE T S AN D L IA B I LI TI E S M EA SU RE D AT AM ORTI Z ED CO ST BY L EVEL  
€
million  
Dec. 31, 2018  
Level 1  
Level 2  
Level 3  
Fair value of financial assets measured at amortized cost  
Financial services receivables  
84,319  
17,537  
13,403  
29  
–
–
–
17,537  
5,004  
29  
84,319  
Trade receivables  
–
8,020  
–
Other financial assets  
378  
Tax receivables  
–
Cash, cash equivalents and time deposits  
Fair value of financial assets measured at amortized cost  
28,938  
144,226  
28,115  
28,493  
823  
–
23,394  
92,339  
Fair value of financial liabilities measured at amortized cost  
Put options and compensation rights granted to  
noncontrolling interest shareholders  
1,853  
23,607  
190,671  
10,064  
33  
–
–
–
23,607  
131,316  
8,535  
1,853  
–
Trade payables  
Financial liabilities  
59,089  
1,297  
–
266  
233  
–
Other financial liabilities  
Tax payables  
33  
Fair value of financial liabilities measured at amortized cost  
226,228  
60,386  
163,491  
2,352  
€
million  
Dec. 31, 2019  
Level 1  
Level 2  
Level 3  
Fair value of financial assets measured at amortized cost  
Financial services receivables  
92,518  
17,940  
13,748  
9
–
–
–
17,940  
4,534  
9
92,518  
Trade receivables  
–
Other financial assets  
456  
–
8,758  
Tax receivables  
–
Cash, cash equivalents and time deposits  
Assets held for sale  
25,923  
158  
24,912  
4
1,010  
154  
–
–
Fair value of financial assets measured at amortized cost  
150,296  
25,372  
23,648  
101,276  
Fair value of financial liabilities measured at amortized cost  
Trade payables  
22,745  
197,590  
11,168  
19  
–
42,828  
707  
22,745  
152,329  
10,069  
19  
–
2,433  
392  
–
Financial liabilities  
Other financial liabilities  
Tax payables  
–
Liabilities associated with assets held for sale  
Fair value of financial liabilities measured at amortized cost  
44  
–
44  
–
231,566  
43,535  
185,205  
2,825  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
283  
DER IVAT IVE F I NA NCIA L I N STR UME NT S W IT H I N H E D GE ACCOU NT I NG BY LEVEL  
€
million  
Dec. 31, 2018  
Level 1  
Level 2  
Level 3  
Noncurrent assets  
Other financial assets  
Current assets  
1,510  
1,341  
368  
–
–
–
–
1,510  
1,341  
368  
–
–
0
–
Other financial assets  
Noncurrent liabilities  
Other noncurrent financial liabilities  
Current liabilities  
Other current financial liabilities  
721  
721  
€
million  
Dec. 31, 2019  
Level 1  
Level 2  
Level 3  
Noncurrent assets  
Other financial assets  
Current assets  
916  
619  
–
–
–
–
916  
619  
–
–
–
–
Other financial assets  
Noncurrent liabilities  
Other noncurrent financial liabilities  
Current liabilities  
1,007  
1,427  
1,007  
1,427  
Other current financial liabilities  
The allocation of fair values to the three levels in the fair value hierarchy is based on the availability of  
observable market prices. Level 1 is used to report the fair value of financial instruments for which a price is  
directly available in an active market. Examples include marketable securities and other equity investments  
measured at fair value that are listed and traded on a public market. Fair values in Level 2, for example of  
derivatives, are measured on the basis of market inputs using market-based valuation techniques. In particular,  
the inputs used include exchange rates, yield curves and commodity prices that are observable in the relevant  
markets and obtained through pricing services. Fair Values in Level 3 are calculated using valuation techniques  
that incorporate inputs that are not directly observable in active markets. In the Volkswagen Group, long-term  
commodity futures are allocated to Level 3 because the prices available on the market must be extrapolated for  
measurement purposes. This is done on the basis of observable inputs obtained for the different commodities  
through pricing services. Options on equity instruments, residual value protection models, customer financing  
receivables, receivables from vehicle financing programs and other equity investments are also reported in  
Level 3. In this process, the relevant corporate plans and company-specific discount rates in particular are used  
for measuring the equity instruments. The significant inputs used to measure fair value for the residual value  
protection models include forecasts and estimates of used vehicle residual values for the appropriate models.  
The measurement of vehicle financing programs requires in particular the use of the corresponding vehicle  
price.  
2
84  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The table below provides a summary of changes in Level 3 balance sheet items measured at fair value:  
CHA N GE S I N BA L A NCE SH E ET I TE M S MEA SU RE D AT FA I R VA LU E BA SED ON LEVEL 3  
Financial assets  
Financial liabilities  
€
million  
measured at fair value  
measured at fair value  
Balance at Jan. 1, 2018  
823  
–33  
–184  
78  
765  
–3  
Foreign exchange differences  
Changes in consolidated Group  
Total comprehensive income  
recognized in profit or loss  
recognized in other comprehensive income  
Additions (purchases)  
–
204  
204  
–
27  
51  
339  
–2  
28  
Sales and settlements  
–183  
5
Transfers into Level 2  
–32  
990  
Balance at Dec. 31, 2018  
816  
Total gains or losses recognized in profit or loss  
Net other operating expense/income  
27  
31  
58  
–4  
–5  
–204  
–203  
–235  
0
of which attributable to assets/liabilities held at the reporting date  
Financial result  
of which attributable to assets/liabilities held at the reporting date  
–
Financial assets  
Financial liabilities  
measured  
measured  
Financial assets  
held for sale  
€
million  
at fair value  
at fair value  
Balance at Jan. 1, 2019  
990  
22  
816  
9
–
–
–
–
–
–
3
–
–
–
3
Foreign exchange differences  
Changes in consolidated Group  
Total comprehensive income  
recognized in profit or loss  
recognized in other comprehensive income  
Additions (purchases)  
0
–
154  
157  
–3  
293  
293  
–
13  
–
Sales and settlements  
–215  
–46  
–3  
–301  
–51  
–
Transfers into Level 2  
Classified as held for sale  
Balance at Dec. 31, 2019  
913  
765  
Total gains or losses recognized in profit or loss  
Net other operating expense/income  
157  
161  
115  
–4  
–293  
–292  
–238  
–1  
–
–
–
–
–
of which attributable to assets/liabilities held at the reporting date  
Financial result  
of which attributable to assets/liabilities held at the reporting date  
–4  
–
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
285  
The transfers between the levels of the fair value hierarchy are reported at the respective reporting dates. The  
transfers out of Level 3 into Level 2 comprise commodity futures for which observable quoted prices are now  
available for measurement purposes due to the decline in their remaining maturities; consequently, no further  
extrapolation is required. There were no transfers between other levels of the fair value hierarchy.  
Commodity prices are the key risk variable for the fair value of commodity futures. Sensitivity analyses are  
used to present the effect of changes in commodity prices on earnings after tax and equity.  
If commodity prices for commodity futures classified as Level 3 had been 10% higher (lower) as of December 31,  
2
019, earnings after tax would have been €168 million (previous year: €59 million) higher (lower). The equity is  
not affected.  
The key risk variable for measuring options on equity instruments held by the Company is the relevant  
enterprise value. Sensitivity analyses are used to present the effect of changes in risk variables on earnings after  
tax.  
If the assumed enterprise values at December 31, 2019 had been 10% higher, earnings after tax would have  
been €3 million (previous year: €3 million) higher. If the assumed enterprise values at December 31, 2019 had  
been 10% lower, earnings after tax would have been €3 million (previous year: €3 million) lower.  
Residual value risks result from hedging agreements with dealers under which earnings effects caused by  
market-related fluctuations in residual values that arise from buyback obligations under leases are borne in  
part by the Volkswagen Group.  
The key risk variable influencing the fair value of the options relating to residual value risks is used car  
prices. Sensitivity analyses are used to quantify the effects of changes in used car prices on earnings after tax.  
If the prices of the used cars covered by the residual value protection model had been 10% higher as of  
December 31, 2019, earnings after tax would have been €354 million (previous year: €325 million) higher. If the  
prices of the used cars covered by the residual value protection model had been 10% lower as of December 31,  
2
019, earnings after tax would have been €374 million (previous year: €352 million) lower.  
If the risk-adjusted interest rates applied to receivables measured at fair value had been 100 basis points  
higher as of December 31, 2019, earnings after tax would have been €3 million (previous year: €1 million)  
lower. If the risk-adjusted interest rates as of December 31, 2019 had been 100 basis points lower, earnings after  
tax would have been €3 million (previous year: €4 million) higher.  
If the corresponding vehicle prices used in the vehicle financing programs had been 10% higher as of  
December 31, 2019, earnings after tax would have been €5 million (previous year: €8 million) higher. If the  
corresponding vehicle prices used in the vehicle financing programs had been 10% lower as of December 31,  
2
019, earnings after tax would have been €5 million (previous year: €8 million) lower.  
If the result of operations of equity investments measured at fair value had been 10% better as of December 31,  
019, the equity would have been €0.2 million (previous year: €2.8 million) higher. If the result of operations  
2
had been 10% worse, the equity would have been €0.2 million (previous year: €2.8 million) lower.  
2
86  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
OFF SET TI NG O F FI NA NC IAL ASSE TS AN D LIAB I L IT I ES  
The following tables contain information about the effects of offsetting in the balance sheet and the potential  
financial effects of offsetting in the case of instruments that are subject to a legally enforceable master netting  
arrangement or a similar agreement.  
AMOUNTS THAT ARE NOT SET  
OFF IN THE BALANCE SHEET  
Gross amounts of  
recognized  
Gross amounts of financial liabilities  
Net amounts of  
financial assets  
presented in the  
balance sheet  
recognized  
financial assets  
set off in the  
balance sheet  
Financial  
instruments Collateral received  
Net amount at  
Dec. 31, 2018  
€
million  
Derivatives  
3,979  
132,909  
17,537  
17,080  
0
–
0
–
3,979  
132,909  
17,537  
17,080  
–1,819  
–171  
–77  
–
1,989  
132,831  
17,536  
17,080  
Financial services receivables  
Trade receivables  
–
0
–
Marketable securities  
–
Cash, cash equivalents and  
time deposits  
28,938  
14,307  
–
28,938  
14,291  
–
–
–
–
28,938  
14,291  
Other financial assets  
–15  
AMOUNTS THAT ARE NOT SET  
OFF IN THE BALANCE SHEET  
Gross amounts of  
recognized  
Gross amounts of financial liabilities  
Net amounts of  
financial assets  
presented in the  
balance sheet  
recognized  
financial assets  
set off in the  
balance sheet  
Financial  
instruments Collateral received  
Net amount at  
Dec. 31, 2019  
€
million  
Derivatives  
3,396  
146,218  
17,952  
16,769  
–146  
–630  
–11  
–
3,250  
145,588  
17,941  
16,769  
–2,010  
–45  
–98  
–
1,195  
145,490  
17,941  
16,769  
Financial services receivables  
Trade receivables  
–
0
–
Marketable securities  
–
Cash, cash equivalents and  
time deposits  
25,923  
14,436  
–
25,923  
14,581  
–
0
–
–
25,923  
14,581  
Other financial assets  
146  
Other financial assets include receivables from tax allocations of €9 million (previous year: €29 million).  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
287  
AMOUNTS THAT ARE NOT SET  
OFF IN THE BALANCE SHEET  
Gross amounts of  
recognized  
Net amounts of  
Gross amounts of  
recognized  
financial liabilities  
financial assets financial liabilities  
set off in the  
balance sheet  
presented in the  
balance sheet  
Financial  
instruments Collateral pledged  
Net amount at  
Dec. 31, 2018  
€
million  
Put options and  
compensation rights  
granted to noncontrolling  
interest shareholders  
1,853  
2,573  
–
0
1,853  
2,573  
–
–
1,853  
834  
Derivatives  
–1,738  
–1  
Financial liabilities  
Trade payables  
190,883  
23,607  
10,111  
–
190,883  
23,607  
10,095  
–
0
–
–1,953  
188,931  
23,607  
10,095  
0
–
–
Other financial liabilities  
–15  
AMOUNTS THAT ARE NOT SET  
OFF IN THE BALANCE SHEET  
Gross amounts of  
recognized  
Net amounts of  
Gross amounts of  
recognized  
financial liabilities  
financial assets financial liabilities  
set off in the  
balance sheet  
presented in the  
balance sheet  
Financial  
instruments Collateral pledged  
Net amount at  
Dec. 31, 2019  
€
million  
Derivatives  
4,195  
201,468  
22,756  
11,812  
0
–
4,195  
201,468  
22,745  
11,182  
–1,900  
–53  
2,241  
199,740  
22,745  
11,182  
Financial liabilities  
Trade payables  
–
0
–
–1,729  
–11  
–630  
–
–
Other financial liabilities  
The “Financial instruments” column shows the amounts that are subject to a master netting arrangement but  
were not set off because they do not meet the criteria for offsetting in the balance sheet. The “Collateral  
received” and “Collateral pledged” columns show the amounts of cash collateral and collateral in the form of  
financial instruments received and pledged for the total assets and liabilities that do not meet the criteria for  
offsetting in the balance sheet.  
Other financial liabilities include liabilities from tax allocations of €19 million (previous year: €33 million).  
2
88  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
AS SET-BACKE D S ECU RI TI E S TRA N SACT IO NS  
Asset-backed securities transactions with financial assets amounting to €27.8 billion (previous year:  
27.9 billion) entered into to refinance the financial services business are included in bonds, commercial paper  
€
and notes, and liabilities from loans. The corresponding carrying amount of the receivables from the customer  
and dealer financing and the finance lease business amounted to €34.1 billion (previous year: €32.7 billion).  
Collateral of €47.9 billion (previous year: €47.9 billion) in total was furnished as part of asset-backed securities  
transactions. The expected payments were assigned to structured entities and the equitable liens in the  
financed vehicles were transferred. These asset-backed securities transactions did not result in the receivables  
from financial services business being derecognized, as the Group retains nonpayment and late payment risks.  
The difference between the assigned receivables and the related liabilities is the result of different terms and  
conditions and the share of the securitized paper and notes held by the Volkswagen Group itself, as well as the  
proportion of vehicles financed within the Group.  
Most of the public and private asset-backed securities transactions of the Volkswagen Group can be repaid  
in advance (clean-up call) if less than 9% or 10%, as appropriate, of the original transaction volume is  
outstanding. The assigned receivables cannot be assigned again or pledged elsewhere as collateral. The claims  
of the holders of commercial paper and notes are limited to the assigned receivables and the receipts from  
those receivables are earmarked for the repayment of the corresponding liability.  
As of December 31, 2019, the fair value of the assigned receivables still recognized in the balance sheet was  
€34.8 billion (previous year: €32.9 billion). The fair value of the related liabilities was €30.1 billion (previous  
year: €30.1 billion) at that reporting date.  
Companies of the Volkswagen Financial Services subgroup are contractually obliged, under certain  
conditions, to transfer funds to the structured entities that are included in its financial statements. Since the  
receivables are transferred to the special purpose entity by way of undisclosed assignment, the situation may  
occur in which the receivable has already been reduced in a legally binding manner at the originator, for  
example if the obligor effectively offsets it against receivables owed to it by a company belonging to the  
Volkswagen Group. In this case, collateral must be furnished for the resulting compensation claims against the  
special purpose entity, for example if the rating of the Group company concerned declines to a contractually  
agreed reference value.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
289  
A DDI TIO NA L I NCOM E STATE M E NT DIS C LO SU RE S I N ACCO RDA N CE W ITH I FR S 7 (F I NA NCIA L I N STR UM E NT S)  
The table below shows net gains and losses on financial assets and financial liabilities by measurement  
category, followed by a detailed explanation of key aspects:  
N ET GA I N S O R LOS SE S FROM FI N A NCIA L I N STR UM ENT S BY I F RS 9 MEASU R EME NT CATEGO RY  
€
million  
2019  
2018  
Financial instruments at fair value through profit or loss  
Financial assets measured at amortized cost  
–242  
6,282  
7
–763  
6,241  
17  
Financial assets at fair value through other comprehensive income (debt instruments)  
Financial liabilities measured at amortized cost  
–4,420  
–4,963  
531  
1,628  
Net gains and losses in the category at "financial instruments at fair value through profit or loss" are mainly  
composed of the fair value measurement gains and losses on derivatives, including interest and gains and  
losses on currency translation.  
Net gains and losses from financial assets measured at fair value through other comprehensive income  
(debt instruments) relate to interest income from fixed-income securities.  
Net gains and losses from financial assets and liabilities measured at amortized cost mainly comprise  
interest income and expenses calculated according to the effective interest method pursuant to IFRS 9, currency  
translation effects, and the recognition of loss allowances. Interest also includes interest income and expenses  
from the lending business of the Financial Services Division.  
2
90  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The table below presents total interest income and expenses from financial assets and liabilities measured at  
amortized cost, separately from financial assets measured at fair value through other comprehensive income:  
TOTA L I NT E RE ST I NCOM E A N D EX P E N SE S ATT RI B U TA B LE TO F I NA N CIA L I N STRU M E N TS N OT M EA SU R E D AT FA I R VA LU E  
TH ROUGH PROFI T OR LO SS  
€
million  
2019  
2018  
Financial assets and liabilities measured at amortized cost  
Interest income  
7,563  
4,120  
5,022  
3,183  
Interest expenses  
Financial assets (debt instruments) and liabilities measured at fair value through other comprehensive  
income  
Interest income  
8
–
17  
1
Interest expenses  
GA I N S A N D LOS S ES O N TH E DI SP OSA L OF F I NA NC IA L A S SE TS M EA SU RED AT A M O RTIZE D CO ST  
€
million  
2019  
2018  
Gains arising from the derecognition of financial assets measured at amortized cost  
Losses arising from the derecognition of financial assets measured at amortized cost  
845  
1,001  
–1,073  
–72  
–978  
–
133  
In the fiscal year, €2 million (previous year: €2 million) was recognized as an expense and €44 million (previous  
year: €51 million) as income from fees and commissions for trust activities and from financial assets and  
liabilities not measured at fair value that are not accounted for using the effective interest method.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
291  
3
6. Cash flow statement  
Cash flows are presented in the cash flow statement classified into cash flows from operating activities,  
investing activities and financing activities, irrespective of the balance sheet classification.  
Cash flows from operating activities are derived indirectly from earnings before tax. Earnings before tax are  
adjusted to eliminate noncash expenditures (mainly depreciation, amortization and impairment losses) and  
income. Other noncash income and expense results mainly from measurement effects in connection with  
financial instruments and to fair value changes relating to hedging transactions. This results in cash flows from  
operating activities after accounting for changes in working capital, which also include changes in lease assets  
and in financial services receivables.  
Investing activities include additions to property, plant and equipment and equity investments, additions  
to capitalized development costs and investments in securities, loans and time deposits.  
Financing activities include outflows of funds from dividend payments and redemption of bonds, inflows  
from the capital increases and issuance of bonds, and changes in other financial liabilities. Please refer to the  
“Equity” section for information on the in-/outflows from the issuance/repayment of hybrid capital contained  
in the capital contributions.  
The changes in balance sheet items that are presented in the cash flow statement cannot be derived directly  
from the balance sheet, as the effects of currency translation and changes in the consolidated Group are  
noncash transactions and are therefore eliminated.  
In the fiscal year, cash flows from operating activities include interest received amounting to €7,640 million  
(
previous year: €7,047 million) and interest paid amounting to €2,604 million (previous year: €1,857 million).  
Cash flows from operating activities also include dividend payments (net of withholding tax) received from  
joint ventures and associates of €3,679 million (previous year: €3,315 million).  
Dividends amounting to €2,419 million (previous year: €1,967 million) were paid to Volkswagen AG  
shareholders.  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Cash, cash equivalents and time deposits as reported in the balance sheet  
Time deposits  
25,923  
–1,593  
24,329  
28,938  
–825  
Cash and cash equivalents as reported in the cash flow statement  
28,113  
Time deposits are not classified as cash equivalents. Time deposits have a contractual maturity of more than  
three months. The maximum default risk corresponds to its carrying amount.  
2
92  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The following table shows the classification of changes in financial liabilities into cash and non-cash  
transactions:  
NON-CASH CHANGES  
Changes in  
Cash-effective  
changes  
Foreign exchange  
differences  
consolidated  
Group  
€
million  
Bonds  
Jan. 1, 2018  
Other changes  
Dec. 31, 2018  
63,118  
20,018  
–193  
–
–1,395  
81,549  
Other total third-party  
borrowings  
99,875  
479  
7,740  
–29  
–414  
–1  
11  
–
1,674  
0
108,886  
449  
Finance lease liabilities  
Total third-party borrowings  
163,472  
27,730  
–607  
11  
279  
190,883  
Put options and  
compensation rights granted  
to noncontrolling interest  
shareholders  
3,795  
–160  
–2,132  
–121  
–
27  
–
–
190  
72  
1,853  
–182  
Other financial assets and  
liabilities  
Financial assets and liabilities  
in financing activities  
167,107  
25,477  
–581  
11  
541  
192,555  
NON-CASH CHANGES  
Changes in  
Foreign  
exchange  
differences  
Cash-effective  
consolidated  
Group  
Classified as  
held for sale  
€
million  
Bonds  
Jan. 1, 2019  
changes  
Other changes  
Dec. 31, 2019  
81,549  
6,132  
496  
–
–
452  
88,629  
Other total third-party  
borrowings  
Finance lease liabilities¹,²  
108,886  
5,567  
–3,392  
–957  
1,616  
81  
–193  
16  
0
9
9
–287  
1,513  
1,678  
106,630  
6,210  
Total third-party borrowings  
196,001  
1,783  
2,193  
–177  
201,468  
Put options and  
compensation rights granted  
to noncontrolling interest  
shareholders³  
1,853  
–182  
–1,135  
18  
–
–
–
–
–
–718  
87  
–
Other financial assets and  
liabilities  
–3  
–81  
Financial assets and  
liabilities in financing  
activities  
197,672  
666  
2,189  
–177  
9
1,046  
201,387  
1
2
3
Value in the opening balance adjusted (see disclosures on IFRS 16).  
Other changes in lease liabilities largely contain noncash additions of lease liabilities.  
Other changes in putௗoptions/compensation rights granted to noncontrolling interest shareholders largely contain the reclassification of the residual liability to  
equity after the put options granted expired in the fiscal year.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
293  
3
7.ꢀFinancial risk management and financial instruments  
1
. H E DG I NG GU I DELI N E S AN D FI NANC IAL R I SK M A NAGEM EN T PRI NCI PLE S  
The principles and responsibilities for managing and controlling the risks that could arise from financial  
instruments are defined by the Board of Management and monitored by the Supervisory Board. General rules  
apply to the Group-wide risk policy; these are oriented on the statutory requirements and the “Minimum  
Requirements for Risk Management by Credit Institutions”.  
Group Treasury is responsible for operational risk management and control of risks from financial  
instruments. The Risk Management Group Executive Committee is regularly informed about current financial  
risks. In addition, the Group Board of Management and the Supervisory Board are regularly updated on the  
current risk situation. Some functions of the Scania, MAN and PHS subgroups are included in Group Treasury’s  
operational risk management and control for risks relating to financial instruments. Subgroups have their own  
risk management structures.  
For more information, please see the management report on pages 187 to 189.  
2
. C RED IT AN D D EFAU LT RI SK  
The credit and default risk arising from financial assets involves the risk of default by counterparties, and  
therefore comprises at a maximum the amount of the claims under carrying amounts receivable from them  
and the irrevocable credit commitments. The maximum potential credit and default risk is reduced by  
collateral held and other credit enhancements. Collateral is held predominantly for financial assets in the “at  
amortized cost” category. It relates primarily to collateral for financial services receivables and trade receivables.  
Collateral comprises vehicles and assets transferred as security, as well as guarantees and real property liens.  
Cash collateral is also used in hedging transactions.  
For level 3 and level 4 financial assets with objective indications of impairment as of the reporting date, the  
collateral provided led to a reduction in risk by €1.3 billion (previous year: €1.3 billion). Collateral of  
€
285 million (previous year: €15 million) has been accepted for assets measured at fair value through profit or  
loss.  
Significant cash and capital investments, as well as derivatives, are only entered into with national and  
international banks. Risk is additionally limited by a limit system based primarily on the equity base of the  
counterparties concerned and on credit assessments by international rating agencies. Financial guarantees  
issued also give rise to credit and default risk. The maximum potential credit and default risk is calculated from  
the amount Volkswagen would have to pay if claims were to be asserted under the guarantees. The  
corresponding amounts are presented in the Liquidity risk section.  
There were no material concentrations of risk at individual counterparties or counterparty groups in the  
past fiscal year due to the global allocation of the Group’s business activities and the resulting diversification.  
There was a slight change in the concentration of credit and default risk exposures to the German public  
banking sector as a whole that has arisen from Group-wide cash and capital investments as well as derivatives:  
the portion attributable to this sector was 5.2% at the end of 2019 compared with 9.7% at the end of 2018. Any  
existing concentration of risk is assessed and monitored both at the level of individual counterparties or  
counterparty groups and with regard to the countries in which these are based, in each case using the share of  
all credit and default risk exposures accounted for by the risk exposure concerned.  
For China, credit and default risk exposures accounted for 34.2% at the end of 2019, as against 25.4% at the  
end of 2018. There were no other concentrations of credit and default risk exposures in individual countries.  
2
94  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
LO S S A L LOWA N C E  
The Volkswagen Group consistently uses the expected credit loss model of IFRS 9 for all financial assets and  
other risk exposures.  
The expected credit loss model under IFRS 9 takes in both loss allowances for financial assets for which  
there are no objective indications of impairment and loss allowances for financial assets that are already  
impaired. For the calculation of impairment losses, IFRS 9 distinguishes between the general approach and the  
simplified approach.  
Under the general approach, financial assets are allocated to one of three stages, plus an additional stage for  
financial assets that are already impaired when acquired (stage 4). Stage 1 comprises financial assets that are  
recognized for the first time or for which the probability of default has not increased significantly. The expected  
credit losses for the next twelve months are calculated at this stage. Stage 2 comprises financial assets with a  
significantly increased probability of default, while financial assets with objective indications of default are  
allocated to stage 3. The lifetime expected credit losses are calculated at these stages. Stage 4 financial assets,  
which are already impaired when acquired, are subsequently measured by recognizing a loss allowance on the  
basis of the accumulated lifetime expected losses. Financial assets classified as impaired on acquisition remain  
in this category until they are derecognized.  
The Volkswagen Group applies the simplified approach to trade receivables and contract assets with a  
significant financing component in accordance with IFRS 15. The same applies to receivables under operating  
or finance leases accounted for under IFRS 16. Under the simplified approach, the expected losses are  
consistently determined for the entire life of the asset.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
295  
The tables below show the reconciliation of the loss allowance for various financial assets and financial  
guarantees and credit commitments:  
C H A N G E S I N LO S S A L LOWA N C E F OR F I N A N C I A L A S SE T S M EA SU RE D AT A M O RT I Z E D CO ST  
Simplified  
€
million  
Stage 1  
Stage 2  
Stage 3  
approach  
Stage 4  
Total  
Carrying amount at Jan. 1, 2018  
Foreign exchange differences  
Changes in consolidated Group  
Newly extended/purchased financial assets (additions)  
Other changes within a stage  
Transfers to  
800  
–2  
802  
–7  
6
1,002  
–35  
15  
622  
–15  
8
138  
–4  
0
3,364  
–63  
33  
4
253  
–69  
–
–
176  
1
30  
16  
459  
275  
132  
195  
Stage 1  
22  
–102  
–33  
–67  
275  
–51  
–13  
–39  
445  
–
–
–
–
–
–
–58  
134  
361  
Stage 2  
Stage 3  
Financial instruments derecognized during the period  
(disposals)  
–120  
–
–148  
–
–226  
–459  
10  
–127  
–34  
3
–33  
–1  
–653  
–493  
13  
Utilization  
Changes to models or risk parameters  
Carrying amount at Dec. 31, 2018  
–1  
4
–2  
750  
946  
896  
634  
146  
3,372  
C H A N G E S I N LO S S A L LOWA N C E F OR F I N A N C I A L A S SE T S M EA SU RE D AT A M O RT I Z E D CO ST  
Simplified  
approach  
€
million  
Stage 1  
Stage 2  
Stage 3  
Stage 4  
Total  
Carrying amount at Jan. 1, 2019  
Foreign exchange differences  
Changes in consolidated Group  
Newly extended/purchased financial assets (additions)  
Other changes within a stage  
Transfers to  
750  
6
946  
896  
3
634  
3
146  
0
3,372  
16  
4
–
2
0
1
–
3
464  
–64  
–
–
255  
–3  
1
719  
–165  
–222  
157  
–32  
Stage 1  
39  
–91  
–45  
–75  
206  
–76  
–12  
–16  
334  
–
–
–
–
–
–
–48  
98  
Stage 2  
Stage 3  
213  
Financial instruments derecognized during the period  
(disposals)  
–146  
–
–106  
–
–145  
–322  
0
47  
–177  
2
–4  
–16  
–
–354  
–516  
1
Utilization  
Changes to models or risk parameters  
Classified as held for sale  
Carrying amount at Dec. 31, 2019  
–2  
0
1
–
–
–2  
–
–2  
913  
677  
893  
760  
94  
3,336  
2
96  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
C H A N G E S I N LO S S A L LOWA N C E F OR F I N A N C I A L G UA RA N T E E S A N D C R E D I T COM M I TM E N T S  
€
million  
Stage 1  
Stage 2  
Stage 3  
Stage 4  
Total  
Carrying amount at Jan. 1, 2018  
Foreign exchange differences  
Changes in consolidated Group  
Newly extended/purchased financial assets (additions)  
Other changes within a stage  
Transfers to  
11  
0
4
0
–
–
0
1
0
–
–
0
0
–
–
1
0
16  
0
–
–
11  
0
12  
0
Stage 1  
0
–1  
0
0
0
0
0
1
0
0
0
1
–
–
0
0
Stage 2  
Stage 3  
0
–
1
Financial instruments derecognized during the period (disposals)  
Utilization  
–4  
–
–4  
–
–1  
–
–9  
0
Changes to models or risk parameters  
Carrying amount at Dec. 31, 2018  
0
0
0
0
18  
1
0
19  
C H A N G E S I N LO S S A L LOWA N C E F OR F I N A N C I A L G UA RA N T E E S A N D C R E D I T COM M I TM E N T S  
€
million  
Stage 1  
Stage 2  
Stage 3  
Stage 4  
Total  
Carrying amount at Jan. 1, 2019  
Foreign exchange differences  
Changes in consolidated Group  
Newly extended/purchased financial assets (additions)  
Other changes within a stage  
Transfers to  
18  
0
1
0
–
0
0
1
0
0
0
–
0
0
19  
0
0
–
0
10  
0
0
10  
0
–1  
Stage 1  
0
–2  
0
0
1
0
0
–
0
–
2
–
–
–
–
0
–
–
0
–
–
–
0
–
–
–
0
0
–1  
0
Stage 2  
Stage 3  
Financial instruments derecognized during the period (disposals)  
Utilization  
–9  
–
–10  
0
Changes to models or risk parameters  
Classified as held for sale  
Carrying amount at Dec. 31, 2019  
0
0
0
–
17  
18  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
297  
C H A N G E S I N LO S S A L LOWA N C E F OR L EA SE R E C E I VA B L E S A N D CON T RAC T A S SE T S  
SIMPLIFIED APPROACH  
€
million  
2019  
2018  
Carrying amount at Jan. 1  
1,193  
14  
1,250  
–6  
Foreign exchange differences  
Changes in consolidated Group  
Newly extended/purchased financial assets (additions)  
Other changes  
6
–
249  
261  
–282  
–88  
–42  
0
450  
0
Financial instruments derecognized during the period (disposals)  
Utilization  
–465  
–54  
18  
Changes to models or risk parameters  
Classified as held for sale  
–
Carrying amount at Dec. 31  
1,312  
1,193  
The loss allowance on assets measured at fair value in Stage 1 rose by €2 million in fiscal year 2019, resulting in  
a closing balance of €3 million. Of this amount, €2 million is attributable to Stage 1 (previous year: €2 million)  
and €1 million to Stage 2 (previous year €– million).  
The amount contractually outstanding for financial assets that have been derecognized in the current year  
and are still subject to enforcement proceedings is €331 million (previous year: €293 million).  
MOD I FICATI ON S  
There were contract modifications to financial assets in the reporting period that did not lead to the  
derecognition of the asset. They were primarily attributable to credit ratings and relate to financial assets for  
which loss allowances were measured in the amount of the lifetime credit losses. For trade and lease  
receivables, the treatment is simplified by considering the credit rating-based modifications where the  
receivables are more than 30 days past due. Before the modification, amortized cost amounted to €120 million  
(previous year: €147 million). In the reporting period, contract modifications resulted in net income/net  
expenses of €–0.2 million (previous year: €1.8 million).  
As of the reporting date, the gross carrying amounts of financial assets that have been modified since initial  
recognition and were simultaneously reclassified from stage 2 or 3 to stage 1 in the reporting period amounted  
to €28 million (previous year: €19 million). As a result, the measurement of the loss allowance for these  
financial assets was changed from lifetime expected credit losses to 12-month expected credit losses.  
2
98  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
M A X IMUM CRE DI T RI SK  
The table below shows the maximum credit risk to which the Volkswagen Group was exposed as of the  
reporting date, broken down by class to which the impairment model is applied:  
M A XIMUM CRE DI T RI SK BY CL A S S  
€
million  
Dec. 31, 2019  
31.12.2018  
Financial instruments measured at fair value  
Financial instruments measured at amortized cost  
Financial guarantees and credit commitments  
not within the scope of IFRS 7  
3,139  
149,045  
5,988  
3,542  
143,466  
4,640  
53,938  
212,109  
49,518  
201,166  
Total  
RAT I N G CAT E G O R I ES  
The Volkswagen Group performs a credit assessment of borrowers in all loan and lease agreements, using  
scoring systems for the high-volume business and rating systems for corporate customers and receivables from  
dealer financing. Receivables rated as good are contained in risk class 1. Receivables from customers whose  
credit rating is not good but have not yet defaulted are contained in risk class 2. Risk class 3 comprises all  
defaulted receivables.  
The table below presents the gross carrying amounts of financial assets by rating category:  
GRO SS CA RRYI N G AMOU NT S OF FI NA NC IAL AS SE TS BY RAT I NG CATEGO RY AS OF D ECEMB E R 3 1, 20 18  
Simplified  
€
million  
Stage 1  
Stage 2  
Stage 3  
approach  
Stage 4  
Credit risk rating grade 1  
receivables with no credit risk – standard loans)  
Credit risk rating grade 2  
receivables with credit risk – intensified loan management)  
Credit risk rating grade 3  
cancelled receivables – non-performing loans)  
Total  
(
116,912  
2,243  
8,007  
4,787  
–
–
58,537  
5,687  
93  
37  
(
(
–
–
1,719  
1,017  
467  
119,155  
12,794  
1,719  
65,241  
597  
GRO SS CA RRYI N G AMOU NT S OF FI NA NC IAL AS SE TS BY RAT I NG CATEGO RY AS OF D ECEMB E R 3 1, 20 19  
Simplified  
approach  
€
million  
Stage 1  
Stage 2  
Stage 3  
Stage 4  
Credit risk rating grade 1  
receivables with no credit risk – standard loans)  
Credit risk rating grade 2  
receivables with credit risk – intensified loan management)  
Credit risk rating grade 3  
cancelled receivables – non-performing loans)  
Total  
(
120,926  
3,240  
8,272  
5,031  
–
–
66,344  
3,226  
89  
43  
(
(
–
–
2,514  
901  
359  
124,166  
13,303  
2,514  
70,470  
490  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
299  
Furthermore, the default risk exposure for financial guarantees and credit commitments is presented below:  
DEFAU LT RI SK FO R FI NANC IAL GUARANTEE S AN D C RED IT CO MMI TM ENT S AS OF DE C EMB ER 31, 2018  
€
million  
Stage 1  
Stage 2  
Stage 3  
Stage 4  
Credit risk rating grade 1  
receivables with no credit risk – standard loans)  
Credit risk rating grade 2  
receivables with credit risk – intensified loan management)  
Credit risk rating grade 3  
cancelled receivables – non-performing loans)  
Total  
(
4,243  
76  
304  
15  
–
–
1
0
(
(
–
–
17  
4
4,318  
319  
17  
5
DEFAU LT RI SK FO R FI NANC IAL GUARANTEE S AN D C RED IT CO MMI TM ENT S AS OF DE C EMB ER 31, 2019  
€
million  
Stage 1  
Stage 2  
Stage 3  
Stage 4  
Credit risk rating grade 1  
receivables with no credit risk – standard loans)  
Credit risk rating grade 2  
receivables with credit risk – intensified loan management)  
Credit risk rating grade 3  
cancelled receivables – non-performing loans)  
Total  
(
5,693  
100  
178  
25  
–
–
0
0
(
(
–
–
7
3
5,793  
203  
7
4
Collateral that was accepted for financial assets in the current fiscal year was recognized in the balance sheet in  
the amount of €149 million (previous year: €134 million). This mainly relates to vehicles.  
3
. LI QU I D ITY R IS K  
The solvency and liquidity of the Volkswagen Group are ensured at all times by rolling liquidity planning, a  
liquidity reserve in the form of cash, confirmed credit lines and the issuance of securities on the international  
money and capital markets. The volume of confirmed bilateral and syndicated credit lines stood at €27.0 billion  
as of December 31, 2019 (previous year: €16.8 billion), of which €3.8 billion (previous year: €3.4 billion) was  
drawn down.  
Local cash funds in certain countries (e.g. China, Brazil, Argentina, South Africa and India) are only available  
to the Group for cross-border transactions subject to exchange controls. There are no significant restrictions  
over and above these.  
3
00  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The following overview shows the contractual undiscounted cash flows from financial instruments:  
M ATU RITY ANA LYSI S OF U N DI SCOU NTE D CA S H F LOWS F ROM F I NA NCIA L I N STR UME NT S  
REMAINING  
REMAINING  
CONTRACTUAL MATURITIES  
CONTRACTUAL MATURITIES  
up to  
one year  
within one  
to five years  
more than  
five years  
up to  
one year  
within one  
to five years  
more than  
five years  
€
million  
2019  
2018  
Put options and  
compensation  
rights granted to  
noncontrolling  
interest  
shareholders  
–
90,137  
22,745  
–
96,135  
0
–
25,542  
–
–
211,814  
22,745  
1,853  
91,891  
23,607  
–
84,965  
0
–
23,380  
–
1,853  
200,235  
23,607  
Financial liabilities  
Trade payables  
Other financial  
liabilities  
8,633  
2,355  
57,182  
176  
5,912  
11,164  
134,027  
379,750  
8,010  
63,059  
1,916  
42,984  
154  
3,036  
10,080  
109,078  
344,854  
Derivatives  
70,932  
1
92,447  
155,672  
31,630  
188,419  
129,865  
26,570  
The cash outflows on other financial liabilities include outflows on liabilities for tax allocations amounting to  
€
19 million (previous year: €33 million).  
Derivatives comprise both cash flows from derivative financial instruments with negative fair values and  
cash flows from derivatives with positive fair values for which gross settlement has been agreed. Derivatives  
entered into through offsetting transactions are also accounted for as cash outflows. The cash outflows from  
derivatives for which gross settlement has been agreed are matched in part by cash inflows. These cash inflows  
are not reported in the maturity analysis. If these cash inflows were also recognized, the cash outflows  
presented would be substantially lower. This applies in particular also if hedges have been closed with  
offsetting transactions.  
The cash outflows from irrevocable credit commitments are presented in section entitled "Other financial  
obligations”, classified by contractual maturities.  
As of December 31, 2019, the maximum potential liability under financial guarantees amounted to  
€
425 million (previous year: €315 million). Financial guarantees are assumed to be due immediately in all  
cases.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
301  
4
4
. M A RKE T RI SK  
.1 Hedging policy and financial derivatives  
During the course of its general business activities, the Volkswagen Group is exposed to foreign currency,  
interest rate, commodity price, equity price and fund price risk. Corporate policy is to limit such risk by means  
of hedging. Generally, all necessary hedging transactions, with the exception of the Scania, MAN and Porsche  
Holding GmbH (Salzburg) subgroups, are executed or coordinated centrally by Group Treasury.  
DI SC LO SU RE S O N GA I N S A N D LO S SE S FRO M FA I R VA LU E H EDGE S  
Fair value hedges involve hedging against the risk of changes in the carrying amount of balance sheet items.  
As of the reporting date, both hedging instruments and hedged items are measured at fair value in relation  
to the hedged risk, and the resulting changes in value are recognized on a net basis in the corresponding  
income statement item.  
The following table shows the gains and losses from (fair value) hedges by risk type:  
DI SC LO SU RE S O N GA I N S A N D LO S SE S FRO M FA I R VA LU E H EDGE S  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Hedging interest rate risk  
Other financial result  
–
–
Other operating result  
–5  
34  
Hedging currency risk  
Other financial result  
–
–
Other operating result  
–39  
–30  
Combined interest rate and currency risk hedging  
Other financial result  
–
2
0
5
Other operating result  
3
02  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
DI SC LO SU RE S O N GA I N S A N D LO S SE S FRO M CA S H FLOW H E DGE S  
Cash flow hedges are used to hedge against risks of fluctuations in future cash flows. These cash flows may arise  
from a recognized asset or liability, or from a highly probable forecast transaction. The following table shows  
the gains and losses from (cash flow) hedges by risk type:  
DI SC LO SU RE S O N GA I N S A N D LO S SE S FRO M CA S H FLOW H E DGE S  
€
million  
2019  
2018  
Hedging interest rate risk  
Gains or losses from changes in fair value of hedging instruments within hedge accounting  
Recognized in equity  
–41  
0
–38  
0
Recognized in profit or loss  
Reclassification from the cash flow hedge reserve to profit or loss  
Due to early discontinuation of the hedging relationships  
Due to realization of the hedged item  
–
–
2
–1  
Hedging currency risk  
Gains or losses from changes in fair value of hedging instruments within hedge accounting  
Recognized in equity  
–2,136  
–1  
–1,367  
–7  
Recognized in profit or loss  
Reclassification from the cash flow hedge reserve to profit or loss  
Due to early discontinuation of the hedging relationships  
Due to realization of the hedged item  
4
–1  
137  
–1,074  
Combined interest rate and currency risk hedging  
Gains or losses from changes in fair value of hedging instruments within hedge accounting  
Recognized in equity  
–4  
2
8
0
Recognized in profit or loss  
Reclassification from the cash flow hedge reserve to profit or loss  
Due to early discontinuation of the hedging relationships  
Due to realization of the hedged item  
–
2
–
–8  
Hedging commodities price risk  
Gains or losses from changes in fair value of hedging instruments within hedge accounting  
Recognized in equity  
–
–
–5  
–
Recognized in profit or loss  
Reclassification from the cash flow hedge reserve to profit or loss  
Due to early discontinuation of the hedging relationships  
Due to realization of the hedged item  
–
–
1
–4  
The table presents effects taken to equity, reduced by deferred taxes.  
The gain or loss from changes in the fair value of hedging instruments used in hedge accounting corresponds  
to the basis for determining hedge ineffectiveness. The ineffective portion of a cash flow hedge is the income or  
expense resulting from changes in the fair value of the hedging instrument that exceed the changes in the fair  
value of the hedged item. This hedge ineffectiveness is attributable to parameter differences between the  
hedging instrument and the hedged item. Such income and expenses are recognized in other operating  
income/expenses or in the financial result.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
303  
The Volkswagen Group uses two different methods to present market risk from nonderivative and derivative  
financial instruments in accordance with IFRS 7. For quantitative risk measurement, interest rate and foreign  
currency risk in the Volkswagen Financial Services subgroup are measured using a value-at-risk (VaR) model on  
the basis of a historical simulation, while market risk in the other Group companies is determined using a  
sensitivity analysis. The value-at-risk calculation indicates the size of the maximum potential loss on the  
portfolio as a whole within a time horizon of 40 days, measured at a confidence level of 99%. To provide the  
basis for this calculation, all cash flows from nonderivative and derivative financial instruments are aggregated  
into an interest rate gap analysis. The historical market data used in calculating value at risk covers a period of  
1,000 trading days. The sensitivity analysis calculates the effect on equity and profit or loss by modifying risk  
variables within the respective market risks.  
DI SC LO SU RE S O N H EDG I N G I N STR UMEN T S I N H ED GE ACCOU NT I NG  
The Volkswagen Group regularly enters into hedging instruments to hedge against changes in the carrying  
amount of balance sheet items. The summary below shows the notional amounts, fair values and base  
variables for determining the ineffectiveness of hedging instruments entered into to hedge against the risk of  
changes in carrying amounts in fair value hedges:  
DI SC LO SU RE S O N H EDG I N G TRA N SACT IO N S I N FA I R VA LU E H E DGE S I N 2 0 18  
Fair value changes  
to determine  
hedge  
€
million  
Notional amount  
Other assets  
Other liabilities  
ineffectiveness  
Hedging interest rate risk  
Interest rate swaps  
48,609  
6,811  
901  
467  
222  
58  
61  
75  
0
309  
95  
Hedging currency risk  
Currency forwards, currency options, cross-currency swaps  
Combined interest rate and currency risk hedging  
Interest rate/currency swaps  
108  
DI SC LO SU RE S O N H EDG I N G TRA N SACT IO N S I N FA I R VA LU E H E DGE S I N 2 0 19  
Fair value changes  
to determine  
hedge  
€
million  
Notional amount  
Other assets  
Other liabilities  
ineffectiveness  
Hedging interest rate risk  
Interest rate swaps  
55,443  
6,807  
580  
650  
74  
97  
111  
1
586  
–17  
12  
Hedging currency risk  
Currency forwards, currency options, cross-currency swaps  
Combined interest rate and currency risk hedging  
Cross-currency interest rate swaps  
13  
3
04  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
In addition, hedging instruments are entered into to hedge against the risk of fluctuations in future cash flows.  
The table below shows the notional amounts, fair values and base variables for determining the ineffectiveness  
of hedging instruments designated as cash flow hedges:  
DI SC LO SU RE S O N H E DG I N G TRA N SACT IO N S I N CA S H FLOW H E DG E S I N 2 0 1 8  
Fair value changes  
to determine  
hedge  
€
million  
Notional amount  
Other assets  
Other liabilities  
ineffectiveness  
Hedging interest rate risk  
Interest rate swaps  
12,477  
39  
15  
17  
Hedging currency risk  
Currency forwards and cross-currency swaps  
Currency options  
66,505  
17,956  
1,834  
187  
836  
91  
2,794  
69  
Combined interest rate and currency risk hedging  
Cross-currency interest rate swaps  
1,424  
44  
11  
35  
DI SC LO SU RE S O N H E DG I N G TRA N SACT IO N S I N CA S H FLOW H E DG E S I N 2 0 1 9  
Fair value changes  
to determine  
hedge  
€
million  
Notional amount  
Other assets  
Other liabilities  
ineffectiveness  
Hedging interest rate risk  
Interest rate swaps  
14,017  
6
48  
–32  
Hedging currency risk  
Currency forwards and cross-currency swaps  
Currency options  
87,271  
15,198  
689  
73  
2,090  
68  
96  
1
Combined interest rate and currency risk hedging  
Cross-currency interest rate swaps  
1,648  
29  
19  
11  
The change in the fair value to determine ineffectiveness corresponds to the change in fair value of the  
designated component.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
305  
DI SC LO SU RE S O N H EDGE D I TEM S I N H ED GE ACCOU NTI NG  
In addition to disclosures on hedging instruments, disclosures are also required on the hedged items, broken  
down by risk category and type of designation for hedge accounting. Below follows a list of hedged items  
designated in fair value hedges, separately from those designated in cash flow hedges:  
DI SC LO SU RE S O N H EDGE D I TEM S I N FA I R VA LU E H E DGE S I N 2 01 8  
Cumulative hedge  
Hedge adjustments  
current period/  
fiscal year  
adjustments from  
discontinued hedging  
relationships  
Cumulative hedge  
adjustments  
€
million  
Carrying amount  
Hedging interest rate risk  
Financial services receivables  
Other financial assets  
19,311  
–
–10  
17  
20  
17  
–
–
–
Financial liabilities  
31,670  
220  
127  
Hedging currency risk  
Financial services receivables  
Other financial assets  
–
640  
26  
–
28  
36  
–
77  
38  
3
–
–
Financial liabilities  
Combined interest rate and currency risk hedging  
Financial services receivables  
Other financial assets  
–
714  
166  
4
–32  
1
4
–4  
1
–
–
–
Financial liabilities  
DI SC LO SU RE S O N H EDGE D I TEM S I N FA I R VA LU E H E DGE S I N 2 01 9  
Cumulative hedge  
adjustments from  
discontinued hedging  
relationships  
Hedge adjustments  
current period/  
fiscal year  
Cumulative hedge  
adjustments  
€
million  
Carrying amount  
Hedging interest rate risk  
Financial services receivables  
Other financial assets  
20,680  
194  
17  
24  
32  
7
–
–
–
Financial liabilities  
40,704  
519  
278  
Hedging currency risk  
Financial services receivables  
Other financial assets  
–
991  
–
–3  
32  
–
–55  
–4  
–
–
–
Financial liabilities  
1,595  
Combined interest rate and currency risk hedging  
Financial services receivables  
Other financial assets  
–
209  
48  
–
–26  
3
–
2
3
–
–
–
Financial liabilities  
3
06  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
DI SC LO SU RE S O N H EDGE D I TEM S I N CA S H F LOW H E DGE S I N 2 01 8  
RESERVE FOR  
Changes in fair value to  
determine hedge  
ineffectiveness  
Discontinued cash flow  
hedges  
€
million  
Active cash flow hedges  
Hedging interest rate risk  
Designated components  
26  
–
19  
–
0
–
0
0
Non-designated components  
Deferred taxes  
–
–1  
19  
Total hedging interest rate risk  
Hedging currency risk  
26  
Designated components  
2,526  
–
2,524  
–885  
–478  
1,162  
0
–9  
1
Non-designated components  
Deferred taxes  
–
Total hedging currency risk  
Combined interest rate and currency risk hedging  
Designated components  
2,526  
–8  
27  
–
2
–
0
1
–26  
–
Non-designated components  
Deferred taxes  
–
8
Total hedging combined interest rate and currency risk  
Hedging commodity price risk  
Designated components  
27  
–18  
–
–
–
–
–
–
–
–
7
–
Non-designated components  
Deferred taxes  
–2  
5
Total hedging commodity price risk  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
307  
DI SC LO SU RE S O N H EDGE D I TEM S I N CA S H F LOW H E DGE S I N 2 01 9  
RESERVE FOR  
Changes in fair value to  
determine hedge  
ineffectiveness  
Discontinued cash flow  
€
million  
Active cash flow hedges  
hedges  
Hedging interest rate risk  
Designated components  
–29  
–
–30  
–
0
–
0
0
Non-designated components  
Deferred taxes  
–
7
Total hedging interest rate risk  
Hedging currency risk  
–29  
–23  
Designated components  
143  
–
184  
–1,380  
366  
–5  
–6  
Non-designated components  
Deferred taxes  
–
0
Total hedging currency risk  
Combined interest rate and currency risk hedging  
Designated components  
143  
–830  
–11  
20  
–
–2  
–
–26  
–
Non-designated components  
Deferred taxes  
–
1
8
Total hedging combined interest rate and currency risk  
Hedging commodity price risk  
Designated components  
20  
–2  
–18  
–
–
–
–
–
–
–
–
1
–
0
1
Non-designated components  
Deferred taxes  
Total hedging commodity price risk  
CHA N GE S I N TH E RESE RV E  
When accounting for cash flow hedges, the designated effective portions of a hedging relationship are  
recognized in OCI I. Any changes in excess of the fair value of the designated component are recognized as  
ineffectiveness through profit or loss.  
The tables below show a reconciliation to the reserve:  
CHAN GE S I N TH E RESE RV E F OR CASH F LOW H E DG ES (OCI I)  
Interest rate/  
currency risk  
Commodity  
price risk  
€
million  
Interest rate risk  
Currency risk  
3,533  
–414  
Total  
3,581  
–450  
–1  
Balance at Jan. 1, 2018  
55  
–38  
–
–16  
8
9
–5  
–
Gains or losses from effective hedging  
relationships  
Reclassifications due to changes in whether the  
hedged item is expected to occur  
–1  
–
Reclassifications due to realization of the  
hedged item  
2
–1,335  
–8  
1
–1,341  
Balance at Dec. 31, 2018  
19  
1,783  
–17  
5
1,790  
3
08  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
CHAN GE S I N TH E RESE RV E F OR CASH F LOW H E DG ES (OCI I)  
Interest rate/  
currency risk  
Commodity  
price risk  
€
million  
Interest rate risk  
Currency risk  
1,783  
Total  
1,790  
–1,137  
1
Balance at Jan. 1, 2019  
19  
–41  
–
–17  
–4  
–
5
–
–
Gains or losses from effective hedging  
relationships  
–1,092  
1
Reclassifications due to changes in whether the  
hedged item is expected to occur  
Reclassifications due to realization of the  
hedged item  
–1  
–557  
2
–4  
–561  
Balance at Dec. 31, 2019  
–23  
135  
–20  
1
93  
If expectations about the occurrence of the hedged item change, the arrangement is reclassified by terminating  
the hedging relationship prematurely. Changed expectations are primarily caused by a change in projections  
for hedging sales revenue.  
Changes in the fair values of non-designated components of a derivative are likewise always recognized  
immediately through profit or loss. An exception from this principle is any change in the fair value attributable  
to non-designated time values of options, to the extent that they relate to the hedged item. Moreover, the  
Volkswagen Group initially recognizes in equity (hedging costs) changes in the fair values of non-designated  
forward components in currency forwards and currency hedges attributed to cash flow hedges. This means that  
the Volkswagen Group recognizes changes in the fair value of the non-designated component or parts thereof  
immediately through profit or loss only if there is ineffectiveness.  
The tables below show a summary of changes in the reserve for hedging costs resulting from the non-  
designated portions of options and currency hedges:  
CHAN GE S I N TH E RESE RV E F OR H EDGI NG CO ST S – NON -DE S IGNATE D TIME VA LU E S OF OPT IO NS  
CURRENCY RISK  
€
million  
2019  
2018  
63  
Balance at Jan. 1  
–1  
Gains and losses from non-designated time value of options  
Hedged item is recognized at a point in time  
Reclassifications due to changes in whether the hedged item is expected to occur  
Hedged item is recognized at a point in time  
Reclassification due to realization of the hedged item  
Hedged item is recognized at a point in time  
Balance at Dec. 31  
–71  
0
–86  
–
38  
23  
–35  
–1  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
309  
CHAN GE S I N TH E RESE RV E F OR H EDGI NG CO ST S – NON -DE S IGNATE D FO RWA RD CO MPON E NT A N D C ROS S CU R RE NCY  
BA SI S SP REA D (CCB S )  
CURRENCY RISK  
€
million  
2019  
2018  
–
Balance at Jan. 1  
–628  
Gains and losses from non-designated forward elements and CCBS  
Hedged item is recognized at a point in time  
Reclassification due to realization of the hedged item  
Hedged item is recognized at a point in time  
Reclassification due to changes in whether the hedged item is expected to occur  
Hedged item is recognized at a point in time  
Balance at Dec. 31  
–973  
656  
–866  
238  
3
0
–942  
–628  
4
.2 Market risk in the Volkswagen Group (excluding Volkswagen Financial Services subgroup)  
4
.2.1 Foreign currency risk  
Foreign currency risk in the Volkswagen Group (excluding Volkswagen Financial Services subgroup) is  
attributable to investments, financing measures and operating activities. Currency forwards, currency options,  
currency swaps and cross-currency interest rate swaps are used to limit foreign currency risk. These  
transactions relate to the exchange rate hedging of all material payments covering general business activities  
that are not made in the functional currency of the respective Group companies. The principle of matching  
currencies applies to the Group’s financing activities.  
Hedging transactions entered into in 2019 as part of foreign currency risk management were amongst  
others in Australian dollars, Brazilian real, sterling, Chinese renminbi, Hong Kong dollars, Indian rupees,  
Japanese yen, Canadian dollars, Mexican pesos, Norwegian kroner, Polish zloty, Russian rubles, Swedish kronor,  
Swiss francs, Singapore dollars, South African rand, South Korean won, Taiwan dollars, Czech koruna,  
Hungarian forints and US dollars.  
All nonfunctional currencies in which the Volkswagen Group enters into financial instruments are included  
as relevant risk variables in the sensitivity analysis in accordance with IFRS 7.  
If the functional currencies concerned had appreciated or depreciated by 10% against the other currencies,  
the exchange rates shown below would have resulted in the following effects on the hedging reserve in equity  
and on earnings after tax. It is not appropriate to add together the individual figures, since the results of the  
various functional currencies concerned are based on different scenarios.  
3
10  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The following table shows the sensitivities of the main currencies in the portfolio as of December 31, 2019:  
DEC. 31, 2019  
+10%  
DEC. 31, 2018  
+10%  
€
million  
–10%  
–10%  
Exchange rate  
EUR/GBP  
Hedging reserve  
Earnings after tax  
EUR/USD  
1,472  
–172  
–1,472  
172  
960  
–205  
–959  
205  
Hedging reserve  
Earnings after tax  
EUR/CNY  
964  
–473  
–979  
473  
1,329  
–449  
–1,272  
449  
Hedging reserve  
Earnings after tax  
EUR/CHF  
739  
–155  
–761  
155  
729  
–159  
–725  
159  
Hedging reserve  
Earnings after tax  
EUR/JPY  
414  
–1  
–396  
1
312  
12  
–298  
–12  
Hedging reserve  
Earnings after tax  
EUR/SEK  
342  
–13  
–344  
13  
287  
–18  
–285  
18  
Hedging reserve  
Earnings after tax  
EUR/CAD  
87  
–122  
–85  
122  
94  
–35  
–92  
35  
Hedging reserve  
Earnings after tax  
EUR/CZK  
190  
–14  
–190  
14  
117  
–30  
–113  
30  
Hedging reserve  
Earnings after tax  
EUR/PLN  
98  
–62  
–98  
62  
65  
–38  
–65  
38  
Hedging reserve  
Earnings after tax  
CZK/GBP  
–78  
–58  
78  
58  
–54  
–52  
54  
52  
Hedging reserve  
Earnings after tax  
EUR/BRL  
136  
0
–136  
0
135  
–1  
–135  
1
Hedging reserve  
Earnings after tax  
EUR/AUD  
6
–111  
–6  
111  
8
–65  
–8  
65  
Hedging reserve  
Earnings after tax  
CZK/PLN  
87  
–25  
–87  
25  
97  
–32  
–97  
32  
Hedging reserve  
Earnings after tax  
EUR/HUF  
105  
1
–105  
–1  
34  
1
–34  
–1  
Hedging reserve  
Earnings after tax  
EUR/KRW  
0
–104  
0
104  
0
–63  
0
63  
Hedging reserve  
Earnings after tax  
79  
–19  
–78  
19  
33  
–15  
–34  
15  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
311  
4
.2.2 Interest rate risk  
Interest rate risk in the Volkswagen Group (excluding Volkswagen Financial Services subgroup) results from  
changes in market interest rates, primarily for medium- and long-term variable interest receivables and  
liabilities. Interest rate swaps and cross-currency interest rate swaps are sometimes entered into to hedge  
against this risk primarily under fair value or cash flow hedges, and depending on market conditions.  
Intragroup financing arrangements are mainly structured to match the maturities of their refinancing.  
Departures from the Group standard are subject to centrally defined limits and monitored on an ongoing basis.  
Interest rate risk within the meaning of IFRS 7 is calculated for these companies using sensitivity analyses.  
The effects of the risk-variable market rates of interest on the financial result and on equity are presented, net  
of tax.  
If market interest rates had been 100 bps higher as of December 31, 2019, equity would have been  
€98 million (previous year: €131 million) lower. If market interest rates had been 100 bps lower as of December 31,  
2019, equity would have been €90 million (previous year: €66 million) higher.  
If market interest rates had been 100 bps higher as of December 31, 2019, earnings after tax would have been  
€55 million (previous year: €24 million) higher. If market interest rates had been 100 bps lower as of December 31,  
2019, earnings after tax would have been €47 million (previous year: €26 million) lower.  
4
.2.3 Commodity price risk  
Commodity price risk in the Volkswagen Group (excluding Volkswagen Financial Services subgroup) primarily  
results from price fluctuations and the availability of ferrous and non-ferrous metals, precious metals,  
commodities required in connection with the Group’s digitalization and electrification strategy, as well as of  
2
coal, CO certificates and rubber.  
Commodity price risk is limited by entering into forward transactions and swaps.  
Commodity price risk within the meaning of IFRS 7 is presented using sensitivity analyses. These show the  
effect on earnings after tax of changes in the risk variable commodity prices.  
If the commodity prices of the hedged nonferrous metals, coal and rubber had been 10% higher (lower) as  
of December 31, 2019, earnings after tax would have been €415 million (previous year: €197 million) higher  
(lower).  
4
.2.4 Equity and bond price risk  
The special funds launched using surplus liquidity and the equity interests measured at fair value are subject in  
particular to equity price and bond price risk, which can arise from fluctuations in quoted market prices, stock  
exchange indices and market rates of interest. The changes in bond prices resulting from variations in the  
market rates of interest are quantified in sections 4.2.1 and 4.2.2, as are the measurement of foreign currency  
and other interest rate risks arising from the special funds and the equity interests measured at fair value. As a  
rule, risks arising from the special funds are countered by ensuring a broad diversification of products, issuers  
and regional markets when investing funds, as stipulated by the Investment Guidelines of the Group. In  
addition, exchange rates are hedged when market conditions are appropriate.  
As part of the presentation of market risk, IFRS 7 requires disclosures on how hypothetical changes in risk  
variables affect the price of financial instruments. Potential risk variables here are in particular quoted market  
prices or indices, as well as interest rate changes as bond price parameters.  
If share prices had been 10% higher as of December 31, 2019, earnings after tax would have been  
€
€
118 million (previous year: €16 million) higher and equity would have been €3 million (previous year:  
4 million) higher. If share prices had been 10% lower as of December 31, 2019, earnings after tax would have  
been €175 million (previous year: €25 million) lower and equity would have been €3 million (previous year:  
4 million) lower.  
€
4
.3 Market risk at Volkswagen Financial Services subgroup  
Exchange rate risk in the Volkswagen Financial Services subgroup is mainly attributable to assets that are not  
denominated in the functional currency and from refinancing within operating activities. Interest rate risk  
relates to refinancing without matching maturities and the varying interest rate elasticity of individual asset  
and liability items. The risks are limited by the use of currency and interest rate hedges.  
3
12  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Microhedges and portfolio hedges are used for interest rate hedging. Fixed-rate assets and liabilities included in  
the hedging strategy are recognized at fair value, as opposed to their original subsequent measurement at  
amortized cost. The resulting effects in the income statement are offset by the corresponding gains and losses  
on the interest rate hedging instruments (swaps). Currency hedges (currency forwards and cross-currency  
interest rate swaps) are used to mitigate foreign currency risk. All cash flows in foreign currency are hedged.  
As of December 31, 2019, the value at risk was €147 million (previous year: €122 million) for interest rate  
risk and €172 million (previous year: €187 million) for foreign currency risk.  
The entire value at risk for interest rate and foreign currency risk at the Volkswagen Financial Services  
subgroup was €170 million (previous year: €214 million).  
5
. ME THO D S FO R MON I TO RI N G H EDGE E FFE CT IVE N E SS  
Since the implementation of IFRS 9, the Volkswagen Group determines hedge effectiveness mainly on a  
prospective basis using the critical terms match method. Retrospective analysis of effectiveness uses  
effectiveness tests in the form of the dollar offset method. Under the dollar offset method, the changes in value  
of the hedged item expressed in monetary units are compared with the changes in value of the hedging  
instrument expressed in monetary units.  
To this end, the accumulated changes in the fair value of the designated spot component of the hedging  
instrument and hedged item are compared. If the critical terms do not match, the same procedure is applied to  
the non-designated component.  
For hedges involving interest rate or cross-currency swaps, the Volkswagen Group is exposed to uncertainty  
resulting from the IBOR reform, which may affect the timing, the amount of the IBOR-based cash flows, or the  
hedged risk of the hedged item or the hedging instrument. The Volkswagen Group applies the practical  
expedients allowed in connection with the amendments to the standard, irrespective of the remaining  
maturity of the hedged items and hedging instruments included in the hedges, to all hedges affected by the  
above-mentioned uncertainty arising from the IBOR reform.  
The uncertainty relates to the following interest rate benchmarks: GBP LIBOR, AUD BBSW, NOK OIBOR,  
USD LIBOR and CAD CDOR. In the case of fair value hedges, the uncertainty relates to the identifiability of  
the risk component which results from the change in the fair value used to hedge against risks of changes  
in the carrying amounts of financial assets and financial liabilities. In cash flow hedges used to hedge against  
risks arising from changes in future cash flows, the uncertainty relates to the highly probable requirement for  
hedged future variable cash flows. The expected impact of the IBOR reform is being assessed on an ongoing  
basis and any measure required will be initiated promptly. By adapting systems and processes, the measures are  
intended to ensure that new interest rate benchmarks can be rolled out to replace the interest rate benchmarks  
discontinued as a result of the IBOR reform in a timely manner. The Volkswagen Group is currently focusing on  
the SONIA interest rate benchmark, because it has already become widely accepted and affects material  
transactions.  
N OT I O NA L A M O U N T O F D E R I VAT I V E S  
The notional amounts of hedging instruments exposed to the uncertainty from the IBOR reform described  
above are €35,389 million in total. Of this total, €13,112 million is attributable to GBP LIBOR, €2,675 million to  
AUD BBSW, €1,432 million to NOK OIBOR, €12,847 million to USD LIBOR and €3,990 million to CAD CDOR.  
The summary below presents the remaining maturities profile of the notional amounts of the hedging  
instruments, which are accounted for under the Volkswagen Group’s hedge accounting rules, and of derivatives  
to which hedge accounting is not applied:  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
313  
N OT I O NA L A M O U N T O F D E R I VAT I V E S  
TOTAL  
TOTAL  
NOTIONAL  
AMOUNT  
NOTIONAL  
AMOUNT  
REMAINING TERM  
within one  
to five years  
more than  
five years  
€
million  
up to one year  
Dec. 31, 2019  
Dec. 31, 2018  
Notional amount of hedging instruments  
within hedge accounting  
Hedging interest rate risk  
Interest rate swap  
19,308  
44,123  
6,029  
69,460  
61,086  
Hedging currency risk  
Currency forwards/Cross-currency swaps  
Currency forwards/Cross-currency swaps in CNY  
Currency forwards/Cross-currency swaps in GBP  
Currency forwards/Cross-currency swaps in USD  
6,886  
11,908  
8,458  
3,983  
13,245  
12,905  
–
–
10,869  
25,153  
23,965  
9,412  
18,270  
18,863  
2,603  
Currency forwards/Cross-currency swaps  
in other currencies  
19,706  
14,384  
1
34,091  
26,770  
Currency options  
Currency options in USD  
3,857  
2,047  
1,692  
4,899  
–
–
–
–
8,755  
2,047  
4,395  
9,683  
4,062  
4,210  
Currency options in CNY  
Currency options in other currencies  
Combined interest rate and currency risk hedging  
Cross-currency interest rate swaps  
2,703  
1,698  
530  
–
2,228  
2,325  
Notional amount of other derivatives  
Hedging Interest rate risk  
Interest rate swap  
22,873  
27,918  
20,060  
70,852  
66,358  
Hedging Currency risk  
Currency forwards/Cross-currency swaps  
Currency forwards/Cross-currency swaps in USD  
6,293  
4,620  
1,362  
585  
4
11,498  
21,105  
12,403  
17,537  
Currency forwards/Cross-currency swaps  
in other currencies  
19,740  
Currency options  
Currency options in USD  
188  
487  
–
–
–
–
188  
487  
–
Currency options in other currencies  
Combined interest rate and currency risk hedging  
Cross-currency interest rate swaps  
Hedging Commodity price risk  
215  
6,008  
6,543  
949  
13,499  
12,450  
Forward commodity contracts (aluminum)  
Forward commodity contracts (copper)  
Forward commodity contracts (nickel)  
Forward commodity contracts (other)  
1,148  
293  
1,894  
663  
–
–
3,041  
956  
2,131  
686  
157  
1,335  
87  
584  
–
2,075  
188  
235  
101  
201  
Both derivatives closed with offsetting transactions and the offsetting transactions themselves are included in  
the respective notional amount. The offsetting transactions cancel out the effects of the original hedging  
transactions. If the offsetting transactions were not included, the respective notional amount would be  
significantly lower. In addition to the derivatives used for hedging foreign currency, interest rate and price risk,  
the Group held options and other derivatives on equity instruments at the reporting date, mainly in  
connection with fund investments, with a notional amount of €18.2 billion (previous year: €3.8 billion) whose  
remaining maturity is under one year. Also in connection with fund investments, the Group held credit default  
swaps with a notional amount of €30.6 billion (previous year: €21.0 billion).  
3
14  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Existing cash flow hedges in the notional amount of €162 million (previous year: €53 million) were  
discontinued because of a reduction in the projections. In addition, hedges were to be terminated due to  
internal risk regulations.  
Items hedged under cash flow hedges are expected to be realized in accordance with the maturity buckets of  
the hedges reported in the table. For cash flow hedges, the Volkswagen Group achieved an average hedging  
interest rate of 1.68% for hedging interest rate risk. In addition, currency risk was hedged at the following  
hedging exchange rates for the major currency pairs: EUR/USD at 1.20; EUR/GBP at 0.88; EUR/CNY at 8.14.  
The fair values of the derivatives are estimated using market data at the balance sheet date as well as by  
appropriate valuation techniques. The following term structures were used for the calculation:  
in %  
EUR  
CAD  
CHF  
CNY  
CZK  
GBP  
JPY  
SEK  
USD  
Interest rate for  
six months  
–0.3774  
–0.3674  
–0.1195  
0.2110  
1.9480  
1.9659  
2.0300  
2.1150  
–0.5622  
–0.5146  
–0.4360  
–0.1120  
2.9797  
2.9918  
3.4000  
4.1500  
2.1445  
2.2949  
2.0600  
1.7250  
0.7651  
0.7386  
0.8844  
1.0172  
–0.1787  
–0.0877  
0.0250  
0.1263  
0.1852  
0.1970  
0.3900  
0.6900  
1.8264  
1.7630  
1.6866  
1.8350  
Interest rate for  
one year  
Interest rate for  
five years  
Interest rate for  
ten years  
3
8.ꢀCapital management  
The Group’s capital management ensures that its goals and strategies can be achieved in the interests of  
shareholders, employees and other stakeholders. In particular, management focuses on generating the  
minimum return on invested assets in the Automotive Division that is required by the capital markets, and on  
increasing the return on equity in the Financial Services Division. In the process, it aims overall to achieve the  
highest possible growth in the value of the Group and its divisions for the benefit of all the Company’s  
stakeholder groups.  
In order to maximize the use of resources in the Automotive Division and to measure the success of this, we  
have for a number of years been using a value-based management system, with value contribution as an  
absolute performance measure and return on investment (ROI) as a relative indicator.  
Value contribution is defined as the difference between operating profit after tax and the opportunity cost  
of invested capital. The opportunity cost of capital is calculated by multiplying the market cost of capital by  
average invested capital. Invested capital is calculated by taking the operating assets reported in the balance  
sheet (property, plant and equipment, intangible assets, lease assets, inventories and receivables) and deducting  
non-interest-bearing liabilities (trade payables and payments on account received). Average invested capital is  
derived from the balance at the beginning and the end of the reporting period. Despite the charges relating to  
the special items recognized in the operating result, the Automotive Division disclosed a positive value  
contribution of €5,691 million in the reporting period which, due to the improvement in the operating result  
before special items and an only slight increase in the cost of capital, was significantly higher than the prior-  
year figure.  
The return on investment is defined as the return on invested capital for a particular period based on the  
operating result after tax. If the return on investment exceeds the market cost of capital, there is an increase in  
the value of the invested capital and a positive value contribution. In the Group, a minimum required rate of return  
on invested capital of 9% is defined, which applies to both the business units and the individual products and  
product lines. Our goal of generating a sustained return on investment of over 14% is anchored in Strategy 2025.  
The return on investment therefore serves as a consistent target in operational and strategic management and  
is used to measure target attainment for the Automotive Division, the individual business units, and projects  
and products. The return on investment achieved for the Automotive Division was 11.2%, which is above our  
minimum rate of return on invested capital of 9% and significantly exceeds the current cost of capital of 6.3%.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
315  
Due to the specific features of the Financial Services Division, its management focuses on return on equity, a  
special target linked to invested capital. This measure is calculated as the ratio of earnings before tax to average  
equity. Average equity is calculated from the balance at the beginning and the end of the reporting period. In  
addition, the goals of the Financial Services Division are to meet the banking supervisory authorities’  
regulatory capital requirements, to procure equity for the growth planned in the coming fiscal years and to  
support its external rating by ensuring capital adequacy. To ensure compliance with prudential requirements at  
all times, a planning procedure integrated into internal reporting has been put in place at the Volkswagen  
Bank, allowing the required equity to be continuously determined on the basis of actual and expected  
business performance. In the reporting period, this again ensured that regulatory minimum capital  
requirements were always met both at Group level and at the level of subordinate companies’ individual,  
specific capital requirements.  
The return on investment and value contribution in the Automotive Division as well as the return on equity  
and the equity ratio in the Financial Services Division are shown in the following table:  
€
million  
2019  
2018  
Automotive Division¹  
Operating result after tax  
Invested capital (average)  
Return on investment (ROI) in %  
Cost of capital in %  
13,019  
116,016  
11.2  
11,438  
104,424  
11.0  
6.3  
6.2  
Opportunity cost of invested capital  
Value contribution²  
7,328  
5,691  
6,474  
4,964  
Financial Services Division  
Earnings before tax  
Average equity  
3,219  
29,684  
10.8  
2,782  
27,982  
9.9  
Return on equity before tax in %  
Equity ratio in %  
12.8  
12.7  
1
2
Including proportionate inclusion of the Chinese joint ventures and allocation of consolidation adjustments between the Automotive and Financial Services  
Divisions; excluding effects on earnings and assets from purchase price allocation.  
The value contribution corresponds to the Economic Value Added (EVA®). EVA® is a registered trademark of Stern Stewart & Co.  
3
16  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
3
9. Contingent liabilities  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Liabilities under guarantees  
574  
192  
511  
138  
Liabilities under warranty contracts  
Assets pledged as security for third-party liabilities  
Other contingent liabilities  
19  
18  
7,708  
8,607  
9,274  
8
,494  
The trust assets and liabilities of the savings and trust entities belonging to the South American subsidiaries  
not included in the consolidated balance sheet amount to €419 million (previous year: €558 million).  
In the case of liabilities from guarantees, the Group is required to make specific payments if the debtors fail  
to meet their obligations.  
The other contingent liabilities primarily comprise potential liabilities arising from matters relating to  
taxes and customs duties, as well as litigation and proceedings relating to suppliers, dealers, customers,  
employees and investors. The contingent liabilities recognized in connection with the diesel issue totaled  
€3.7 billion (previous year: €5.4 billion), of which €3.4 billion (previous year: €3.4 billion) was attributable to  
investor lawsuits. Also included are certain elements of the class action lawsuits and proceedings/misdemeanor  
proceedings relating to the diesel issue as far as these can be quantified. As some of these proceedings are still  
at a very early stage, the plaintiffs have in a number of cases so far not specified the basis of their claims and/or  
there is insufficient certainty about the number of plaintiffs or the amounts being claimed. Where these  
lawsuits meet the definition of a contingent liability, no disclosure was normally required because it had not  
been possible to measure the amount involved.  
In addition, other contingent liabilities include an amount of €0.7 billion for potential liabilities resulting  
from the risk of tax proceedings instituted by the Brazilian tax authorities against MAN Latin America.  
On May 5, 2016, the U.S. National Highway Traffic Safety Administration (NHTSA) announced, jointly with  
the Takata company, a further extension of the recall for various models from different manufacturers  
containing certain airbags produced by the Takata company. Recalls were also ordered by the local authorities  
in individual countries. The recalls also included models manufactured by the Volkswagen Group. Appropriate  
provisions have been recognized. Currently, the possibility of further extensions to the recalls that could also  
affect Volkswagen Group models cannot be ruled out. It is not possible at the moment to provide further  
disclosures in accordance with IAS 37.86 in relation to this matter because the technical investigations and  
consultations with the authorities are still being carried out.  
As permitted by IAS 37.92, in order not to prejudice the outcomes of the proceedings and the interests of  
the Company, we have not made any further disclosures about estimates in connection with the financial  
effects of, and disclosures about, uncertainty regarding the timing or amount of contingent liabilities in  
connection with the diesel issue and investigations by the European Commission. Further information can be  
found under the section entitled “Litigation”.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
317  
4
0.ꢀLitigation  
Volkswagen AG and the companies in which it is directly or indirectly invested are involved in a substantial  
number of legal disputes and governmental proceedings in Germany and abroad. Such legal disputes and other  
proceedings occur, among other things, in relation to or in connection with employees, public authorities,  
services, dealers, investors, customers, suppliers, products, or other contracting parties. For the companies in  
question, these disputes and proceedings may result in payments such as fines or in other obligations or  
consequences. In particular, substantial compensatory or punitive damages may have to be paid and cost-  
intensive measures may have to be implemented. In this context, specific estimation of the objectively likely  
consequences is often possible only to a very limited extent, if at all.  
Risks may also emerge in connection with the adherence to regulatory requirements. This particularly  
applies in the case of regulatory gray areas where Volkswagen and the authorities responsible for the respective  
regulations may interpret the regulations differently. In addition, legal risks can arise from the criminal  
activities of individual persons, which even the best compliance management system can never completely  
prevent.  
Where transparent and economically viable, adequate insurance coverage was taken out for these risks. For  
the identifiable and measurable risks, provisions considered appropriate based on existing information were  
recognized and information about contingent liabilities disclosed. As some risks cannot be assessed or can only  
be assessed to a limited extent, the possibility of material loss or damage not covered by the insured amounts  
and provisions cannot be ruled out. This applies particularly to legal risk assessment regarding the diesel issue.  
Diesel issue  
On September 18, 2015, the US Environmental Protection Agency (EPA) publicly announced in a “Notice of  
Violation” that irregularities in relation to nitrogen oxide (NO ) emissions had been discovered in emissions  
x
tests on certain Volkswagen Group vehicles with type 2.0 l diesel engines in the USA. In this context,  
Volkswagen AG announced that noticeable discrepancies between the figures achieved in testing and in actual  
road use had been identified in around eleven million vehicles worldwide with type EA 189 diesel engines. On  
November 2, 2015, the EPA issued a “Notice of Violation” alleging that irregularities had also been discovered in  
the software installed in US vehicles with type V6 3.0 l diesel engines.  
Numerous court and governmental proceedings were subsequently initiated in various countries. We have  
since succeeded in making substantial progress and ending many of these proceedings.  
In the USA, Volkswagen AG and certain affiliates reached settlement agreements with various government  
authorities and private plaintiffs, the latter represented by a Plaintiffs’ Steering Committee in a multidistrict  
litigation in the US state of California. These agreements resolved certain civil claims as well as criminal charges  
under US federal law and the laws of certain US states in connection with the diesel issue. As part of the  
agreements entered into with the US Department of Justice and the State of California (Plea Agreement and  
Third Partial Consent Decrees), a Compliance Monitor and Compliance Auditor was appointed for Volkswagen  
in 2017 for a term of three years. Although Volkswagen AG and its subsidiaries and affiliates are firmly  
committed to fulfilling the obligations arising from these agreements, a breach of these obligations cannot be  
completely ruled out. In the event of a violation, significant penalties could be imposed as stipulated in the  
agreements, in addition to the possibility of further monetary fines, criminal sanctions and injunctive relief.  
The diesel issue is rooted in a modification of parts of the software of the relevant engine control units –  
which, according to Volkswagen AG’s legal position, is only unlawful under US law – for the type EA 189 diesel  
engines that Volkswagen AG was developing at that time. The decision to develop and install this software  
function was taken in late 2006 below Board of Management level. None of the members of the Board of  
Management had, at that time and for several years to follow, knowledge of the development and  
implementation of this software function.  
3
18  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
In the months following publication of a study by the International Council on Clean Transportation in May  
014, Volkswagen AG’s Powertrain Development department checked the test set-ups on which the study was  
based for plausibility, confirming the unusually high NO emissions from certain US vehicles with type EA 189  
.0 l diesel engines. The California Air Resources Board (CARB) – a part of the environmental authority of  
2
x
2
California – was informed of this result, and, at the same time, an offer was made to recalibrate the engine  
control unit software of type EA 189 diesel engines in the USA as part of a service measure that was already  
planned in the USA. This measure was evaluated and adopted by the Ausschuss für Produktsicherheit (APS –  
Product Safety Committee), which initiates necessary and appropriate measures to ensure the safety and  
conformity of Volkswagen AG products that have been placed in the market. There are no findings that an  
unlawful “defeat device” under US law was disclosed to the APS as the cause of the discrepancies or to the  
persons responsible for preparing the 2014 annual and consolidated financial statements. Instead, at the time  
the 2014 annual and consolidated financial statements were being prepared, the persons responsible for  
preparing the 2014 annual and consolidated financial statements remained under the impression that the issue  
could be solved with comparatively little effort.  
In the course of the summer of 2015, however, it became successively apparent to individual members of  
Volkswagen AG’s Board of Management that the cause of the discrepancies in the USA was a modification of  
parts of the software of the engine control unit, which was later identified as an unlawful “defeat device” as  
defined by US law. This culminated in the disclosure of a “defeat device” to EPA and CARB on September 3, 2015.  
According to the assessment at that time of the responsible persons dealing with the matter, the scope of the  
costs expected by the Volkswagen Group (recall costs, retrofitting costs and financial penalties) was not  
fundamentally dissimilar to that in previous cases involving other vehicle manufacturers, and, therefore,  
appeared to be controllable overall with a view to the business activities of the Volkswagen Group. This  
assessment by the Volkswagen Group was based, among other things, on the advice of a law firm engaged in the  
USA for approval issues, according to which similar cases in the past were resolved amicably with the US  
authorities. The EPA's publication of the “Notice of Violation” on September 18, 2015, which the Board of  
Management had not expected, especially at that time, then presented the situation in an entirely different  
light.  
The AUDI AG Board of Management members in office at the time in question have likewise stated that they  
had no knowledge of the use of “defeat device” software that was prohibited by US law in the type V6 3.0 l TDI  
engines until the EPA issued its November 2015 “Notice of Violation.”  
Within the Volkswagen Group, Volkswagen AG has development responsibility for the four-cylinder diesel  
engines such as the type EA 189, and AUDI AG has development responsibility for the six- and eight-cylinder  
diesel engines such as the type V6 3.0 l and V8 4.2 l diesel engines.  
In agreement with the respective responsible authorities, the Volkswagen Group is making technical  
measures available worldwide for virtually all diesel vehicles with type EA 189 engines. Within its area of  
responsibility, the Kraftfahrt-Bundesamt (KBA – German Federal Motor Transport Authority) ascertained for all  
clusters (groups of vehicles) that implementation of the technical measures would not bring about any adverse  
changes in fuel consumption figures, CO emission figures, engine output, maximum torque, and noise  
2
emissions.  
Following the studies carried out by AUDI AG to check all relevant diesel concepts for possible irregularities  
and retrofit potentials, measures proposed by AUDI AG have been adopted and mandated by the KBA in various  
recall orders pertaining to vehicle models with V6 and V8 TDI engines. Currently, AUDI AG assumes that the  
total cost, including the amount based on recalls, of the ongoing largely software-based retrofit program that  
began in July 2017 will be manageable and has recognized corresponding balance-sheet risk provisions. AUDI AG  
has in the meantime developed software updates for many of the affected powertrains and, after approval by  
the KBA, already installed these in the vehicles of a large number of affected customers. The approvals that are  
still outstanding are expected in the course of 2020.  
In connection with the diesel issue, potential consequences for Volkswagen’s results of operations, financial  
position and net assets could emerge primarily in the following legal areas:  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
319  
1. Criminal and administrative proceedings worldwide (excluding the USA/Canada)  
Criminal investigations, regulatory offense proceedings, and/or administrative proceedings have been opened  
in some countries (in Germany for example by the Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin –  
Federal Financial Supervisory Authority). The public prosecutor’s offices in Braunschweig and Munich are  
investigating the core issues of the criminal investigations.  
In April 2019, the Braunschweig Office of the Public Prosecutor issued indictments, including one against a  
former Chairman of the Board of Management of Volkswagen AG, charging, among other things, fraud relating  
to Type EA 189 engines in connection with the diesel issue.  
In September 2019, the Braunschweig Office of the Public Prosecutor furthermore indicted the current and  
a former Chairman of the Board of Management of Volkswagen AG as well as a former member of its Board of  
Management (currently Chairman of the Supervisory Board) on charges of market manipulation relating to  
capital market disclosure obligations in connection with the diesel issue. The Public Prosecutor’s Office also  
requested that the court name Volkswagen AG as a collateral participant in the proceedings.  
In July 2019, the Munich II Office of the Public Prosecutor issued indictments, including one against the  
former Chairman of the Board of Management of AUDI AG, charging, among other things, fraud relating to  
3.0 TDI engines in connection with the diesel issue.  
Based on the information available at the present time, no change in the risk situation of the Volkswagen  
Group results from these indictments.  
The Stuttgart Office of the Public Prosecutor is conducting a criminal investigation relating to the diesel  
issue on suspicion of fraud and illegal advertising that also involves a member of the Board of Management of  
Dr. Ing. h.c. F. Porsche AG.  
The respective Group companies appointed renowned law firms to clarify the matters underlying the public  
prosecutor’s accusations. The Board of Management and Supervisory Board receive regular updates on the  
current status.  
In an administrative fine order issued on May 7, 2019, the Stuttgart Office of the Public Prosecutor  
terminated the regulatory offense proceeding conducted against Dr. Ing. h.c. F. Porsche AG in connection with  
the diesel issue by finding a negligent breach of the obligation to supervise occurring in the organizational unit  
“Prüffeld Entwicklung Gesamtfahrzeug/Qualität” (Overall Vehicle Development/Quality - Testing Facility). The  
administrative order imposes a total fine of €535 million, consisting of a penalty payment of €4 million and the  
forfeiture of economic benefits in the amount of €531 million. After thorough examination, Dr. Ing. h.c. F.  
Porsche AG has accepted the fine and paid it in full, rendering the administrative fine order legally final. Further  
sanctions against or forfeitures by Dr. Ing. h.c. F. Porsche AG are therefore not to be expected in Europe in  
connection with the unitary factual situation underlying the administrative fine order.  
As the type approval authority of proper jurisdiction, the KBA moreover continuously tests Audi, VW, and  
Porsche brand vehicles for problematic functions. If certain functions are deemed impermissible by the KBA,  
the affected vehicles are recalled pursuant to a recall order or they are brought back into compliance by means  
of a voluntary service measure.  
Furthermore, additional administrative actions relating to the diesel issue are ongoing in other  
jurisdictions.  
The companies of the Volkswagen Group continue to cooperate with the government authorities.  
Whether the criminal and administrative proceedings will ultimately result in fines or other consequences  
for the Company, and if so what amounts these may entail, is currently subject to estimation risks. According to  
Volkswagen’s estimates, the likelihood that a sanction will be imposed is 50% or less in the majority of these  
proceedings. Contingent liabilities have therefore been disclosed where the amount of such liabilities could be  
measured and the likelihood of a sanction being imposed was assessed at not lower than 10%. Provisions were  
recognized to a small extent.  
2. Product-related lawsuits worldwide (excluding the USA/Canada)  
In principle, it is possible that customers in the affected markets will file civil lawsuits or that importers and  
dealers will assert recourse claims against Volkswagen AG and other Volkswagen Group companies. Besides  
individual lawsuits, various forms of collective actions (i.e. assertion of individual claims by plaintiffs acting  
jointly or as representatives of a class) are available in various jurisdictions. Furthermore, in a number of  
markets it is possible for consumer and/or environmental organizations to bring suit to enforce alleged rights  
to injunctive relief, declaratory judgment, or damages.  
3
20  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Customer class action lawsuits and actions brought by consumer and/or environmental organizations are  
pending against Volkswagen AG and other Volkswagen Group companies in a number of countries including  
Australia, Belgium, Brazil, Germany, Italy, the Netherlands, Portugal, South Africa, and the United Kingdom.  
Alleged rights to damages and other relief are asserted in these actions. The pending actions include in  
particular the following:  
In Australia, various class action lawsuits with opt-out provisions are currently pending against Volkswagen  
AG and other Volkswagen Group companies, including the Australian subsidiaries. Given the opt-out rule, the  
class actions have the potential to automatically cover all vehicles with type EA 189 engines unless the right to  
opt out is actively exercised. In all, approximately 100 thousand vehicles in the Australian market with type  
EA 189 engines are affected. In December 2019 Volkswagen AG reached agreements with the Australian class  
action plaintiffs that would terminate the litigation. The court must still approve the settlement. Depending on  
the number of claims filed under the class action settlement, Volkswagen AG anticipates payment of an  
amount of up to AUD 127.1 million plus litigation costs to settle the class action lawsuits. Two civil suits filed  
against Volkswagen AG and other Group companies by the Australian Competition and Consumer Commission  
(
ACCC) were settled in the second half of 2019. The settlement is not yet legally final, however, as an appellate  
court has yet to rule on the amount of the fine. Depending on the appellate court decision, Volkswagen AG  
anticipates payment of a fine of up to AUD 125 million plus litigation costs.  
In Belgium, the Belgian consumer organization Test Aankoop VZW has filed a class action to which an opt-  
out mechanism has been held to apply. The class action pertains to vehicles purchased by consumers on the  
Belgian market after September 1, 2014. The asserted claims are based on purported violations of unfair  
competition and consumer protection law as well as on alleged breach of contract.  
In Brazil two class actions are pending. One of these pertains to approximately 17 thousand vehicles. In  
this litigation, an appeals judgment was rendered in May 2019 that only partially upheld the lower court's  
decision. This judgment initially reduced the damage liability of Volkswagen do Brasil considerably to around  
BRL 172 million plus interest. This amount can increase as a result of the adjudicated inflation rate and the  
assertion of individual claims alleging declines in the value of affected Amarok vehicles. The judgment remains  
non-final. In the second class action, compensation claims are made based on purported breaches of  
environmental regulations.  
In Germany, the Verbraucherzentrale Bundesverband e .V . (Federation of Consumer Organizations) filed an  
action in November 2018 with the Braunschweig Higher Regional Court for model declaratory judgment  
against Volkswagen AG. The complaint is seeking a ruling that certain preconditions for potential consumer  
claims against Volkswagen AG are met; however, no specific payment obligations would result from any  
determinations the court may make. Individual claims would have to be established afterwards in subsequent  
separate proceedings. Oral argument in the consumer action for model declaratory judgment began in  
September 2019. Volkswagen AG intends to offer individual settlements to consumers who registered claims  
under the action for model declaratory judgment and meet the settlement criteria. The volume of such  
settlements amounts to approximately €830 million.  
In addition, various actions have been brought against companies of the Volkswagen Group in several  
German Regional Courts by financialright GmbH, which is asserting rights assigned to it by a total of approxi-  
mately 45 thousand customers in Germany, Slovenia, and Switzerland.  
In England and Wales, suits filed in court by various law firms have been joined in a single collective action  
(
group litigation). Because of the opt-in mechanism, not all vehicles with type EA 189 engines are automatically  
covered by the group litigation; potential claimants must instead take action in order to join. To date some  
0 thousand plaintiffs have registered claims under the group litigation. The group litigation opt-in period has  
expired.  
9
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
321  
In Italy, a class action lawsuit filed by the consumer association Altroconsumo on behalf of Italian customers is  
pending before the Venice Regional Court. This litigation involves damage claims based on alleged breach of  
contract as well as claims based on purported violations of Italian consumer protection law. Some 82 thousand  
customers have registered for the class action, whereby the validity of roughly half of the registrations is still  
unclear. In Italy, the court decision dismissing the class action filed by the consumer association Codacons as  
inadmissible also became legally final in the reporting year.  
In the Netherlands, Stichting Volkswagen Car Claim has brought an opt-out class action seeking declaratory  
rulings. Any individual claims would then have to be established afterwards in separate proceedings. In  
November 2019, the Regional Court in Amsterdam held the requests for relief to be inadmissible in part. Oral  
argument on the merits of the class action will take place in 2020.  
A Portuguese consumer organization has filed a class action with opt-out mechanism in Portugal. There are  
potentially up to approximately 139 thousand vehicles affected in the Portuguese market. The complaint seeks  
vehicle return and alleges damages as well.  
In South Africa, an opt-out class action seeking damages is pending that pertains to some 8 thousand  
vehicles with V6 and V8 TDI engines in addition to approximately 72 thousand vehicles with type EA 189  
engines.  
Furthermore, individual lawsuits and similar proceedings are pending against Volkswagen AG and other  
Volkswagen Group companies in various countries, most of which are seeking damages or rescission of the  
purchase contract. In Germany, there are over 70 thousand such individual lawsuits.  
Volkswagen estimates the likelihood that the plaintiffs will prevail to be 50% or less in the great majority of  
customer class actions, complaints filed by consumer and/or environmental organizations, and individual  
lawsuits. Contingent liabilities are disclosed for these proceedings where the amount of such liabilities can be  
measured and the chance that the plaintiff will prevail was assessed as not implausible. Since most of these  
proceedings are still in an early stage, it is in many cases not yet possible to quantify the realistic risk exposure.  
In addition, provisions were recognized to the extent necessary based on the current assessment.  
At this time it cannot be estimated how many customers will choose to file lawsuits in the future in  
addition to those already pending, given the consumer action for model declaratory judgment in Germany,  
among other things, and what their prospect of success will be.  
3. Lawsuits filed by investors worldwide (excluding the USA/Canada)  
Investors from Germany and abroad have filed claims for damages against Volkswagen AG – in some cases  
along with Porsche Automobil Holding SE (Porsche SE) as joint and several debtors – based on purported losses  
due to alleged misconduct in capital market communications in connection with the diesel issue.  
The vast majority of these investor lawsuits are currently pending at the Regional Court in Braunschweig. In  
August 2016, the Regional Court in Braunschweig ordered that common questions of law and fact relevant to  
the lawsuits pending at the Regional Court in Braunschweig be referred to the Higher Regional Court in  
Braunschweig for binding declaratory rulings pursuant to the Kapitalanleger-Musterverfahrensgesetz  
(KapMuG – German Act on Model Case Proceedings in Disputes Regarding Capital Market Information). In this  
proceeding, common questions of law and fact relevant to these actions are to be adjudicated in a consolidated  
manner by the Higher Regional Court in Braunschweig (model case proceedings). All lawsuits at the Regional  
Court in Braunschweig will be stayed pending resolution of the common issues, unless the cases can be  
dismissed for reasons independent of the common issues that are to be adjudicated in the model case  
proceedings. The resolution in the model case proceedings of the common questions of law and fact will be  
binding for all pending cases that have been stayed in the described manner. Oral argument in the model case  
proceedings before the Braunschweig Higher Regional Court began in September 2018 and will be continued  
at subsequent hearings.  
At the Regional Court in Stuttgart, further investor lawsuits have been filed against Volkswagen AG, in some  
cases along with Porsche SE as joint and several debtor.  
3
22  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
Holding that the factual situation at issue is by and large already covered by the model case proceedings being  
heard by the Braunschweig Higher Regional Court and that these proceedings, being paramount in this regard,  
preclude further such actions, the Stuttgart Higher Regional Court in March 2019 refused to proceed with  
further capital investor model case proceedings (which include Porsche SE) that had been referred to it by the  
Stuttgart Regional Court. The plaintiff side has appealed one of these decisions to the Federal Court of Justice.  
Further investor lawsuits have been filed at various courts in Germany and the Netherlands. Worldwide  
(
excluding USA and Canada), investor lawsuits, judicial applications for dunning procedures and conciliation  
proceedings, and claims under the KapMuG are currently pending against Volkswagen AG in connection with  
the diesel issue, with the claims totaling roughly €9.6 billion.  
Volkswagen AG remains of the opinion that it duly complied with its capital market obligations. Therefore,  
no provisions have been recognized for these investor lawsuits. Insofar as the chance of success was estimated  
at not lower than 10%, contingent liabilities have been disclosed.  
4. Proceedings in the USA/Canada  
In the USA and Canada, the matters described in the EPA’s “Notices of Violation” are the subject of various  
types of lawsuits and requests for information that have been filed in particular by customers, investors,  
salespersons, and various government agencies in Canada and the United States, including the attorneys  
general of several US states, against Volkswagen AG and other Volkswagen Group companies.  
In the fiscal year, Volkswagen AG and certain affiliates settled the consumer protection claims asserted by  
the Attorney General of the US state of New Mexico, the last remaining state asserting consumer protection  
claims.  
The attorneys general of five US states (Illinois, Montana, New Hampshire, Ohio, and Texas) and some  
municipalities have suits pending in state and federal courts against Volkswagen AG, Volkswagen Group of  
America, Inc. and certain affiliates, alleging violations of environmental laws. In the fiscal year, the  
environmental claims of two US states – Alabama and Tennessee – were dismissed in full by trial or appellate  
courts as preempted by federal law with no possibility of further appeal and the New Mexico Attorney General  
voluntarily dismissed its environmental claims. The claims asserted by Illinois, Hillsborough County (Florida),  
and Salt Lake County (Utah) have been dismissed in full, but the dismissals have been appealed. Certain claims  
asserted by Ohio, Texas, and two Texas counties have also been dismissed, but these suits are currently  
proceeding as to other claims.  
In March 2019, the US Securities and Exchange Commission filed a lawsuit against Volkswagen AG,  
Volkswagen Group of America Finance, LLC, VW Credit, Inc. and a former Chairman of the Board of  
Management of Volkswagen AG, asserting claims under US federal securities law based among other things on  
alleged misstatements and omissions in connection with the offer and sale of certain bonds and asset-backed  
securities.  
Furthermore, in December 2019, the Canadian federal environmental regulator filed charges against  
Volkswagen AG in respect of 2.0 l and 3.0 l Volkswagen and Audi diesel vehicles at the conclusion of its criminal  
enforcement-related investigation into the diesel emissions issue. Volkswagen AG cooperated with the  
investigation and agreed to a plea resolution addressing all of the charges. In January 2020, Volkswagen AG  
pleaded guilty to the charges and agreed to pay a penalty of CAD 196.5 million, which was approved by the  
court. Following this approval, the Ontario provincial environmental regulator withdrew its action against  
Volkswagen AG as to a quasi-criminal enforcement-related offense with respect to certain Volkswagen and Audi  
2.0 l diesel vehicles. Additionally, a certified environmental class action is pending on behalf of residents in  
Quebec. This action was authorized on the sole issue of whether punitive damages could be recovered. The  
appeals filed by Volkswagen were denied. The case remains in the early stages.  
To the extent a matter is not separately described above, an assessment is not yet possible at the current  
stage of the proceedings or has, in accordance with IAS 37.92, not been presented so as not to compromise the  
results of the proceedings and the interests of the Company.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
323  
5. Additional proceedings  
With its ruling of November 8, 2017, the Higher Regional Court of Celle ordered, upon the request of three US  
funds, the appointment of a special auditor for Volkswagen AG. The special auditor is to examine whether  
there was a breach of duties on the part of the members of the Board of Management and Supervisory Board  
of Volkswagen AG in connection with the diesel issue on or after June 22, 2006 and, if so, whether this resulted  
in damages for Volkswagen AG. The ruling by the Higher Regional Court of Celle is formally unappealable.  
However, Volkswagen AG has filed a constitutional complaint with the German Federal Constitutional Court  
alleging infringement of its constitutionally guaranteed rights. It is currently unclear when the Federal  
Constitutional Court will reach a decision on this matter. Following the formally unappealable ruling from the  
Higher Regional Court of Celle, the special auditor appointed by the court indicated that he was not available to  
conduct the special audit on grounds of age. In June 2019, the Hanover Regional Court denied the motion filed  
by the US funds to replace the special auditor. The opposing side has appealed this denial to the Celle Higher  
Regional Court; this appeal is still pending.  
In addition, a second motion seeking appointment of a special auditor for Volkswagen AG to examine  
matters relating to the diesel issue has been filed with the Regional Court of Hanover. This proceeding has been  
stayed pending a decision by the Federal Constitutional Court in the initial special auditor litigation.  
6. Risk assessment regarding the diesel issue  
An amount of around €2.9 billion (previous year: €2.4 billion) has been included in the provisions for litigation  
and legal risks as of December 31, 2019 to protect against the currently known legal risks related to the diesel  
issue based on existing information and current assessments. Insofar as these can be adequately measured at  
this stage, contingent liabilities relating to the diesel issue were disclosed in the notes in an aggregate amount  
of €3.7 billion (previous year: €5.4 billion), whereby €3.4 billion (previous year: €3.4 billion) of this amount  
results from lawsuits filed by investors in Germany. The provisions recognized and the contingent liabilities  
disclosed as well as the other latent legal risks in the context of the diesel issue are in part subject to substantial  
estimation risks given that the fact-finding efforts have not yet been concluded, the complexity of the  
individual relevant factors and the ongoing coordination with the authorities. Should these legal or estimation  
risks materialize, this could result in further substantial financial charges. In particular, the possibility cannot  
be ruled out that the provisions recognized may have to be adjusted in light of knowledge acquired or future  
events.  
Based on the information as it exists and has been established, there continue to be no conclusive findings  
or assessments available to the Board of Management of Volkswagen AG regarding the described facts that  
would suggest that a different assessment of the associated risks should have been made.  
In line with IAS 37.92, no further statements have been made concerning estimates of financial impact or  
about uncertainty regarding the amount or maturity of provisions and contingent liabilities in relation to the  
diesel issue. This is so as to not compromise the results of the proceedings or the interests of the Company.  
Additional important legal cases  
In 2011, ARFB Anlegerschutz UG (haftungsbeschränkt) brought an action against Volkswagen AG and Porsche  
SE for claims for damages for allegedly violating disclosure requirements under capital market law in  
connection with the acquisition of ordinary shares in Volkswagen AG by Porsche SE in 2008. The damages  
currently being sought based on allegedly assigned rights amounted to approximately €2.26 billion plus  
interest. In April 2016, the Regional Court in Hanover had formulated numerous objects of declaratory  
judgment that the cartel senate of the Higher Regional Court in Celle will decide on in model case proceedings  
under the KapMuG. In the first hearing in October 2017 the court already indicated that it currently does not  
see claims against Volkswagen AG as justified, both for want of sufficiently specific pleadings and for reasons of  
law. Volkswagen AG sees the statements of the court’s senate as confirmation that the claims made against the  
Company have absolutely no basis.  
3
24  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
At the time in question (2010/2011), other investors had also asserted claims – including claims against  
Volkswagen AG – arising out of the same circumstances in an approximate total amount of €4.6 billion and  
initiated conciliation proceedings. Volkswagen AG always refused to participate in these conciliation  
proceedings; since then, these claims have not been pursued further.  
In Brazil, the Brazilian tax authorities commenced tax proceedings against MAN Latin America; at issue in  
these proceedings are the tax consequences of the acquisition structure chosen for MAN Latin America in  
2
009. In December 2017, a second instance judgment that was negative for MAN Latin America was rendered  
in administrative court proceedings. MAN Latin America initiated proceedings against this judgment before  
the regular court in 2018. Due to the difference in the penalties plus interest which could potentially apply  
under Brazilian law, the estimated size of the risk in the event that the tax authorities are able to prevail overall  
with their view is laden with uncertainty. However, a positive outcome continues to be expected for MAN Latin  
America. Should the opposite occur, this could result in a risk of about €0.7 billion for the contested period  
from 2009 onwards, which has been stated within the contingent liabilities in the notes.  
In 2011, the European Commission conducted searches at European truck manufacturers on suspicion of an  
unlawful exchange of information during the period 1997–2011 and issued a statement of objections to MAN,  
Scania and the other truck manufacturers concerned in November 2014. With its settlement decision in July  
2016, the European Commission fined five European truck manufacturers. MAN’s fine was waived in full as the  
company had informed the European Commission about the irregularities as a key witness.  
In September 2017, the European Commission fined Scania €0.88 billion. Scania has appealed to the  
European Court of Justice in Luxembourg and will use all means at its disposal to defend itself. Scania had  
already recognized a provision of €0.4 billion in 2016.  
Furthermore, antitrust lawsuits for damages were received from customers. As is the case in any antitrust  
proceedings, this may result in further lawsuits for damages. Neither provisions nor contingent liabilities were  
stated because the early stage of proceedings makes an assessment currently impossible.  
In April 2019 the European Commission issued a statement of objections to Volkswagen AG, AUDI AG, and  
Dr. Ing. h.c. F. Porsche AG in connection with the Commission's antitrust investigation of the automobile  
industry. These objections state the European Commission's preliminary evaluation of the matter and afford  
the opportunity to comment. The subject matter of the proceedings is limited to the cooperation of German  
automobile manufacturers on technical questions in connection with the development and introduction of  
SCR systems and gasoline particulate filters for passenger cars that were sold in the European Economic Area.  
The manufacturers are not charged with any other misconduct such as price fixing or allocating markets and  
customers. After receiving access to the investigation files starting in July 2019, Volkswagen in December 2019  
filed its reply to the European Commission's statement of objections. In the same matter, the Chinese  
Competition Authority has also issued information requests to Volkswagen AG, AUDI AG, and Dr. Ing. h.c. F.  
Porsche AG, and commenced an administrative action.  
In the proceedings against a number of captive automobile finance companies regarding potential  
competition law infringements (alleged exchange of competitively sensitive information), the Italian  
Competition Authority assessed a fine of €163 million against Volkswagen AG and Volkswagen Bank GmbH in  
January 2019. Provisions were recognized by Volkswagen Bank GmbH. Volkswagen AG and Volkswagen Bank  
GmbH filed an appeal against this decision in March 2019. In the same context, an antitrust class action lawsuit  
has furthermore been filed by customers in Italy against Volkswagen Bank GmbH, among others.  
In June 2019, the US District Court for the Northern District of California dismissed two putative class action  
complaints brought by purchasers of German luxury vehicles alleging that, since the 1990s, several automobile  
manufacturers, including Volkswagen AG and other Group companies conspired to unlawfully increase the  
prices of German luxury vehicles in violation of US antitrust and consumer protection law. The court held that  
the plaintiffs have not stated a claim for relief because the allegations in the complaints do not plausibly  
support the alleged anticompetitive agreements. Plaintiffs filed amended complaints, which Volkswagen  
moved to dismiss. Plaintiffs in Canada filed claims with similar allegations on behalf of putative classes of  
purchasers of German luxury vehicles against several automobile manufacturers, including Volkswagen Group  
Canada Inc., Audi Canada Inc., and other Group companies. Neither provisions nor contingent liabilities were  
stated because the early stage of proceedings makes an assessment currently impossible.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
325  
In addition, a few national and international authorities have initiated antitrust investigations. Volkswagen is  
cooperating closely with the responsible authorities in these investigations. An assessment of the underlying  
situation is not possible at this early stage.  
Volkswagen has been responding to information requests from the US Environmental Protection Agency (EPA)  
and CARB related to automatic transmissions in certain vehicles with gasoline engines. In August 2019,  
Volkswagen agreed with the EPA to forfeit approximately 220 thousand Greenhouse Gas Emission Credits in  
response to the EPA’s inquiry. Also in August 2019, Volkswagen and the Plaintiffs’ Steering Committee  
announced the settlement of civil claims relating to approximately 98 thousand Volkswagen, Audi, Porsche and  
Bentley vehicles. Volkswagen's testing of these vehicles in connection with the information requests resulted in  
a 1 mile per gallon change, when rounded according to EPA rules, in the fuel economy disclosed on the  
"
Monroney label" required by US regulations. In October 2019, the Court granted preliminary approval of the  
settlement.  
Provisions were recognized by Volkswagen Bank GmbH and Volkswagen Leasing GmbH for possible claims in  
connection with financial services provided to consumers.  
In February 2020, Volkswagen AG and another defendant were served with a lawsuit filed by GT Gettaxi Ltd. The  
lawsuit in particular alleges large damage claims. Volkswagen will evaluate the alleged claims and defend itself  
against them.  
In addition, various proceedings are pending worldwide, particularly in the USA, in which customers are  
asserting purported claims either individually or in class actions. These claims are as a rule based on alleged  
vehicle defects, including defects alleged in vehicle parts supplied to the Volkswagen Group (for instance, in the  
Takata case).  
Risks may also result from actions for infringement of intellectual property, including infringement of patents,  
trademarks or other third-party rights, particularly in Germany and the USA. These actions pertain among  
other things to patents for semiconductor technology used in vehicles, but may also extend to control,  
regulation or power-units, and communications technology as well. If Volkswagen is alleged or determined to  
have violated third-party intellectual property rights, it may have to pay damages, modify manufacturing  
processes, or redesign products and may be barred from selling certain products. Volkswagen could also face  
costly litigation. These risks could lead to delivery and production restrictions or interruptions.  
In line with IAS 37.92, no further statements have been made concerning estimates of financial impact or about  
uncertainty regarding the amount or maturity of provisions and contingent liabilities in relation to additional  
important legal cases. This is so as to not compromise the results of the proceedings or the interests of the  
Company.  
3
26  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
4
1.ꢀOther financial obligations  
PAYABLE  
2019  
PAYABLE  
PAYABLE  
from 2024  
TOTAL  
€
million  
2020 – 2023  
Dec. 31, 2018  
Purchase commitments in respect of  
property, plant and equipment  
intangible assets  
8,362  
1,022  
39  
1,621  
85  
0
–
–
9,983  
1,107  
39  
investment property  
–
Obligations from  
loan commitments to unconsolidated subsidiaries  
irrevocable credit commitments to customers  
leasing and rental contracts  
326  
3,010  
1,190  
–
70  
–
5
326  
3,085  
6,372  
2,847  
2,334  
Miscellaneous other financial obligations  
2,971  
1,762  
966  
5,699  
PAYABLE  
PAYABLE  
PAYABLE  
TOTAL  
€
million  
2020  
2021 – 2024  
from 2025  
Dec. 31, 2019  
Purchase commitments in respect of  
property, plant and equipment  
intangible assets  
7,257  
913  
24  
1,347  
275  
–
–
1
–
8,603  
1,189  
24  
investment property  
Obligations from  
loan commitments to unconsolidated subsidiaries  
irrevocable credit commitments to customers  
leasing and rental contracts  
313  
2,605  
329  
1
53  
–
3
314  
2,661  
652  
172  
151  
Miscellaneous other financial obligations  
3,257  
1,712  
997  
5,966  
Other financial obligations include an amount of €1.2 billion for investments to which the Group has  
committed itself, both in the infrastructure for zero-emission vehicles and in initiatives to promote access to  
and awareness of these technologies. These commitments were made as part of the settlement agreements in  
the USA in connection with the diesel issue.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
327  
4
2. Total audit fees of the Group auditor  
Under the provisions of the Handelsgesetzbuch (HGB – German Commercial Code), Volkswagen AG is obliged to  
disclose the total audit fee of the Group auditor, PricewaterhouseCoopers GmbH Wirtschafts-  
prüfungsgesellschaft.  
€
million  
2019  
2018  
Financial statement audit services  
Other assurance services  
Tax advisory services  
19  
4
20  
6
1
1
Other services  
32  
26  
52  
56  
The financial statement audit services were attributable to the audit of the consolidated financial statements of  
Volkswagen AG and of annual financial statements of German Group companies as well as to reviews of the  
interim consolidated financial statements of Volkswagen AG and of interim financial statements of German  
Group companies. The auditors provided assurance services and tax advice only to a small extent. Other  
services provided by the auditors in the reporting period focused on advice on how to implement new legal  
standards and on support for measures in connection with the diesel issue.  
4
3. Personnel expenses  
€
million  
2019  
2018  
Wages and salaries  
34,683  
8,231  
33,368  
7,791  
Social security, post-employment and other employee benefit costs  
42,913  
41,158  
3
28  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
4
4. Average number of employees during the year  
2019  
2018  
Performance-related wage-earners  
Salaried staff  
265,092  
304,174  
256,684  
302,554  
559,238  
8,791  
569,266  
of which in the passive phase of partial retirement  
Vocational trainees  
9,554  
18,180  
87,446  
80,302  
67,748  
17,905  
577,143  
78,579  
5
6
Employees of Chinese joint ventures  
655,722  
4
5. Events after the balance sheet date  
On January 30, 2020, TRATON SE submitted an offer for the acquisition of all outstanding ordinary shares of  
Navistar that are not yet held by TRATON SE, at a price of USD 35.00 per share in cash. This corresponds to an  
offer price of around €2.6 billion. TRATON SE held around 16.8% of the outstanding ordinary shares of Navistar  
as of December 31, 2019.  
Continuing restrictions due to the coronavirus could adversely affect the results of operations, financial  
position and net assets in 2020. In this context, please refer to our remarks found in the management report in  
the “Report on Expected Developments” and “Report on Risks and Opportunities” sections.  
4
6. Remuneration based on performance shares and phantom shares (share-based  
payment)  
At the beginning of 2017, the Supervisory Board of Volkswagen AG resolved to adjust the remuneration system  
of the Board of Management with effect from January 1, 2017. The remuneration system of the Board of  
Management comprises non-performance-related and performance-related components. The performance-  
related remuneration now consists of a performance-related annual bonus with a one-year assessment period  
and a long-term incentive (LTI) in the form of a performance share plan with a mostly forward-looking three-  
year term (share-based payment). In addition, a bonus was converted into phantom preferred shares (phantom  
shares) in 2016; the payment was made in 2019.  
The group of beneficiaries of the performance share plan was expanded at the end of 2018 by including  
members of top management and at the end of 2019 by adding all other members of management and selected  
participants below management level. Performance shares were first granted to members of top management  
at the beginning of 2019. All other beneficiaries will receive performance shares for the first time at the  
beginning of 2020. The function of the performance share plan for top management and other beneficiaries is  
largely identical to the performance share plan that was granted to the members of the Board of Management.  
When the performance share plan was launched, members of top management were guaranteed a minimum  
bonus amount for the first three years on the basis of the remuneration for 2018, while all other beneficiaries  
were given a guarantee for the first three years on the basis of the remuneration for 2019.  
P E R F O R M A N C E S H A R E S  
Each performance period of the performance share plan has a term of three years. At the time the LTI is granted,  
the annual target amount under the LTI is converted, on the basis of the initial reference price of Volkswagen’s  
preferred shares, into performance shares of Volkswagen AG, which are allocated to the respective beneficiary as  
a pure calculation position.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
329  
For members of the Board of Management and of top management, the number of performance shares is  
definitively determined on the basis of a three-year, forward-looking performance period based on the degree  
of target achievement for the annual earnings per Volkswagen preferred share. For all other beneficiaries, the  
number is definitively determined on the basis of a three-year performance period with a forward-looking  
horizon of one year. As a departure from this, in 2020 the number will be determined on the basis of a one-year  
forward-looking performance period, and in 2021 on the basis of a two-year performance period with a  
forward-looking horizon of one year. After the end of the performance period, a cash settlement is made. The  
payment amount corresponds to the number of determined performance shares, multiplied by the closing  
reference price at the end of the period plus a dividend equivalent. The payment amount under the  
performance share plan is limited to 200% of the target amount.  
BOAR D OF M A NAGEMEN T  
Dec. 31, 2019  
Dec. 31, 2018  
Total expense of the reporting period  
Carrying amount of the obligation  
Intrinsic value of the obligation  
Fair value on granting date  
€ million  
€ million  
€ million  
€ million  
Shares  
22  
57  
18  
48  
31  
34  
20  
22  
Granted performance shares  
431,800  
155,418  
276,382  
134,956  
of which granted during the reporting period  
Shares  
TOP M A NAG EME NT T I ER  
Dec. 31, 2019  
Dec. 31, 2018  
Total expense of the reporting period  
Carrying amount of the obligation  
Intrinsic value of the obligation  
Fair value at grant date  
€ million  
€ million  
€ million  
€ million  
Shares  
115  
115  
–
–
–
–
–
–
104  
71  
Granted performance shares  
531,090  
531,090  
of which granted during the reporting period  
Shares  
M E M B E R S O F M A NAGE M E N T A N D SE L E CTE D PA RTI CI PA NT S B E LOW M A NAGE M E NT L EV E L  
If 100% of the targets agreed in each case are reached, the total target amount for all other beneficiaries will total  
629 million (previous year: €– million).  
€
P H A N TO M S H A R E S  
At its meeting on April 22, 2016, Volkswagen AG’s Supervisory Board accepted the offer made by the members  
of the Board of Management to withhold 30% of the variable remuneration for fiscal year 2015 for the Board of  
Management members active on the date of the resolution and to make its disposal subject to future share  
price performance by means of phantom shares. The amount withheld led to the creation of 50,703 phantom  
preferred shares. In 2018, Mr. Stadler received a cash payment of the value of 8,633 shares in an amount of  
€1.0 million as part of the termination of his contract of service. The other phantom shares were settled as  
planned in fiscal year 2019. The payment amount totaled €5.3 million. In the fiscal year, changes in the value of  
the phantom shares led to the recognition of expenses of €0.3 million (previous year: income of €1.0 million).  
3
30  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
4
7.ꢀRelated party disclosures in accordance with IAS 24  
Related parties as defined by IAS 24 are natural persons and entities that Volkswagen AG has the ability to  
control or on which it can exercise significant influence, or natural persons and entities that have the ability to  
control or exercise significant influence on Volkswagen AG, or that are influenced by another related party of  
Volkswagen AG.  
All transactions with related parties are regularly conducted on an arm’s length basis.  
Porsche SE held the majority of the voting rights in Volkswagen AG as of the reporting date. The creation of  
rights of appointment for the State of Lower Saxony was resolved at the Extraordinary General Meeting of  
Volkswagen AG on December 3, 2009. As a result, Porsche SE cannot appoint the majority of the members of  
Volkswagen AG’s Supervisory Board for as long as the State of Lower Saxony holds at least 15% of  
Volkswagen AG’s ordinary shares. However, Porsche SE has the power to participate in the operating policy  
decisions of the Volkswagen Group and is therefore classified as a related party as defined by IAS 24.  
The contribution of Porsche SE’s holding company operating business to Volkswagen AG on August 1, 2012  
has the following effects on the agreements between Porsche SE, Volkswagen AG and companies of the Porsche  
Holding Stuttgart Group that existed prior to the contribution and were entered into on the basis of the  
Comprehensive Agreement and its related implementation agreements:  
!
ꢀ As part of the contribution of Porsche SE’s holding company operating business to Volkswagen AG,  
Volkswagen AG undertook to assume standard market liability compensation effective August 1, 2012 for  
guarantees issued to external creditors, whereby it is indemnified internally.  
!ꢀ Volkswagen AG continues to indemnify Porsche SE internally against claims by the Einlagensicherungsfonds  
(
German deposit protection fund) after Porsche SE submitted an indemnification agreement required by the  
Bundesverband Deutscher Banken (Association of German Banks) to the Einlagensicherungsfonds in August  
009. Volkswagen AG has also undertaken to indemnify the Einlagensicherungsfonds against any losses  
2
caused by measures taken by the latter in favor of a bank in which Volkswagen AG holds a majority interest.  
ꢀ Under certain conditions, Porsche SE continues to indemnify Porsche Holding Stuttgart, Porsche AG and  
their legal predecessors against tax disadvantages that exceed the obligations recognized in the financial  
statements of those companies relating to periods up to and including July 31, 2009. In return,  
Volkswagen AG has undertaken to reimburse Porsche SE for any tax advantages of Porsche Holding Stuttgart,  
Porsche AG and their legal predecessors and subsidiaries relating to tax assessment periods up to July 31,  
!
2009. Based on the results of the external tax audit for the assessment periods 2006 to 2008, which has now  
been completed, and based on information for the 2009 assessment period available at the date of preparing  
these consolidated financial statements, a compensation obligation in the low triple-digit million euro range  
would arise for Volkswagen AG. New information emerging in the future from the external tax audit that  
commenced at the end of 2015 for the 2009 assessment period could result in an increase or decrease in the  
potential compensation obligation.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
331  
Under the terms of the Comprehensive Agreement, Porsche SE and Volkswagen AG had granted each other  
put and call options with regard to the remaining 50.1 % interest in Porsche Holding Stuttgart held by  
Porsche SE until the contribution of its holding company operating business to Volkswagen AG. Both  
Volkswagen AG (if it had exercised its call option) and Porsche SE (if it had exercised its put option) had  
undertaken to bear the tax burden resulting from the exercise of the options and any subsequent activities  
in relation to the equity investment in Porsche Holding Stuttgart (e.g. from recapture taxation on the spin-  
off in 2007 and/or 2009). If tax benefits had accrued to Volkswagen AG, Porsche Holding Stuttgart, Porsche  
AG, or their respective subsidiaries as a result of recapture taxation on the spin-off in 2007 and/or 2009, the  
purchase price to be paid by Volkswagen AG for the transfer of the outstanding 50.1 % equity investment in  
Porsche Holding Stuttgart if the put option had been exercised by Porsche SE would have been increased by  
the present value of the tax benefit. This arrangement was taken over under the terms of the contribution  
agreement to the effect that Porsche SE has a claim against Volkswagen AG for payment in the amount of  
the present value of the realizable tax benefits from any recapture taxation of the spin-off in 2007 as a  
result of the contribution. It was also agreed under the terms of the contribution that Porsche SE will  
indemnify Volkswagen AG, Porsche Holding Stuttgart and their subsidiaries against taxes if measures taken  
by or not taken by Porsche SE result in recapture taxation for 2012 at these companies in the course of or  
following implementation of the contribution. In this case, too, Porsche SE is entitled to assert a claim for  
payment against Volkswagen AG in the amount of the present value of the realizable tax benefits that arise  
at the level of Volkswagen AG or one of its subsidiaries as a result of such a transaction.  
Further agreements were entered into and declarations were issued in connection with the contribution of  
Porsche SE’s holding company operating business to Volkswagen AG, in particular:  
!ꢀ Porsche SE indemnifies its contributed subsidiaries, Porsche Holding Stuttgart, Porsche AG and their sub-  
sidiaries against certain liabilities to Porsche SE that relate to the period up to and including December 31,  
2011 and that exceed the obligations recognized in the financial statements of those companies for that  
period.  
!
ꢀ Moreover, Porsche SE indemnifies Volkswagen AG, Porsche Holding Stuttgart, Porsche AG and their  
subsidiaries against half of the taxes (other than taxes on income) arising at those companies in conjunction  
with the contribution that would not have been incurred in the event of the exercise of the call option on the  
shares of Porsche Holding Stuttgart that continued to be held by Porsche SE until the contribution.  
Volkswagen AG therefore indemnifies Porsche SE against half of such taxes that it incurs. In addition, Porsche  
Holding Stuttgart is indemnified against half of the land transfer tax and other costs triggered by the merger.  
ꢀ Additionally, Porsche SE and Porsche AG agreed to allocate any subsequent VAT receivables or liabilities from  
transactions in the period up to December 31, 2009 to the company entitled to the receivable or incurring the  
liability.  
!
!
ꢀ A range of information, conduct and cooperation obligations were agreed by Porsche SE and the Volkswagen  
Group.  
According to a notification dated January 2, 2020, the State of Lower Saxony and Hannoversche  
Beteiligungsgesellschaft Niedersachsen mbH, Hanover, held 20.00 % of the voting rights of Volkswagen AG on  
December 31, 2019. As mentioned above, the General Meeting of Volkswagen AG on December 3, 2009 also  
resolved that the State of Lower Saxony may appoint two members of the Supervisory Board (right of  
appointment).  
3
32  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
The following tables present the amounts of supplies and services transacted, as well as outstanding receivables  
and liabilities, between consolidated companies of the Volkswagen Group and related parties:  
REL AT ED PA RT I E S  
SUPPLIES AND SERVICES  
RENDERED  
SUPPLIES AND SERVICES  
RECEIVED  
€
million  
2019  
2018  
2019  
2018  
Porsche SE and its majority interests  
Supervisory Board members  
5
5
0
3
4
0
1
1
0
3
2
0
Board of Management members  
Unconsolidated subsidiaries  
1,243  
16,627  
181  
1
1,137  
16,724  
194  
1
1,597  
646  
1,312  
3
1,649  
491  
1,267  
2
Joint ventures and their majority interests  
Associates and their majority interests  
Pension plans  
Other related parties  
0
0
1
1
State of Lower Saxony, its majority interests and joint ventures  
10  
10  
4
8
LIABILITIES  
RECEIVABLES FROM  
(INCLUDING OBLIGATIONS) TO  
€
million  
Dec. 31, 2019  
Dec. 31, 2018  
Dec. 31, 2019  
Dec. 31, 2018  
Porsche SE and its majority interests  
Supervisory Board members  
4
4
0
170  
91  
1
205  
78  
0
0
Board of Management members  
Unconsolidated subsidiaries  
0
1,497  
12,953  
326  
1
0
1,319  
11,989  
112  
1
1,667  
2,683  
1,063  
–
1,869  
2,671  
487  
–
Joint ventures and their majority interests  
Associates and their majority interests  
Pension plans  
Other related parties  
0
–
264  
0
100  
2
State of Lower Saxony, its majority interests and joint ventures  
1
1
The tables above do not contain the dividend payments (net of withholding tax) of €3,679 million (previous  
year: €3,315 million) received from joint ventures and associates and dividends of €753 million (previous  
year: €601 million) paid to Porsche SE.  
Receivables from joint ventures are primarily attributable to loans granted in an amount of €8,290 million  
(
€
previous year: €7,606 million) as well as trade receivables in an amount of €4,375 million (previous year:  
4,045 million). Receivables from non-consolidated subsidiaries also result primarily from loans granted in an  
amount of €938 million (previous year: €741 million) as well as trade receivables in an amount of €188 million  
(previous year: €214 million).  
Impairment losses of €56 million (previous year: €56 million) were recognized on the outstanding related  
party receivables. In the fiscal year, expenses of €37 million (previous year: €29 million) were incurred in this  
context.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
333  
In addition, the Volkswagen Group has furnished guarantees to external banks on behalf of related parties in  
the amount of €322 million (previous year: €239 million).  
In the reporting period, the Volkswagen Group made capital contributions of €668 million (previous year:  
€298 million) to related parties.  
The changes in supplies and services rendered to and received from joint ventures and their majority  
interests are primarily attributable to supply relationships with the Chinese joint ventures.  
As in the previous year, obligations to members of the Supervisory Board relate primarily to interest-  
bearing bank balances of Supervisory Board members that were invested at standard market terms and  
conditions at Volkswagen Group companies.  
Obligations to the Board of Management comprise outstanding balances for the annual bonus and the fair  
values of the performance shares in the amount of €50.1 million (previous year: €64.8 million) granted to  
Board of Management members.  
In addition to the amounts shown above, the following expenses were recognized for benefits and  
remuneration granted to members of the Board of Management and Supervisory Board of the Volkswagen  
Group in the course of their activities as members of these bodies:  
€
2019  
2018  
Short-term benefits  
36,307,352  
19,606,328  
12,901,219  
10,100,271  
32,417,428  
10,022,492  
10,519,369  
12,994,964  
65,954,253  
Benefits based on performance shares and virtual shares  
Post-employment benefits  
Termination benefits  
78,915,169  
Benefits paid on the basis of performance shares include the cost of €19.5 million (previous year: €10.6 million)  
attributable to the performance shares granted to Board of Management members under the remuneration  
system applicable as from 2017. Pursuant to the guidance of IFRS 2, this requires inclusion of not only the  
performance share plan for 2017 and 2018, but also of a pro-rated amount for future share plans to be granted  
during the current employment contract.  
In fiscal year 2019, the share price performance up to the settlement date led to the recognition of expense  
of €0.1 million (previous year: income of €0.6 million) for the phantom shares.  
The employee representatives and the representative of the senior executives on the Supervisory Board are  
also entitled to a regular salary as set out in their employment contracts. For members of German works  
councils, this is based on the provisions of the Betriebsverfassungsgesetz (BetrVG – German Works Constitution  
Act). In the previous year, due to investigations by the authorities, a review of the remuneration of some works  
council members were conducted. Prior to this and as a precaution, components of the remuneration of some  
works council members had been retained in this context until the matter was clarified. In fiscal year 2019, the  
matter was addressed and concluded as part of an arbitration procedure by two former judges from the  
German Federal Labour Court as well as by final settlements before a labor court. The previous remuneration  
was largely confirmed in the process.  
The post-employment benefits relate to additions to pension provisions for current members of the Board of  
Management. The termination benefits relate to the severance payment made to Mr. Schot in connection with  
his early departure from the Board of Management on March 31, 2020.  
Disclosures on the pension provisions for members of the Board of Management and more detailed  
explanations of the remuneration of the Board of Management and the Supervisory Board can be found in the  
section entitled “Remuneration of the Board of Management and the Supervisory Board” and in the  
remuneration report, which is part of the management report.  
3
34  
Notes to the Consolidated Financial Statements  
Consolidated Financial Statements  
4
8. German Corporate Governance Code  
On November 15, 2019, the Board of Management and Supervisory Board of Volkswagen AG issued their  
declaration of conformity with the German Corporate Governance Code as required by section 161 of the  
Aktiengesetz (AktG – German Stock Corporation Act) and made it permanently available to the shareholders of  
Volkswagen AG on the Company’s website at www.volkswagenag.com/en/InvestorRelations/corporate-  
governance/declaration-of-conformity.html.  
On November 20, 2019, the Board of Management and Supervisory Board of AUDI AG likewise issued their  
declaration of conformity with the German Corporate Governance Code and made it permanently available to  
the shareholders at www.audi.com/cgk-declaration.  
In December 2019, the Executive Board and Supervisory Board of TRATON SE likewise issued their  
declaration of conformity with the German Corporate Governance Code and made it permanently available to  
the shareholders at ir.traton.com/websites/traton/English/5000/corporate-governance.html.  
In December 2019, the Executive Board and Supervisory Board of MAN SE issued their declaration of  
conformity with the German Corporate Governance Code as required by section 161 of the AktG and made it  
permanently available to the shareholders at www.corporate.man.eu/en/investor-relations/corporate-  
governance/corporate-governance-at-man/Corporate-Governance-at-MAN.html.  
The Executive Board and Supervisory Board of RENK AG issued a declaration of conformity in December  
2019 and made it permanently available to the shareholders at www.renk-ag.com/en/investor-  
relations/financial-reports.  
4
9. Remuneration of the Board of Management and the Supervisory Board  
€
2019  
2018  
Board of Management remuneration  
Non-performance-related remuneration  
Performance-related remuneration  
Long-term incentive component  
13,332,515  
17,647,682  
14,414,075  
13,051,264  
14,827,178  
22,457,869  
50,336,310  
45,394,271  
Supervisory Board remuneration  
Non-performance-related remuneration  
Performance-related remuneration  
4,547,188  
779,967  
4,004,372  
534,614  
5,327,155  
4,538,986  
NON -PER FO RM ANCE -RE L ATE D RE MU N ERAT IO N OF TH E BOA RD O F M A NAGEME NT  
The non-performance-related remuneration of the Board of Management comprises fixed remuneration and  
fringe benefits. The fringe benefits relate to noncash benefits granted and include in particular the use of  
operating assets such as company cars and the payment of insurance premiums. Taxes due on these noncash  
benefits were mainly borne by Volkswagen AG.  
PERFO RM AN CE- R EL ATE D RE MU N E RATIO N AN D LO N G-TE RM I NCE NT I V E COMP ON E NT OF TH E BOA RD O F M A NAGEM ENT  
Performance-related remuneration includes the annual bonus with a one-year assessment period. The long-  
term incentive component contains the long-term incentive (LTI) in the form of a performance share plan with  
a forward-looking three-year term. For details on performance share plans for current members of the Board of  
Management, please refer to the information in the section entitled “Remuneration based on performance  
shares and phantom shares (share-based payment)”.  
Consolidated Financial Statements  
Notes to the Consolidated Financial Statements  
335  
At its meeting on April 22, 2016, Volkswagen AG’s Supervisory Board accepted the offer made by the members  
of the Board of Management to withhold 30% of the variable remuneration for fiscal year 2015 for the Board of  
Management members active on the date of the resolution and to make its disposal subject to future share  
price performance by means of phantom shares. The resulting effects on remuneration were reported as  
appropriate in previous years. For further details on the settlement of phantom shares, please refer to the  
information in the section entitled “Remuneration based on performance shares and phantom shares (share-  
based payment)”.  
Expenses for performance shares and phantom shares do not represent remuneration under German GAAP  
and are therefore not included in the tables above.  
As in the previous year, no interest-free advances were paid to members of the Board of Management.  
SU PERV IS ORY B OARD RE MU N ERAT ION  
The remuneration of the members of the Supervisory Board of Volkswagen AG is comprised entirely of non-  
performance-related remuneration components. Remuneration for supervisory board work at subsidiaries  
comprises a mix of non-performance-related and performance-related components.  
PEN SIO N EN TI TL EMEN TS A N D B E N EF IT S TO R ETI R ED MEMB E R S OF TH E B OAR D OF M A NAGEME NT  
On December 31, 2019, the pension provisions for members of the Board of Management amounted to  
€60.5 million (previous year: €55.8 million). Current pensions are index-linked in accordance with the index-  
linking of the highest collectively agreed salary insofar as the application of section 16 of the Gesetz zur  
Verbesserung der betrieblichen Altersversorgung (BetrAVG – German Company Pension Act) does not lead to a  
higher increase.  
For former members of the Board of Management and their surviving dependents €32.7 million (previous  
year: €44.0 million) were granted. Pension provisions in accordance with IFRSs for this group of individuals  
amounted to €373.7 million (previous year: €324.0 million).  
In connection with his departure effective March 31, 2020, Mr. Schot was promised the following amounts:  
x
x
x
a non-performance-related component of €2.4 million (previous year: €– million),  
a performance-related component of €3.8 million (previous year €– million) and  
a long-term incentive component of €3.9 million (previous year: €– million) were recognized.  
The individual remuneration of the members of the Board of Management and the Supervisory Board is  
explained in the remuneration report in the management report on page 70. A comprehensive assessment of  
the individual remuneration components, including the LTI, in the form of the performance share plan can also  
be found there.  
3
36  
Responsibility Statement  
Consolidated Financial Statements  
Responsibility Statement  
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated  
financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the  
Group, and the Group management report includes a fair review of the development and performance of the  
business and the position of the Group, together with a description of the material opportunities and risks  
associated with the expected development of the Group.  
Wolfsburg, February 18, 2020  
Volkswagen Aktiengesellschaft  
The Board of Management  
Herbert Diess  
Oliver Blume  
Abraham Schot  
Frank Witter  
Gunnar Kilian  
Andreas Renschler  
Stefan Sommer  
Hiltrud Dorothea Werner  
Consolidated Financial Statements  
Independent Auditor’s Report  
337  
Independent Auditor’s Report  
On completion of our audit, we issued an unqualified auditor's report dated February 26, 2020 in German  
language. The following text is a translation of this auditor’s report. The German text is authoritative:  
To VOLKSWAGEN AKTIENGESELLSCHAFT, Wolfsburg  
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE GROUP MANAGEMENT  
REPORT  
AU DIT OP I N IO N S  
We have audited the consolidated financial statements of VOLKSWAGEN AKTIENGESELLSCHAFT, Wolfsburg, and  
its subsidiaries (the Group), which comprise the balance sheet as at December 31, 2019, and the income  
statement and the statement of comprehensive income, the statement of changes in equity and the cash flow  
statement for the financial year from January 1 to December 31, 2019, and notes to the consolidated financial  
statements, including a summary of significant accounting policies. In addition, we have audited the group  
management report of VOLKSWAGEN AKTIENGESELLSCHAFT, which is combined with the Company’s  
management report, for the financial year from January 1 to December 31, 2019. In accordance with the  
German legal requirements, we have not audited the content of those parts of the group management report  
listed in the “Other Information” section of our auditor’s report.  
In our opinion, on the basis of the knowledge obtained in the audit,  
!
ꢀ the accompanying consolidated financial statements comply, in all material respects, with the IFRSs as  
adopted by the EU, and the additional requirements of German commercial law pursuant to § [Article] 315e  
Abs. [paragraph] 1 HGB [Handelsgesetzbuch: German Commercial Code] and, in compliance with these  
requirements, give a true and fair view of the assets, liabilities, and financial position of the Group as at  
December 31, 2019, and of its financial performance for the financial year from January 1 to December 31,  
2
019, and  
!
ꢀ the accompanying group management report as a whole provides an appropriate view of the Group’s  
position. In all material respects, this group management report is consistent with the consolidated financial  
statements, complies with German legal requirements and appropriately presents the opportunities and risks  
of future development. Our audit opinion on the group management report does not cover the content of those  
parts of the group management report listed in the “Other Information” section of our auditor’s report.  
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that our audit has not led to any reservations relating  
to the legal compliance of the consolidated financial statements and of the group management report.  
BA SI S FO R TH E AU DIT OP I N I ON S  
We conducted our audit of the consolidated financial statements and of the group management report in  
accordance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as “EU Audit  
Regulation”) and in compliance with German Generally Accepted Standards for Financial Statement Audits  
promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our  
responsibilities under those requirements and principles are further described in the “Auditor’s  
Responsibilities for the Audit of the Consolidated Financial Statements and of the Group Management Report”  
section of our auditor’s report. We are independent of the group entities in accordance with the requirements  
of European law and German commercial and professional law, and we have fulfilled our other German  
professional responsibilities in accordance with these requirements. In addition, in accordance with  
Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided non-audit services  
prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is  
sufficient and appropriate to provide a basis for our audit opinions on the consolidated financial statements  
and on the group management report.  
3
38  
Independent Auditor’s Report  
Consolidated Financial Statements  
EMPHA SI S OF M ATTER – D I E SEL I S SU E  
We draw attention to the information provided and statements made in section “Key Events“ of the notes to the  
consolidated financial statements and in section “Report on Risks and Opportunities“ of the group  
management report with regard to the diesel issue including information about the allegations made and  
claims filed, the underlying causes, the non-involvement of members of the board of management as well as  
the impact on these financial statements.  
Based on the results of the various measures taken to investigate the issue presented so far, which underlie  
the consolidated financial statements and the group management report, there is still no evidence that  
members of the Company’s board of management were aware of the deliberate manipulation of engine  
management software before summer 2015. Nevertheless, should as a result of the ongoing investigation new  
solid knowledge be obtained showing that members of the board of management were informed earlier about  
the diesel issue, this could eventually have an impact on the consolidated financial statements and on the  
group management report for financial year 2019 and prior years.  
The provisions for warranties and legal risks recorded so far are based on the presented state of knowledge. Due  
to the inevitable uncertainties associated with the current and expected litigation it cannot be excluded that a  
future assessment of the risks may be different.  
Our opinions on the consolidated financial statements and on the group management report are not  
modified in respect of this matter.  
K EY AU DIT M AT T E RS I N T H E AU D I T OF T H E CO N SO LI DATE D F I NA N CI A L STATE M E N TS  
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit  
of the consolidated financial statements for the financial year from January 1 to December 31, 2019. These  
matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in  
forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.  
In our view, the matters of most significance in our audit were as follows:  
ᬚ
ᬛ
ᬜ
ᬝ
Accounting treatment of risk provisions for the diesel issue  
Recoverability of goodwill and brand names  
Recoverability of capitalized development costs  
Completeness and measurement of provisions for warranty obligations arising from sales  
Our presentation of these key audit matters has been structured in each case as follows:  
ᬅ
ᬆ
ᬇ
Matter and issue  
Audit approach and findings  
Reference to further information  
Hereinafter we present the key audit matters:  
ꢀ
ᬚ
ꢀ
Accounting treatment of risk provisions for the diesel issue  
ᬅ
Companies of the Volkswagen Group are involved in investigations by government authorities in  
numerous countries (in particular in Europe, the United States and Canada) with respect to irregularities  
in the exhaust gas emissions from diesel engines in certain vehicles of the Volkswagen Group. Different  
measures are being implemented in various countries for affected vehicles. These include hardware  
and/or software solutions, vehicle repurchases or the early termination of leases and, in some cases, cash  
payments to vehicle owners. Furthermore, payments are being made as a result of criminal proceedings  
and civil law settlements with various parties. In addition, there are civil lawsuits pending from  
customers, dealers and holders of securities. Further direct and indirect effects concern in particular  
impairment of assets and customer-specific sales programs.  
Consolidated Financial Statements  
Independent Auditor’s Report  
339  
The Volkswagen Group recognizes the expenses directly related to the diesel issue in its operating income.  
The special items expensed in financial year 2019 amount to € 2.3 billion. These relate to fines paid  
(€ 0.5 billion) and to further additions to reserves for legal risks (€ 2.1 billion). The reversal of reserves for  
technical measures in the amount of € 0.3 billion had an inverse effect. In addition to provisions,  
contingent liabilities for legal risks in regard to the diesel issue in the amount of € 3.7 billion are reported as  
of December 31, 2019.  
The reported provisions and contingent liabilities are exposed to considerable estimation risk due to  
the wide-ranging investigations and proceedings that are ongoing, the complexity of the various  
negotiations and pending approval procedures by authorities, and developments in market conditions.  
This matter was of particular significance for our audit due to the material amounts of the provisions as  
well as the scope of assumptions and discretion on the part of the executive directors.  
ᬆ
In order to audit the recognition and measurement of provisions for field activities and vehicle  
repurchases arising as a result of the diesel issue, we critically examined the processes put in place by the  
companies of the Volkswagen Group to make substantive preparations to address the diesel issue, and  
assessed the progress made in implementing the technical solutions developed to remedy it. We  
compared this knowledge with the technical and legal substantiations of independent experts, as  
presented to us. We used in particular an IT data analysis solution to examine the quantity structure  
underlying the field activities and repurchases. We assessed the inputs used to measure the repair  
solutions and the repurchases. We used this as a basis to evaluate the calculation of the provisions.  
In order to audit the recognition and measurement of the provisions for legal risks and the disclosure  
of contingent liabilities for legal risks resulting from the diesel issue, we assessed both the available  
official documents as well as in particular the work delivered and opinions prepared by experts  
commissioned by the Volkswagen Group. As part of a targeted selection of key procedures and  
supplemented by additional samples, we inspected the correspondence relating to the litigation and, in  
talks with officials from the affected companies and the lawyers involved, and including our own legal  
experts, we discussed the assessments made.  
Taking into consideration the information provided and statements made in the section entitled  
"Key events" in the notes to the consolidated financial statements and in the section entitled "Report on  
Risks and Opportunities" in the group management report with regard to the diesel issue including  
information about the underlying causes, the non-involvement of members of the board of management  
as well as the impact on these financial statements, we believe that, overall, the assumptions and inputs  
underlying the calculation of the risk provisions for the diesel issue are appropriate to properly recognize  
and measure the provisions.  
ᬇ
The Company's disclosures on the diesel issue are contained in the sections entitled "Key events" and  
"Litigation" in the notes to the consolidated financial statements, and in sections entitled “Report on Risks  
and Opportunities”, sub-section “Legal risks” in the group management report.  
ᬛ
ᬅ
Recoverability of goodwill and brand names  
The intangible assets reported in the consolidated financial statements of VOLKSWAGEN  
AKTIENGESELLSCHAFT include € 23.2 billion in goodwill and € 16.8 billion in purchased brand names  
(
intangible assets with indefinite useful lives). The Company allocates goodwill and brand names to the  
subgroups and brands, respectively, within the Volkswagen Group. As part of the regular impairment  
testing of goodwill and brand names, the Company compares the carrying amount of the subgroups and  
brands, respectively, against their respective recoverable amount. In general, the recoverable amount is  
calculated on the basis of the value in use. The value in use is calculated using discounted cash flow  
models on the basis of the Volkswagen Group's five-year operating plan prepared by the executive  
directors and acknowledged by the Supervisory Board and extrapolated based on assumptions about  
long-term growth rates. The discount rate used is the weighted average cost of capital for the relevant  
reporting segment. The result of this measurement depends to a large extent on the executive directors’  
3
40  
Independent Auditor’s Report  
Consolidated Financial Statements  
assessment with regard to the future cash inflows of the respective subgroups and brands, respectively,  
and on the discount rate used, and is therefore subject to considerable uncertainty. Against this  
background and due to the underlying complexity of the measurement models, this matter was of  
particular importance for our audit.  
ᬆ
As part of our audit, we assessed, among other things, the method used to perform impairment tests and  
the calculation of the weighted cost of capital. We evaluated the appropriateness of the future cash inflows  
used in the measurement, including by comparing this data with the five-year operating plan prepared by  
the executive directors and acknowledged by the Supervisory Board, and through reconciliation with  
general and sector-specific market expectations. We also evaluated that the costs for Group functions not  
recognized in a segment were properly included in the impairment test for the respective subgroup and  
brand, respectively. With the knowledge that even relatively small changes in the discount rate applied  
can have a material impact on the recoverable amounts calculated in this way, we also focused our testing  
in particular on the parameters used to determine the discount rate applied and evaluated the  
measurement model. Furthermore, due to the materiality of the goodwill and brand names, we also  
performed our own sensitivity analyses for the subgroups and brands, respectively, (comparison of  
carrying amounts and recoverable amounts) and determined that the respective goodwill and brand  
names were sufficiently covered by the discounted future cash flows. Overall, we consider the  
measurement inputs and assumptions used by the executive directors to be in line with our expectations  
and to lie also within a range that we consider reasonable.  
ᬇ
The Company's disclosures on goodwill and brand names are contained in section entitled “Intangible  
assets” in the notes to the consolidated financial statements.  
ᬜ
ᬅ
Recoverability of capitalized development costs  
In the consolidated financial statements of VOLKSWAGEN AKTIENGESELLSCHAFT capitalized development  
costs amounting to € 24.0 billion are reported under the "Intangible assets" balance sheet item. In  
accordance with IAS 38, research costs are treated as expenses incurred, while development costs for  
future series products are capitalized provided in particular that sale of these products (in connection  
with other assets) is likely to bring an economic benefit. Until amortization begins, developments must be  
tested for impairment in accordance with IAS 36 at least once a year based on the cash-generating units to  
which they are allocated. To meet this requirement, over the period from capitalization until completion  
of development the Company assesses whether the capitalized development costs incurred are covered by  
future cash flows. Once amortization begins, an assessment must be carried out at each reporting date as  
to whether there are indications of impairment. If this is the case, an impairment test must be performed  
and any impairment loss recognized. For impairment losses recognized in prior periods, an annual  
assessment must be carried out as to whether there are indications that the reason for the impairment  
has ceased to apply. In the financial year, the Volkswagen Group adjusted the definition of cash-generating  
units for capitalized development costs. While the focus in the Passenger Cars division was previously on  
individual models or model groups, the Volkswagen Group has made the judgment that the required  
degree of independence of cash flows from models or model groups is no longer given due to the  
2
increasing tightening of CO and emissions-related fleet requirements and other changes in the fourth  
quarter of 2019 and that brands must therefore now be regarded as the smallest identifiable group of  
assets that meet the definition criteria of a cash-generating unit.  
Consolidated Financial Statements  
Independent Auditor’s Report  
341  
The Volkswagen Group generally applies the present value of the future cash flows (value in use) from the  
relevant cash-generating units to test these intangible assets for impairment. The value in use is  
determined using the discounted cash flow method based on the Group’s five-year financial planning  
prepared by the executive directors. The discount rate used is the weighted average cost of capital (WACC).  
The weighted average cost of capital applied in the Volkswagen Group includes the weighted average cost  
of equity and debt before taxes.  
Due to the adjusted definition of the cash-generating units a one-time write-up in an amount of  
€
1.1 billion resulted in the fourth quarter 2019, thereof € 0.9 billion from prior years that are recognized  
in the “other operating income” income statement line item. Furthermore, the “finance income” is  
increased by € 0.1 billion due to write-ups at the Chinese joint ventures accounted for at-equity  
The result of this measurement depends to a large extent on the executive directors’ assessment of  
future cash inflows and the discount rate used and is therefore subject to considerable uncertainty.  
Against this background and due to the complex nature of the valuation, this matter was of particular  
significance in the context of our audit.  
ᬆ
As part of our audit we assessed whether, overall, the assumptions underlying the measurements  
particularly in the form of future cash inflows, and the discount rates used provide an appropriate basis  
by which to test the individual cash-generating units for impairment. We based our assessment, among  
other things, on a comparison with general and sector-specific market expectations as well as the  
executive directors’ detailed explanations regarding key planning value drivers. We also evaluated that the  
costs for Group functions were properly included in the impairment tests of the respective cash-  
generating units. With the knowledge that even relatively small changes in the discount rate applied can  
in some cases have material effects on values, we also focused our testing on the parameters used to  
determine the discount rate applied and evaluated the measurement model. We also assessed the  
consistency of the measurement model applied and evaluated the mathematical accuracy of the  
calculations. With respect to completed development projects, we inquired the executive directors about  
whether or not there were indications of impairment or that reasons for impairment had ceased to apply,  
and critically examined these assumptions based on our knowledge of the Group's legal and economic  
environment. As part of our audit, we also assessed whether the adjusted definition of the cash-  
generating units is in line with the relevant requirements of IAS 36. In our view, the measurement inputs  
and assumptions used by the executive directors, and the measurement model, were properly derived for  
the purposes of conducting impairment tests and the adjustment made to the definition of the cash-  
generating units are substantiated and reasonably documented.  
ᬇ
Company's disclosures on capitalized development costs and the associated impairment testing and the  
adjustment of the cash-generating units are contained in sections entitled “Accounting policies” and  
“Intangible assets” in the notes to the consolidated financial statements.  
ᬝ
ᬅ
Completeness and measurement of provisions for warranty obligations arising from sales  
In the consolidated financial statements of the Volkswagen Group € 27.0 billion in provisions for  
obligations arising from sales are reported under the "Other provisions" balance sheet item. These  
obligations primarily relate to warranty claims arising from the sale of vehicles, motorcycles, components  
and genuine parts. Warranty claims are calculated on the basis of losses to date, estimated future losses  
and the policy on ex gratia arrangements. An estimate is also made of the discount rate. In addition,  
assumptions must be made about the nature and extent of future warranty and ex gratia claims. These  
assumptions are based on qualified estimates.  
3
42  
Independent Auditor’s Report  
Consolidated Financial Statements  
From our point of view, this matter was of particular significance for our audit because the recognition  
and measurement of this material item is to a large extent based on estimates and assumptions made by  
the Company's executive directors.  
ᬆ
With the knowledge that estimated values result in an increased risk of accounting misstatements and  
that the measurement decisions made by the executive directors have a direct and significant effect on  
consolidated net profit/loss, we assessed the appropriateness of the carrying amounts, including by  
comparing these figures with historical data and using the measurement bases presented to us.  
Furthermore, we assessed that the interest rates with matching terms were properly derived from market  
data. We evaluated the entire calculations (including discounting) for the provisions using the applicable  
measurement inputs and assessed the planned timetable for utilizing the provisions.  
In doing so, we were able to satisfy ourselves that the estimates applied, and the assumptions made by  
the executive directors were sufficiently documented and supported to justify the recognition and  
measurement of the provisions for warranty obligations arising from sales.  
ᬇ
The Company's disclosures on other provisions are contained in sections entitled “Accounting policies”  
and “Noncurrent and current other provisions” in the notes to the consolidated financial statements.  
OTH ER I N F ORM ATIO N  
The executive directors are responsible for the other information. The other information comprises the  
following non-audited parts of the group management report:  
x
the statement on corporate governance pursuant to § 289f HGB and § 315d HGB included in section  
Corporate Governance Report” of the group management report  
“
x
x
the corporate governance report pursuant to No. 3.10 of the German Corporate Governance Code  
the separate non-financial report pursuant to § 289b Abs. 3 HGB and § 315b Abs. 3 HGB  
The other information comprises further the remaining parts of the annual report, – excluding cross-  
references to external information – with the exception of the audited consolidated financial statements, the  
audited group management report and our auditor’s report.  
Our audit opinions on the consolidated financial statements and on the group management report do not  
cover the other information, and consequently we do not express an audit opinion or any other form of  
assurance conclusion thereon.  
In connection with our audit, our responsibility is to read the other information and, in so doing, to consider  
whether the other information  
x
is materially inconsistent with the consolidated financial statements, with the group management report or  
our knowledge obtained in the audit, or  
x
otherwise appears to be materially misstated.  
Responsibilities of the Executive Directors and the Supervisory Board for the Consolidated Financial Statements and the Group  
Management Report  
The executive directors are responsible for the preparation of the consolidated financial statements that  
comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German  
commercial law pursuant to § 315e Abs. 1 HGB and that the consolidated financial statements, in compliance  
with these requirements, give a true and fair view of the assets, liabilities, financial position, and financial  
performance of the Group. In addition the executive directors are responsible for such internal control as they  
have determined necessary to enable the preparation of consolidated financial statements that are free from  
material misstatement, whether due to fraud or error.  
In preparing the consolidated financial statements, the executive directors are responsible for assessing the  
Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable,  
matters related to going concern. In addition, they are responsible for financial reporting based on the going  
concern basis of accounting unless there is an intention to liquidate the Group or to cease operations, or there  
is no realistic alternative but to do so.  
Consolidated Financial Statements  
Independent Auditor’s Report  
343  
Furthermore, the executive directors are responsible for the preparation of the group management report that,  
as a whole, provides an appropriate view of the Group’s position and is, in all material respects, consistent with  
the consolidated financial statements, complies with German legal requirements, and appropriately presents  
the opportunities and risks of future development. In addition, the executive directors are responsible for such  
arrangements and measures (systems) as they have considered necessary to enable the preparation of a group  
management report that is in accordance with the applicable German legal requirements, and to be able to  
provide sufficient appropriate evidence for the assertions in the group management report.  
The supervisory board is responsible for overseeing the Group’s financial reporting process for the  
preparation of the consolidated financial statements and of the group management report.  
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and of the Group Management Report  
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a  
whole are free from material misstatement, whether due to fraud or error, and whether the group management  
report as a whole provides an appropriate view of the Group’s position and, in all material respects, is  
consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with  
the German legal requirements and appropriately presents the opportunities and risks of future development,  
as well as to issue an auditor’s report that includes our audit opinions on the consolidated financial statements  
and on the group management report.  
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in  
accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted  
Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always  
detect a material misstatement. Misstatements can arise from fraud or error and are considered material if,  
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of  
users taken on the basis of these consolidated financial statements and this group management report.  
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:  
x
Identify and assess the risks of material misstatement of the consolidated financial statements and of the  
group management report, whether due to fraud or error, design and perform audit procedures responsive  
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit  
opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one  
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or  
the override of internal control.  
x
Obtain an understanding of internal control relevant to the audit of the consolidated financial statements  
and of arrangements and measures (systems) relevant to the audit of the group management report in  
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of  
expressing an audit opinion on the effectiveness of these systems.  
x
x
Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness  
of estimates made by the executive directors and related disclosures.  
Conclude on the appropriateness of the executive directors’ use of the going concern basis of accounting  
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or  
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we  
conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the  
related disclosures in the consolidated financial statements and in the group management report or, if such  
disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit  
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause  
the Group to cease to be able to continue as a going concern.  
3
44  
Independent Auditor’s Report  
Consolidated Financial Statements  
x
x
Evaluate the overall presentation, structure and content of the consolidated financial statements, including  
the disclosures, and whether the consolidated financial statements present the underlying transactions and  
events in a manner that the consolidated financial statements give a true and fair view of the assets,  
liabilities, financial position and financial performance of the Group in compliance with IFRSs as adopted  
by the EU and the additional requirements of German commercial law pursuant to § 315e Abs. 1 HGB.  
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business  
activities within the Group to express audit opinions on the consolidated financial statements and on the  
group management report. We are responsible for the direction, supervision and performance of the group  
audit. We remain solely responsible for our audit opinions.  
x
x
Evaluate the consistency of the group management report with the consolidated financial statements, its  
conformity with German law, and the view of the Group’s position it provides.  
Perform audit procedures on the prospective information presented by the executive directors in the group  
management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the  
significant assumptions used by the executive directors as a basis for the prospective information, and  
evaluate the proper derivation of the prospective information from these assumptions. We do not express a  
separate audit opinion on the prospective information and on the assumptions used as a basis. There is a  
substantial unavoidable risk that future events will differ materially from the prospective information.  
We communicate with those charged with governance regarding, among other matters, the planned scope and  
timing of the audit and significant audit findings, including any significant deficiencies in internal control that  
we identify during our audit.  
We also provide those charged with governance with a statement that we have complied with the relevant  
independence requirements and communicate with them all relationships and other matters that may  
reasonably be thought to bear on our independence, and where applicable, the related safeguards.  
From the matters communicated with those charged with governance, we determine those matters that  
were of most significance in the audit of the consolidated financial statements of the current period and are  
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation  
precludes public disclosure about the matter.  
Consolidated Financial Statements  
Independent Auditor’s Report  
345  
OTH ER LE GA L AN D REGU L ATORY R EQU I RE M EN TS  
Further Information pursuant to Article 10 of the EU Audit Regulation  
We were elected as group auditor by the annual general meeting on May 14, 2019. We were engaged by the  
supervisory board on May 20, 2019. We have been the group auditor of the VOLKSWAGEN  
AKTIENGESELLSCHAFT, Wolfsburg, without interruption since the financial year 1948/1949.  
We declare that the audit opinions expressed in this auditor’s report are consistent with the additional  
report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).  
GERM AN PU B LI C AU DITO R RE SP O NS I B LE F OR T H E ENGAGEME NT  
The German Public Auditor responsible for the engagement is Frank Hübner.  
Hanover, February 26, 2020  
PricewaterhouseCoopers GmbH  
Wirtschaftsprüfungsgesellschaft  
Harald Kayser  
Frank Hübner  
Wirtschaftsprüfer  
Wirtschaftsprüfer  
(German Public Auditor)  
(
German Public Auditor)  
3
46  
Five-Year Review  
Additional Information  
Five-Year Review  
2019  
2018  
2017  
2016  
2015  
Volume Data (thousands)  
Vehicle sales (units)  
Germany  
10,956  
1,347  
9,609  
10,823  
2,112  
8,712  
671  
10,900  
1,236  
9,664  
11,018  
2,303  
8,715  
656  
10,777  
1,264  
9,513  
10,875  
2,579  
8,296  
634  
10,391  
1,257  
9,135  
10,405  
2,685  
7,720  
619  
10,010  
1,279  
8,731  
10,017  
2,681  
7,336  
604  
Abroad  
Production (units)  
Germany  
Abroad  
Employees (yearly average)  
Germany  
297  
291  
285  
280  
276  
Abroad  
374  
365  
350  
339  
329  
Financial Data (in € million)  
Income Statement  
Sales revenue  
252,632  
–203,490  
49,142  
–20,978  
–9,767  
–1,437  
16,960  
1,396  
235,849  
–189,500  
46,350  
–20,510  
–8,819  
–3,100  
13,920  
1,723  
229,550  
–186,001  
43,549  
–20,859  
–8,126  
–745  
217,267  
–176,270  
40,997  
–22,700  
–7,336  
–3,858  
7,103  
213,292  
–179,382  
33,911  
–23,515  
–7,197  
–7,267  
–4,069  
2,767  
Cost of sales  
Gross profit  
Distribution expenses  
Administrative expenses  
Net other operating result  
Operating result  
13,818  
–146  
Financial result  
189  
Earnings before tax  
Income tax expense  
Earnings after tax  
18,356  
4,326  
15,643  
–3,489  
12,153  
13,673  
–2,210  
11,463  
7,292  
–1,301  
–59  
1,912  
14,029  
5,379  
–1,361  
Personnel expenses  
42,913  
41,158  
38,950  
37,017  
36,268  
Balance Sheet (at December 31)  
Noncurrent assets  
Current assets  
300,608  
187,463  
488,071  
274,620  
183,536  
458,156  
262,081  
160,112  
422,193  
254,010  
155,722  
409,732  
236,548  
145,387  
381,935  
Total assets  
Equity  
123,651  
1,870  
117,342  
225  
109,077  
229  
92,910  
221  
88,270  
210  
of which: noncontrolling interests  
Noncurrent liabilities  
Current liabilities  
196,497  
167,924  
488,071  
172,846  
167,968  
458,156  
152,726  
160,389  
422,193  
139,306  
177,515  
409,732  
145,175  
148,489  
381,935  
Total equity and liabilities  
Cash flows from operating activities  
17,983  
7,272  
–1,185  
9,430  
13,679  
Cash flows from investing activities attributable to operating  
activities  
20,076  
–865  
19,386  
24,566  
18,218  
17,625  
16,797  
9,712  
15,523  
9,068  
Cash flows from financing activities  
Additional Information  
Financial Key Performance Indicators  
347  
Financial Key Performance  
Indicators  
%
2019  
2018  
2017  
2016  
2015  
Volkswagen Group  
Gross margin  
19.5  
17.0  
6.7  
19.7  
17.5  
5.9  
19.0  
17.0  
6.0  
18.9  
17.0  
3.3  
15.9  
17.0  
–1.9  
–0.6  
–0.6  
23.1  
Personnel expense ratio  
Operating return on sales  
Return on sales before tax  
Return on sales after tax  
Equity ratio  
7.3  
6.6  
6.0  
3.4  
5.6  
5.2  
5.0  
2.5  
25.3  
25.6  
25.8  
22.7  
Automotive Division1  
Change in unit sales year-on-year2  
Change in sales revenue year-on-year  
Research and development costs as a percentage of sales revenue  
Operating return on sales  
EBITDA (in € million)3  
Return on investment (ROI)4  
+ 0.5  
+ 5.7  
6.7  
+ 1.1  
+ 2.7  
6.8  
+ 3.7  
+ 5.3  
6.7  
+ 3.8  
+ 1.1  
7.3  
–2.0  
+ 3.6  
7.4  
6.5  
5.5  
5.7  
2.5  
–3.4  
7,212  
–0.2  
29,706  
11.2  
26,707  
11.0  
26,094  
12.1  
18,999  
8.2  
Cash flows from operating activities as a percentage of sales  
revenue  
14.5  
9.2  
6.0  
10.9  
12.9  
Cash flows from investing activities attributable to operating  
activities as a percentage of sales revenue  
9.4  
6.6  
9.4  
6.6  
9.0  
6.5  
8.6  
6.9  
8.1  
6.9  
Capex as a percentage of sales revenue  
Net liquidity as a percentage of sales revenue  
Ratio of noncurrent assets to total assets5  
Ratio of current assets to total assets6  
Inventory turnover7  
8.4  
8.2  
9.7  
12.5  
23.4  
15.9  
5.5  
11.5  
23.1  
15.2  
5.8  
26.4  
17.0  
4.8  
23.3  
17.6  
5.0  
23.7  
16.3  
5.1  
Equity ratio  
37.6  
37.9  
36.9  
31.4  
32.6  
Financial Services Division  
Increase in total assets  
Return on equity before tax8  
Equity ratio  
7.9  
10.8  
12.8  
11.2  
9.9  
6.0  
9.8  
8.3  
10.8  
12.5  
13.9  
12.2  
11.9  
12.7  
13.7  
1
2
3
Including allocation of consolidation adjustments between the Automotive and Financial Services divisions.  
Including the Chinese joint ventures. These companies are accounted for using the equity method.  
Operating result plus net depreciation/amortization and impairment losses/reversals of impairment losses on property, plant and equipment, capitalized development costs, lease  
assets, goodwill and financial assets as reported in the cash flow statement.  
For details, see Value-based management on page 126.  
Ratio of property, plant and equipment to total ass.  
Ratio of inventories to total assets at the balance sheet date.  
Ratio of sales revenue to average monthly inventories.  
Earnings before tax as a percentage of average equity.  
4
5
6
7
8
3
48  
Glossary  
Additional Information  
Glossary  
6
HOHFWHGꢀWHUPVꢀDWꢀDꢀJODQFHꢀ  
Liquefied Natural Gas (LNG)  
Test procedure  
LNG is needed so that natural gas engines can be  
used in long-distance trucks and buses, since this  
is the only way of achieving the required energy  
density.  
Levels of fuel consumption and exhaust gas  
emissions for vehicles registered in Europe were  
previously measured on a chassis dynamometer  
with the help of the “New European Driving  
Cycle (NEDC)”. Since fall 2017, the existing test  
procedure for emissions and fuel consumption  
used in the EU is being gradually replaced by the  
Worldwide Harmonized Light-Duty Vehicles Test  
Procedure (WLTP). This has been in place for new  
vehicle types since fall 2017 and will apply to all  
new vehicles since fall 2018. The aim of this new  
Big Data  
Big data is a term used to describe new ways of  
analyzing and evaluating data volumes that are  
too vast and too complex to be processed using  
manual or conventional methods.  
Modular Electric Drive Toolkit (MEB)  
The modular system is being developed for the  
manufacturing of electric vehicles. The MEB  
establishes parameters for axles, drive systems,  
high-voltage batteries, wheelbases and weight  
ratios to ensure a vehicle optimally fulfills the  
requirements of e-mobility. The first vehicle  
based on the MEB should go into series produc-  
tion in 2020.  
Compliance  
Adherence to statutory provisions, internal com-  
pany policies and ethical principles.  
Corporate Governance  
test cycle is to state CO  
2
emissions and fuel  
International term for responsible corporate  
management and supervision driven by long-  
term value added.  
consumption in a more practice-oriented man-  
ner. A further important European regulation is  
the Real Driving Emissions (RDE) for passenger  
cars and light commercial vehicles, which also  
monitors emissions using portable emission  
measuring technology in real road traffic.  
Modular Transverse Toolkit (MQB)  
Hybrid drive  
As an extension of the modular strategy, this  
platform can be deployed in vehicles whose  
architecture permits a transverse arrangement of  
the engine components. The modular perspective  
enables high synergies to be achieved between  
the vehicles in the Volkswagen Passenger Cars,  
Volkswagen Commercial Vehicles, Audi, SEAT and  
ŠKODA brands.  
Drive combining two different types of engine  
and energy storage systems (usually an internal  
combustion engine and an electric motor).  
Turntable concept  
Concept of flexible manufacturing enabling the  
production of different models in variable daily  
volumes within a single plant, as well as offering  
the facility to vary daily production volumes of  
one model between two or more plants.  
Hybrid notes  
Hybrid notes issued by Volkswagen are classified  
in their entirety as equity. The issuer has call  
options at defined dates during their perpetual  
maturities. They pay  
a
fixed coupon until the  
variable  
Plug-in hybrid  
first possible call date, followed by  
a
Performance levels of hybrid vehicles. Plug-in  
Vocational groups  
rate depending on their terms and conditions.  
hybrid electric vehicles (PHEVs) have  
a
larger  
For example, electronics, logistics, marketing, or  
finance. A new teaching and learning culture is  
gradually being established by promoting  
training in the vocational groups. The specialists  
are actively involved in the teaching process by  
passing on their skills and knowledge to their  
colleagues.  
battery with a correspondingly higher capacity  
that can be charged via the combustion engine,  
the brake system, or an electrical outlet. This  
increases the range of the vehicle.  
Industry 4.0  
Describes the fourth industrial revolution and  
the systematic development of real-time and  
intelligent networks between people, objects and  
systems, exploiting all of the opportunities of  
information technology along the entire value  
added chain. Intelligent machines, inventory  
systems and operating equipment that inde-  
pendently exchange information, trigger actions  
and control each other will be integrated into  
production and logistics at a technical level. This  
offers tremendous versatility, efficient resource  
utilization, ergonomics and the integration of  
customers and business partners in operational  
processes throughout the entire value chain.  
Rating  
Systematic assessment of companies in terms of  
their credit quality. Ratings are expressed by  
means of rating classes, which are defined  
differently by the individual rating agencies.  
Zero-Emissions Vehicle (ZEV)  
Vehicles that operate without exhibiting any  
harmful emissions from combustion gases.  
Examples of zero-emissions vehicles include  
purely battery-powered electric vehicles (BEV) or  
fuel cell vehicles.  
Additional Information  
Glossary  
349  
Capitalization ratio  
Return on equity before tax  
The capitalization ratio is defined as the ratio of  
capitalized development costs to total research and  
development costs in the Automotive Division. It  
shows the proportion of primary research and devel-  
opment costs subject to capitalization.  
The return on equity shows the ratio of profit before  
tax to average shareholders’ equity of a period,  
expressed as a percentage. It reflects the company’s  
profitability per share and indicates the interest rate  
earned on equity.  
Distribution ratio  
Return on sales before tax  
The distribution ratio is the ratio of total dividends  
attributable to ordinary and preferred shares to  
earnings after tax attributable to the shareholders of  
Volkswagen AG. The distribution ratio provides infor-  
mation on how earnings are distributed.  
The return on sales is the ratio of profit before tax to  
sales revenue in a period, expressed as a percentage. It  
shows the level of profit generated for each unit of  
sales revenue. The return on sales provides infor-  
mation on the profitability of all business activities  
before deducting income tax expense.  
Dividend yield  
The dividend yield is the ratio of the dividend for the  
reporting year to the closing price per share class on  
the last trading day of the reporting year; it represents  
the interest rate earned per share. The dividend yield  
is used in particular for measuring and comparing  
shares.  
Tax rate  
The tax rate is the ratio of income tax expense to  
profit before tax, expressed in percent. It shows what  
percentage of the profit generated has to be paid over  
as tax.  
Equity ratio  
The equity ratio measures the percentage of total  
assets attributable to shareholders’ equity as of a  
reporting date. This ratio indicates the stability and  
financial strength of the company and shows the  
degree of financial independence.  
Gross margin  
Gross margin is the percentage of sales revenue  
attributable to gross profit in a period. Gross margin  
provides information on profitability net of cost of  
sales.  
Price-earnings ratio  
The price-earnings ratio is calculated by dividing the  
share price per share class at the end of the year by  
the earnings per share. It reflects a company’s profita-  
bility per share; a comparison over several years shows  
how its performance has developed over time.  
3
50  
Index  
Additional Information  
Index  
A
G
Q
Accounting policies  
221 ff  
Group structure  
196 f  
Quality assurance  
147 ff, 174 f  
B
I
R
Balance sheet  
ύώώ ff, ύώϕ f, ώϐϑ ff  
ώόϔ ff  
IFRSs  
ώόϏ ff  
ύύϐ ff, ύώϕ, ύϕϑ  
ύϑϏ f, ύϓϑ  
Ratings  
ύύώ  
ύύύ f  
Basis of consolidation  
Board of Management  
Brands  
Income statement  
Information technology  
Investment policy  
Refinancing  
Remuneration  
ϓ ff, ϒύ ff, ϓό ff, ϏϏϐ f  
ώύ ff  
ϒϏ, ϓό ff, Ϗώϔ f  
ύϒύ f  
Report on post-balance sheet date events  
ύϑϒ  
Research and development  
Return on investment (ROI) and  
value contribution  
ύϏύ, ύϏϒ ff, ύϓώ f  
C
K
Cash flow statement  
ύύϕ ff, ώόώ, ώϕύ f  
ύϏϒ f, ύϓϒ ff  
ώύϕ  
Key figures  
Uώ  
ϑϒ, ύώϑ ff, ύϒϏ  
ϒϔ, ύϒϐ ff  
CO  
ώ
emissions  
Risk management  
Consolidation methods  
Core performance indicators  
Corporate Governance  
Currency  
L
ϑϒ  
Litigation  
ύϓϕ ff, Ϗύϓ ff  
S
ϒό ff, ϏϏϐ  
ϕϒ, ύϒό, ώώό  
Sales and marketing  
Segment reporting  
Shareholders  
ύϐϒ f  
ύύϏ, ώϏϏ ff  
M
ϕώ , ύόϕ  
Market development  
Models  
ϕϑ ff, ύϑϔ ff  
ϕϔ f, ύϒό f  
D
Shares  
ϕώ f, ύόϓ ff  
Declaration of conformity  
Deliveries  
ϒό f  
ύόό ff  
Statement of comprehensive income  
Strategy  
ύϕϒ f  
ϑύ ff, ύϐϔ ff, ύϑϑ f  
ύώϔ, ύϒώ f, ύϔϕ  
ϑϓ ff, ϔϒ ff, ϏϏϐ f  
ύύώ, ύϏϏ ff  
N
Dividend policy, yield  
Dividend proposal  
ύόϔ  
Summaries  
Nonfinancial key performance indicators  
ύϏϏ ff  
ύϏό, ώϒό  
Supervisory Board  
Sustainability  
O
E
Orders received  
ϐύ, ϐϏ, ύόϑ  
ύϐύ ff, ύϓϏ  
T
Earnings per share  
ύόϔ, ώϐϐ  
Target-performance comparison  
Test procedure  
ύώϔ  
Employees  
ϑϏ, ύόϒ, ύϏύ, ύϐϕ ff, ύϒϏ, ύϓϒ, ώϓώ, Ϗώϔ  
P
Uώ, ύϏϒ, ύϓϓ  
Environmental  
protection  
Procurement  
ύϏύ, ύϑϑ f, ύϓϒ ff  
Production  
ώϑ ff, ύόϒ, ύϏύ, ύϐϏ ff, ύϓϏ f  
Environmental strategy  
Equity  
ύϑϑ f  
V
Proposal on the appropriation of net profit  
Prospects  
ύϏό  
ύϕό  
ώόό f, ώϑϕ f  
Value added  
Vehicle sales  
60, 133 ff  
23, 106, 131  
F
Financial data, overview  
Ϗϐϒ f  
Financial risk management  
ώϕϏ ff  
Scheduled Dates 2020  
FI NANCIAL CALEN DER  
March 17  
Volkswagen AG Annual Media Conference  
and Investor Conference  
April 29  
Interim Report January – March  
May 7  
Volkswagen AG Annual General Meeting  
Juli 30  
Half-Yearly Financial Report  
Oktober 29  
Interim Report January – September  
Contact Information  
PUBLISHED BY  
Volkswagen AG  
Group Financial Publications, Letterbox 1848-2  
3
8436 Wolfsburg, Germany  
Phone + 49 (0) 5361 9-0  
Fax + 49 (0) 5361 9-28282  
This annual report is published in English and German.  
Both versions of the report are available on the Internet  
at www.volkswagenag.com/ir.  
The German version is legally binding.  
INVESTOR RELATIONS  
Volkswagen AG  
Investor Relations, Letterbox 1849  
3
8436 Wolfsburg, Germany  
Phone + 49 (0) 5361 9-0  
Fax + 49 (0) 5361 9-30411  
E-mail investor.relations@volkswagen.de  
Internet www.volkswagenag.com/ir  
CONCEPT, DESIGN AND REALIZATION  
C3 Creative Code and Content GmbH  
ENGLISH TRANSLATION  
Leinhäuser Language Services GmbH, Unterhaching  
FINANCIAL REPORT  
Produced in-house with firesys  
PHOTOGRAPHY  
Volkswagen AG  


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