volkswagen+in+the+us+ +an+evolving+growth+story
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Volkswagen in the U.S.: An Evolving Growth StoryDeutsche Bank Global Auto Industry Conference
Michael Lohscheller EVP & CFO, Volkswagen Group of America, Inc.
Detroit, 10 January 2012
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This presentation contains forward-looking statements and information on the business development of
the Volkswagen Group. These statements may be spoken or written and can be recognized by termssuch as expects, anticipates, intends, plans, believes, seeks, estimates, will or wordswith similar meaning. These statements are based on assumptions relating to the development of theeconomies of individual countries, and in particular of the automotive industry, which we have made onthe basis of the information available to us and which we consider to be realistic at the time of going topress. The estimates given involve a degree of risk, and the actual developments may differ from thoseforecast.
Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such asin Western Europe (and especially Germany) or in the USA, Brazil or China, will have a correspondingimpact on the development of our business. The same applies in the event of a significant shift incurrent exchange rates relative to the US dollar, sterling, yen, Brazilian real, Chinese renminbi andCzech koruna.
If any of these or other risks occur, or if the assumptions underlying any of these statements proveincorrect, the actual results may significantly differ from those expressed or implied by suchstatements.
We do not update forward-looking statements retrospectively. Such statements are valid on the date ofpublication and can be superseded.
Disclaimer
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Agenda
Volkswagen Group sales update
Volkswagens profitable growth in the U.S. market
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Volkswagens profitable growth in the US market
Agenda
Volkswagen Group sales update
Volkswagens profitable growth in the U.S. market
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1) incl. Scania (Jan-Sept)2) preliminary figures
January to October 2011 vs. 2010World Car market: 5.1% VW Group: 14.4%
9.3%
21.4%
-1.5%
8.8%
26.1%30.5%
6.7% 5.1%11.4%
22.6%
2.5%
19.8%
North America Western Europe Central & Eastern Europe
South America Asia PacificRest of World
Car marketCars + LCV
VW Group Car market VW Group Car market VW Group
Car market VW GroupCar market VW GroupCar market VW Group
World car markets and Volkswagen Group deliveries to customers1,2)January to December 2011 vs. 2010
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Volkswagen Group deliveries to customers by market1,2)January to December 2011 vs. 2010
000 units January to December 2010
January to December 2011
7,183
2,896
427549 902
2,144
264
8,216
3,150
557667 948
2,569
324
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Volkswagen
Group
Western
Europe
Central &
EasternEurope
North America South America Asia Pacific Rest of World
14.4%
8.8%
30.5% 21.4% 5.1%19.8%
22.6%
1) incl. Scania (Jan-Sept)2) preliminary figures
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Volkswagen Group deliveries to customers by brands1,2)January to December 2011 vs. 2010
000 units January to December 2010
January to December 2011
7,183
4,503
1,092763
3405
43644
8,216
5,091
1,303876
3507
52959
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Volkswagen
Group
Volkswagen
PassengerCars
Audi KODA SEAT Bentley Commercial
Vehicles
Scania
14.4%
13.1%
19.2% 14.8% 3.1%
36.9%
21.4%
35.4%
1) incl. Scania (Jan-Sept)2) preliminary figures
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Volkswagen Group of America Overview
LocationsBrands
Group Sales 2011: > 444,000 units in USA /+ 23 % vs. YTD 20101
Group Market share YTD 2011: 3.5% in USA /+ 0.4 percentage points vs. YTD 20101
Over 4,300 employees
Finance company: VW Credit, Inc.
Locations in USA: Corporate Headquarters in Herndon, Virginia Group Quality/Technical Facilities Auburn Hills, MI New factory in Chattanooga, Tennessee Corporate Design Center and Electronic Research
Laboratory (ERL) in California
Ports and post production facilities in California,Georgia, Rhode Island and Texas Parts distribution centers in California, Florida, New
Jersey, Texas and Wisconsin Financial Service Center in Auburn Hills (Remarketing
& Auction) as well as in Illinois and Oregon
Source: 1Autodata Motor Intelligence, Jan. 2012
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Expected Overall U.S. Market Development
Gradual economic recovery
Job growth
Housing market recovery
Improved consumer confidence
Fleet renewal;more fuel efficient vehicles
Population growth,immigration
Source: Volkswagen Group of America, Inc., PwC/Autofacts
Mil. Units
18
17
16
15
14
13
12
11
10
014FC
0697 01 0790 94 080298 1095 03 0993 99 110496 12FC
92 05 13FC
0091
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Business Objectives 2012
Build on fundamentals that contribute to sustainable and
profitable growth
Out-perform market with double-digit growth
Volkswagen Group of America to continue sales momentum in2012 and aim to sell over 500,000 units the first time in 39years.
Market forecast between 13.5 14 million units in 2012depending on economic conditions.
Achieve profit at an operating level in 2012 for the secondconsecutive year for U.S. Sales Operations
Passat and Beetle with first full-year of sales. Refreshed CC to hitthe market this spring, followed later by the all-new Jetta Hybrid.
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Volkswagen in America Then and
Flashback to the 1960s... Then to the 1990s...
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Key Messages
U.S. car market is recovering, but at a slower pace
Executing 2018 Growth Strategy
Broad-based Momentum established
Volkswagen brand improvements beginning to emerge across
Business
Brand, Quality, Customer Experience
Financial move towards Break-even
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U.S. Volkswagen Brand Sales Development 2010-2011
Source: Autodata Motor Intelligence, Jan. 2012
December YTD 2010Market Share: 2.2%
December YTD 2011Market Share: 2.5%
+26%256,830
324,400
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Total Market Segmentation 2011 vs. 2010
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ChangesinUnits
Changes
in%
Total SegmentVolume [in 1,000]
(33,277) (31,523) (30,101) (8,181) (7,304)
4,183 4,575 12,24417,088 20,876
31,669
79,42595,686
149,791 153,757
202,536223,228
261,086
(50,000)
0
50,000
100,000
150,000
200,000
250,000
300,000
478.3 901.1 98.9 20.5 170.1 300.9 43.5 472.4 222.1 124.5 297.9 167.4 811.3 1152.7 1519.0 2142.5 1449.4 1773.9
-6.5% -3.4%
-23.3%-28.5%
-4.1%
1.4%11.8%
2.7%8.3%
20.1%11.9%
90.3%
13.4% 14.9% 11.3% 10.4%18.2% 17.3%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
VW Growth Segments
Source: Autodata Motor Intelligence, Jan. 2012
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Volkswagen U.S. Sales Development 1952 - 2011 & Target
17
200
400
800
600
(000) 800 k in 2018
> 324 kin 2011
Source: Internal
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Foundations to Fix Underperformance in U.S. Market
Sustainable profitabilityConsumer First choice
800,000 unit sales
20182011
Product
Deliveries toCustomers
Challenges
VWG
oals
Focus
20182011 2011 201820182011 20182011Q3
Consideration Initial Quality (IQS) LoyaltyThroughput
per dealerUsed VW Car sales
2011Q3
2018
BrandDevelopment
Quality CustomerExperience
Network UsedCars/Fleet
Source: Volkswagen Group of America, Inc.
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Product Portfolio Continues to Develop
Passat Beetle Jetta GLI
Golf R Tiguan
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CC
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Passat Delivers Volkswagen Core Values
Brand Positioning
Brand InsightPeople love our
brand. They justdont buy our cars.
BetterEngineering
for All Product InsightGiving people a
ration alibi, bydelivering better
engineering at anaffordable price.
Human InsightPeople want
permission to buy
what they desire.
Core Tenets
Elevating Every Segment
Committed to Delivering Better
Engineering
Technology
Fit and Finish
Handling and DriverExperience
Priced within Reach
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Creating Brand Momentum Prior to the Passat LaunchKey 2011 Brand Momentum Moments
Source: Volkswagen Group of America, Inc., Polk, Urban Science
Think Blue
Brand Campaign
Global Beetle
Super Bowl
Chattanooga
Oprah
Metric Results11 vs. 10
Brand Sales +26%
Jetta Sales +54%
Jetta Leads +79%
Brand Leads +57%
Jetta
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Passat Priced for the Market
Passat2.5L
PassatTDI
PassatV6
Passat2010
Camry Accord Altima Fusion Malibu Sonata
$32,950
$19,995
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Quality & Safety Awards
Best Full-line Manufacturer
Small Multi-Function
GolfMid-Size Car Jetta
Entry Utility Tiguan
Volkswagen ranks 2nd among Volume Makes
Compact Sporty Car GTI & EOS
Compact Car
Golf & Jetta
Compact Crossover SUV Tiguan
Entry Premium Car CC
Mid-Size Premium Crossover SUV Touareg
IIHS Top Safety Pick Award:
2012 Volkswagen Passat
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Key Profit Drivers
Introduction of products in the sweet spot of their segmentsProduct
Competitive entry prices while maintaining price premiumRevenue management
Pricing
Increase of localized cars to 75% for Volkswagen BrandHigh localization of parts and componentsLocalization of carsand components
Localized MDO (Market Delivery Options) strategyIncrease revenue per car
Parts & Accessories
Leveraging efficiencies of the group:- Marketing/IT/FacilitiesCost Efficiencies
Integrated customer approachLocal funding
Financial Services
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Financial Highlights 2011
Jetta Success
Passat and Beetle Launch
Revenue per Car Increase
Incentive Reduction
Marketing Efficiencies
Parts Business
Increase of Used Car ProceedsSuccessful Local Funding
Improved Dealer Profitability
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Local Content of Passat, Jetta, Beetle
Passat Jetta / Beetle
85%85%
Local ContentLocal Content
Sourcing in North America
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Volkswagen incentives are 16% lower year over year and 29%below the industry average (December YTD)
-29%-16%
IndustryDodgeChryslerMitChev
2,000
Ford
1,000
Nissan0
HondaToyotaMazdaKia
4,000
Hyundai
3,000
CYTD 2011CYTD 2010
Source: AutoData Motor Intelligence; Jan. 2012
USD / unit
IndustryAverage
VW CYTD 2011
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Dealer Profitability & Value of the Volkswagen BrandFranchise
Volkswagen brand ranks 3 in dealer confidence
in the value of the franchise (next 12 months)
Return on Sales
VW National 10 vs. 11
Source: Volkswagen Group of America, Inc.; National Automobile Dealers Association, 2011
in %
2.4%
2.2%
Nov. YTD 2011
Nov. YTD 2010
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Volkswagen in the U.S.: An Evolving Growth StoryDeutsche Bank Global Auto Industry Conference
Michael Lohscheller EVP & CFO, Volkswagen Group of America, Inc.
Detroit, 10 January 2012